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Acquisitions (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Schedule of Business Acquisitions

This acquisition was accounted for using the purchase method of accounting for business combinations, and accordingly, the assets and liabilities of Asheville Savings Bank were recorded based on estimates of fair values as of October 1, 2017. The Company was able to change its valuations of acquired Asheville Savings Bank assets and liabilities for up to one year after the acquisition date by recording measurement period adjustments. The table below is a condensed balance sheet disclosing the amount assigned to each major asset and liability category of Asheville Savings Bank on October 1, 2017, and the related fair value adjustments recorded by the Company to reflect the acquisition. The $88.7 million in goodwill that resulted from this transaction is non-deductible for tax purposes.

($ in thousands)	As Recorded by Asheville Savings Bank				Initial Fair Value Adjustments				Measurement Period Adjustments			As Recorded by First Bancorp
Assets
Cash and cash equivalents	$	41,824			—				—			41,824
Securities	95,020				—				—			95,020
Loans, gross	617,159				(9,631		)	(a)	—			606,180
					(1,348		)	(b)	—
Allowance for loan losses	(6,685		)		6,685			(c)	—			—
Presold mortgages	3,785				—				—			3,785
Premises and equipment	10,697				9,857			(d)	—			20,554
Core deposit intangible	—				9,760			(e)	120		(i)	9,880
Other	35,944				(5,851		)	(f)	(777	)	(j)	29,316
Total	797,744				9,472				(657	)		806,559
Liabilities
Deposits	$	678,707			430			(g)	—			679,137
Borrowings	20,000				—				—			20,000
Other	8,943				298			(h)	(380	)	(k)	8,861
Total	707,650				728				(380	)		707,998
Net identifiable assets acquired												98,561
Total cost of acquisition
Value of stock issued					$	169,299
Cash paid in the acquisition					17,939
Total cost of acquisition												187,238
Goodwill recorded related to acquisition of Asheville Savings Bank												$	88,677

Explanation of Fair Value Adjustments

(a) This fair value adjustment represents the amount necessary to reduce performing loans to their fair value due to interest rate factors and credit factors. Assuming the loans continue to perform, this amount will be amortized to increase interest income over the remaining lives of the related loans.

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

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

(d) 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.

(e) 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 is being amortized as expense on an accelerated basis over seven years.

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

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

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

(i) This fair value adjustment relates to a change in the final amount of the core deposit intangible asset from the amount originally estimated.

(j) This fair value adjustment relates to the write-down of a foreclosed property based on an updated appraisal and the related tax deferred tax asset adjustment.

(k)

This fair value adjustment was recorded to adjust the tax liability assumed on the acquisition date based on updated information.

This acquisition was accounted for using the purchase method of accounting for business combinations, and accordingly, the assets and liabilities of Carolina Bank were recorded based on estimates of fair values as of March 3, 2017. The Company was able to change its valuations of acquired Carolina Bank assets and liabilities for up to one year after the acquisition date by recording measurement period adjustments. The table below is a condensed balance sheet disclosing the amount assigned to each major asset and liability category of Carolina Bank on March 3, 2017, and the related fair value adjustments recorded by the Company to reflect the acquisition. The $66.5 million in goodwill that resulted from this transaction is non-deductible for tax purposes.

($ in thousands)	As Recorded by Carolina Bank				Initial Fair Value Adjustments				Measurement Period 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)	146		(l)	497,522
					(2,715		)	(d)	—
Allowance for loan losses	(5,746		)		5,746			(e)	—			—
Premises and equipment	17,967				4,251			(f)	(319	)	(m)	21,899
Core deposit intangible	—				8,790			(g)	—			8,790
Other	34,976				(4,804		)	(h)	757		(n)	30,929
Total	683,852				5,536				584			689,972
Liabilities
Deposits	$	584,950			431			(i)	—			585,381
Borrowings	21,855				(2,855		)	(j)	(262	)	(o)	18,738
Other	12,855				225			(k)	(444	)	(p)	12,636
Total	619,660				(2,199		)		(706	)		616,755
Net identifiable assets acquired												73,217
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												$	66,540

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. Assuming the loans continue to perform, 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 is being 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 securities was less than the current interest rate on similar instruments. This amount is being 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.

(l) This fair value adjustment was a miscellaneous adjustment to increase the initial fair value of gross loans.

(m) This fair value adjustment relates to miscellaneous adjustment to decrease the initial fair value of premises and equipment.

(n) This fair value adjustment relates to changes in the estimate of deferred tax assets/liabilities associated with the acquisition and a miscellaneous adjustment to decrease the initial fair value of foreclosed real estate acquired in the transaction based on newly obtained valuations.

(o) This fair value adjustment relates to miscellaneous adjustments to decrease the initial fair value of borrowings.

(p)

This fair value adjustment related to a change in the estimate of a contingent liability.

Pro Forma Combined Financial Results

The following unaudited pro forma financial information presents the combined results of the Company and Asheville Savings Bank as if the acquisition had occurred as of January 1, 2016, after giving effect to certain adjustments, including amortization of the core deposit intangible, and related income tax effects. The pro forma financial information does not necessarily reflect the results of operations that would have occurred had the Company and Asheville Savings Bank constituted a single entity during such period.

    

($ in thousands, except share data)	Pro Forma Combined Twelve Months Ended December 31, 2017
Net interest income	$	183,996
Noninterest income	54,523
Total revenue	238,519
Net income available to common shareholders	51,600
Earnings per common share
Basic	$	1.79
Diluted	1.78

The following unaudited pro forma financial information presents the combined results of the Company and Carolina Bank as if the acquisition had occurred as of January 1, 2016, after giving effect to certain adjustments, including amortization of the core deposit intangible, and related income tax effects. The pro forma financial information does not necessarily reflect the results of operations that would have occurred had the Company and Carolina Bank constituted a single entity during such period.

    

($ in thousands, except share data)	Pro Forma Combined Year Ended December 31, 2017
Net interest income	$	168,759
Noninterest income	50,098
Total revenue	218,857
Net income available to common shareholders	49,907
Earnings per common share
Basic	$	1.93
Diluted	1.92

X

- Definition

Tabular disclosure of pro forma results of operations for a material business acquisition or series of individually immaterial business acquisitions that are material in the aggregate.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (h)(2)
-URI http://asc.fasb.org/extlink&oid=79982066&loc=d3e1392-128463

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 2
-Subparagraph (h)(3)
-URI http://asc.fasb.org/extlink&oid=79982066&loc=d3e1392-128463

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X

- Definition

Tabular disclosure of a material business combination completed during the period, including background, timing, and recognized assets and liabilities. This table does not include leveraged buyouts.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=79982066&loc=d3e1486-128463

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-Name Accounting Standards Codification
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