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Acquisitions (Tables)

3 Months Ended

Mar. 31, 2017

Acquisitions Tables

Condensed Balance Sheet of Carolina Bank and Related Fair Value Adjustments

($ in thousands)		As Recorded by Carolina Bank				Fair Value Adjustments				As Recorded by First Bancorp
Assets
Cash and cash equivalents		$	81,466				(2	)	(a)		81,464
Securities			49,629				(261	)	(b)		49,368
Loans, gross			505,560				(5,469	)	(c)		497,376
							(2,715	)	(d)
Allowance for loan losses			(5,746	)			5,746		(e)		—
Premises and equipment			17,967				4,251		(f)		22,218
Core deposit intangible			—				8,790		(g)		8,790
Other			34,976				(4,804	)	(h)		30,172
Total			683,852				5,536				689,388

Liabilities
Deposits		$	584,950				431		(i)		585,381
Borrowings			21,855				(2,855	)	(j)		19,000
Other			12,855				225		(k)		13,080
Total			619,660				(2,199	)			617,461

Net identifiable assets acquired											71,927

Total cost of acquisition
Value of stock issued						$	114,478
Cash paid in the acquisition							25,279
Total cost of acquisition											139,757

Goodwill recorded related to acquisition of Carolina Bank										$	67,830

Explanation of Fair Value Adjustments

(a)

This adjustment was recorded to a short-term investment to its estimated fair value.

(b)

This fair value adjustment was recorded to adjust the securities portfolio to its estimated fair value.

(c)

This fair value adjustment represents the amount necessary to reduce performing loans to their fair value due to interest rate factors and credit factors. This amount will be amortized to increase interest income over the remaining lives of the related loans.

(d)

This fair value adjustment was recorded to write-down purchased credit impaired loans assumed in the acquisition to their estimated fair market value.

(e)

This fair value adjustment reduced the allowance for loan losses to zero as required by relevant accounting guidance.

(f)

This adjustment represents the amount necessary to increase premises and equipment from its book value on the date of acquisition to its estimated fair market value.

(g)

This fair value adjustment represents the value of the core deposit base assumed in the acquisition based on a study performed by an independent consulting firm. This amount was recorded by the Company as an identifiable intangible asset and will be amortized as expense on an accelerated basis over seven years.

(h)

This fair value adjustment primarily represents the net deferred tax liability associated with the other fair value adjustments made to record the transaction.

(i)

This fair value adjustment was recorded because the weighted average interest rate of Carolina Bank’s time deposits exceeded the cost of similar wholesale funding at the time of the acquisition. This amount will be amortized to reduce interest expense on an accelerated basis over their remaining five year life.

(j)

This fair value adjustment was primarily recorded because the interest rate of Carolina Bank’s trust preferred security was less than the current interest rate on similar instruments. This amount will be amortized on approximately a straight-line basis to increase interest expense over the remaining life of the related borrowing, which is 18 years.

(k)

This fair value adjustment represents miscellaneous adjustments needed to record assets and liabilities at their fair value.

Pro Forma Combined Financial Results of the Company and Carolina Bank

($ in thousands, except share data)		Carolina Bank Only - March 3, 2017-March 31, 2017				Pro Forma Combined Three Months Ended March 31, 2017				Pro Forma Combined Three Months Ended March 31, 2016
Net interest income		$	1,886				38,209				35,966
Noninterest income			503				10,999				7,291
Total revenue			2,389				49,208				43,257

Net income available to common shareholders			210				5,377				7,880

Earnings per common share
Basic						$	0.22				0.33
Diluted							0.22				0.32