First Bancorp Extends Net Interest Margin Expansion

The Tip Desk · October 27, 2026 · 4 min read

Net interest income reached $114.8 million as the margin widened 4 bps to 3.75% and loans rose 5.1% annualized.

First Bancorp (FBNC), the Southern Pines, North Carolina bank holding company with $13.2 billion of assets, posted net interest income of $114.8 million for the three months ended September 30, 2026, up 3.2% from $111.3 million in the linked quarter and 12.0% from $102.5 million a year earlier.

The company said the increase came from additional loan volume, a higher loan yield, and one extra earning day versus the second quarter. Net interest margin expanded 4 bps to 3.75% from 3.71% in the linked quarter and 29 bps from 3.46% a year earlier. That followed a 4 bps expansion in the second quarter, when NIM reached 3.71% from 3.67% in the first quarter.

Loan yield rose 8 bps to 5.75% from 5.67% in the linked quarter and 6 bps from 5.69% a year earlier. Securities yield rose 5 bps to 2.76% from 2.71%. The company attributed the linked-quarter NIM expansion to a $152.6 million increase in average loans and the 8 bps loan-yield rise, with taxable securities contributing an additional $1.0 million from higher balances and yields. Offsetting those gains, the cost of interest-bearing deposits rose 7 bps on $83.5 million of additional average balances; money-market balances increased $135.2 million and the cost of those deposits rose 7 bps. Loans were 74.3% of average interest-earning assets, up from 70.4% a year earlier, while securities fell to 22.5% and short-term investments to 3.1%.

Total cost of funds increased 5 bps to 1.39% from 1.34% in the linked quarter and decreased 12 bps from 1.51% a year earlier. Cost of total deposits rose 4 bps to 1.35% from 1.31% and fell 11 bps from 1.46%. The company said the linked-quarter rise in deposit cost was partly a result of a Federal Reserve rate increase during the quarter.

Period-end loans were $9.1 billion, up $116.2 million, or 5.1% annualized, from June 30, 2026 and $685.7 million, or 8.1%, from September 30, 2025. Average deposits were $11.1 billion, up $103.8 million from the linked quarter and $263.8 million from the like quarter. Noninterest-bearing checking was $3.6 billion, or 33% of deposits. Period-end total deposits were $11.1 billion, up $41.4 million, or 1.5% annualized, from June 30, 2026 and $245.1 million, or 2.3%, from September 30, 2025. The loan-to-deposit ratio was 81.8%.

Net income was $51.3 million, or $1.24 a share, compared with $50.5 million, or $1.22 a share, in the second quarter and $20.4 million, or $0.49 a share, in the third quarter of 2025. Adjusting for a $27.9 million securities-loss earnback in the third quarter of 2025, adjusted diluted earnings were $1.01 a share in that year-ago period.

Noninterest expenses were $64.0 million, up $1.2 million, or 2.0%, from the linked quarter, driven by a $1.0 million increase in personnel expense and $0.5 million of merger and acquisition expenses related to the pending Carolina Bank acquisition, scheduled to close in early 2027. The efficiency ratio was 49.09%, compared with 49.12% in the linked quarter. Noninterest income was $15.1 million, down $0.9 million from the linked quarter, primarily a $0.9 million decrease in other income, net.

The provision for credit losses was $1.3 million, up from $1.2 million in the linked quarter and down from $3.4 million a year earlier. The company said the provision was driven by net charge-offs of $2.1 million, partially offset by improved economic factors and reversal of the remaining incremental reserve for potential exposure from Hurricane Helene. The allowance for credit losses decreased $0.7 million to $124.2 million, or 1.36% of loans. Annualized net charge-offs were 0.09% of average loans, up from 0.04% in the linked quarter and down from 0.14% a year earlier. Nonperforming assets were $45.0 million, or 0.34% of assets, consistent with June 30, 2026.

Common equity tier 1 capital was 14.26% at September 30, 2026, up from 14.09% at June 30, 2026. Total risk-based capital was 16.22%, up 0.16% from the linked quarter. Tangible common equity to tangible assets was 9.73%, down 10 bps from 9.83%. Cash dividends declared were $0.24 a share, matching the second quarter.

Chairman and CEO Richard H. Moore said the company remained confident in finishing the year on a strong note and looked forward to welcoming the Carolina Bank team.