Companies: 10,793     total market cap: $139.375 T
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First Bancorp
FBNC
#4422
Rank
$2.43 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$58.63
Share price
-1.13%
Change (1 day)
62.01%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. First Bancorp
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2022 Q1

First Bancorp - 10-Q quarterly report FY2022 Q1


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
Commission File Number 0-15572
FIRST BANCORP
(Exact Name of Registrant as Specified in its Charter)
North Carolina56-1421916
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification Number)
300 SW Broad St.,Southern Pines,North Carolina28387
(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 classTrading SymbolName of each exchange on which registered:
Common Stock, No Par ValueFBNCThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 (§232.405 of this chapter) 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. (Check one)
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The number of shares of the registrant's Common Stock outstanding on April 30, 2022 was 35,639,889.


INDEX
FIRST BANCORP AND SUBSIDIARIES
Page
Consolidated Balance Sheets - March 31, 2022 and December 31, 2021
4
Consolidated Statements of Income - For the Three Months Ended March 31, 2022 and 2021
5
Consolidated Statements of Comprehensive Income - For the Three Months Ended March 31, 2022 and 2021
6
Consolidated Statements of Shareholders’ Equity - For the Three Months Ended March 31, 2022 and 2021
7
Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 2022 and 2021
8
Notes to Consolidated Financial Statements
9
33
45
47
 
 
47
47
47
49
50

Page 2
FORWARD-LOOKING STATEMENTS
Part I of 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 judgment 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, including the impact of the current pandemic. For additional information about factors that could affect the matters discussed in this paragraph, see the “Risk Factors” section of our 2021 Annual Report on Form 10-K and Item 1A of Part II of this report.

Page 3
Part I. Financial Information
Item 1 - Financial Statements
First Bancorp and Subsidiaries
Consolidated Balance Sheets
($ in thousands)March 31,
2022 (unaudited)		December 31,
2021
ASSETS  
Cash and due from banks, noninterest-bearing$124,785 128,228 
Due from banks, interest-bearing440,974 332,934 
Total cash and cash equivalents565,759 461,162 
Securities available for sale2,685,048 2,630,414 
Securities held to maturity (fair values of $492,307 and $511,699)
546,090 513,825 
Presold mortgages in process of settlement at fair value5,672 19,257 
SBA and other loans held for sale3,630 61,003 
Loans6,064,698 6,081,715 
Allowance for credit losses on loans(82,069)(78,789)
Net loans5,982,629 6,002,926 
Premises and equipment135,482 136,092 
Operating right-of-use lease assets20,380 20,719 
Accrued interest receivable24,728 25,896 
Goodwill364,263 364,263 
Other intangible assets16,928 17,827 
Foreclosed properties2,750 3,071 
Bank-owned life insurance164,273 165,786 
Other assets134,428 86,660 
Total assets$10,652,060 10,508,901 
LIABILITIES
Deposits:      Noninterest-bearing checking accounts$3,593,642 3,348,622 
Interest-bearing checking accounts1,577,197 1,593,231 
Money market accounts2,636,913 2,562,283 
Savings accounts735,659 708,054 
Time deposits of $100,000 or more543,542 613,414 
Other time deposits298,194 299,025 
Total deposits9,385,147 9,124,629 
Borrowings67,415 67,386 
Accrued interest payable576 607 
Operating lease liabilities20,903 21,192 
Other liabilities60,529 64,512 
Total liabilities9,534,570 9,278,326 
Commitments and contingencies
SHAREHOLDERS’ EQUITY
Preferred stock, no par value per share.  Authorized: 5,000,000 shares
Issued & outstanding:  none as of March 31, 2022 and December 31, 2021
— — 
Common stock, no par value per share.  Authorized: 40,000,000 shares
Issued & outstanding:  35,639,889 shares and 35,629,177 shares as of March 31, 2022 and December 31, 2021, respectively
723,441 722,671 
Retained earnings559,004 532,874 
Stock in rabbi trust assumed in acquisition(1,814)(1,803)
Rabbi trust obligation1,814 1,803 
Accumulated other comprehensive loss(164,955)(24,970)
Total shareholders’ equity1,117,490 1,230,575 
Total liabilities and shareholders’ equity$10,652,060 10,508,901 
See accompanying notes to unaudited consolidated financial statements.

Page 4
First Bancorp and Subsidiaries
Consolidated Statements of Income
Three Months Ended March 31,
20222021
($ in thousands, except share data)(unaudited)
INTEREST INCOME
Interest and fees on loans$64,202 51,073 
Interest on investment securities:
Taxable interest income13,210 5,913 
Tax-exempt interest income1,048 323 
Other, principally overnight investments649 700 
Total interest income79,109 58,009 
INTEREST EXPENSE
Savings, checking and money market accounts1,185 1,314 
Time deposits of $100,000 or more430 858 
Other time deposits156 216 
Borrowings460 383 
Total interest expense2,231 2,771 
Net interest income76,878 55,238 
Provision for credit losses3,500 — 
Reversal of provision for unfunded commitments(1,500)— 
Total provision for credit losses2,000 — 
Net interest income after provision for credit losses74,878 55,238 
NONINTEREST INCOME
Service charges on deposit accounts3,541 2,733 
Other service charges, commissions and fees7,005 5,522 
Fees from presold mortgage loans1,121 4,544 
Commissions from sales of insurance and financial products945 2,190 
SBA consulting fees780 2,764 
SBA loan sale gains3,261 2,330 
Bank-owned life insurance income976 620 
Other gains (losses), net1,622 (34)
Total noninterest income19,251 20,669 
NONINTEREST EXPENSES
Salaries expense23,454 20,131 
Employee benefits expense5,578 4,574 
Total personnel expense29,032 24,705 
Occupancy expense3,384 2,904 
Equipment related expenses1,304 1,045 
Merger and acquisition expenses3,484 — 
Intangibles amortization expense1,017 897 
Foreclosed property (gains) losses, net(80)157 
Other operating expenses13,324 10,357 
Total noninterest expenses51,465 40,065 
Income before income taxes42,664 35,842 
Income tax expense8,695 7,648 
Net income$33,969 28,194 
Earnings per common share:
Basic$0.95 0.99 
Diluted0.95 0.99 
Dividends declared per common share$0.22 0.20 
Weighted average common shares outstanding:
Basic35,433,739 28,357,809 
Diluted35,640,978 28,537,853 
See accompanying notes to unaudited consolidated financial statements.

Page 5
First Bancorp and Subsidiaries
Consolidated Statements of Comprehensive Income
    
Three Months Ended
March 31,
20222021
($ in thousands)(unaudited)
Net income$33,969 28,194 
Other comprehensive loss:
Unrealized losses on securities available for sale:
Unrealized holding losses arising during the period, pretax(181,795)(24,235)
Tax benefit41,776 5,569 
Postretirement Plans:
Amortization of unrecognized net actuarial loss44 171 
Tax benefit(10)(40)
Other comprehensive loss(139,985)(18,535)
Comprehensive (loss) income$(106,016)9,659 
See accompanying notes to unaudited consolidated financial statements.

Page 6
First Bancorp and Subsidiaries
Consolidated Statements of Shareholders’ Equity
($ in thousands, except share data - unaudited)Common StockRetained
Earnings		Stock in
Rabbi
Trust
Assumed
in
Acquisition		Rabbi
Trust
Obligation		Accumulated
Other
Comprehensive
Income
(Loss)		Total
Shareholders’
Equity
SharesAmount
Three Months Ended March 31, 2021
Balances, January 1, 202128,579 $400,582 478,489 (2,243)2,243 14,350 893,421 
Adoption of new accounting standard(17,051)(17,051)
Net income28,194 28,194 
Cash dividends declared ($0.20 per common share)
(5,688)(5,688)
Change in Rabbi Trust obligation(13)13 — 
Stock repurchases(107)(4,036)(4,036)
Stock-based compensation20 651 651 
Other comprehensive loss(18,535)(18,535)
Balances, March 31, 202128,489 $397,094 483,944 (2,256)2,256 (4,185)876,853 
Three Months Ended March 31, 2022
Balances, January 1, 202235,629 $722,671 532,874 (1,803)1,803 (24,970)1,230,575 
Net income33,969 33,969 
Cash dividends declared ($0.22 per common share)
(7,839)(7,839)
Change in Rabbi Trust obligation(11)11 — 
Stock withheld for payment of taxes(3)(117)(117)
Stock-based compensation14 887 887 
Other comprehensive loss(139,985)(139,985)
Balances, March 31, 202235,640 $723,441 559,004 (1,814)1,814 (164,955)1,117,490 

See accompanying notes to unaudited consolidated financial statements.






Page 7
First Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
Three Months Ended March 31,
($ in thousands-unaudited)20222021
Cash Flows From Operating Activities
Net income$33,969 28,194 
Reconciliation of net income to net cash provided by operating activities:
Provision for credit losses2,000 — 
Net security premium amortization3,437 2,876 
Loan discount accretion(1,671)(1,341)
Other purchase accounting accretion and amortization, net(172)29 
Foreclosed property (gains) losses and write-downs, net(80)157 
Other (gains) losses, net(1,622)34 
(Decrease) increase in net deferred loan fees(776)2,845 
Bank-owned life insurance income(976)(620)
Depreciation of premises and equipment1,726 1,448 
Amortization of operating lease right-of-use assets339 517 
Repayments of lease obligations(289)(416)
Stock-based compensation expense547 397 
Amortization of intangible assets1,017 897 
Amortization of SBA servicing assets626 470 
Fees/gains from sale of presold mortgages and SBA loans(4,382)(6,874)
Origination of presold mortgage loans in process of settlement(46,488)(112,592)
Proceeds from sales of presold mortgage loans in process of settlement60,860 127,346 
Origination of SBA loans for sale(39,807)(37,359)
Proceeds from sales of SBA and other loans88,895 32,467 
Decrease in accrued interest receivable1,168 1,620 
Decrease (increase) in other assets3,509 (5,242)
Decrease (increase) in net deferred income tax asset1,160 (4,596)
Decrease in accrued interest payable(31)(163)
(Decrease) increase in other liabilities(2,816)639 
Net cash provided by operating activities100,143 30,733 
Cash Flows From Investing Activities
Purchases of securities available for sale(330,147)(475,960)
Purchases of securities held to maturity(36,089)(37,438)
Proceeds from maturities/issuer calls of securities available for sale91,421 80,650 
Proceeds from maturities/issuer calls of securities held to maturity2,684 5,780 
(Purchases) redemptions of FRB and FHLB stock, net(9,818)1,836 
Net decrease in loans29,927 110,212 
Proceeds from sales of foreclosed properties520 1,183 
Purchases of premises and equipment(1,217)(4,534)
Proceeds from sales of premises and equipment99 218 
Bank-owned life insurance death benefits3,595 — 
Net cash used by investing activities(249,025)(318,053)
Cash Flows From Financing Activities
Net increase in deposits260,752 459,906 
        Payments on long-term borrowings(33)(531)
Cash dividends paid – common stock(7,123)(5,140)
Repurchases of common stock— (4,036)
Payment of taxes related to stock withheld(117)(103)
Net cash provided by financing activities253,479 450,096 
Increase in cash and cash equivalents104,597 162,776 
Cash and cash equivalents, beginning of period461,162 367,290 
Cash and cash equivalents, end of period$565,759 530,066 
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest$2,422 2,934 
Cash paid during the period for income taxes— 9,585 
Non-cash: Unrealized loss on securities available for sale, net of taxes(140,019)(18,666)
Non-cash: Foreclosed loans transferred to other real estate119 727 
Non-cash: Accrued dividends at end of period7,839 5,688 
Non-cash: Initial recognition of operating lease right-of-use assets and operating lease liabilities— 444 
See accompanying notes to consolidated financial statements.

Page 8
First Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)

Note 1 - Organization and Basis of Presentation

The consolidated financial statements include the accounts of First Bancorp (the “Company”) and its wholly owned subsidiary First Bank (the “Bank”). The Bank has three wholly owned subsidiaries that are fully consolidated, SBA Complete, Inc. (“SBA Complete”), Magnolia Financial, Inc. ("Magnolia Financial"), and First Troy SPE, LLC. All significant intercompany accounts and transactions have been eliminated.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and notes necessary for complete financial statements in accordance with GAAP. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of March 31, 2022, the consolidated results of operations for the three months ended March 31, 2022 and 2021, and the consolidated cash flows for the three months ended March 31, 2022 and 2021. Any such adjustments were of a normal, recurring nature. These interim financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes in the Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for interim period are not necessarily indicative of the results that may be expected for the full year.
Reference is made to Note 1 of the 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) for a discussion of accounting policies and other relevant information with respect to the financial statements. To maintain consistency and comparability, certain amounts from prior periods have been reclassified to conform to current period presentation with no effect on net income or shareholders' equity as previously reported.
The Company has evaluated all subsequent events through the date the financial statements were issued.
Impact of COVID-19
Our market areas and local economies continue to show signs of recovery from the impact of the COVID-19 pandemic. However, the current pandemic is ongoing and dynamic in nature, and there are many related uncertainties, including, among other things, its severity and new variants that may arise; its ultimate duration and infection spikes that may occur; the impact on our customers, employees and vendors; the impact on the financial services and banking industry; and the ongoing impact on the economy as a whole. The extent to which the COVID-19 pandemic has a further impact on our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities and other third parties in response to the COVID-19 pandemic.
Note 2 – Accounting Pronouncements
Accounting Standards Adopted in 2022
The Company did not adopt any accounting standards during the first three months of 2022.
Accounting Standards Pending Adoption
ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." This Accounting Standards Update ("ASU") eliminates the accounting guidance for troubled debt restructurings by creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This ASU also requires entities to disclose current period gross write-offs by year of origination for financing receivables and net investment in leases. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years and early adoption is permitted. The entity must have adopted the amendments in ASU 2016-13 ("CECL") to adopt the amendments in this ASU. The Company is currently evaluating the impact of

Page 9
adopting the new guidance on the consolidated financial statements but does not expect it to have a material effect on its financial statements.

Note 3 – Securities

The book values and approximate fair values of investment securities at March 31, 2022 and December 31, 2021 are summarized as follows:
($ in thousands)March 31, 2022December 31, 2021
Amortized
Cost		Fair
Value		UnrealizedAmortized
Cost		Fair
Value		Unrealized
Gains(Losses)Gains(Losses)
Securities available for sale:
US Treasuries$149,534 149,391 — (143)$— — — — 
Government-sponsored enterprise securities71,953 64,168 — (7,785)71,951 69,179 — (2,772)
Mortgage-backed securities2,632,054 2,425,911 349 (206,492)2,545,150 2,514,805 9,489 (39,834)
Corporate bonds45,369 45,578 367 (158)45,380 46,430 1,106 (56)
Total available for sale$2,898,910 2,685,048 716 (214,578)2,662,481 2,630,414 10,595 (42,662)
Securities held to maturity:
Mortgage-backed securities$18,662 18,513 1 (150)20,260 20,845 585 — 
State and local governments527,428 473,794 19 (53,653)493,565 490,854 2,955 (5,666)
Total held to maturity$546,090 492,307 20 (53,803)513,825 511,699 3,540 (5,666)

All of the Company’s mortgage-backed securities were issued by government-sponsored enterprises, except for private mortgage-backed securities with a fair value of $0.9 million and $0.9 million as of March 31, 2022 and December 31, 2021, respectively.

The following table presents information regarding securities with unrealized losses at March 31, 2022:
Securities in an Unrealized
Loss Position for
Less than 12 Months		Securities in an Unrealized
Loss Position for
More than 12 Months		Total
($ in thousands)Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses
US Treasuries$149,391 143 — — 149,391 143 
Government-sponsored enterprise securities19,855 2,104 44,313 5,681 64,168 7,785 
Mortgage-backed securities1,656,529 133,422 705,932 73,220 2,362,461 206,642 
Corporate bonds13,914 86 928 72 14,842 158 
State and local governments431,433 46,491 40,482 7,162 471,915 53,653 
Total unrealized loss position$2,271,122 182,246 791,655 86,135 3,062,777 268,381 



Page 10
The following table presents information regarding securities with unrealized losses at December 31, 2021:
Securities in an Unrealized
Loss Position for
Less than 12 Months		Securities in an Unrealized
Loss Position for
More than 12 Months		Total
($ in thousands)Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses		Fair ValueUnrealized
Losses
Government-sponsored enterprise securities$21,436 522 47,743 2,250 69,179 2,772 
Mortgage-backed securities1,773,022 25,977 404,484 13,857 2,177,506 39,834 
Corporate bonds999 1 945 55 1,944 56 
State and local governments228,279 3,797 34,398 1,869 262,677 5,666 
Total unrealized loss position$2,023,736 30,297 487,570 18,031 2,511,306 48,328 
As of March 31, 2022 and December 31, 2021, the Company's security portfolio held 600 securities of which 371 securities were in an unrealized loss position. In the above tables, all of the securities that were in an unrealized loss position at March 31, 2022 and December 31, 2021 are bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns. In arriving at this conclusion, the Company reviewed third-party credit ratings and considered the severity of the impairment. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost.
At March 31, 2022 and December 31, 2021, the Company determined that expected credit losses associated with held to maturity debt securities was insignificant.
The book values and approximate fair values of investment securities at March 31, 2022, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
 Securities Available for SaleSecurities Held to Maturity
($ in thousands)Amortized
Cost		Fair
Value		Amortized
Cost		Fair
Value
Securities
Due within one year$26,102 26,381 436 440 
Due after one year but within five years152,051 151,996 — — 
Due after five years but within ten years87,703 79,832 17,141 15,988 
Due after ten years1,000 928 509,851 457,366 
Mortgage-backed securities2,632,054 2,425,911 18,662 18,513 
Total securities$2,898,910 2,685,048 546,090 492,307 
At March 31, 2022 and December 31, 2021 investment securities with carrying values of $852.8 million and $951.4 million, respectively, were pledged as collateral for public deposits.
At March 31, 2022 and December 31, 2021, there were no holdings of securities of any one issuer, other than US Government and its agencies or government sponsored enterprises, in an amount greater than 10% of shareholders equity.
Included in “Other assets” in the Consolidated Balance Sheets are investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank of Richmond (“FRB”) stock totaling $32.2 million and $22.3 million at March 31, 2022 and December 31, 2021, respectively. These investments do not have readily determinable fair values. The FHLB stock had a cost and fair value of $5.3 million and $4.6 million at March 31, 2022 and December 31, 2021, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system. The FRB stock had a cost and fair value of $26.8 million and $17.8 million at March 31, 2022 and December 31, 2021, respectively, and is a requirement for FRB member bank qualification. Periodically, both the FHLB and FRB recalculate the Company’s required level of holdings, and the Company either buys more stock or redeems a portion of the stock at cost. The Company determined that neither stock was impaired at either period end.

Page 11
The Company owns 12,356 Class B shares of Visa, Inc. (“Visa”) stock that were received upon Visa’s initial public offering. These shares are expected to convert into Class A Visa shares subsequent to the settlement of certain litigation against Visa, to which the Company is not a party. The Class B shares have transfer restrictions, and the conversion rate into Class A shares is periodically adjusted as Visa settles litigation. The conversion rate at March 31, 2022 was approximately 1.62, which means the Company would receive approximately 19,993 Class A shares if the stock had converted on that date. This Class B stock does not have a readily determinable fair value and is carried at zero. If a readily determinable fair value becomes available for the Class B shares, or upon the conversion to Class A shares, the Company will adjust the carrying value of the stock to its market value with a credit to earnings.
Note 4 – Loans, Allowance for Credit Losses, and Asset Quality Information

The following is a summary of the major categories of total loans outstanding:
($ in thousands)March 31, 2022December 31, 2021
 AmountPercentageAmountPercentage
All  loans:
Commercial, financial, and agricultural$603,454 10 %$648,997 11 %
Real estate – construction, land development & other land loans795,886 13 %828,549 13 %
Real estate – mortgage – residential (1-4 family) first mortgages1,045,167 17 %1,021,966 17 %
Real estate – mortgage – home equity loans / lines of credit329,348 6 %331,932 5 %
Real estate – mortgage – commercial and other3,234,949 53 %3,194,737 53 %
Consumer loans56,822 1 %57,238 1 %
Subtotal6,065,626 100 %6,083,419 100 %
Unamortized net deferred loan fees(928)(1,704)
Total loans$6,064,698 $6,081,715 

Included in the line item "Commercial, financial, and agricultural" in the table above are Paycheck Protection Program ("PPP") loans totaling $15.6 million and $39.0 million at March 31, 2022 and December 31, 2021, respectively. PPP loans are fully guaranteed by the SBA. Included in unamortized net deferred loan fees are approximately $1.3 million and $2.6 million at March 31, 2022 and December 31, 2021, respectively, in unamortized net deferred loan fees associated with PPP loans. These fees are being amortized under the effective interest method over the terms of the loans. Accelerated amortization is recorded in the periods in which principal amounts are forgiven in accordance with the terms of the program.
Included in the table above are credit card balances outstanding totaling $38.8 million and $37.9 million at March 31, 2022 and December 31, 2021, respectively. At March 31, 2022, approximately 57% of total credit card balances are business credit cards included in "commercial, financial and agricultural" above and the remaining 43% are personal credit cards included in consumer loans in the table above.

Also included in the table above are various non-PPP SBA loans, with additional information on these loans presented in the table below.
($ in thousands)March 31, 2022December 31, 2021
Guaranteed portions of non-PPP SBA loans included in table above$33,024 48,377 
Unguaranteed portions of non-PPP SBA loans included in table above126,936 122,772 
Total non-PPP SBA loans included in the table above$159,960 171,149 
Sold portions of SBA loans with servicing retained - not included in tables above$426,601 414,240 

At March 31, 2022 and December 31, 2021, there was a remaining unaccreted discount on the retained portion of sold non-PPP SBA loans amounting to $5.9 million and $6.0 million, respectively.

Loans in the amount of $5.4 billion and $4.3 billion were pledged as collateral for certain borrowings at March 31, 2022 and December 31, 2021, respectively.

Page 12

The loans above also include loans to executive officers and directors serving the Company at March 31, 2022 and to their related persons, totaling approximately $6.5 million and $0.6 million at March 31, 2022 and December 31, 2021, respectively. There were $5.8 million in new loans due to the addition of new directors, there was $36,000 in advances on loans in the first three months of 2022, and repayments amounted to $21,000. The loans were made on terms and conditions applicable to similarly situated borrowers and management does not believe these loans involve more than the normal risk of collectability or present other unfavorable features.
As of March 31, 2022 and December 31, 2021, unamortized discounts on all acquired loans totaled $15.6 million and $17.2 million, respectively. Loan discounts are generally amortized as yield adjustments over the respective lives of the loans, so long as the loans perform.
Nonperforming assets are defined as nonaccrual loans, troubled debt restructured loans ("TDRs"), loans past due 90 or more days and still accruing interest, and foreclosed real estate. Nonperforming assets are summarized as follows.
($ in thousands)March 31,
2022		December 31,
2021
Nonaccrual loans$33,460 34,696 
TDRs - accruing12,727 13,866 
Accruing loans > 90 days past due— 1,004 
Total nonperforming loans46,187 49,566 
Foreclosed real estate2,750 3,071 
Total nonperforming assets$48,937 52,637 
At March 31, 2022 and December 31, 2021, the Company had $1.0 million and $1.5 million, respectively, in residential mortgage loans in process of foreclosure, respectively.

The following table is a summary of the Company’s nonaccrual loans by major categories as of March 31, 2022.
($ in thousands)Nonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal Nonaccrual Loans
Commercial, financial, and agricultural$3,911 8,661 12,572 
Real estate – construction, land development & other land loans928 126 1,054 
Real estate – mortgage – residential (1-4 family) first mortgages161 3,559 3,720 
Real estate – mortgage – home equity loans / lines of credit— 807 807 
Real estate – mortgage – commercial and other8,351 6,865 15,216 
Consumer loans— 91 91 
Total$13,351 20,109 33,460 



Page 13
The following table is a summary of the Company’s nonaccrual loans by major categories as of December 31, 2021.
($ in thousands)Nonaccrual Loans with No AllowanceNonaccrual Loans with an AllowanceTotal Nonaccrual Loans
Commercial, financial, and agricultural$3,947 8,205 12,152 
Real estate – construction, land development & other land loans495 137 632 
Real estate – mortgage – residential (1-4 family) first mortgages858 4,040 4,898 
Real estate – mortgage – home equity loans / lines of credit— 694 694 
Real estate – mortgage – commercial and other7,648 8,583 16,231 
Consumer loans— 89 89 
Total$12,948 21,748 34,696 

There was no interest income recognized during the three month period ended March 31, 2022 or the year ended December 31, 2021 on nonaccrual loans. The Company follows its nonaccrual policy of reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status.

The following table represents the accrued interest receivables written off by reversing interest income during each period indicated:
($ in thousands)For the Three Months Ended March 31, 2022For the Year Ended December 31, 2021For the Three Months Ended March 31, 2021
Commercial, financial, and agricultural$8 195 64 
Real estate – construction, land development & other land loans12 6 — 
Real estate – mortgage – residential (1-4 family) first mortgages10 31 5 
Real estate – mortgage – home equity loans / lines of credit2 14 4 
Real estate – mortgage – commercial and other100 453 220 
Consumer loans— — — 
Total$132 699 293 

The following table presents an analysis of the payment status of the Company’s loans as of March 31, 2022.
($ in thousands)Accruing
30-59
Days Past
Due		Accruing
60-89
Days
Past
Due		Accruing
90 Days
or More
Past
Due		Nonaccrual
Loans		Accruing
Current		Total Loans
Receivable
Commercial, financial, and agricultural$389 105 — 12,572 590,388 603,454 
Real estate – construction, land development & other land loans1,492 — — 1,054 793,340 795,886 
Real estate – mortgage – residential (1-4 family) first mortgages8,739 20 — 3,720 1,032,688 1,045,167 
Real estate – mortgage – home equity loans / lines of credit891 36 — 807 327,614 329,348 
Real estate – mortgage – commercial and other2,294 — — 15,216 3,217,439 3,234,949 
Consumer loans103 134 — 91 56,494 56,822 
Total$13,908 295 — 33,460 6,017,963 6,065,626 
Unamortized net deferred loan fees(928)
Total loans$6,064,698 

Page 14
The following table presents an analysis of the payment status of the Company’s loans as of December 31, 2021.
($ in thousands)Accruing
30-59
Days
Past
Due		Accruing
60-89
Days
Past
Due		Accruing
90 Days
or More
Past
Due		Nonaccrual
Loans		Accruing
Current		Total Loans
Receivable
Commercial, financial, and agricultural$377 93 — 12,152 636,375 648,997 
Real estate – construction, land development & other land loans4,046 — 286 632 823,585 828,549 
Real estate – mortgage – residential (1-4 family) first mortgages6,571 1,488 — 4,898 1,009,009 1,021,966 
Real estate – mortgage – home equity loans / lines of credit489 124 718 694 329,907 331,932 
Real estate – mortgage – commercial and other164 1,496 — 16,231 3,176,846 3,194,737 
Consumer loans116 62 — 89 56,971 57,238 
Total$11,763 3,263 1,004 34,696 6,032,693 6,083,419 
Unamortized net deferred loan fees(1,704)
Total loans$6,081,715 

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. The Company reviews individually evaluated loans on nonaccrual with a net book balance of $350,000 or greater for designation as collateral dependent loans, as well as certain other loans that may still be accruing interest and/or are less than $350,000 in size that management of the Company designates as having higher risk. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining the allowance for credit losses.

The following table presents an analysis of collateral-dependent loans of the Company as of March 31, 2022.
($ in thousands)Residential PropertyBusiness AssetsLandCommercial PropertyTotal Collateral-Dependent Loans
Commercial, financial, and agricultural$— 9,508 — — 9,508 
Real estate – construction, land development & other land loans— — 928 — 928 
Real estate – mortgage – residential (1-4 family) first mortgages161 — — — 161 
Real estate – mortgage – commercial and other— — — 11,081 11,081 
Total$161 9,508 928 11,081 21,678 

The following table presents an analysis of collateral-dependent loans of the Company as of December 31, 2021.
($ in thousands)Residential PropertyBusiness AssetsLandCommercial PropertyTotal Collateral-Dependent Loans
Commercial, financial, and agricultural$— 7,886 — — 7,886 
Real estate – construction, land development & other land loans— — 533 — 533 
Real estate – mortgage – residential (1-4 family) first mortgages871 — — — 871 
Real estate – mortgage – commercial and other— — — 10,743 10,743 
Total$871 7,886 533 10,743 20,033 


Page 15
Under CECL, for collateral dependent loans, the Company has adopted the practical expedient to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The Company's policy is to obtain third-party appraisals on any significant pieces of collateral. For loans secured by real estate, the Company's policy is to write nonaccrual loans down to 90% of the appraised value, which considers estimated selling costs. For real estate collateral that is in industries which may be undergoing heightened stress due to economic or other external factors, the Company may reduce the collateral values by an additional 10-25% to recognize additional discounts that are estimated to be incurred in a near-term sale. For non real-estate collateral secured loans, the Company generally writes nonaccrual loans down to 75% of the appraised value, which provides for selling costs and liquidity discounts that are usually incurred when disposing of non real-estate collateral. For reviewed loans that are not on nonaccrual basis, the Company assigns a specific allowance based on the parameters noted above.

The Company does not believe that there is significant excess collateral for any of the loan types noted above.



Page 16
The following table presents the activity in the Allowance for Credit Losses ("ACL") on loans for each of the periods indicated.
($ in thousands)Commercial,
Financial,
and
Agricultural		Real Estate
–
Construction,
Land
Development
& Other Land
Loans		Real Estate
–
Residential
(1-4 Family)
First
Mortgages		Real Estate
– Mortgage
– Home
Equity
Lines of
Credit		Real Estate
– Mortgage
–
Commercial
and Other		Consumer LoansUnallocatedTotal
As of and for the three months ended March 31, 2022
Beginning balance$16,249 16,519 8,686 4,337 30,342 2,656 — 78,789 
Charge-offs(790)— — (41)(45)(167)— (1,043)
Recoveries247 137 4 233 155 47 — 823 
Provisions / (Reversals)307 (599)(531)(2,455)6,875 (97)— 3,500 
Ending balance$16,013 16,057 8,159 2,074 37,327 2,439 — 82,069 

($ in thousands)Commercial,
Financial,
and
Agricultural		Real Estate
–
Construction,
Land
Development
& Other Land
Loans		Real Estate
–
Residential
(1-4 Family)
First
Mortgages		Real Estate
– Mortgage
– Home
Equity
Lines of
Credit		Real Estate
– Mortgage
–
Commercial
and Other		Consumer LoansUnallocatedTotal
As of and for the year ended December 31, 2021
Beginning balance$11,316 5,355 8,048 2,375 23,603 1,478 213 52,388 
Adjustment for implementation of CECL3,067 6,140 2,584 2,580 (257)674 (213)14,575 
Allowance for acquired PCD loans2,917 165 222 92 1,489 10 — 4,895 
Charge-offs(3,722)(245)(273)(400)(2,295)(667)— (7,602)
Recoveries1,744 948 761 578 533 358 — 4,922 
Provisions/(Reversals)927 4,156 (2,656)(888)7,269 803 — 9,611 
Ending balance$16,249 16,519 8,686 4,337 30,342 2,656 — 78,789 

($ in thousands)Commercial,
Financial,
and
Agricultural		Real Estate
–
Construction,
Land
Development
& Other Land
Loans		Real Estate
–
Residential
(1-4 Family)
First
Mortgages		Real Estate
– Mortgage
– Home
Equity
Lines of
Credit		Real Estate
– Mortgage
–
Commercial
and Other		Consumer LoansUnallocatedTotal
As of and for the three months ended March 31, 2021
Beginning balance$11,316 5,355 8,048 2,375 23,603 1,478 213 52,388 
Adjustment for implementation of CECL3,067 6,140 2,584 2,580 (257)674 (213)14,575 
Charge-offs(1,438)(66)(38)(131)(510)(134)— (2,317)
Recoveries514 294 87 11 262 35 — 1,203 
Provisions/(Reversals)147 (1,589)(1,685)(526)3,409 244 — — 
Ending balance$13,606 10,134 8,996 4,309 26,507 2,297 — 65,849 

Page 17
Credit Quality Indicators
The Company tracks credit quality based on its internal risk ratings. Upon origination, a loan is assigned an initial risk grade, which is generally based on several factors such as the borrower’s credit score, the loan-to-value ratio, the debt-to-income ratio, etc. Loans that are risk-graded as substandard during the origination process are declined. After loans are initially graded, they are monitored regularly for credit quality based on many factors, such as payment history, the borrower’s financial status, and changes in collateral value. Loans can be downgraded or upgraded depending on management’s evaluation of these factors. Internal risk-grading policies are consistent throughout each loan type.
The following describes the Company’s internal risk grades in ascending order of likelihood of loss:
Risk GradeDescription
Pass:
1Loans with virtually no risk, including cash secured loans.
2Loans with documented significant overall financial strength.  These loans have minimum chance of loss due to the presence of multiple sources of repayment – each clearly sufficient to satisfy the obligation.
3Loans with documented satisfactory overall financial strength.  These loans have a low loss potential due to presence of at least two clearly identified sources of repayment – each of which is sufficient to satisfy the obligation under the present circumstances.
4Loans to borrowers with acceptable financial condition.  These loans could have signs of minor operational weaknesses, lack of adequate financial information, or loans supported by collateral with questionable value or marketability.  
5Loans that represent above average risk due to minor weaknesses and warrant closer scrutiny by management.  Collateral is generally required and felt to provide reasonable coverage with realizable liquidation values in normal circumstances.  Repayment performance is satisfactory.
P
(Pass)		Consumer loans (<$500,000) that are of satisfactory credit quality with borrowers who exhibit good personal credit history, average personal financial strength and moderate debt levels.  These loans generally conform to Bank policy, but may include approved mitigated exceptions to the guidelines.  
Special Mention:
6Existing loans with defined weaknesses in primary source of repayment that, if not corrected, could cause a loss to the Bank.
Classified:
7An existing loan inadequately protected by the current sound net worth and paying capacity of the obligor or the collateral pledged, if any.  These loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.
8Loans that have a well-defined weakness that make the collection or liquidation in full highly questionable and improbable.  Loss appears imminent, but the exact amount and timing is uncertain.
9Loans that are considered uncollectible and are in the process of being charged-off.  This grade is a temporary grade assigned for administrative purposes until the charge-off is completed.
F
(Fail)		Consumer loans (<$500,000) with a well-defined weakness, such as exceptions of any kind with no mitigating factors, history of paying outside the terms of the note, insufficient income to support the current level of debt, etc.

In the tables that follow, substantially all of the "Classified Loans" have grades of 7 or Fail, with those categories having similar levels of risk. The amount of revolving lines of credit that converted to term loans during the period was immaterial.

The tables below present the Company’s recorded investment in loans by credit quality indicators by year of origination or renewal as of the periods indicated. Acquired loans are presented in the year originated, not in the year of acquisition.


Page 18
Term Loans by Year of Origination
($ in thousands)20222021202020192018PriorRevolvingTotal
As of March 31, 2022
Commercial, financial, and agricultural
Pass$35,980 177,169 105,179 66,635 62,972 29,478 105,225 582,638 
Special Mention— 125 399 621 2,633 216 2,504 6,498 
Classified119 2,454 1,417 2,136 6,908 577 707 14,318 
Total commercial, financial, and agricultural36,099 179,748 106,995 69,392 72,513 30,271 108,436 603,454 
Real estate – construction, land development & other land loans
Pass113,568 488,287 94,674 59,914 9,256 12,619 9,836 788,154 
Special Mention— 38 726 4,117 107 98 5 5,091 
Classified1,416 148 45 944 71 17 — 2,641 
Total real estate – construction, land development & other land loans114,984 488,473 95,445 64,975 9,434 12,734 9,841 795,886 
Real estate – mortgage – residential (1-4 family) first mortgages
Pass53,280 277,391 206,074 114,970 76,281 290,677 8,318 1,026,991 
Special Mention— 512 448 328 201 3,331 96 4,916 
Classified136 391 480 895 940 9,410 1,008 13,260 
Total real estate – mortgage – residential (1-4 family) first mortgages53,416 278,294 207,002 116,193 77,422 303,418 9,422 1,045,167 
Real estate – mortgage – home equity loans / lines of credit
Pass306 2,258 410 299 1,254 2,244 315,092 321,863 
Special Mention48 187 — — — 18 1,112 1,365 
Classified18 163 96 75 — 327 5,441 6,120 
Total real estate – mortgage – home equity loans / lines of credit372 2,608 506 374 1,254 2,589 321,645 329,348 
Real estate – mortgage – commercial and other
Pass275,364 1,315,875 716,571 307,705 184,889 337,011 57,982 3,195,397 
Special Mention521 2,042 4,737 4,849 3,708 3,103 1,340 20,300 
Classified124 4,979 249 2,953 5,910 4,832 205 19,252 
Total real estate – mortgage – commercial and other276,009 1,322,896 721,557 315,507 194,507 344,946 59,527 3,234,949 
Consumer loans
Pass5,115 29,404 6,453 2,313 1,407 923 10,998 56,613 
Special Mention— — — — — — — — 
Classified— 141 11 1 — 17 39 209 
Total consumer loans5,115 29,545 6,464 2,314 1,407 940 11,037 56,822 
Total$485,995 2,301,564 1,137,969 568,755 356,537 694,898 519,908 6,065,626 
Unamortized net deferred loan fees(928)
Total loans6,064,698 


Page 19


Term Loans by Year of Origination
($ in thousands)20212020201920182017PriorRevolvingTotal
As of December 31, 2021
Commercial, financial, and agricultural
Pass$204,945 138,540 71,369 66,645 16,009 17,492 112,933 627,933 
Special Mention225 1,255 1,313 2,729 225 9 2,348 8,104 
Classified1,609 793 1,703 7,096 511 96 1,152 12,960 
Total commercial, financial, and agricultural206,779 140,588 74,385 76,470 16,745 17,597 116,433 648,997 
Real estate – construction, land development & other land loans
Pass573,613 133,888 69,066 12,455 9,764 8,190 13,737 820,713 
Special Mention41 737 5,095 110 104 2 9 6,098 
Classified1,541 49 47 83 14 4 — 1,738 
Total real estate – construction, land development & other land loans575,195 134,674 74,208 12,648 9,882 8,196 13,746 828,549 
Real estate – mortgage – residential (1-4 family) first mortgages
Pass241,619 224,617 120,097 82,531 86,074 234,950 11,051 1,000,939 
Special Mention888 615 516 229 323 3,237 94 5,902 
Classified419 156 535 1,185 653 11,246 931 15,125 
Total real estate – mortgage – residential (1-4 family) first mortgages242,926 225,388 121,148 83,945 87,050 249,433 12,076 1,021,966 
Real estate – mortgage – home equity loans / lines of credit
Pass3,111 498 439 1,304 245 1,649 317,319 324,565 
Special Mention194 — 15 — — 19 1,341 1,569 
Classified75 97 71 — — 607 4,948 5,798 
Total real estate – mortgage – home equity loans / lines of credit3,380 595 525 1,304 245 2,275 323,608 331,932 
Real estate – mortgage – commercial and other
Pass1,328,156 796,992 355,885 211,118 197,165 197,659 66,104 3,153,079 
Special Mention1,759 4,849 5,801 3,741 2,072 1,801 1,440 21,463 
Classified7,147 413 2,110 6,025 3,897 603 — 20,195 
Total real estate – mortgage – commercial and other1,337,062 802,254 363,796 220,884 203,134 200,063 67,544 3,194,737 
Consumer loans
Pass14,960 25,431 2,965 1,722 673 525 10,810 57,086 
Special Mention— 4 — — — — — 4 
Classified— 73 — 8 — 25 42 148 
Total consumer loans14,960 25,508 2,965 1,730 673 550 10,852 57,238 
Total$2,380,302 1,329,007 637,027 396,981 317,729 478,114 544,259 6,083,419 
Unamortized net deferred loan fees(1,704)
Total loans6,081,715 

Page 20
Troubled Debt Restructurings

The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, extension of terms and other actions intended to minimize potential losses.

The vast majority of the Company’s TDRs modified during the periods ended March 31, 2022 and March 31, 2021 related to interest rate reductions combined with extension of terms. The Company does not generally grant principal forgiveness.

The Company’s TDRs can be classified as either nonaccrual or accruing based on the loan’s payment status. The TDRs that are nonaccrual are reported within the nonaccrual loan totals presented previously.

At March 31, 2022 there were two loans with immaterial commitments to lend additional funds to debtors whose loans were modified as a TDR. At December 31, 2021, there were no commitments to lend additional funds to debtors whose loans were modified as a TDR.

The following table presents information related to loans modified in a TDR during the three months ended March 31, 2022 and 2021.
($ in thousands)For the three months ended March 31, 2022For the three months ended March 31, 2021
Number of
Contracts		Pre-
Modification
Restructured
Balances		Post-
Modification
Restructured
Balances		Number of
Contracts		Pre-
Modification
Restructured
Balances		Post-
Modification
Restructured
Balances
TDRs – Accruing
Real estate – mortgage – residential (1-4 family) first mortgages1 36 36 — — — 
Real estate – mortgage – commercial and other— — — 1 160 160 
TDRs – Nonaccrual
Commercial, financial, and agricultural1 41 41 1 111 108 
Real estate – mortgage – residential (1-4 family) first mortgages1 36 36 — — — 
Real estate – mortgage – commercial and other1 540 540 — — — 
Total TDRs arising during period4 $653 $653 2 $271 $268 

The Company considers a loan to have defaulted when it becomes 90 or more days delinquent under the modified terms, has been transferred to nonaccrual status, or has been transferred to foreclosed real estate. There were no accruing TDRs that were modified in the previous twelve months and that defaulted during the three months ended March 31, 2022 or 2021.
Concentration of Credit Risk
Most of the Company's business activity is with customers located within the markets where it has banking operations. Therefore, the Company’s exposure to credit risk is significantly affected by changes in the economy within its markets. Approximately 89% of the Company's loan portfolio is secured by real estate and is therefore susceptible to changes in real estate valuations.
Allowance for Credit Losses - Unfunded Loan Commitments
In addition to the allowance for credit losses on loans, the Company maintains an allowance for lending-related commitments such as unfunded loan commitments and letters of credit. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for lending-related commitments on off-balance sheet credit exposures is adjusted as a provision for unfunded commitments expense. The estimate includes consideration of the likelihood that funding will occur, which is based on a historical funding study derived from internal information, and an estimate of expected credit losses on commitments

Page 21
expected to be funded over its estimated life, which are the same loss rates that are used in computing the allowance for credit losses on loans. The allowance for credit losses for unfunded loan commitments of $12.0 million and $13.5 million at March 31, 2022 and December 31, 2021, respectively, is separately classified on the Consolidated Balance Sheets within "Other liabilities".
The following table presents the balance and activity in the allowance for credit losses for unfunded loan commitments for the three months ended March 31, 2022.
($ in thousands)Total Allowance for Credit Losses - Unfunded Loan Commitments
Beginning balance at December 31, 2021$13,506 
Charge-offs— 
Recoveries— 
Reversal of provision for unfunded commitments(1,500)
Ending balance at March 31, 2022$12,006 

Allowance for Credit Losses - Securities Held to Maturity
The allowance for credit losses for securities held to maturity was immaterial at March 31, 2022 and December 31, 2021.
Note 5 – Goodwill and Other Intangible Assets
The following is a summary of the gross carrying amount and accumulated amortization of amortizable intangible assets as of March 31, 2022 and December 31, 2021, and the carrying amount of unamortized intangible assets as of those same dates.
March 31, 2022December 31, 2021
($ in thousands)Gross Carrying
Amount		Accumulated
Amortization		Gross Carrying
Amount		Accumulated
Amortization
Amortizable intangible assets:
Customer lists$2,700 1,501 2,700 1,386 
Core deposit intangibles29,050 18,972 29,050 18,076 
SBA servicing assets12,677 7,086 11,932 6,460 
Other100 40 100 33 
Total$44,527 27,599 43,782 25,955 
Unamortizable intangible assets:
Goodwill$364,263 364,263 
SBA servicing assets are recorded for the portions of SBA loans that the Company has sold but continues to service for a fee. Servicing assets are initially recorded at fair value and amortized over the expected lives of the related loans and are tested for impairment on a quarterly basis. SBA servicing asset amortization expense is recorded within noninterest income as an offset to SBA servicing fees within the line item "Other service charges, commissions, and fees." As derived from the table above, the Company had a SBA servicing asset at March 31, 2022 with a remaining book value of $5.6 million. The Company recorded $0.7 million and $0.6 million in new servicing assets associated with the guaranteed portion of SBA loans sold during the first three months of 2022 and 2021, respectively. During the first three months of 2022 and 2021, the Company recorded $0.6 million and $0.5 million, respectively, in related servicing asset amortization expense. At March 31, 2022 and December 31, 2021, the Company serviced SBA loans totaling $426.6 million and $414.2 million, respectively, for others. There were no other loans serviced in any period presented.
Amortization expense of all other intangible assets, excluding the SBA servicing assets, totaled $1.0 million and $0.9 million for the three months ended March 31, 2022 and 2021, respectively.
There were no changes to the carrying amounts of goodwill for the three months ended March 31, 2022.
Goodwill is evaluated for impairment on at least an annual basis, with the annual evaluation occurring as of October 31 of each year. The Company performed the required annual impairment testing in the fourth quarter of 2021.

Page 22
Management evaluated the events and circumstances in the first quarter of 2022 that could indicate that goodwill might be impaired and concluded that a subsequent interim test was not necessary.
The following table presents the estimated amortization expense schedule related to acquisition-related amortizable intangible assets. These amounts will be recorded as "Intangibles amortization expense" within the noninterest expense section of the Consolidated Statements of Income. These estimates are subject to change in future periods to the extent management determines it is necessary to make adjustments to the carrying value or estimated useful lives of amortized intangible assets.
($ in thousands)Estimated Amortization
Expense
April 1, 2022 to December 31, 2022$2,666 
20232,545 
20241,718 
20251,358 
2026962 
Thereafter2,088 
Total$11,337 
Note 6 - Borrowings
The following tables present information regarding the Company’s outstanding borrowings at March 31, 2022 and December 31, 2021 (dollars are in thousands):
DescriptionDue dateCall FeatureMarch 31, 2022Interest Rate
FHLB Principal Reducing Credit7/24/2023None$68 
1.00% fixed
FHLB Principal Reducing Credit12/22/2023None942 
1.25% fixed
FHLB Principal Reducing Credit6/26/2028None222 
0.25% fixed
FHLB Principal Reducing Credit7/17/2028None42 
0.00% fixed
FHLB Principal Reducing Credit8/18/2028None164 
1.00% fixed
FHLB Principal Reducing Credit8/22/2028None164 
1.00% fixed
FHLB Principal Reducing Credit12/20/2028None339 
0.50% fixed
Trust Preferred Securities1/23/2034Quarterly by Company
beginning 1/23/2009		20,620 
3.00% at 03/31/22
adjustable rate
3 month LIBOR + 2.70%
Trust Preferred Securities6/15/2036Quarterly by Company
beginning 6/15/2011		25,774 
2.22% at 03/31/22
adjustable rate
3 month LIBOR + 1.39%
Trust Preferred Securities1/7/2035Quarterly by Company
beginning 1/7/2010		10,310 
2.24% at 03/31/22
adjustable rate
3 month LIBOR + 2.00%
Trust Preferred Securities9/20/2034Quarterly by Company
beginning 9/20/2009		12,372 
3.08% at 03/31/22
adjustable rate
3 month LIBOR + 2.15%
Total borrowings / weighted average rate as of March 31, 2022
$71,017 2.56%
Unamortized discount on acquired borrowings(3,602)
Total borrowings$67,415 


Page 23
DescriptionDue dateCall FeatureDecember 31, 2021Interest Rate
FHLB Principal Reducing Credit7/24/2023None$79 
1.00% fixed
FHLB Principal Reducing Credit12/22/2023None952 
1.25% fixed
FHLB Principal Reducing Credit6/26/2028None225 
0.25% fixed
FHLB Principal Reducing Credit7/17/2028None44 
0.00% fixed
FHLB Principal Reducing Credit8/18/2028None166 
1.00% fixed
FHLB Principal Reducing Credit8/22/2028None166 
1.00% fixed
FHLB Principal Reducing Credit12/20/2028None342 
0.50% fixed
Trust Preferred Securities1/23/2034Quarterly by Company
beginning 1/23/2009		20,620 
2.83% at 12/31/21
adjustable rate
3 month LIBOR + 2.70%
Trust Preferred Securities6/15/2036Quarterly by Company
beginning 6/15/2011		25,774 
1.59% at 12/31/21
adjustable rate
3 month LIBOR + 1.39%
Trust Preferred Securities1/7/2035Quarterly by Company
beginning 1/7/2010		10,310 
2.12% at 12/31/21
adjustable rate
3 month LIBOR + 2.00%
Trust Preferred Securities9/20/2034Quarterly by Company
beginning 9/20/2009		12,372 
2.72% at 12/31/21
adjustable rate
3 month LIBOR + 2.15%
Total borrowings / weighted average rate as of December 31, 2021
$71,050 2.24%
Unamortized discount on acquired borrowings(3,664)
Total borrowings$67,386 
Note 7 – Leases
The Company enters into leases in the normal course of business. As of March 31, 2022, the Company leased 17 branch offices for which the land and buildings are leased and nine branch offices for which the land is leased but the building is owned. The Company also leases office space for several operational departments. All of the Company’s leases are operating leases under applicable accounting standards and the lease agreements have maturity dates ranging from April 2022 through May 2076, some of which include options for multiple five- and ten-year extensions. The weighted average remaining life of the lease term for these leases was 19.4 years as of March 31, 2022. Certain of the Company's lease agreements include variable lease payments based on changes in inflation, with the impact of that factor being insignificant to the Company's total lease expense. As permitted by applicable accounting standards, the Company has elected not to recognize leases with original lease terms of 12 months or less (short-term leases) on the Company's Consolidated Balance Sheets. The short-term lease cost for each period presented was insignificant.
Leases are classified as either operating or finance leases at the lease commencement date, and as previously noted, all of the Company's leases have been determined to be operating leases. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
The Company uses its incremental borrowing rate, on a collateralized basis, at lease commencement to calculate the present value of lease payments when the rate implicit in the lease is not known. The weighted average discount rate for leases was 2.88% as of March 31, 2022.
Total operating lease expense was $0.9 million and $0.7 million for the three months ended March 31, 2022 and 2021, respectively. The right-of-use assets and lease liabilities were $20.4 million and $20.9 million as of March 31, 2022, respectively, and were $20.7 million and $21.2 million as of December 31, 2021, respectively.

Page 24
Future undiscounted lease payments for operating leases with initial terms of one year or more as of March 31, 2022 are as follows.
($ in thousands)
April 1, 2022 to December 31, 2022$1,747 
20232,360 
20242,163 
20251,706 
20261,685 
Thereafter19,988 
Total undiscounted lease payments29,649 
Less effect of discounting(8,746)
Present value of estimated lease payments (lease liability)$20,903 
Note 8 – Pension Plans
The Company has historically sponsored two defined benefit pension plans – a qualified retirement plan (the “Pension Plan”) which was generally available to all employees, and a Supplemental Executive Retirement Plan (the “SERP”), which was for the benefit of certain senior management executives of the Company. Effective December 31, 2012, the Company froze both plans for all participants. Although no previously accrued benefits were lost, employees no longer accrue benefits under these plans for service subsequent to 2012.
The Company recorded periodic pension cost totaling $51,000 and $191,000 for the three months ended March 31, 2022 and 2021, respectively. The following table contains the components of the pension cost.
 For the Three Months Ended March 31,
($ in thousands)2022 Pension Plan 2021 Pension Plan 2022 SERP2021 SERP2022 Total Both Plans2021 Total Both Plans
Service cost$— — — — — — 
Interest cost267 306 28 39 295 345 
Expected return on plan assets(288)(325)— — (288)(325)
Amortization of net (gain)/loss180 210 (136)(39)44 171 
Net periodic pension cost$159 191 (108)— 51 191 

The service cost component of net periodic pension cost is included in salaries and benefits expense and all other components of net periodic pension cost are included in other noninterest expense.
The Company’s contributions to the Pension Plan are based on computations by independent actuarial consultants and are intended to be deductible for income tax purposes. The Company did not contribute to the Pension Plan in the first three months of 2022 and does not expect to contribute to the Pension Plan in the remainder of 2022.
The Company’s funding policy with respect to the SERP is to fund the related benefits from the operating cash flow of the Company.
Note 9 – Fair Value
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal and most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) of identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

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Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at March 31, 2022.
($ in thousands)

Description of Financial Instruments
Fair Value at March 31, 2022Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable Inputs
(Level 3)
Recurring
Securities available for sale:
US Treasury$149,391 — 149,391 — 
Government-sponsored enterprise securities64,168 — 64,168 — 
Mortgage-backed securities2,425,911 — 2,425,911 — 
Corporate bonds45,578 — 45,578 — 
Total available for sale securities$2,685,048 — 2,685,048 — 
Presold mortgages in process of settlement$5,672 5,672 — — 
Nonrecurring
Individually evaluated loans$12,590 — — 12,590 

The following table summarizes the Company’s financial instruments that were measured at fair value on a recurring and nonrecurring basis at December 31, 2021.
($ in thousands)

Description of Financial Instruments
Fair Value at December 31, 2021Quoted Prices in
Active Markets
for Identical
Assets (Level 1)		Significant Other
Observable Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Recurring
Securities available for sale:
Government-sponsored enterprise securities$69,179 — 69,179 — 
Mortgage-backed securities2,514,805 — 2,514,805 — 
Corporate bonds46,430 — 46,430 — 
Total available for sale securities$2,630,414 — 2,630,414 — 
Presold mortgages in process of settlement$19,257 19,257 — — 
Nonrecurring
Individually evaluated loans$11,583 — — 11,583 
  Foreclosed real estate364 — — 364 
The following is a description of the valuation methodologies used for instruments measured at fair value.
Presold Mortgages in Process of Settlement - The fair value is based on the committed price that an investor has agreed to pay for the loan and is considered a Level 1 input.
Securities Available for Sale — When quoted market prices are available in an active market, the securities are classified as Level 1 in the valuation hierarchy. If quoted market prices are not available, but fair values can be estimated by observing quoted prices of securities with similar characteristics, the securities are classified as Level 2 on the valuation hierarchy. Most of the fair values for the Company’s Level 2 securities are determined by our third-party bond accounting provider using matrix pricing. Matrix pricing is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other

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benchmark quoted securities. For the Company, Level 2 securities include U.S. Treasury bonds, mortgage-backed securities, commercial mortgage-backed obligations, government-sponsored enterprise securities, and corporate bonds. In cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.
Collateral-dependent loans — Fair values for collateral-dependent loans are measured on a non-recurring basis and are based on (1) the underlying collateral values securing the loans, adjusted for estimated selling costs, or (2) the net present value of the cash flows expected to be received for such loans. Collateral may be in the form of real estate or business assets including equipment, inventory and accounts receivable. The vast majority of the collateral is real estate. The value of real estate collateral is generally determined by third-party appraisers using an income or market valuation approach based on an appraisal conducted by an independent, licensed third party appraiser (Level 3). The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable borrower’s financial statements if not considered significant. Likewise, values for inventory and accounts receivable collateral are based on borrower financial statement balances or aging reports on a discounted basis as appropriate (Level 3). Appraisals used in this analysis are generally obtained at least annually based on when the loans first became impaired, and thus the appraisals are not necessarily as of the period ends presented. Any fair value adjustments are recorded in the period incurred as provision for credit losses on the Consolidated Statements of Income.
Foreclosed real estate – Foreclosed real estate, consisting of properties obtained through foreclosure or in satisfaction of loans, is reported at the lower of cost or fair value. Fair value is measured on a non-recurring basis and is based upon independent market prices or current appraisals that are generally prepared using an income or market valuation approach and conducted by an independent, licensed third party appraiser, adjusted for estimated selling costs (Level 3). Appraisals used in this analysis are generally obtained at least annually based on when the assets were acquired, and thus the appraisals are not necessarily as of the period ends presented. At the time of foreclosure, any excess of the loan balance over the fair value of the real estate held as collateral is treated as a charge against the allowance for credit losses. For any real estate valuations subsequent to foreclosure, any excess of the real estate recorded value over the fair value of the real estate is treated as a foreclosed real estate write-down on the Consolidated Statements of Income.
For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of March 31, 2022, the significant unobservable inputs used in the fair value measurements were as follows:
($ in thousands)Fair Value at March 31, 2022Valuation
Technique		Significant Unobservable
Inputs		Range (Weighted Average)
Individually evaluated loans - collateral-dependent$6,909 Appraised valueDiscounts applied for estimated costs to sell10%
Individually evaluated loans - cash-flow dependent5,681 PV of expected cash flowsDiscount rates used in the calculation of the present value ("PV") of expected cash flows
4%-11% (6.50%)
For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of December 31, 2021, the significant unobservable inputs used in the fair value measurements were as follows:
($ in thousands)Fair Value at December 31, 2021Valuation
Technique		Significant Unobservable
Inputs		Range (Weighted Average)
Individually evaluated loans - collateral-dependent$7,326 Appraised valueDiscounts applied for estimated costs to sell10%
Individually evaluated loans - cash-flow dependent4,257 PV of expected cash flowsDiscount rates used in the calculation of PV of expected cash flows
4%-11% (6.22%)
Foreclosed real estate364 Appraised valueDiscounts applied for estimated costs to sell10%

The carrying amounts and estimated fair values of financial instruments not carried at fair value at March 31, 2022 and December 31, 2021 are as follows:

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  March 31, 2022December 31, 2021
($ in thousands)Level in Fair
Value
Hierarchy		Carrying
Amount		Estimated
Fair Value		Carrying
Amount		Estimated
Fair Value
Cash and due from banks, noninterest-bearingLevel 1$124,785 124,785 128,228 128,228 
Due from banks, interest-bearingLevel 1440,974 440,974 332,934 332,934 
Securities held to maturityLevel 2546,090 492,307 513,825 511,699 
SBA and other loans held for saleLevel 23,630 4,010 61,003 62,044 
Total loans, net of allowanceLevel 35,982,629 5,957,829 6,002,926 5,990,235 
Accrued interest receivableLevel 124,728 24,728 25,896 25,896 
Bank-owned life insuranceLevel 1164,273 164,273 165,786 165,786 
SBA Servicing AssetLevel 35,591 5,667 5,472 5,546 
DepositsLevel 29,385,147 9,382,240 9,124,629 9,124,701 
BorrowingsLevel 267,415 59,593 67,386 61,295 
Accrued interest payableLevel 2576 576 607 607 
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no highly liquid market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include net premises and equipment, intangible and other assets such as deferred income taxes, prepaid expense accounts, income taxes currently payable and other various accrued expenses. In addition, the income tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.
Note 10 – Stock-Based Compensation
The Company recorded total stock-based compensation expense of $547,000 and $397,000 for the three months ended March 31, 2022 and 2021, respectively. In addition, the Company recognized $126,000 and $91,000 of income tax benefits related to stock-based compensation expense for the three months ended March 31, 2022 and 2021, respectively.
At March 31, 2022, the sole equity-based compensation plan for the Company is the First Bancorp 2014 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 8, 2014. As of March 31, 2022, the Equity Plan had 431,852 shares remaining available for grant.
The Equity Plan is intended to serve as a means to attract, retain and motivate key employees and directors and to associate the interests of the plans' participants with those of the Company and its shareholders. The Equity Plan allows for both grants of stock options and other types of equity-based compensation, including stock appreciation rights, restricted stock, restricted performance stock, unrestricted stock, and performance units.
Recent equity awards to employees have been made in the form of shares of restricted stock awards with service vesting conditions only. Compensation expense for these awards is recorded over the requisite service periods. Upon forfeiture, any previously recognized compensation cost is reversed. Upon a change in control (as defined in the Equity Plan), unless the awards remain outstanding or substitute equivalent awards are provided, the awards become immediately vested.

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Certain of the Company’s equity grants contain terms that provide for a graded vesting schedule whereby portions of the award vest in increments over the requisite service period. The Company recognizes compensation expense for awards with graded vesting schedules on a straight-line basis over the requisite service period for each incremental award. Compensation expense is based on the estimated number of stock awards that will ultimately vest. Over the past five years, there have been insignificant amounts of forfeitures, and therefore the Company assumes that all awards granted with service conditions only will vest.
In addition to employee equity awards, the Company's practice is to grant common shares, valued at approximately $32,000, to each non-employee director (currently 13 in total) in June of each year. Compensation expense associated with these director awards is recognized on the date of award since there are no vesting conditions.
The following table presents information regarding the activity for the first three months of 2022 related to the Company’s outstanding restricted stock awards:
Long-Term Restricted Stock Awards
Number of UnitsWeighted-Average
Grant-Date Fair Value
Nonvested at January 1, 2022206,331 $35.25 
Granted during the period20,494 45.88 
Vested during the period(6,997)36.05 
Forfeited or expired during the period(7,115)31.50 
Nonvested at March 31, 2022212,713 $36.33 
Total unrecognized compensation expense as of March 31, 2022 amounted to $4.2 million with a weighted-average remaining term of 2.3 years. For the nonvested awards that are outstanding at March 31, 2022, the Company expects to record $2.1 million in compensation expense in the next twelve months, $1.6 million of which is expected to be recorded in the remaining quarters of 2022.

Note 11 - Shareholders' Equity

Stock Repurchases

During the first three months of 2022, the Company did not repurchase any shares of the Company's common stock.

During the first three months of 2021, the Company repurchased approximately 106,744 shares of the Company's common stock at an average stock price of $37.81 per share, which totaled $4 million, under a $20 million repurchase authorization publicly in January 2021.


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Note 12 – Earnings Per Share
The following is a reconciliation of the numerators and denominators used in computing Basic and Diluted Earnings Per Common Share ("EPS"):
 For the Three Months Ended March 31,
 20222021
($ in thousands except per
share amounts)		Income
(Numerator)		Shares
(Denominator)		Per Share
Amount		Income
(Numerator)		Shares
(Denominator)		Per Share
Amount
Basic EPS:
Net income$33,969 $28,194 
Less: income allocated to participating securities(198)(178)
Basic EPS per common share$33,771 35,433,739 $0.95 $28,016 28,357,809 $0.99 
Diluted EPS:
Net income $33,969 35,433,739 $28,194 28,357,809 
Effect of Dilutive Securities— 207,239 — 180,044 
Diluted EPS per common share$33,969 35,640,978 $0.95 $28,194 28,537,853 $0.99 

Note 13 – Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive loss for the Company are as follows:
($ in thousands)March 31, 2022December 31, 2021
Unrealized loss on securities available for sale$(213,862)(32,067)
Deferred tax asset 49,145 7,369 
Net unrealized loss on securities available for sale(164,717)(24,698)
Postretirement plans liability(309)(353)
Deferred tax asset71 81 
Net postretirement plans liability(238)(272)
Total accumulated other comprehensive loss$(164,955)(24,970)
The following table discloses the changes in accumulated other comprehensive loss for the three months ended March 31, 2022 (all amounts are net of tax).
($ in thousands)Unrealized Loss on
Securities
Available for Sale		Postretirement Plans Asset
(Liability)		Total
Beginning balance at January 1, 2022$(24,698)(272)(24,970)
Other comprehensive loss before reclassifications(140,019)— (140,019)
Amounts reclassified from accumulated other comprehensive income
— 34 34 
Net current-period other comprehensive (loss) income(140,019)34 (139,985)
Ending balance at March 31, 2022$(164,717)(238)(164,955)


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The following table discloses the changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2021 (all amounts are net of tax).
($ in thousands)Unrealized Gain
(Loss) on
Securities
Available for Sale		Postretirement Plans Asset
(Liability)		Total
Beginning balance at January 1, 2021$15,749 (1,399)14,350 
Other comprehensive loss before reclassifications(18,666)— (18,666)
Amounts reclassified from accumulated other comprehensive income
— 131 131 
Net current-period other comprehensive (loss) income(18,666)131 (18,535)
Ending balance at March 31, 2021$(2,917)(1,268)(4,185)

Amounts reclassified from accumulated other comprehensive income for Unrealized Gain (Loss) on Securities Available for Sale represent realized securities gains or losses, net of tax effects. Amounts reclassified from accumulated other comprehensive income for Postretirement Plans Asset (Liability) represent amortization of amounts included in Accumulated Other Comprehensive Income, net of taxes, and are recorded in the "Other operating expenses" line item of the Consolidated Statements of Income.

Note 14 – Revenue from Contracts with Customers

All of the Company’s revenues that are in the scope of the “Revenue from Contracts with Customers” accounting standard (“ASC 606”) are recognized within noninterest income. The following table presents the Company’s sources of noninterest income for the three months ended March 31, 2022 and 2021. Items outside the scope of ASC 606 are noted as such.
For the Three Months Ended
($ in thousands)March 31, 2022March 31, 2021
Noninterest Income: In-scope of ASC 606:
Service charges on deposit accounts:$3,541 2,733 
Other service charges, commissions, and fees:
Interchange income4,711 3,524 
Other service charges and fees2,263 1,998 
Commissions from sales of insurance and financial products:
Insurance income— 1,326 
Wealth management income945 864 
SBA consulting fees780 2,764 
Noninterest income (in-scope of ASC 606)12,240 13,209 
Noninterest income (out-of-scope of ASC 606)7,011 7,460 
Total noninterest income$19,251 20,669 
A description of the Company’s revenue streams accounted for under ASC 606 is detailed below.
Service charges on deposit accounts: The Company earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Overdraft fees are recognized at the point in time that the overdraft occurs. Maintenance and activity fees include account maintenance fees and transaction-based fees. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of the month, representing the period over which the Company satisfies the performance obligation. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Service charges on deposits are withdrawn from the customer’s account balance.

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Other service charges, commissions, and fees: The Company earns interchange income on its customers’ debit and credit card usage and earns fees from other services utilized by its customers. Interchange income is primarily comprised of interchange fees earned whenever the Company’s debit and credit cards are processed through card payment networks such as MasterCard. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange fees are offset with interchange expenses and are presented on a net basis. Other service charges include revenue from processing wire transfers, bill pay service, cashier’s checks, ATM surcharge fees, and other services. The Company’s performance obligation for fees, exchange, and other service charges are largely satisfied, and related revenue recognized, when the services are rendered or upon completion. Payment is typically received immediately or in the following month.
Commissions from the sale of insurance and financial products: The Company earns commissions from the sale of wealth management products and also earned commissions from the sale of insurance policies until the sale of First Bank Insurance Services on June 30, 2021.
Wealth management income primarily consists of commissions received on financial product sales, such as annuities. The Company’s performance obligation is generally satisfied upon the issuance of the financial product. Shortly after the policy is issued, the carrier remits the commission payment to the Company, and the Company recognizes the revenue. The Company also earns some fees from asset management, which is billed quarterly for services rendered in the most recent period, for which the performance obligation has been satisfied.
Insurance income, which was earned by the Company until June 30, 2021, generally consisted of commissions from the sale of insurance policies and performance-based commissions from insurance companies. The Company recognized commission income from the sale of insurance policies when it acted as an agent between the insurance company and the policyholder. The Company’s performance obligation is generally satisfied upon the issuance of the insurance policy. Shortly after the policy is issued, the carrier remits the commission payment to the Company, and the Company recognized the revenue. Performance-based commissions from insurance companies were recognized at a point in time as policies are sold.
SBA consulting fees: The Company earns fees for its consulting services related to the origination of SBA loans. Fees are based on a percentage of the dollar amount of the originated loans and are recorded when the performance obligation has been satisfied.
The Company has made no significant judgments in applying the revenue guidance prescribed in ASC 606 that affect the determination of the amount and timing of revenue from the above-described contracts with customers.

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Item 2 - Management's Discussion and Analysis of Consolidated Results of Operations and Financial Condition
Overview and Highlights at and for Three Months Ended March 31, 2022

The Company earned net income of $34.0 million, or $0.95 diluted EPS, during the three months ended March 31, 2022 compared to net income of $28.2 million, or $0.99 diluted EPS, for the three months ended March 31, 2021. The main drivers to the increase in net income are presented below. Refer also to additional discussion in the Results of Operations section following.
•On October 15, 2021 we acquired Select Bancorp, Inc. ("Select") which was headquartered in Dunn, North Carolina and which contributed total assets of $1.8 billion, total loans of $1.3 billion, and total deposits of $1.6 billion as of the acquisition date. As such, comparisons for the financial periods presented are impacted by our acquisition of Select.
•Net interest income for the first quarter of 2022 was $76.9 million, a 39.2% increase from the $55.2 million recorded in the first quarter of 2021. The increase in net interest income from the prior year period was driven by higher earning assets related to both the Select acquisition and organic growth, offset somewhat by a reduction in net interest margin ("NIM").
•For the three months ended March 31, 2022, the Company recorded a provision for credit losses of $3.5 million based on changes in the loan portfolio and economic forecasts, and a reversal of the provision for unfunded commitments of $1.5 million related to fluctuations in the levels and mix of outstanding loans commitments. No provision for credit losses or unfunded commitments was required in the comparable period of 2021, which was the first quarter we adopted CECL.
•Noninterest income declined $1.4 million, or 6.9%, from the prior year period primarily due to a $3.4 million decrease in mortgage banking income related to lower levels of activity, a $2.0 million decrease in SBA consulting fees due to lower PPP-related revenues, and a $1.2 million decrease in commissions on sales of financial and insurance products due to the sale of substantially all of the assets of our property and casualty insurance agency subsidiary in June 2021. Reductions in noninterest income were substantially offset by higher levels of transactions and number of accounts generating service charge income and bankcard revenue.
•Noninterest expense increased $11.4 million, or 28.5% for the quarter ended March 31, 2022 as compared to the prior year. Included in the March 31, 2022 quarter was $3.5 million in merger and acquisition expenses primarily related to computer system conversion costs. The balance of the increase in noninterest expenses was driven by higher operating expenses resulting from the Select acquisition.
•Income tax expense increased $1.0 million relative to the higher pre-tax income. The effective tax rates were 20.4% and 21.3% for the first quarter of 2022 and 2021, respectively. The lower effective tax rate in the first quarter of 2022 was related to higher tax exempt income in that quarter relative to taxable income.

Total assets at March 31, 2022 amounted to $10.7 billion, a 1.4% increase from December 31, 2021. The primary balance sheet changes are presented below. Refer also to additional discussion in the Financial Condition section following.
•Total loans amounted to $6.1 billion at March 31, 2022, a decrease of $17.0 million, or 0.28% from year end due primarily to reductions in PPP loans through forgiveness which more than offset organic growth during the first quarter of 2022.
•Total investment securities increased $86.9 million from December 31, 2021 to a total of $3.2 billion at March 31, 2022, as the Company deployed excess liquidity during the period.
•Total deposits amounted to $9.4 billion at March 31, 2022, an increase of $260.5 million, or 2.9%, from December 31, 2021. The high core deposit growth is believed to be due to a combination of stimulus funds and changes in customer behaviors during the pandemic, as well as our ongoing growth and retention initiatives.
•We remain well-capitalized by all regulatory standards with a total common equity Tier 1 ratio of 12.85% and total risk-based capital ratio of 14.99%.

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•Accumulated other comprehensive loss increased $140.0 million related to higher unrealized losses on available for sale securities due to increased market rates experienced in the first quarter of 2022.
Impact of COVID-19
Our market areas and local economies continue to show signs of recovery from the impact of the COVID-19 pandemic, However, the current pandemic is ongoing and dynamic in nature, and there are many related uncertainties, including, among other things, its severity and new variants that may arise; its ultimate duration and infection spikes that may occur; the impact on our customers, employees and vendors; the impact on the financial services and banking industry; and the ongoing impact on the economy as a whole.
Our financial position and results of operations are particularly susceptible to the ability of our loan customers to meet loan obligations, the availability of our workforce, the availability of our vendors and supply chain issues, and the decline in the value of assets held by us. The impact of the COVID-19 pandemic lessened in 2021, and we experienced increased commercial activity throughout our market areas. We have not realized significant negative impact on our loan portfolio or asset quality. Further, all COVID-19 deferral status loans have returned to regular payment schedules. While the economic pressures and uncertainties arising from the COVID-19 pandemic have resulted in, and may continue to result in, specific changes in consumer and business spending and borrowing habits, we have seen improvements in many industries in which we have loan exposure including retail/strip centers, hotels/lodging, restaurants, entertainment, and commercial real estate.
The ongoing impact on the Company of the continuing pandemic is uncertain. The extent to which the COVID-19 pandemic has a further impact on our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the COVID-19 pandemic and actions taken by governmental authorities and other third parties in response to the COVID-19 pandemic.
Critical Accounting Policies and Estimates
The accounting principles we follow and our methods of applying these principles conform with GAAP and with general practices followed by the banking industry. Certain of these principles involve a significant amount of judgment and may involve the use of estimates based on our best assumptions at the time of the estimation. We have identified the accounting policies discussed below as being more sensitive in terms of judgments and estimates taking into account their overall potential impact to our consolidated financial statements.
Allowance for Credit Losses on Loans and Unfunded Commitments
The ACL represents management’s current estimate of credit losses for the remaining estimated life of financial instruments. We perform periodic and systematic detailed reviews of the loan portfolio to identify trends and to assess the overall collectability of the portfolio. We believe the accounting estimate related to the ACL is a “critical accounting estimate” as: (1) changes in it can materially affect the provision for credit losses and net income; (2) it requires management to predict borrowers’ likelihood or capacity to repay, including evaluation of inherently uncertain future economic conditions; (3) the value of underlying collateral must be estimated on collateral-dependent loans; (4) prepayment activity must be projected to estimate the life of loans that often are shorter than contractual terms; and (5) it requires estimation of a reasonable and supportable forecast period for credit losses. Accordingly, this is a highly subjective process and requires significant judgment since it is difficult to evaluate current and future economic conditions in relation to an overall credit cycle and estimate the timing and extent of loss events that are expected to occur prior to end of a loan’s estimated life.
Our ACL is assessed at each balance sheet date and adjustments are recorded in the provision for credit losses. The ACL is estimated based on loan level characteristics using historical loss rates, a reasonable and supportable economic forecast, and assumptions of probability of default and loss given default. Loan balances considered uncollectible are charged-off against the ACL. There are many factors affecting the ACL, some of which are quantitative, while others require qualitative judgment. Although management believes its process for determining the ACL adequately considers all the potential factors that could potentially result in credit losses, the process includes subjective elements and is susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for credit losses could be required that could adversely affect our earnings or financial position in future periods.

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Purchased credit deteriorated ("PCD") loans represent assets that are acquired with evidence of more than insignificant credit quality deterioration since origination as of the acquisition date. At acquisition, the allowance for credit losses on PCD assets is booked directly to the ACL. Any subsequent changes in the ACL on PCD assets is recorded through the provision for credit losses.
We believe that the ACL is adequate to absorb the expected life of loan credit losses on the portfolio of loans as of the balance sheet date. Actual losses incurred may differ materially from our estimates.
We estimate expected credit losses on commitments to extend credit over the contractual period in which we are exposed to credit risk on the underlying commitments, unless the obligation is unconditionally cancellable. The allowance for off-balance sheet credit exposures, which is included in "Other liabilities" on the Consolidated Balance Sheets, is adjusted for as an increase or decrease to the provision for unfunded commitments. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The methodology is based on a loss rate approach that starts with the probability of funding based on historical experience. Similar to methodology discussed above related to the loans receivable portfolio, adjustments are made to the historical losses for current conditions and reasonable and supportable forecast.
Goodwill and Other Intangible Assets
We believe that the accounting for goodwill and other intangible assets also involves a higher degree of judgment than most other significant accounting policies. Accounting Standards Codification 350-10 establishes standards for the amortization of acquired intangible assets, generally over the estimated useful life of the related assets, and impairment assessment of goodwill. At March 31, 2022, we had core deposit and other intangibles of $16.9 million subject to amortization and $364.3 million of goodwill, which is not subject to amortization.
Goodwill arising from business combinations represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair value of the liabilities assumed. Goodwill has an indefinite useful life and is evaluated for impairment annually or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. At each reporting date between annual goodwill impairment tests, we consider potential indicators of impairment. During 2022 there were no triggers warranting interim impairment assessments and for the 2021 annual assessment, we concluded that it was more likely than not that the fair value exceeded its carrying value.
The primary identifiable intangible asset we typically record in connection with a whole bank or bank branch acquisition is the value of the core deposit intangibles which represent the estimated value of the long-term deposit relationships acquired in the transaction. Determining the amount of identifiable intangible assets and their average lives involves multiple assumptions and estimates and is typically determined by performing a discounted cash flow analysis, which involves a combination of any or all of the following assumptions: customer attrition/runoff, alternative funding costs, deposit servicing costs, and discount rates. The core deposit intangibles are amortized over the estimated useful lives of the deposit accounts based on a method that we believe reasonably approximates the anticipated benefit stream from this intangible. The estimated useful lives are periodically reviewed for reasonableness and have generally been estimated to have a life ranging from seven to ten years, with an accelerated rate of amortization. We review identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our policy is that an impairment loss is recognized, equal to the difference between the asset’s carrying amount and its fair value, if the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Estimating future cash flows involves the use of multiple estimates and assumptions, such as those listed above.
Current Accounting Matters
See Note 2 to the Consolidated Financial Statements for information about recently announced or adopted accounting standards.


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RESULTS OF OPERATIONS
Net Interest Income
Net interest income is our largest source of revenue and is the difference between the interest earned on interest-earning assets (generally loans and investment securities) and the interest expense incurred in connection with interest-bearing liabilities (generally deposits and borrowed funds). Changes in the net interest income are the result of changes in volume and the net interest spread which affects NIM. Volume refers to the average dollar levels of interest-earning assets and interest-bearing liabilities. Net interest spread refers to the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. NIM refers to net interest income divided by average interest-earning assets and is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities. Net interest income is also influenced by external factors such as local economic conditions, competition for loans and deposits, and market interest rates.
Net interest income for the three months ended March 31, 2022 amounted to $76.9 million, an increase of $21.6 million, or 39.2%, from the $55.2 million recorded in the first quarter of 2021. Net interest income on a tax-equivalent basis for the three month period ended March 31, 2022 amounted to $77.6 million, an increase of $21.9 million, or 39.3%, from the $55.7 million recorded in the first quarter of 2021. For internal purposes, we evaluate our NIM on a tax-equivalent basis by adding the tax benefit realized from tax-exempt loans and securities to reported interest income then dividing by total average earning assets. We believe that analysis of NIM on a tax-equivalent basis is useful and appropriate because it allows a comparison of net interest in different periods without taking into account the different mix of taxable versus non-taxable loans and investments that may have existed during those periods.
The following table presents an analysis of net interest income.

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Average Balances and Net Interest Income Analysis
 For the Three Months Ended March 31,
 20222021


($ in thousands)		Average
Volume		Average
Rate		Interest
Earned
or Paid		Average
Volume		Average
Rate		Interest
Earned
or Paid
Assets      
Loans (1) (2)$6,051,487 4.30 %$64,202 $4,684,143 4.42 %$51,073 
Taxable securities2,995,377 1.79 %13,210 1,652,834 1.45 %5,913 
Non-taxable securities288,468 1.47 %1,048 67,196 1.95 %323 
Short-term investments, primarily interest-bearing cash478,861 0.55 %649 494,233 0.57 %700 
Total interest-earning assets9,814,193 3.27 %79,109 6,898,406 3.41 %58,009 
Cash and due from banks115,748 80,898 
Premises and equipment135,990 121,798 
Other assets498,488 376,724 
Total assets$10,564,419 $7,477,826 
Liabilities
Interest-bearing checking$1,576,323 0.06 %$224 $1,203,942 0.09 %$266 
Money market deposits2,606,133 0.13 %853 1,650,387 0.23 %918 
Savings deposits721,911 0.06 %108 538,781 0.10 %130 
Time deposits >$100,000581,979 0.30 %430 555,180 0.63 %858 
Other time deposits298,570 0.21 %156 224,045 0.39 %216 
Total interest-bearing deposits5,784,916 0.12 %1,771 4,172,335 0.68 %2,388 
Borrowings67,381 2.77 %460 61,405 2.53 %383 
Total interest-bearing liabilities5,852,297 0.15 %2,231 4,233,740 0.27 %2,771 
Noninterest-bearing checking3,435,437 2,301,780 
Other liabilities66,563 57,116 
Shareholders’ equity1,210,122 885,190 
Total liabilities and
shareholders’ equity		$10,564,419 $7,477,826 
Net yield on interest-earning assets and net interest income3.18 %$76,878 3.25 %$55,238 
Net yield on interest-earning assets and net interest income – tax-equivalent (3)3.21 %$77,575 3.27 %$55,681 
Interest rate spread3.17 %3.14 %
Average prime rate3.29 %3.25 %
(1)   Average loans include nonaccruing loans, the effect of which is to lower the average rate shown. Interest earned includes recognized net loan fees, including late fees, prepayment fees, and deferred loan fee amortization (including deferred PPP fees), in the amounts of $1.4 million, and $3.4 million for three months ended March 31, 2022 and 2021, respectively.
(2) Includes accretion of discount on acquired and SBA loans of $2.3 million and $1.3 million for three months ended March 31, 2022 and 2021, respectively.
(3)   Includes tax-equivalent adjustments of $697,000 and $443,000 for three months ended March 31, 2022 and 2021, respectively, to reflect the tax benefit that we receive related to tax-exempt securities and tax-exempt loans, which carry interest rates lower than similar taxable investments/loans due to their tax exempt status. This amount has been computed assuming a 23% tax rate and is reduced by the related nondeductible portion of interest expense.








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Overall, as demonstrated in the table above, net interest income grew $21.6 million for the three months ended March 31, 2022 from the comparable period of the prior year. Higher earning asset volumes, from both organic growth and the Select acquisition, and lower rates on interest-bearing liabilities, which were partially offset by lower yields on interest-earning assets, drove the increase.
•Average loan volumes for the three months ended March 31, 2022 were $1.4 billion higher than the same period in 2021. Higher volumes were partially offset by lower interest rates on loans related to the general low market rate environment, resulting in an increase in loan interest income of $13.1 million.
•Higher average volume of $1.6 billion on total securities resulted in an increase of $8.0 million in interest income for the three months ended March 31, 2022 when compared to the same period in 2021. Also contributing to the increase in interest income was the higher yields on the portfolio as reinvestment rates increased between the periods.
•Lower interest rates paid on deposits drove a $0.6 million decrease in deposit interest expense for the three months ended March 31, 2022 compared to the same period in 2021. Reductions in rates on deposits more than offset the $1.6 billion increase in average volume for total interest-bearing deposits.
•The reduction in NIM was in large part a result of general low market rate environment through most of 2021 and the shift of earning asset mix to lower yielding investment securities from loans as excess liquidity was deployed to securities.
Our NIM for all periods benefited from the net accretion income, primarily associated with purchase accounting premiums/discounts associated with acquisitions. Presented in the table below is the amount of accretion which increased net interest income in each year.
Three Months Ended March 31,
($ in thousands)20222021
Interest income – increased by accretion of loan discount on acquired loans
$1,671 752 
Interest income - increased by accretion of loan discount on retained SBA loans
667 589 
Total interest income impact2,338 1,341 
Interest expense – reduced by premium amortization of deposits
234 15 
Interest expense – increased by discount accretion of borrowings
(73)(44)
Total net interest expense impact161 (29)
Total impact on net interest income$2,499 1,312 
The increase in loan discount accretion on purchased loans for the first quarter of 2022 as compared to the prior year was driven by the loans acquired from Select in the fourth quarter of 2021. Generally the level of loan discount accretion will decline each year due to the natural paydowns in acquired loan portfolios. At March 31, 2022 and 2021, unaccreted loan discount on purchased loans amounted to $15.6 million and $12.7 million, respectively.
In addition to the loan discount accretion recorded on acquired loans, we record accretion on the discounts associated with the retained unguaranteed portions of SBA loans sold in the secondary market. The level of SBA loan discount accretion will vary relative to fluctuations in the SBA loan portfolio. At March 31, 2022 and 2021, unaccreted loan discount on SBA loans amounted to $5.9 million and $7.1 million, respectively.
Amortization of net deferred loan fees also impacts interest income. During the first quarter of 2022, we amortized net deferred PPP fees of $1.3 million as interest income compared to $3.0 million for the first quarter of 2021. At March 31, 2022, we had $1.3 million in remaining deferred PPP origination fees that will be recognized over the lives of the loans, with accelerated amortization expected to result from the loan forgiveness process. We expect substantially all of these fees will be recognized in the second quarter of 2022 as a result of the loan forgiveness process.



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Provision for Credit Losses and Provision for Unfunded Commitments
The provisions for credit losses represents our current estimate of life of loan credit losses in the loan portfolio and unfunded loan commitments. Our estimate of credit losses is determined using a complex model that relies on reasonable and supportable forecasts and historical loss information to determine the balance of the ACL and resulting provision for credit losses. The provision for unfunded commitments represents expected losses on unfunded loan commitments that are expected to result in outstanding loan balances. The allowance for unfunded commitments is included in "Other liabilities" in the Consolidated Balance Sheets.
The provision for credit losses of $3.5 million for the three months ended March 31, 2022 was based on changes in the loan portfolio and updated economic forecasts, and is compared to no provision for the three months ended March 31, 2021. The amount of provision recorded in each period was the amount required such that the total ACL reflected the appropriate balance as determined under CECL. We recorded a reversal of provision for unfunded commitments for the three months ended March 31, 2022 totaling $1.5 million related primarily to the fluctuations in the levels and mix of outstanding loan commitments. There was no provision for unfunded commitments for the three months ended March 31, 2021.
Additional discussion of our asset quality and credit metrics, which impact our provision for credit losses, is provided in the "Nonperforming Assets" and "Allowance for Credit Losses and Loan Loss Experience" sections following.
Noninterest Income
Our noninterest income amounted to $19.3 million and $20.7 million for the three months ended March 31, 2022 and 2021, respectively. Included in noninterest income was nonrecurring amounts totaling $1.6 million in other gains and $34,000 in other losses for the three months ended March 31, 2022 and 2021, respectively. The following table presents the primary components of noninterest income.
 For the Three Months Ended March 31,
($ in thousands)20222021
Service charges on deposit accounts
$3,541 2,733 
Other service charges, commissions and fees - net bankcard interchange4,711 3,523 
Other service charges, commissions, and fees - other2,294 1,999 
Fees from presold mortgage loans
1,121 4,544 
Commissions from sales of insurance and financial products
945 2,190 
SBA consulting fees
780 2,764 
SBA loan sale gains
3,261 2,330 
Bank-owned life insurance ("BOLI") income976 620 
Other gains (losses), net
1,622 (34)
Noninterest income$19,251 20,669 
Service charges on deposit accounts increased $0.8 million, or 30%, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021. The increase was driven by the higher number of new customers and transaction accounts generating fees from both organic growth and the Select acquisition.
Other service charges, commissions and fees - net bankcard interchange represents interchange income from debit and credit card transactions, net of associated interchange expense, and totaled $4.7 million for the three months ended March 31, 2022, a 34% increase from the $3.5 million for the three months ended March 31, 2021. The growth in card usage by our customers is related to the higher volume of outstanding cards giving rise to increased transaction volume as well as customer payment preferences. Because the Company exceeded $10 billion in total assets at December 31, 2021, it is expected that bankcard revenue will be adversely impacted by the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 limit on debit card interchange fees beginning July 1, 2022.
Other service charges, commissions and fees - other includes items such as SBA guarantee servicing fees, ATM charges, wire transfer fees, safety deposit box rentals, fees from sales of personalized checks, and check cashing fees. The increase in this line item for the three months ended March 31, 2022 compared to the three months ended

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March 31, 2021 of $0.3 million, or 15%, was primarily due to growth in the number of accounts and related transaction activity, as well as the Bank's deposit base increases.
Fees from presold mortgages amounted to $1.1 million for the three months ended March 31, 2022, a decline of $3.4 million, or 75%, from the same time period in 2021. The decrease was due to the general decline in home mortgage refinancings and new originations during 2022 as compared to the prior year.
Commissions from sales of insurance and financial products amounted to $0.9 million for the three months ended March 31, 2022, down $1.2 million from the same period in 2021. The decrease is due to the sale of the majority of the assets of our property and casualty insurance subsidiary in June 2021.
The reduction in SBA consulting services for the three months ended March 31, 2022, compared to the same period in 2021 of $2.0 million, or 72%, is directly related to the wind-down of the PPP loan program and lower related revenues earned in the current period. SBA loan sale gains were up $0.9 million, or 40%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 relating to the timing of sales and the volume of originated loans available to be sold in each period.
The increase in BOLI income for the three months ended March 31, 2022, compared to the same period in 2021, of $0.4 million was related to the acquisition of Select which contributed $31.0 million in BOLI as of the date of acquisition.
Other gains (losses), net amounted to a net gain of $1.6 million for the three months ended March 31, 2022 due primarily to death benefits realized on BOLI policies.
Noninterest Expenses
Total noninterest expenses totaled $51.5 million and $40.1 million for the three months ended March 31, 2022 and 2021, respectively. Included in noninterest expense was nonrecurring merger and acquisition costs totaling $3.5 million for the three months ended March 31, 2022. There were no merger costs for the comparable period of 2021. The following table presents the primary components of noninterest expense.
For the Three Months Ended March 31,
($ in thousands)20222021
Salaries$23,454 $20,131 
Employee benefits5,578 4,574 
Total personnel expense29,032 24,705 
Occupancy expense3,384 2,904 
Equipment related expenses1,304 1,045 
Merger and acquisition expenses3,484 — 
Amortization of intangible assets1,017 897 
Credit card rewards and other expenses1,243 1,076 
Telephone and data lines935 751 
Software costs1,574 1,207 
Data processing expense2,101 1,343 
Advertising and marketing expense911 610 
Foreclosed property (gains) losses, net(80)157 
Non-credit losses602 185 
Other operating expenses5,958 5,185 
Total$51,465 $40,065 

In general, the increase in noninterest expenses was driven by higher operating expenses from personnel, locations, number of accounts, and higher level of activity resulting from the Select acquisition completed in the fourth quarter of 2021. Merger and acquisition expenses amounted to $3.5 million for the three months ended March 31, 2022 primarily related to computer system conversion costs.

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Total personnel expense increased from $24.7 million for the three months ended March 31, 2021 to $29.0 million for the three months ended March 31, 2022, an increase of $4.3 million, or 18%. Within personnel expense, total compensation increased $3.3 million, or 16.5% primarily related to the incremental number of associates from the Select acquisition, combined with regular annual salary increases. Employee benefits expense increased $1.0 million, or 22% relative to the higher salaries and other compensation expense combined with higher insurance claims in the first quarter of 2022 compared to the prior year.
Income Taxes
We recorded income tax expense of $8.7 million for the three months ended March 31, 2022 and $7.6 million for the three months ended March 31, 2021. Our effective tax rates declined to 20.4% from 21.3% for the three months ended March 31, 2022 and 2021, respectively. The lower effective tax rate in the first quarter of 2022 was related to higher tax-exempt income in that quarter relative to taxable income.

FINANCIAL CONDITION
Total assets at March 31, 2022 amounted to $10.7 billion, a 1.4% increase from December 31, 2021. Total loans at March 31, 2022 amounted to $6.1 billion, a 0.3% decrease from December 31, 2021, and total deposits amounted to $9.4 billion, a 2.9% increase from December 31, 2021.
For the first three months of 2022, loans declined $17.0 million, or 0.3%, related primarily to forgiveness of PPP loans offsetting core growth, which is historically slower in the first quarter of the year. We did experience growth in our commercial real estate and 1-4 family first mortgage categories and expect to experience continued organic growth during the remainder of 2022. The mix of our loan portfolio remained substantially the same at March 31, 2022 compared to December 31, 2021. The majority of our real estate loans were personal and commercial loans where real estate provides additional security for the loan. Note 4 to the consolidated financial statements presents additional detailed information regarding our mix of loans.
For the three month period ended March 31, 2022, we continued to experience growth in our deposit base, with total deposits increasing by $260.5 million, or 2.9% from December 31, 2021. Deposit growth was primarily in transaction accounts (checking, money market and savings), which we believe to be related to our ongoing deposit growth initiatives, as well as stimulus funds and changes in customer behaviors remaining from the pandemic. We routinely engage in activities designed to grow and retain deposits, such as (1) emphasizing relationship banking to new and existing customers, where borrowers are encouraged and normally expected to maintain deposit accounts with us, (2) pricing deposits at rate levels that will attract and/or retain deposits, and (3) continually working to identify and introduce new products that will attract customers or enhance our appeal as a primary provider of financial services.


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Nonperforming Assets
Nonperforming assets include nonaccrual loans, TDRs, loans past due 90 or more days and still accruing interest, and foreclosed real estate. Nonperforming assets are summarized as follows:
 
 
$ in thousands
As of/for the quarter ended March 31, 2022As of/for the quarter ended December 31, 2021
Nonperforming assets
Nonaccrual loans$33,460 34,696 
TDRs – accruing12,727 13,866 
Accruing loans >90 days past due— 1,004 
Total nonperforming loans46,187 49,566 
Foreclosed real estate2,750 3,071 
Total nonperforming assets$48,937 52,637 
Asset Quality Ratios
Nonaccrual loans to total loans0.55 %0.57 %
Nonperforming loans to total loans0.76 %0.82 %
Nonperforming assets to total loans and foreclosed properties0.81 %0.87 %
Nonperforming assets to total assets0.46 %0.50 %
Allowance for credit losses to nonaccrual loans245.27 %227.08 %
As shown in the table above, nonperforming assets decreased from December 31, 2021 to March 31, 2022, which was primarily driven by the decrease in TDRs, decrease in accruing loans past due 90 days or more which were directly related to the Select acquisition, and the reduction in foreclosed properties.
We have reviewed the collateral for our nonperforming assets, including nonaccrual loans, and have included this review among the factors considered in the evaluation of the allowance for credit losses discussed below.
At March 31, 2022, total nonaccrual loans amounted to $33.5 million, compared to $34.7 million at December 31, 2021. "Real estate-mortgage-commercial and other" is the largest category of nonaccruals loans, at $15.2 million, or 45% of total nonaccrual loans, followed by "Commercial, financial, and agricultural" at $12.6 million, or 38% of total nonaccrual loans. Included in those categories are nonaccrual SBA loans totaling $18.0 million at March 31, 2022, or 54% of total nonaccrual loans, that have $7.4 million in guarantees from the SBA.
TDRs are accruing loans for which we have granted concessions to the borrower as a result of the borrower’s financial difficulties. At March 31, 2022, total accruing TDRs amounted to $12.7 million, compared to $13.9 million at December 31, 2021, with the decrease being attributed to one large commercial TDR paying off during the period.

As reflected in Note 4 to the financial statements, total classified loans were relatively flat at $55.8 million at March 31, 2022 compared to $56.0 million at December 31, 2021. Special mention loans decreased from $43.1 million at December 31, 2021 to $38.2 million at March 31, 2022.
Total foreclosed real estate amounted to $2.8 million at March 31, 2022 and $3.1 million at December 31, 2021. Our foreclosed property balances have generally been decreasing as a result of sales activity during the periods and favorable overall asset quality. During the first quarter of 2022, we recorded sales of three foreclosed properties partially offset by the addition of one foreclosed property. We believe that the fair values of foreclosed real estate, less estimated costs to sell, equal or exceed their respective carrying values at the dates presented.


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The following table presents the detail of all of our foreclosed real estate at each period end:
($ in thousands)At March 31, 2022At December 31, 2021
Vacant land and farmland$103 104 
1-4 family residential properties911 1,231 
Commercial real estate1,736 1,736 
Total foreclosed real estate$2,750 3,071 

Allowance for Credit Losses and Loan Loss Experience
Our ACL is based on the total amount of loan losses that are expected over the remaining life of the loan portfolio. Our estimate of credit losses on loans is determined using a complex model, based primarily on the utilization of discounted cash flows, that relies on reasonable and supportable forecasts and historical loss information to determine the balance of the allowance for credit losses and resulting provision for credit losses.
We recorded $3.5 million provision for credit losses on loans in the first quarter of 2022 compared to no provision in the first quarter of 2021, which was the first quarter of our adoption of CECL. The higher provision in 2022 was primarily related to changes in the loan portfolio and updated economic forecasts.
We have no foreign loans, few agricultural loans and do not engage in significant lease financing or highly leveraged transactions. Commercial loans are diversified among a variety of industries. The majority of our real estate loans are primarily personal and commercial loans where real estate provides additional security for the loan. Collateral for virtually all of these loans is located within our principal market area.
For the periods indicated, the following table summarizes our balances of loans outstanding, average loans outstanding, allowance for credit losses, charge-offs and recoveries, and key ratios.
Loan Ratios, Loss and Recovery Experience
($ in thousands)Three Months
Ended
March 31, 2022		Twelve Months
Ended December 31,
2021		Three Months
Ended
March 31, 2021
Loans outstanding at end of period$6,064,698 6,081,715 4,624,054 
Average amount of loans outstanding6,051,487 5,018,391 4,684,143 
Allowance for credit losses, at period end82,069 78,789 65,849 
Total charge-offs(1,043)(7,602)(2,317)
Total recoveries823 4,922 1,203 
Net charge-offs$(220)$(2,680)$(1,114)
Ratios:
Net charge-offs as a percent of average loans (annualized)0.01 %0.05 %0.10 %
Allowance for credit losses as a percent of loans at end of period1.35 %1.30 %1.42 %
Recoveries of loans previously charged-off as a percent of loans charged-off78.91 %64.75 %51.92 %

In addition to the allowance for credit losses on loans, we maintain an allowance for lending-related commitments such as unfunded loan commitments. We estimate expected credit losses associated with these commitments over the contractual period in which we are exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable. The allowance for lending-related commitments on off-balance sheet credit exposures is adjusted as a provision for unfunded commitments expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The allowance for unfunded commitments of $12.0 million and $13.5 million at March 31, 2022 and December 31, 2021, respectively, is classified on the balance sheet within "Other liabilities".

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We recorded a reversal provision for credit losses on unfunded commitments of $1.5 million during the first quarter of 2022 primarily relating to the fluctuations in the levels and mix of outstanding loan commitments.
We believe the ACL is adequate at each period end presented. It must be emphasized, however, that the determination of the allowances using our procedures and methods rests upon various judgments and assumptions about economic conditions and other factors affecting loans. No assurance can be given that we will not in any particular period sustain loan losses that are sizable in relation to the amounts reserved or that subsequent evaluations of the loan portfolio, in light of conditions and factors then prevailing, will not require significant changes in the allowance for credit losses or future charges to earnings. See “Critical Accounting Policies – Allowance for Credit Losses on Loans and Unfunded Commitments” in Note 1 to the 2021 Annual Report on Form 10-K filed with the SEC for more information.
In addition, various regulatory agencies, as an integral part of their examination process, periodically review our allowance for credit losses and value of other real estate. Such agencies may require us to recognize adjustments to the allowance or the carrying value of other real estate based on their judgments about information available at the time of their examinations.
Liquidity, Commitments, and Contingencies
Our liquidity is determined by our ability to convert assets to cash or acquire alternative sources of funds to meet the needs of our customers who are withdrawing or borrowing funds, and to maintain required reserve levels, pay expenses and operate the Company on an ongoing basis. Our primary liquidity sources are net income from operations, cash and due from banks, federal funds sold and other short-term investments. Our securities portfolio is comprised almost entirely of readily marketable securities, which could also be sold to provide cash. Since the beginning of the COVID-19 pandemic in early 2020, we have seen our liquidity levels increase, with increases in deposits account balances leading to higher cash and investment securities levels.
In addition to internally generated liquidity sources, we have the ability to obtain borrowings from the following three sources: 1) an approximately $876 million line of credit with the FHLB (of which $1.9 million and $2.0 million were outstanding at March 31, 2022 and December 31, 2021, respectively); 2) a $100 million federal funds line with a correspondent bank (of which none was outstanding at March 31, 2022 or December 31, 2021); and 3) an approximately $138 million line of credit through the Federal Reserve Bank of Richmond’s discount window (of which none was outstanding at March 31, 2022 or December 31, 2021). Unused and available lines of credit amounted to $1.1 billion at March 31, 2022.
Our overall liquidity is essentially the same as at December 31, 2021 with our liquid assets (cash and securities) as a percentage of our total deposits and borrowings at 33.9% at March 31, 2022. We believe our liquidity sources, including unused lines of credit, are at an acceptable level and remain adequate to meet our operating needs in the foreseeable future.
The amount and timing of our contractual obligations and commercial commitments has not changed materially since December 31, 2021, detail of which is presented in the Contractual Obligations and Other Commercial Commitments table of our 2021 Annual Report on Form 10-K. In addition, we are not involved in any legal proceedings that, in our opinion, could have a material effect on our consolidated financial position.
Off-Balance Sheet Arrangements and Derivative Financial Instruments
Off-balance sheet arrangements include transactions, agreements, or other contractual arrangements pursuant to which we have obligations or provide guarantees on behalf of an unconsolidated entity. We have no off-balance sheet arrangements of this kind other than letters of credit and repayment guarantees associated with our trust preferred securities.
Derivative financial instruments include futures, forwards, interest rate swaps, options contracts, and other financial instruments with similar characteristics. We have not engaged in significant derivative activities through March 31, 2022, and have no current plans to do so.
Capital Resources
The Company is regulated by the FRB and is subject to the securities registration and public reporting regulations of the SEC. Our banking subsidiary, First Bank, is also regulated by the FRB and the North Carolina Office of the Commissioner of Banks. We must comply with regulatory capital requirements established by the FRB. Failure to

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meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on our financial statements. We are not aware of any recommendations of regulatory authorities or otherwise which, if they were to be implemented, would have a material effect on our liquidity, capital resources, or operations.
Under Basel III standards and capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Our capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
The capital standards require us to maintain minimum ratios of “Common Equity Tier 1” capital to total risk-weighted assets, “Tier 1” capital to total risk-weighted assets, and total capital to risk-weighted assets of 4.50%, 6.00% and 8.00%, respectively. Common Equity Tier 1 capital is comprised of common stock and related surplus, plus retained earnings, and is reduced by goodwill and other intangible assets, net of associated deferred tax liabilities. Tier 1 capital is comprised of Common Equity Tier 1 capital plus Additional Tier 1 Capital, which includes non-cumulative perpetual preferred stock and trust preferred securities. Total capital is comprised of Tier 1 capital plus certain adjustments, the largest of which is our allowance for credit losses. Risk-weighted assets refer to our on- and off-balance sheet exposures, adjusted for their related risk levels using formulas set forth in FRB regulations.
In addition to the risk-based capital requirements described above, we are subject to a leverage capital requirement, which calls for a minimum ratio of Tier 1 capital (as defined above) to quarterly average total assets of 3.00% to 5.00%, depending upon the institution’s composite ratings as determined by its regulators. The FRB has not advised us of any requirement specifically applicable to us.
At March 31, 2022, our capital ratios exceeded the regulatory minimum ratios discussed above. The following table presents the capital ratios for the Company and the regulatory minimums discussed above for the periods indicated.
March 31, 2022December 31, 2021
Risk-based capital ratios:  
Common equity Tier 1 to Tier 1 risk weighted assets12.85 %12.53 %
Minimum required Common Equity Tier 1 capital7.00 %7.00 %
Tier I capital to Tier 1 risk weighted assets13.74 %13.42 %
Minimum required Tier 1 capital8.50 %8.50 %
Total risk-based capital to Tier II risk weighted assets14.99 %14.67 %
Minimum required total risk-based capital10.50 %10.50 %
Leverage capital ratio:  
Tier 1 capital to quarterly average total assets9.60 %9.39 %
Minimum required Tier 1 leverage capital4.00 %4.00 %
First Bank is also subject to capital requirements that do not vary materially from the Company’s capital ratios presented above. At March 31, 2022, First Bank exceeded the minimum ratios established by the regulatory authorities.
Item 3 – Quantitative and Qualitative Disclosures About Market Risk
INTEREST RATE RISK (INCLUDING QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK)
Net interest income is our most significant component of earnings and we consider interest rate risk to be our most significant market risk. In addition to changes in volumes of loans and deposits, our level of net interest income is continually at risk due to the effect that changes in general market interest rate trends have on interest yields earned and paid with respect to our various categories of earning assets and interest-bearing liabilities. It is our policy to maintain portfolios of earning assets and interest-bearing liabilities with maturities and repricing opportunities that will afford protection, to the extent practical, against wide interest rate fluctuations.

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Our exposure to interest rate risk is analyzed on a regular basis by management using standard "gap" reports (which measure the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that time period), maturity reports, and an asset/liability software model that simulates future levels of interest income and expense based on current interest rates, expected future interest rates, and various intervals of “shock” interest rates. Over the years, we have been able to maintain a fairly consistent yield on average earning assets (NIM), even during periods of changing interest rates. Over the past five calendar years, our NIM has ranged from a low of 3.16% (realized in 2021) to a high of 4.09% (realized in 2018). The 93 basis point fluctuation in NIM between the high and low point during this period was a direct result of the FRB monetary policy enacted at the beginning of the COVID-19 pandemic resulting in a reduction in short-term market interest rates totaling 150 basis points in March 2020. During the first quarter of 2022, the FRB implemented monetary policy to combat inflationary conditions and increased short-term rates 25 basis points, with the anticipation of additional rate increases to occur throughout 2022.
There has be no significant change in the Company-estimated net interest income sensitivity from December 31, 2021. Using stated maturities for all fixed rate instruments except mortgage-backed securities (which are allocated in the periods of their expected payback) and securities and borrowings with call features that are expected to be called (which are shown in the period of their expected call), at March 31, 2022, we had approximately $3.2 billion more in interest-bearing liabilities that are subject to interest rate changes within one year than earning assets. This generally would indicate that net interest income would experience downward pressure in a rising interest rate environment and would benefit from a declining interest rate environment. However, this method of analyzing interest sensitivity only measures the magnitude of the timing differences and does not address earnings, market value, or management actions. Also, interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. In addition to the effects of “when” various rate-sensitive products reprice, market rate changes may not result in uniform changes in rates among all products. For example, included in interest-bearing liabilities subject to interest rate changes within one year as of March 31, 2022 were deposits totaling $4.9 billion comprised of checking, savings, and certain types of money market deposits with interest rates set by management. These types of deposits historically have not repriced with, or in the same proportion, as general market indicators.
Generally, when rates change, our interest-sensitive assets that are subject to adjustment reprice immediately at the full amount of the change, while our interest-sensitive liabilities that are subject to adjustment reprice at a lag to the rate change and typically not to the full extent of the rate change. In the short-term (less than twelve months), this generally results in us being asset-sensitive, meaning that our net interest income benefits from an increase in interest rates and is negatively impacted by a decrease in interest rates, which is what we experienced following the March 2020 interest rate cuts. However, in the twelve-month and longer horizon, the impact of having a higher level of interest-sensitive liabilities generally lessens the short-term effects of changes in interest rates. Overall we believe that in the near-term (twelve months), net interest income will not likely experience significant pressure from fluctuations in interest rates, and specifically from the anticipated rise in interest rates.
Because of the static nature and limitations as discussed above of the gap report, we also employ an earnings simulation model to analyze the sensitivity of net interest income to movements in interest rates. The model is based on actual cash flows and repricing characteristics for on- and off-balance sheet instruments and incorporates market-based assumptions regarding the impact of changing interest rates on the prepayment rate of certain assets and liabilities. Earnings-simulation analysis captures not only the potential of these interest sensitive assets and liabilities to mature or reprice, but also the probability that they will do so. Moreover, earnings-simulation analysis considers the relative sensitivities of these balance sheet items and projects their behavior over an extended period of time.
The general discussion in the foregoing paragraph applies most directly in a “normal” interest rate environment in which longer-term maturity instruments carry higher interest rates than short-term maturity instruments, and is less applicable in periods in which there is a “flat” interest rate curve. A “flat yield curve” means that short-term interest rates are substantially the same as long-term interest rates. Actions taken by the FRB at the beginning of the pandemic resulted in a very low and flat interest rate curve environment. Recent actions to raise short-term interest rates have resulted in a some steepening of the yield curve on the short end (within 3 years). However, the longer end of the curve continues to be flat. A flat interest rate curve is an unfavorable interest rate environment for many banks, including the Bank, as short-term interest rates generally drive our deposit pricing and longer-term interest rates generally drive loan pricing. When these rates converge, the profit spread we realize between loan yields and deposit rates narrows, which pressures our net interest margin.


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Assuming that short term rates continue to rise over the next 12 months, we may see some benefit to our net interest margin from raising rates if we are able to maintain stable funding costs. Our experience historically has been that our demand deposit accounts have lagged the timing and amount of general market increases. However, we expect continued pressure on net interest margin from market competition for quality loans and the investment of liquidity in lower earning assets until loan demand increases sufficiently to deploy excess liquidity from short-term investments and securities.
Inflation
Because the assets and liabilities of a bank are primarily monetary in nature (payable in fixed, determinable amounts), the performance of a bank is affected more by changes in interest rates than by inflation as discussed above under Interest Rate Risk. Interest rates generally increase as the rate of inflation increases, but the magnitude of the change in rates may not be the same. The effect of inflation on banks is normally not as significant as its influence on those businesses that have large investments in plant and inventories. During periods of high inflation, there are normally corresponding increases in the money supply, and banks will normally experience above average growth in assets, loans, and deposits. Also, general increases in the price of goods and services will result in increased operating expenses.
Item 4 – Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, which are our controls and other procedures that are designed to ensure that information required to be disclosed in our periodic reports with the SEC is recorded, processed, summarized and reported within the required time periods.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is communicated to our management to allow timely decisions regarding required disclosure.  Based on the evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective in allowing timely decisions regarding disclosure to be made about material information required to be included in our periodic reports with the SEC. In addition, no change in our internal control over financial reporting has occurred during, or subsequent to, the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1 – Legal Proceedings
Various legal proceedings may arise in the ordinary course of business and may be pending or threatened against the Company and its subsidiaries. Neither the Company nor any of its subsidiaries is involved in any pending legal proceedings that management believes are material to the Company or its consolidated financial position.  If an exposure were to be identified, it is the Company’s policy to establish and accrue appropriate reserves during the accounting period in which a loss is deemed to be probable and the amount is determinable.
Item 1A – Risk Factors
Investing in shares of our common stock involves certain risks, including those identified and described in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as well as cautionary statements contained in this Form 10-Q, including those under the caption “Forward-Looking Statements” set forth in the forepart of this Form 10-Q, risks and matters described elsewhere in this Form 10-Q and in our other filings with the SEC. There are no material changes from the risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.



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Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
PeriodTotal Number of
Shares
Purchased		Average Price
Paid per Share		Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs (1)		Maximum Number of
Shares (or Approximate Dollar Value) that May Yet Be
Purchased Under the
Plans or Programs (1)
January 1, 2021 to January 31, 2021— $— — $— 
February 1, 2021 to February 28, 2021— — — $40,000,000 
March 1, 2021 to March 31, 2021— — — $40,000,000 
Total— — — $40,000,000 
(1)All shares available for repurchase are pursuant to publicly announced share repurchase authorizations. On February 7, 2022, the Company reported the authorization of a $40 million repurchase program with an expiration date of December 31, 2022. As of March 31, 2022, the Company had the remaining authorization to repurchase up to $40 million of the Company's stock.



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Index
Item 6 - Exhibits
The following exhibits are filed with this report or, as noted, are incorporated by reference. Except as noted below the exhibits identified have Securities and Exchange Commission File No. 000-15572. Management contracts, compensatory plans and arrangements are marked with an asterisk (*).
2.a
2.b
2.c
2.d
2.e
3.a
Articles of Incorporation of the Company and amendments thereto were filed as Exhibits 3.a.i through 3.a.v to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2002, and are incorporated herein by reference. Articles of Amendment to the Articles of Incorporation were filed as Exhibits 3.1 and 3.2 to the Company’s Current Report on Form 8-K filed on January 13, 2009, and are incorporated herein by reference. Articles of Amendment to the Articles of Incorporation were filed as Exhibit 3.1.b to the Company’s Registration Statement on Form S-3D filed on June 29, 2010 (Commission File No. 333-167856), and are incorporated herein by reference. Articles of Amendment to the Articles of Incorporation were filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 6, 2011, and are incorporated herein by reference. Articles of Amendment to the Articles of Incorporation were filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 26, 2012, and are incorporated herein by reference.
3.b
Amended and Restated Bylaws of the Company were filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed on February 9, 2018, and are incorporated herein by reference.
4.a
Form of Common Stock Certificate was filed as Exhibit 4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, and is incorporated herein by reference.
10.a
Amended and Restated Employment Agreement by and among the Company and the Bank and Michael G. Mayer effective February 1, 2022 was filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed on January 28, 2022 and is incorporated by reference.
21
List of Subsidiaries of Registrant
31.1
Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
31.2
Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002.
32.1
Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101
The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
Copies of exhibits are available upon written request to: First Bancorp, Elizabeth B. Bostian, Chief Financial Officer, 300 SW Broad Street, Southern Pines, North Carolina, 28387

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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
  
May 10, 2022BY:/s/  Richard H. Moore
 Richard H. Moore
Chief Executive Officer
(Principal Executive Officer),
and Director
 
May 10, 2022BY:/s/  Elizabeth B. Bostian
 Elizabeth B. Bostian
Executive Vice President
and Chief Financial Officer
May 10, 2022BY:/s/  Blaise B. Buczkowski
Blaise B, Buczkowski
Executive Vice President
and Chief Accounting Officer

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