First Bancorp, Inc. (FBNC, $43.86): “First Choice for a Great Bank”
By: Ben L’Empereur,
AIM Student at Marquette University
Summary
- First
Bancorp (NC) (NASDAQ:FBNC) ) is a regional bank holding company that
engages in the activities of accepting deposits and making loans primarily in North
Carolina and Northeastern South Carolina.
- The bank has weathered the economic fallout of the pandemic well, beating pre-pandemic quarterly performance in 2021.
- On September 15th, FBNC announced a cash dividend of $0.20 per share, an 11.1% increase from the dividend rate from last year at this time.
- On September 17th, shareholders approved an acquisition of Select Bancorp which is expected to close in the fourth quarter of 2021.
- AUM have grown more than $1 billion since being added to the AIM Small Cap Fund in March 2021.
Key
points:
First Bancorp, Inc. still has a room
to grow to fulfill the original investment thesis and max out their growth
potential. FBNC is committed to growing their footprint in the Carolina region.
Their acquisition of Select Bancorp (SLCT) is a keen indication of this strategy.
SLCT has 22 branches throughout North and South Carolina. With the addition of
these 22 branches, First Bancorp will now have 124 branches in these areas.
Not only is FBNC’s footprint in
this region growing, so is the population. Over the past decade, the Charlotte
region grew by 16.3%, outgrowing North Carolina as a whole (9.5%). The Charlotte
area is expected to grow another 50% by 2050. This huge influx of people
presents opportunities for FBNC to capture more customers moving into the area.
The risk associated with
investing in banks due to the pandemic have also started to subside as well.
Last year at this time, FBNC has a provision for credit loss of $19.3 million.
This year, that number is only at $1.9 million. With interest income and fee
income expected to grow slightly this year, this reduction in provision for
credit loss should offer a nice increase to their bottom line.
FBNC also realizes the importance
that technology has in the banking industry today. In 2020, they made much
needed updates to their online and mobile banking applications, making access
and the user experience more beneficial for their customers. This investment in
technology is part of the strategy to be able to offer the same resources of larger
regional banks but with the experience of a local community bank.
What
has the stock done lately?
In the past month, FBNC’s stock
has increased about 5.56% while the benchmark has decreased -3.25%. While the
last couple of weeks have been hard on the markets, FBNC continues to post
growth. This strong performance could be, in part, due to the increase in
dividend payments to investors.
Past
Year Performance: In the past year, FBNC has increased nearly 100%.
While this increase can be attributed in part to the rebound from the pandemic,
the company still has strong fundamentals that drive this growth. Compared to
the benchmark, this company has rebounded quite nicely.
With their existing branches and
their acquisition of Select Bancorp, First Bancorp, Inc. is in a strong
position to capture a large percent of the growing population in the North and
South Carolina regions. The increase in their dividend payment also signals solid
fundamentals of the company. I recommend that we hold FBNC to benefit from the
acquisition of Select Bancorp and the growing population in the Carolinas.
