First Bancorp
Annual Report 2008

Plain-text annual report

FIRST BANCORP N O B E T T E R P L A C E T O B E 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T F I R S T B A N C O R P | F I N A N C I A L H I G H L I G H T S ($ in thousands except share data) Years Ended December 31, 2008 2007 2006 Change 2007 to 2008 Change 2006 to 2007 S E L E C T E D I N C O M E S T A T E M E N T D A T A Net interest income Provision for loan losses Noninterest income Noninterest expenses Income taxes Net income 9,880 21,107 62,661 13,120 22,005 $ 86,559 P E R S H A R E D ATA Earnings – basic Earnings – diluted Cash dividends declared Market Price: High Low Close Book value Tangible book value $ 1.38 1.37 0.76 20.86 11.25 18.35 13.27 9.18 79,284 5,217 18,473 57,580 13,150 21,810 1.52 1.51 0.76 26.72 16.40 18.89 12.11 8.56 74,536 4,923 14,310 53,198 11,423 19,302 1.35 1.34 0.74 23.90 19.47 21.84 11.34 7.76 S E L E C T E D B A L A N C E S H E E T D A T A (at year end) Assets Loans Deposits Shareholders’ equity $2,750,567 2,211,315 2,074,791 219,868 2,317,249 1,894,295 1,838,277 174,070 2,136,624 1,740,396 1,695,679 162,705 9.2% 89.4% 14.3% 8.8% -0.2% 0.9% -9.2% -9.3% 0.0% -21.9% -31.4% -2.9% 9.6% 7.2% 18.7% 16.7% 12.9% 26.3% 6.4% 6.0% 29.1% 8.2% 15.1% 13.0% 12.6% 12.7% 2.7% 11.8% -15.8% -13.5% 6.8% 10.3% 8.5% 8.8% 8.4% 7.0% R AT I O S Return on average assets Return on average equity Net charge-offs to average loans 0.89% 10.44% 0.24% 1.02% 12.77% 0.16% 1.00% 11.83% 0.11% -13bps -233bps 8 bps 2 bps 94 bps 5 bps N O N F I N A N C I A L D A T A Shares outstanding Number of branches Number of employees – full/part time 16,573,826 74 612/75 14,377,981 70 574/81 14,352,884 68 579/82 F I R S T B A N C O R P | T A B L E O F C O N T E N T S President’s Letter ......................................................................... 2 Board of Directors ..................................................................... 10 Executive Officers ....................................................................... 11 Service Area Map ........................................................................12 Local Advisory Boards ............................................................. 14 First Bancorp and Subsidiaries .............................................18 Financial Summary .....................................................................19 Financial Statements ................................................................22 Independent Auditors’ Report ..............................................24 Shareholder Information ..................................Inside Back Cover 2 | N O B E T T E R P L A C E T O B E 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T 1of33 98% 55,000 74 SA NDLE R O ’ NE ILL 200 8 B ANK & TH R IF T SM -ALL STA RS SOUND ASSET QUALITY S URCH AR GE -FR EE NAT I O NWI DE AND UK AT MS B RANC HE S N O B E T T E R P L A C E T O B E NO BETTER PLACE TO BE | 12 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T F I R S T B A N C O R P | P R E S I D E N T ’ S L E T T E R Dear Friends and Shareholders: I write to you during one of the most difficult economic times this country has ever experienced. We are in the midst of a recession with the economic data getting seemingly worse with each passing day. It appears that the housing market is at the we have been careful to consistently follow heart of this problem. What began with heavy what we believe are sound credit underwriting losses in the sub-prime mortgage market practices for all the loans we make. We also did expanded to become a decline in the overall not chase the high returns of risky investments housing market, which is having a pervasive that have resulted in large losses at many other effect on most aspects of our economy. Our government has been working hard to devise ways to bring us out of this situation, but it is banks. Although we are not immune to general economic conditions, we believe that our conservative operating philosophy has helped likely to be a gradual process. protect us from the worst effects of the current The financial industry has been economic environment. especially hard hit. Events that occurred Because we were largely able to avoid the during 2008 were breathtaking, including types and magnitude of losses experienced the demise of Fannie Mae, Bear Stearns, Lehman Brothers, and Wachovia. People’s confidence in banks became so shaken that in October 2008, the United States Treasury concluded that it had no other option than to begin injecting capital into banks. Although there have been some criticisms with the way this was done, I firmly believe that the actions taken by the Treasury have been beneficial to the financial system and America. Although we were well- capitalized by all regulatory definitions, we participated in the Treasury’s capital purchase program, which I will discuss later in my report. In light of all of the turmoil, First Bancorp has been a safe-haven from the storm. We never entered the sub-prime mortgage market, and by much of the industry, we reported a very profitable year in 2008. For the year, we made $22 million, or $1.37 per diluted share. This was a decrease of only 9.3% from the $1.51 in earnings per share that we reported for 2007. From a performance standpoint, our 2008 return on average assets was 0.89% and our return on average equity was 10.44%. If you are a follower of banks, you know how strong these results are in light of the challenges faced by the banking industry. From a balance sheet perspective, we finished the year with $2.8 billion in assets, an 18.7% increase from 2007, with loans of $2.2 billion and deposits of $2.1 billion. Please see the Financial Summary section of this annual report beginning on page 19 for more discussion of our 2008 results. Jerry L. Ocheltree, President and CEO, First Bancorp and First Bank 2 | N O B E T T E R P L A C E T O B E 2 | N O B E T T E R P L A C E T O B E 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T From a shareholder perspective, I am proud with us their observations and suggestions for that our financial stability allowed us to maintain improvement. This attention to sound loan our dividend rate throughout 2008. We paid underwriting has resulted in our asset quality dividends of $0.76 per share in 2008, which comparing favorably to peers on a consistent was unchanged from 2007. Our intent at the basis. Although we have experienced some beginning of this year was to continue with the recent deterioration in asset quality that is to same rate for 2009. However, consistent with be expected with the decline in the economy, our historically conservative nature amid ever- our asset quality remains sound and continues worsening economic conditions, we felt it was to compare favorably to peers. As of December prudent to conserve capital. Thus, we declared 31, 2008, First Bancorp’s ratio of nonaccrual a lower dividend rate for the first quarter of loans to total loans was 1.20% compared to a 2009, amounting to an annualized rate of $0.32. regulatory peer average of 2.20%. Sound asset We will assess our divided rate every quarter, quality is something that is critical these days, and my hope is that in the near future, as and we will continue to emphasize it. conditions allow, we can increase it from its I hope you agree that First Bancorp’s new level. I am also pleased that our overall performance was strong during 2008. In fact, stock performance for 2008 compared favorably our recent performance was so strong that in to our peers. When you factor in dividends, the September, First Bancorp was recognized by the total return of our stock was a gain of 1.6% in investment banking firm Sandler O’Neill as one 2008. This compares to a decline of 33.8% for of the 33 best performing small-cap banks in the a small company index and a decline of 15.2% nation. We are proud to have been recognized for a peer bank index. Stock return performance with this honor. has been dismal thus far in 2009, both for our stock and the overall market. Although we expect 2009 to be a challenging year, I am optimistic that the American economy will improve soon and stocks will recover. One of the main factors impacting bank Now I would like to discuss some of the other accomplishments for 2008, as well as some things we have planned for the upcoming year. We entered 2008 working to ensure a smooth transition for our April 1 acquisition of Great Pee Dee Bancorp, and its banking stocks these days is asset quality. Asset quality subsidiary Sentry Bank & Trust, which had concerns are what have caused so many been announced in July 2007. Sentry Bank & problems for the banking industry over the Trust, with assets of $211 million, had served past year. We devote substantial time and the citizens of Cheraw, South Carolina since resources to ensure that we minimize the risks 1935 and had more recently expanded to associated with making loans. We have an Florence, South Carolina. Both Cheraw and experienced team of senior lenders who review Florence are in counties that were contiguous and approve each other’s large loans, and we to ones we were already serving. Not only was have an ongoing training program for all of this merger a natural fit for us geographically, our loan officers. Also, on a quarterly basis, we but was also a great fit culturally. John Long, engage a third party loan review firm to review the President of Sentry Bank, and the rest of his samples of our loans, with the firm then sharing team had always treated their customers with N O B E T T E R P L A C E T O B E | 3 N O B E T T E R P L A C E T O B E | 3 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T the same high degree of personalized care that by the US Treasury as a significant and growing we emphasize at First Bank. We also welcomed impediment to economic recovery. With no their Chairman Jim Crawford, who easy solution, in October of 2008 the Treasury has been an asset to our board of directors. announced a plan to purchase preferred stock Another initiative that we worked on throughout 2008 was an effort to increase the company’s capital. We entered 2008 with capital at a level that put us in the “well-capitalized” category by regulatory standards, but with less of a cushion than we were used to having and less than we needed to finance future growth. When this has occurred in past years (as it does for many growing companies), we have been able to access the capital markets and raise capital easily. However, with the economy in steady decline in 2008, the capital markets ceased to operate as they had in the past. Accordingly, we were finding capital sources increasingly scarce. This situation was not just happening to us, but was also occurring at many healthy banks across the nation. Without access to capital to finance growth, many healthy banks, including First Bancorp, were faced with the prospect of reducing their lending activities in order to preserve capital. When healthy banks are not able to lend money normally, the entire economy is negatively affected. As the year progressed, the lack of available capital and its ramifications were identified of healthy banks. By buying preferred stock of healthy banks, the Treasury’s goal was to give those banks the capital needed in order to allow for increased lending. I keep referring to this program as being for healthy banks because that was the stated intent of the US Treasury. These funds were not intended to “bail out” unhealthy banks, but rather only to create a lending stimulus for healthy banks, like First Bancorp. The preferred stock was offered on attractive terms, with a dividend rate of 5% for the first five years, which also provides a reasonable investment return for the US Treasury. Additionally, as part of the program, participating banks were required to issue warrants that allow the Treasury to buy a set amount of each bank’s common stock based on current stock prices for the next 10 years. The primary negatives to the US Treasury’s offer was that participating banks cannot buy back stock or increase their cash dividend for three years. Additionally there was, and continues to be, the fear of increased government regulation for banks accepting these funds. Also, until the funds can be deployed or leveraged into loans or other investments Jerry L. Ocheltree, President and CEO, First Bancorp and First Bank, at left, and David L. Burns, Chairman, First Bancorp 4 | N O B E T T E R P L A C E T O B E 4 | N O B E T T E R P L A C E T O B E 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T yielding more than the 5% dividend rate Also during 2008, we continued to look (which equates to about 8.20% on a pretax for ways to become more efficient. Although basis), earnings per share dilution will occur. our expense ratios compare favorably to peer After careful deliberation, your board of directors elected to apply for $65 million in preferred stock sales to the US Treasury. We were approved by the US Treasury in December 2008 and received the $65 million proceeds on January 9, 2009. This additional capital assures that we can continue to meet the credit needs of the communities we serve in the same manner as we have done for the past 74 years. If you need a loan, I hope you will visit your nearest First Bank branch. We are eager to serve you. The Transaction Account Guarantee Program announced by the FDIC in November 2008 was a related program that was designed to provide depositors with greater confidence in the banking system. Under this program, all bank deposits are guaranteed by the FDIC up to $250,000 through December 31, 2009. Additionally, banks were given the option to pay an additional premium to the FDIC in return for unlimited FDIC insurance on all noninterest- bearing transaction accounts throughout 2009. We elected to participate in this option in order to give our customers the maximum protection possible. Based on conversations that I have had with customers, these government sponsored-programs I have just discussed appear to have had the desired effect of increasing consumer confidence in banks. banks, we know that optimum efficiency is especially important during these economic times. Fortunately, technology is allowing us to cut costs with no impact to our customers, or sometimes a favorable impact. In 2008, we began a pilot program for branch capture technology, which allows our branches to transmit teller transactions over the internet without the expense of a courier physically picking up the documents and driving them to the home office for processing. We expect significant savings related to this program upon its complete implementation in 2009. A similar technology is involved in our remote deposit capture product that is available to our business customers. Remote deposit capture provides business customers with a method to electronically transmit checks received from their customers into their bank account without having to visit a branch. This is an especially valuable service to our customers who are not in close proximity to one of our branches, and it also allows our customers to extend their banking day by providing same day credit for deposits until 5 pm. Furthermore, because the electronic transaction is automated, it is more efficient for our company compared to the customer taking N O B E T T E R P L A C E T O B E | 5 N O B E T T E R P L A C E T O B E | 5 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T their checks to one of our tellers and having to of Great Pee Dee Bancorp, which had one undergo a more manual process. branch in Florence. The opening of a second We also introduced new teller technology in 2008 that reduces paper by producing “virtual tickets,” which replace internal documents and branch should give us better market coverage in this growing city located at the intersection of two large interstate highways. the cumbersome management of this inventory. Another investment that we made in 2008 Furthermore, item processing personnel needs are was in our ability to offer our customers reduced due to the virtual elimination of encoding government-sponsored FHA and VA loans. read failures thereby significantly reducing the These types of loans require a great deal of need for manual processing. This technology expertise, and we have recently made additions further reduces our reliance on couriers, while also reducing data processing fees. We will continue to look for ways to become even more efficient in 2009. One of the biggest cost saving opportunities for us in 2009 relates to our planned April rollout of bank statements delivered over the internet to our customers’ e-mail accounts. This will save us significant postage and supplies costs compared to US Postal delivery. Also, during the second half of 2009, we plan to introduce mobile banking capabilities to our customers. Generally, the more things that to our mortgage loan staff with the required skills. We felt the addition of these products was especially important given the growth in military personnel that we expect in our market areas surrounding Fort Bragg as a result of the Base Realignment and Closure (BRAC) actions approved by Congress in November 2005. While some military bases in other states are closing, the number of military personnel at Fort Bragg is expected to increase as a result of BRAC with a total population increase of approximately 40,000 related to this initiative. We are eager to we can process or deliver electronically, the more serve their banking needs. efficient we will become. While it is important to be efficient, we do not want to miss opportunities for growth, and we will continue to make investments where we We also launched two new deposit products in 2008. First, with deposit safety being a concern of many customers due to the events occurring in the financial industry, we began believe it will benefit our shareholders. In 2008, we opened a full service branch in Fort Chiswell, Virginia. Fort Chiswell is located at the intersection of Interstates 77 & 81, and our branch there is just a few miles away from our branch in Wytheville. This has been a very successful market for us and we were pleased to make this investment. As it relates to 2009 branch expansion, our new branch in Florence, South Carolina is scheduled to open in late March. We entered the Florence market with our acquisition offering our customers the ability to obtain FDIC insurance coverage of up to $50 million by opening a CDARS® deposit account. Now, when a customer deposits a large amount with First Bank, the customer has the option of accessing the CDARS® network, whereby we place the funds into certificates of deposit issued by other banks in the same network in increments less than $100,000 so that both the principal and interest is eligible for complete 6 | N O B E T T E R P L A C E T O B E 6 | N O B E T T E R P L A C E T O B E 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T FDIC protection. As a result, our customers can Savings Club is a fun way to teach that lesson. receive FDIC coverage from many banks, while still working with their local First Bank branch. And we will also continue to provide the best in all areas of community banking in 2009. With Another deposit product we launched in 2008 is aimed at teaching children good savings habits. the possibility that some of our competitors are currently distracted with other matters, we Our Looney Tunes Saving Club is a fun savings believe there is an opportunity right now in program that encourages good savings habits by the marketplace to gain new market share by rewarding children for positive behaviors. For continuing to do what we have always done example, when a child opens a Looney Tunes best – Banking One-on-One. savings account, they receive a New Member Let me conclude this letter by saying farewell Kit complete with membership cards, stickers, pencils and other surprises. Every time a child visits a branch and makes a deposit of any size, they get to select a fun toy from the Looney Tunes Treasure Chest. With consumer debt rising, it’s important that our children and grandchildren learn the importance of saving. The Looney Tunes to Jordan Washburn, who is retiring from our board of directors this year. Jordan joined our board in 1995 upon our acquisition of Central State Bank in High Point, North Carolina. Jordan was critical to the integration of that merger and has provided wise N O B E T T E R P L A C E T O B E | 7 N O B E T T E R P L A C E T O B E | 7 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T counsel in our board room ever since. Jordan proxy statement, and I encourage you to read is also very involved in many charitable causes it closely. On the back of the proxy statement in his community. We’ll miss Jordan’s presence, is a location map for your convenience. I invite and we wish him the best in all of his future you to attend this meeting, which will give you endeavors. Accompanying the mailing of this annual report is our SEC Form 10-K, proxy statement and the notice of our Annual Shareholders Meeting, which is being held at the James an opportunity to meet the management and board of directors of your company, as well as, the opportunity to personally thank Jordan Washburn for his years of service to First Bancorp. H. Garner Conference Center at 3:00 PM on Your support is appreciated, and I welcome May 7, 2009. There is important information regarding your company contained within the your comments and suggestions. Sincerely, Jerry L. Ocheltree March 10, 2009 N O B E T T E R P L A C E T O B E 8 | N O B E T T E R P L A C E T O B E 2 0 0 8 A N N U A L R E P O R T F I R S T B A N C O R P | P E R F O R M A N C E market oppo rtunit y per fom a nce First Bancorp is the 6th largest bank headquartered in North Carolina. TOTAL ASSETS Dollars in millions $2.8 BILLION IN ASSETS First Bancorp has paid dividends every year since its 1987 public offering. DIVIDENDS PER SHARE Dollars $.76 DOLLARS PER SHARE First Bancorp maintained solid profitability, despite a tumultuous year in the financial industry. EARNINGS PER SHARE Dollars 9% DECREASE N O B E T T E R P L A C E T O B E | 9 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T L to R Front Row- Virginia C. Thomasson, Thomas F. Phillips, Jerry L. Ocheltree, David L. Burns, A. Jordan Washburn Back Row- Goldie H. Wallace, George R. Perkins Jr., James G. Hudson Jr., Dennis A. Wicker, Frederick L. Taylor II, James C. Crawford III, Jack D. Briggs, R. Walton Brown, John C. Willis, John F. Burns and Mary Clara Capel F I R S T B A N C O R P | B O A R D O F D I R E C T O R S Jack D. Briggs President of J. Briggs, Inc., Davidson Funeral Home, Inc., Carter Funeral Home, Inc. and Mountain View of Denton, Inc., and Secretary, Piedmont Funeral Home Funeral director and retail furniture merchant R. Walton Brown Executive Vice President of First Bank David L. Burns Chairman, First Bancorp President, Z. V. Pate, Inc. Holding company for agricultural, timber, restaurant and retail sales operations John F. Burns Executive Vice President First Bancorp and First Bank Mary Clara Capel Director of Administration Capel, Inc. Rug manufacturer, importer and exporter James C. Crawford III Investor James G. Hudson Jr. Executive Vice President First Bank (retired) Jerry L. Ocheltree President and CEO First Bancorp and First Bank George R. Perkins Jr. Chairman and CEO Frontier Spinning Mills, LLC Thomas F. Phillips Chairman, First Bank Owner, Phillips Ford 10 | N O B E T T E R P L A C E T O B E Frederick L. Taylor II President Troy Lumber Company Virginia C. Thomasson, CPA Chairman, Montgomery Data Services, Inc. Partner, Holden, Thomasson & Longfellow, P.C. Goldie H. Wallace Investor A. Jordan Washburn Chairman, First Bank Insurance Services, Inc. Retired Dennis A. Wicker Attorney SZD Wicker LPA John C. Willis Investor 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T F I R S T B A N C O R P | E X E C U T I V E O F F I C E R S Jerry L. Ocheltree President and CEO First Bancorp and First Bank David G. Grigg President Montgomery Data Services, Inc. Eric P. Credle Chief Financial Officer Executive Vice President Anna G. Hollers Chief Operating Officer Executive Vice President Secretary Teresa C. Nixon Chief Lending Officer Executive Vice President R. Walton Brown Executive Vice President John F. Burns Executive Vice President Timothy S. Maples Senior Vice President Assistant Secretary Lee C. McLaurin Senior Vice President Controller F I R S T B A N K | R E G I O N A L E X E C U T I V E O F F I C E R S Janet D. Abernethy Senior Vice President Roger S. Gentry Jr. Senior Vice President J. Bradford Mickle Senior Vice President Richard E. Clayton Senior Vice President Jimmy G. Grubbs Senior Vice President Jimmy R. Preslar Senior Vice President David C. Foushee Senior Vice President Michael L. Hardin Senior Vice President Stamey R. Taylor Senior Vice President John S. Long Executive Vice President Charles R. Vance III Senior Vice President A R E A E X E C U T I V E O F F I C E R S R. Glenn Batten Senior Vice President Susie C. Jones Vice President Robert T. Patterson Senior Vice President Frances H. Cagle Senior Vice President Phillip W. Fulghum Senior Vice President Jerry M. Kinlaw Senior Vice President Frank E. Love Senior Vice President H. Dean Martin Senior Vice President Michael W. Vinson Senior Vice President Joseph F. Youngblood Senior Vice President N O B E T T E R P L A C E T O B E | 11 N O B E T T E R P L A C E T O B E | 11 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T F I R S T B A N C O R P | S E R V I C E A R E A M A P L E G E N D 12 | N O B E T T E R P L A C E T O B E 12 | N O B E T T E R P L A C E T O B E First Bank Main Office First Bank BranchesFirst Bank Branches operating as First Bank of VirginiaLoan Production Office First Bank Insurance Services (Troy, Southern Pines) First Bank Investment Services (Troy, Southern Pines, Albemarle)2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T N O B E T T E R P L A C E T O B E | 13 N O B E T T E R P L A C E T O B E | 13 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T F I R S T B A N K | L O C A L A D V I S O R Y B O A R D S 14 | N O B E T T E R P L A C E T O B E ALBEMARLE & RICHFIELDBradford BarringerRichard Clayton Sr.Tony DennisRuby FraleyWilliam HarveyAngela KrolTony LowderDean MartinDavid MullisG. T. Rabe Jr. APEXWilliam GordonJack HunterKarl LackMilton Rogers Jr. ASHEBOROBrooks HedrickKennan HillGilbert IngoldCharles SwiersBillie WilsonBobby Wright BISCOE & CANDORRalph BosticKristy GarnerLarry PreslarTim PrivettVance RichardsonHarold VanDerveer Jr.BROADWAYDonald Andrews Jr.Cecil CameronHenry GreenDonny HunterMatthew JacksonFrank McDonaldKatherine TaylorGary Thomas BRUNSWICK COUNTY (serves Shallotte and Ocean Isle)David KestersonBrad MickleJeffrey MillikenWilliam Smith CHERAW (serves Cheraw and Florence)Robert Bennett Jr.William ButlerJames Crawford IIIHenry Duvall IVMalloy Evans Jr.John LongHerbert Watts DENTONStan BinghamJack BriggsDelbert CranfordLeroy HinesleyPeggy (Dixie) KearnsWanona Smith DILLON COUNTY, SC (serves Dillion and Latta)Carroll AllenGerald Arnette Jr.Walton BrownMcKethan GaddyLafon Legette Jr.Douglas LynnMendel SmithLewis SteppCharles Vance IIIDUPLIN COUNTY (serves Kenansville, Rose Hill and Wallace)Glenn BattenDennis BeasleyAlice BrownRonald CollierRobert Frederick IIJonathan FussellJimmy JacksonRoss PowellLawrence RouseJoseph WallaceKevin Wilson FAIRMONTJames CappsWilliam Greene Jr.Hal Herring Jr.Frank McCreeRonald NyeIsiah TaylorVayda Taylor HARMONYL. A. Anderson Jr.Norman DudleyJo Ellen FoxRobert MooreTeresa Sherrow HARNETT COUNTY (serves Anderson Creek, Angier and Lillington )David AvretteEdgar BainJames BlaylockJames BurginDonald GregoryCharles GriffinDan HoneycuttReginald KellyHarold LassiterEdgar Smith Jr.Thomas StancilStamey TaylorDonald Ray TurlingtonCharles Wellons IIRay Womble Jr.Robert WombleThomas WombleThomas Wood2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T N O B E T T E R P L A C E T O B E | 15 HIGH POINT & ARCHDALEDwight BumgarnerCaroline BurnettMichael ByrdSteve FoleyJack HendrixRyan HoskinsWarren LackeyClayton Miller Jr.Jerry OcheltreeWalter StanleyJordan WashburnJoseph Youngblood KANNAPOLISDallas CampbellMichael HurlbertJeff IsenhourRosena JohnsonBillie OvercashWayne PetreaMelvin RapeReginald Smith LOCUST & POLKTONBetty EskridgeGerald FriedmanDakeita Vanderburg-HortonTimothy HuieLeon HuneycuttRichard JonesJerry JordanAdrian MarbryRobert McCoyPeggy MorganRonald Turner LUMBERTONHerman ChavisMichael HardinEdward HickmanStaley JacksonNancy JessupSusie JonesLacy Koonce Jr.Evelyn PriceBhagirath ShahMAYODANClaude HopperLonnie SechristDennis SparksFrank Vaughn Steve Wall MOORESVILLEJanet AbernethyClyde HowardDean SteinPaul TaylorKevin Vanhoy MT. PLEASANTZeba BarringerRichard Clayton Sr.Max CruseDoris FurrLee KluttzRick LambertDavid LockhartDavid PreddyKay Scott NEW HANOVER COUNTY(serves Leland and Wilmington)Dawn CarterDonna GurganusDavid HoneycuttGerald KinlawBrad MickleDonnie NorrisChad PearsonMatt ScharfWilliam Stanfield IIIShelly WagnerHarold Wells IVNORTH MOORE (serves Bennett, Carthage, Robbins, Seagrove and Seven Lakes)Tammy BarnettStan BeckChristopher BradyFrances CagleWyanne CavinessJohn Frye Sr.James GarnerJohn GarnerRobin GarnerRebecca GilmoreKenneth HillPhyllis LawrenceBernard Routh PEMBROKETimothy BrooksRonald BrownMichael HardinDiane JonesCynthia LocklearEddie Mac LocklearWilliam Oxendine PITTSBOROWilliam ArthursDeborah BrownJoe BurkeFaye Dark David FousheeLinda HarrisJames NordanHazel PuckettRalph RiddleRouse Wilson2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T F I R S T B A N K | L O C A L A D V I S O R Y B O A R D S 16 | N O B E T T E R P L A C E T O B E ROCKINGHAMGeorgia CagleJim CoxJuanita CoxBryan LeggettJimmy MaskeJesse Spencer SALISBURYJanet AbernethyBradley BostDonald Bost Sr.Millie CressWilliam FurrDarrell HancockWilliam MasonJohn PorterRachel RossHarry Welch Jr.Jane Welch SANFORDRex BrownStewart ForbesDavid FousheeTeresa NixonDonald OldhamGeorge Perkins Jr.Ronald PerkinsonHal PerryAngela PooleLloyd Tice Jr.James WickerClement WilliamsJeffrey Yow SCOTLAND COUNTY (serves Laurel Hill, Laurinburg and Maxton)Clifton BuieDavid BurnsPaul DavisRonald GibsonT. G. Gibson IIIBetty HastyR. M. HendersonHyder Massey Jr.Charles Nichols Jr.Jimmy PreslarFrank Roofe IIIMichael VinsonMark WardAndrew Williamson Jr. SOUTH MOORE (serves Aberdeen, Pinebluff, Pinehurst, Southern Pines and Vass)Allan BeckHugh BinghamCharles BoyerE. E. BraffordJohn BurnsFelton CapelHenry Clayton Lori FosterBob FriesenPhilip FulghumJames GarnerRoger GentryStewart McFadyenMichael McMillanCharles McWilliamsMalcolm OwingsGeorge ParkerWilliam SamuelsRobert SpringerEdward Taws Jr.Lynette Williams ST. PAULS Tim FergusonClaude Fulghum Jr.Fred Gibson Jr.Teresa KashnerJohn OdumLloyd Williams THOMASVILLEThomas BallardJosephine CitrinHenry DarrJames Hudson Jr.John HunnicuttStuart KennedyEsmail Nikouyeh Milton Riley Jr.Michael SandersWilliam SlateJohn Todd TROYDavid BrittHilton Cochran Sr.Winston Dozier Jr.Rick HarrisJerry HolderRosemary HuntleyWilliam ManessBobby MorrisJimmy Preslar2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T F I R S T B A N K O F V I R G I N I A N O B E T T E R P L A C E T O B E | 17 COMMUNITY SERVICE ADVISORY BOARDFelton Capel, ChairmanJanet AbernethyRalph BosticFlorence BrownDavid BrutonJesse CapelRichard Clayton Sr. David FousheeJames GarnerRoger GentryJim GrubbsMichael HardinAndres HernandezTravis JacksonDiane JonesJohn LongLouise MackRoxanne MclverBrad MickleAnn MoffittTeresa NixonJerry OcheltreeJimmy PreslarWilliam RobertsStamey TaylorCharles Vance IIIChanaka Yatawara PRIMER BANCO ADVISORY BOARDDavid BrutonHeriberto Corral-LopezVictor DauAndres HernandezJorge Antonio Mendez- ContrerasJimmy PreslarDaniel RezaIrma RobledoIsai RobledoLuis RodriguezRicardo RomeroMatthew RothbeindJoe YoungbloodLOCAL ADVISORY BOARDSABINGDONJanet BerryJohn CarricoSusan ForknerJim GrubbsAndrew HargrovesJ. W. Kiser RADFORDWilliam Bishop Jr.Darryl GillespieFlorine GrahamBrad HarveyJeffrey IrbyJeffrey Price WYTHEVILLEDavid CarpenterRobert Fowlkes Jr.Jim GrubbsGeorge Johnstone Sr.Stanly King Jr. Lanny LindamoodThomas LovelaceJerry OcheltreeCarolyn RudzinskiBarbara ShannonAmanda Brewer-SmithPhyl SnappCharles Stanley III2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T F I R S T B A N C O R P & S U B S I D I A R I E S F I R S T B A N C O R P 341 N. Main Street Troy, NC 27371-0508 Subsidiaries of First Bancorp F I R S T B A N K 341 North Main Street Troy, NC 27371-0508 M O N TG O M E R Y D ATA S E R V I C E S , I N C . 355 Bilhen Street Troy, NC 27371-0627 Subsidiary of First Bank F I R S T B A N K I N S U R A N C E S E R V I C E S , I N C . 580 South West Broad Street Southern Pines, NC 28388 1030 Albemarle Road Troy, NC 27371 David L. Burns Chairman Thomas F. Phillips Chairman Jerry L. Ocheltree President and Chief Executive Officer Jerry L. Ocheltree President and Chief Executive Officer Virginia C. Thomasson Chairman David G. Grigg President Fred M. Thompson Senior Vice President Bradley Ferree IT Network Officer A. Jordan Washburn Chairman Jerry L. Ocheltree President Phyllis A. Stevenson Assistant Vice President Stuart F. Fields Vice President Jeffrey A. Morris Vice President Bobby R. Morris Assistant Vice President L to R, Virginia C. Thomasson, Chairman, Montgomery Data Services, Inc., A. Jordan Washburn, Chairman, First Bank Insurance Services, Inc., Jerry L. Ocheltree, President and CEO, First Bancorp and First Bank, 18 | N O B E T T E R P L A C E T O B E 18 | N O B E T T E R P L A C E T O B E David L. Burns, Chairman, First Bancorp, and Thomas F. Phillips, Chairman, First Bank 2 0 0 8 A N N U A L R E P O R T F I N A N C I A L S U M M A R Y The following is a brief summary of our interest income when comparing 2008 to 2007. financial results for 2008. The final paragraph Net interest income amounted to $86.6 million on page 20 contains information on where to in 2008, a 9.2% increase from 2007. Also, during find a more detailed analysis. the second, third and fourth quarters of 2008, we Our net income for 2008 was $22.0 million, or $1.37 per diluted share, compared to net income of $21.8 million, or $1.51 per diluted recorded non-cash net interest income purchase accounting adjustments related to the Great Pee Dee acquisition totaling $366,000 in each quarter, share, reported for 2007, a decrease of 9.3% in which increased net interest income. The largest earnings per share. The decline in earnings per of the adjustments relates to recording the Great share was primarily due to a higher provision Pee Dee time deposit portfolio at fair market for loan losses associated with a decline in value. This adjustment was $1.1 million and is asset quality and a lower net interest margin being amortized to reduce interest expense over largely caused by the sharp decrease in interest a total of eleven months, or $100,000 per month, rates that occurred during the year. until March 2009. The 2008 earnings reflect the impact of the The impact of the growth in loans and acquisition of Great Pee Dee Bancorp, which deposits on net interest income was partially had $213 million in total assets as of the offset by a decline in our net interest margin acquisition date of April 1, 2008, and resulted (tax-equivalent net interest income divided by in the issuance of 2,059,091 shares of First average earning assets). Our net interest margin Bancorp common stock. Key performance ratios for 2008 include: • Return on average assets of 0.89% • Return on average equity of 10.44% • Net charge-offs to average loans of 0.24% for 2008 was 3.74% compared to 4.00% for 2007. Our net interest margin was negatively impacted by the Federal Reserve lowering interest rates by a total of 500 basis points from September 2007 to December 2008. When interest rates are lowered, our net interest • Nonperforming assets to total assets at margin declines, at least temporarily, as most period end of 1.29% of our adjustable rate loans reprice downward Total assets at December 31, 2008 amounted immediately, while rates on our customer to $2.8 billion, 18.7% higher than a year earlier. time deposits are fixed, and thus do not adjust Total loans at December 31, 2008 amounted downward until they mature. to $2.2 billion, a 16.7% increase from a year earlier, and total deposits amounted to $2.1 During the fourth quarter of 2008, the Federal Reserve announced a series of interest billion at December 31, 2008, a 12.9% increase rate cuts – a 50 basis point cut on October 8, from a year earlier. A significant portion of the 2008 growth was due to the acquisition of Great Pee Dee Bancorp, which had $184 million in loans, $148 million in deposits, and $211 million in assets on the merger date. 2008, another 50 basis point cut on October 30, 2008, and a 75 basis point cut on December 16, 2008, bringing interest rates to historic lows. As a result of these interest rate cuts, our net interest margin of 3.70% realized for the fourth The growth in loans and deposits was the quarter of 2008 was a nine basis point decrease primary reason for the increase in our net from the margin realized in the third quarter N O B E T T E R P L A C E T O B E | 19 N O B E T T E R P L A C E T O B E | 19 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T F I N A N C I A L S U M M A R Y ( C O N T. ) of 2008. As a continuing result of these rate growth, including the April 1, 2008 acquisition cuts, we expect that our net interest margin will of Great Pee Dee. Additionally, we recorded decline further in the first quarter of 2009. FDIC insurance expense of $1,154,000 in 2008 Our provision for loan losses for 2008 was $9,880,000 compared to $5,217,000 recorded in 2007. The higher provision in 2008 was primarily related to negative trends in asset quality. Although we have no sub-prime exposure, the current economic environment has resulted in an increase in our delinquencies and classified assets. At December 31, 2008, our nonperforming assets were $35.4 million compared to $10.8 million at December 31, 2007. Our nonperforming assets to total assets ratio was 1.29% at December 31, 2008 compared to 0.47% at the previous year end. Our ratio of net charge-offs to average loans was 0.24% in 2008 compared to 0.16% for 2007. Although our asset quality ratios discussed above reflect unfavorable trends, they compare favorably to those typical of our peers based on public information available. Noninterest income for 2008 amounted to $21.1 million, a 14.3% increase over 2007. The positive variance primarily relates to increases in service charges on deposit accounts. These higher service charges were primarily associated with the expansion of the availability of the customer overdraft protection program in the fourth quarter of 2007 to include debit card purchases and ATM withdrawals. Previously the overdraft protection program, in which we charge a fee for honoring payments on overdrawn accounts, only applied to written checks. compared to $100,000 in 2007 as a result of the FDIC recently beginning to charge for FDIC insurance again. Based on recently published FDIC guidance, our annual FDIC insurance expense is expected to increase by $1.8 million in 2009. In addition to the higher annual premiums for 2009, on February 27, 2009 the FDIC announced plans to charge a special one-time assessment to all banks in the second quarter of 2009 in order to replenish its reserves. Unless the proposal is changed, the special assessment is expected to amount to $4 million for our company. Also, based on preliminary actuarial reports, we expect our pension expense to increase by $1.3 million in 2009, primarily as a result of investment losses experienced by the pension plan’s assets in 2008. During both 2007 and 2008, our effective tax rate was approximately 37%-38%. The foregoing discussion and financial information in this report is only intended to provide a general overview of our financial position and results of operations. In order to fully analyze and understand our financial position and results of operations, you’ll want to review the Form 10-K, which includes Management’s Discussion and Analysis. For shareholders, the Form 10-K is being mailed with this report. For other interested parties, you can access our Form 10-K through the Company’s website at www.FirstBancorp.com or through the SEC EDGAR database at www.sec. Noninterest expenses for 2008 amounted gov or if you’d prefer, contact investor relations to $62.7 million, an 8.8% increase from 2007. at First Bancorp - you’ll find contact information This increase is primarily attributable to our on the inside of the back cover. 20 | N O B E T T E R P L A C E T O B E 20 | N O B E T T E R P L A C E T O B E 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T S E L E C T E D C O N S O L I D AT E D F I N A N C I A L D ATA ($ in thousands, except per share data) Year Ended December 31, 2008 2007 2006 2005 2004 I N C O M E S TAT E M E N T D ATA Interest income Interest expense Net interest income Provision for loan losses Net interest income after provision Noninterest income Noninterest expense Income before income taxes Income taxes Net income Earnings per share – basic Earnings per share – diluted Shares outstanding – basic Shares outstanding – diluted P E R S H A R E D ATA Cash dividends declared Dividend payout ratio Market price High Low Close Stated book value Tangible book value $ 147,862 61,303 86,559 9,880 76,679 21,107 62,661 35,125 13,120 $ 22,005 148,942 69,658 79,284 5,217 74,067 18,473 57,580 34,960 13,150 21,810 1.38 1.37 1.52 1.51 129,207 54,671 74,536 4,923 69,613 14,310 53,198 30,725 11,423 19,302 1.35 1.34 101,429 32,838 68,591 3,040 65,551 15,004 47,636 32,919 16,829 16,090 1.14 1.12 81,593 20,303 61,290 2,905 58,385 15,864 43,717 30,532 10,418 20,114 1.42 1.40 15,980,533 14,378,279 14,468,974 16,027,144 14,294,753 14,435,252 14,165,992 14,360,032 14,138,513 14,395,152 $ 0.76 55.07% 0.76 50.00% 0.74 54.81% 0.70 61.40% 0.66 46.48% $ 20.86 11.25 18.35 13.27 9.18 26.72 16.40 18.89 12.11 8.56 S E L E C T E D B A L A N C E S H E E T D ATA ( AT Y E A R E N D ) Total assets Loans Allowance for loan losses Intangible assets Deposits Shareholders’ equity $ 2,750,567 2,211,315 29,256 67,780 2,074,791 219,868 2,317,249 1,894,295 21,324 51,020 1,838,277 174,070 S E L E C T E D AV E R A G E B A L A N C E S Assets Loans Earning assets Deposits Interest-bearing liabilities Shareholders’ equity $2,484,296 2,117,028 2,329,025 1,985,332 2,019,256 210,810 2,139,576 1,808,219 1,998,428 1,780,265 1,726,002 170,857 23.90 19.47 21.84 11.34 7.76 2,136,624 1,740,396 18,947 51,394 1,695,679 162,705 1,922,510 1,623,188 1,793,811 1,599,575 1,537,385 163,193 27.88 19.32 20.16 10.94 7.48 29.73 18.47 27.17 10.54 7.04 1,801,050 1,482,611 15,716 49,227 1,494,577 155,728 1,638,913 1,367,053 14,717 49,330 1,388,768 148,478 1,709,380 1,422,419 1,593,554 1,460,620 1,359,744 154,871 1,545,332 1,295,682 1,434,425 1,306,404 1,232,130 146,683 A S S E T Q U A L I T Y R AT I O S Net charge-offs to average loans Nonperforming loans to total loans at year end Nonperforming assets to total assets at year end Allowance for loan losses to total loans at year end Allowance for loan losses to nonperforming 0.24% 1.38% 1.29% 1.32% 0.16% 0.41% 0.47% 1.13% 0.11% 0.39% 0.39% 1.09% 0.14% 0.11% 0.17% 1.06% 0.14% 0.27% 0.32% 1.08% loans at year end 95.62% 272.93% 276.11% 950.76% 395.19% P E R F O R M A N C E A N D O T H E R R AT I O S Return on average assets Return on average equity Net interest margin (taxable equivalent basis) Efficiency ratio (taxable equivalent basis) Shareholders’ equity to total assets at year end Tangible common equity to tangible assets at year end Loans to deposits at year end 0.89% 10.44% 3.74% 57.85% 7.99% 5.67% 106.58% 1.02% 12.77% 4.00% 58.57% 7.51% 5.43% 103.05% 1.00% 11.83% 4.18% 59.54% 7.62% 5.34% 102.64% 0.94% 10.39% 4.33% 56.68% 8.65% 6.08% 99.20% 1.30% 13.71% 4.31% 56.32% 9.06% 6.24% 98.44% N O B E T T E R P L A C E T O B E | 21 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T C O N D E N S E D C O N S O L I D AT E D B A L A N C E S H E E T S ($ in thousands) A S S E T S Cash and due from banks, noninterest bearing Due from banks, interest bearing Federal funds sold Total cash and cash equivalents Securities Presold mortgages in process of settlement Loans Less: Allowance for loan losses Net loans Premises and equipment Accrued interest receivable Intangible assets Other Total assets L I A B I L I T I E S Deposits: Demand Savings, NOW, and money market Time deposits of $100,000 or more Other time deposits Total deposits Repurchase agreements Borrowings Other liabilities Total liabilities S H A R E H O L D E R S ’ E Q U I T Y Common stock Retained earnings Accumulated other comprehensive income (loss) Total shareholders’ equity Total liabilities and shareholders’ equity December 31, 2008 2007 $ 88,015 105,191 31,574 224,780 187,183 423 2,211,315 (29,256) 2,182,059 52,259 12,653 67,780 23,430 $2,750,567 $ 229,478 664,754 592,192 588,367 2,074,791 61,140 367,275 27,493 2,530,699 96,072 131,952 (8,156) 219,868 $2,750,567 31,455 111,591 23,554 166,600 151,754 1,668 1,894,295 (21,324) 1,872,971 46,050 12,961 51,020 14,225 2,317,249 232,141 558,393 479,176 568,567 1,838,277 39,695 242,394 22,813 2,143,179 56,302 122,102 (4,334) 174,070 2,317,249 22 | N O B E T T E R P L A C E T O B E 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T C O N D E N S E D C O N S O L I D AT E D S TAT E M E N T S O F I N C O M E ($ in thousands, except per share data) I N T E R E S T I N C O M E Interest and fees on loans Interest on investment securities Other, principally overnight investments Total interest income I N T E R E S T E X P E N S E Savings, NOW and money market Time deposits of $100,000 or more Other time deposits Borrowings and repurchase agreements Total interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses N O N I N T E R E S T I N C O M E Service charges on deposit accounts Other service charges, commissions and fees Fees from presold mortgage loans Commissions from sales of investment products Data processing fees Securities gains (losses) Other gains (losses) Total noninterest income N O N I N T E R E S T E X P E N S E S Personnel expense Occupancy and equipment related expense Intangibles amortization Other operating expenses Total noninterest expenses Income before income taxes Income taxes Net income E A R N I N G S P E R S H A R E : Basic Diluted Weighted average common shares outstanding: Basic Diluted Year Ended December 31, 2007 2006 2008 $138,878 7,973 1,011 147,862 9,736 21,308 22,197 8,062 61,303 86,559 9,880 76,679 13,535 4,842 869 1,552 167 (14) 156 21,107 35,446 8,280 416 18,519 62,661 35,125 13,120 $22,005 139,323 7,014 2,605 148,942 10,368 22,687 26,498 10,105 69,658 79,284 5,217 74,067 9,988 5,158 1,135 1,511 204 487 (10) 18,473 33,670 7,604 374 15,932 57,580 34,960 13,150 21,810 120,694 6,231 2,282 129,207 7,094 17,662 21,276 8,639 54,671 74,536 4,923 69,613 8,968 4,578 1,062 1,434 162 205 (2,099) 14,310 30,678 6,866 322 15,332 53,198 30,725 11,423 19,302 $1.38 1.37 1.52 1.51 1.35 1.34 15,980,533 16,027,144 14,378,279 14,468,974 14,294,753 14,435,252 N O B E T T E R P L A C E T O B E | 23 2 0 0 8 A N N U A L R E P O R T I N D E P E N D E N T A U D I TO R S ’ R E P O R T R E P O R T O F I N D E P E N D E N T R E G I S T E R E D P U B L I C A C C O U N T I N G F I R M The Board of Directors First Bancorp and Subsidiaries: We have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of First Bancorp and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008 (not presented herein), and in our report dated March 10, 2009, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheets and condensed consolidated statements of income (included on pages 22 and 23 herein) is fairly stated, in all material respects, in relation to the consolidated financial statements from which it has been derived. Charlotte, North Carolina March 10, 2009 F O R WA R D L O O K I N G S TAT E M E N T S The discussions in this annual report contain statements that could be deemed 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. 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 opinions or judgments of the Company and its management about future events. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of the Company’s customers, the Company’s level of success in integrating acquisitions, actions of government regulators, the level of market interest rates, and general economic conditions. For additional information about the factors that could affect the matters discussed in this paragraph, see the “Risk Factors” section of the Company’s most recent report on Form 10-K. 24 | N O B E T T E R P L A C E T O B E 2 0 0 8 A N N U A L R E P O R T 2 0 0 8 A N N U A L R E P O R T S H A R E H O L D E R I N F O R M AT I O N C O R P O R A T E O F F I C E S H A R E H O L D E R S E R V I C E S 341 North Main Street P. O. Box 508 Troy, NC 27371 910-576-6171 800-548-9377 Fax 910-576-0662 www.FirstBancorp.com I N D E P E N D E N T A U D I T O R S Elliott Davis, PLLC Charlotte, NC C O R P O R A T E C O U N S E L Robinson, Bradshaw & Hinson, PA Charlotte, NC T R A N S F E R A G E N T Registrar & Transfer Co., Inc. 10 Commerce Drive Cranford, NJ 07016-3572 800-368-5948 www.rtco.com S H A R E H O L D E R S ’ M E E T I N G The Annual Meeting of Shareholders will be held on May 7, 2009 at 3:00 PM at the James H. Garner Conference Center, 211 Burnette Street, Troy, North Carolina. C O M M O N S T O C K I N F O R M A T I O N The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol FBNC. There were 16,573,826 shares outstanding as of December 31, 2008 with 2,747 shareholders of record and approximately 4,000 additional shareholders that held their shares in “street name.” First Bancorp now offers online access to your First Bancorp Stock Account, including your account balance, certificate history, dividend reinvestment plan information and more. Choose Investor Relations at www.FirstBancorp.com and select Shareholder Login. First Bancorp now offers online access to all financial publications, including annual reports and quarterly reports filed with the Securities and Exchange Commission, at www.FirstBancorp.com. Choose Investor Relations and select SEC Filings. For more information or shareholder assistance, call us toll-free at 800-548-9377 and ask for Shareholder Services. C O P I E S O F F O R M 1 0 - K Copies of the First Bancorp Annual Report on Form 10-K filed with the Securities and Exchange Commission may be obtained at no cost by contacting: Investor Relations Anna Hollers P. O. Box 508 Troy, NC 27371-0508 800-548-9377 or by visiting our corporate website at www.FirstBancorp.com D I V I D E N D R E I N V E S T M E N T Registered holders of First Bancorp stock are eligible to participate in the Company’s Dividend Reinvestment Plan, a convenient and economical way to purchase additional shares of First Bancorp common stock without payment of brokerage commissions. For an information folder and authorization form, or to receive additional information on this plan, contact: D I R E C T D E P O S I T I N V E S T O R R E L A T I O N S With Direct Deposit, shareholders may enjoy the convenience of having dividends directly deposited into their checking or savings account. There is no cost for this service. Shareholders may obtain further information about Direct Deposit by calling us toll-free at 800-548-9377 and asking for Shareholder Services. Anna Hollers Investor Relations 800-548-9377 or Registrar & Transfer Co., Inc. Dividend Reinvestment Section 10 Commerce Drive Cranford, NJ 07016-3572 800-368-5948 or info@rtco.com N O B E T T E R P L A C E T O B E | 25 FIRST BANCORP N O BET TER PLACE TO B E 341 NORTH MAIN STREET POST OFFICE BOX 508 TROY, NC 27371-0508 WWW.FIRSTBANCORP.COM 

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