This comprehensive analysis, last updated on October 27, 2025, offers a deep dive into First Bancorp (FBNC) across five critical dimensions: its Business & Moat, Financial Statements, Past Performance, Future Growth, and Fair Value. We benchmark FBNC's standing against key rivals like United Community Banks, Inc. (UCBI) and SouthState Corporation (SSB), interpreting all findings through the time-tested investment framework of Warren Buffett and Charlie Munger.
Mixed. First Bancorp is a community bank focused on traditional lending in North and South Carolina. The bank is successfully growing its core loan and deposit base. However, its profitability has declined sharply due to rising costs and unrealized investment losses. Compared to peers, FBNC is less efficient and lacks the scale to compete with larger regional banks. The bank's future growth prospects appear modest and tied to its local markets. Investors may wish to hold existing positions, but should look for improved efficiency before buying new shares.
US: NASDAQ
First Bancorp (FBNC) is the holding company for First Bank, a state-chartered bank headquartered in Southern Pines, North Carolina. Its business model is the quintessential example of a community-focused regional bank. The bank's core operation revolves around attracting deposits from individuals and small-to-medium-sized businesses within its key markets—primarily North and South Carolina—and then using those funds to originate loans. The primary revenue driver is net interest income, which is the spread between the interest it earns on its loan portfolio and the interest it pays on deposits and other borrowings. The bank serves its customers through a network of 118 branch locations, offering a standard suite of products including checking and savings accounts, commercial and industrial (C&I) loans, commercial real estate (CRE) loans, residential mortgages, and consumer loans. Ancillary services that generate fee income include wealth management, insurance, and treasury services for businesses, but these represent a smaller portion of the overall revenue mix, underscoring the bank's reliance on traditional lending.
The largest and most critical product segment for First Bancorp is its Commercial Lending portfolio, which includes Commercial and Industrial (C&I) loans and Commercial Real Estate (CRE) loans. Combined, these loans represent over 79% of the bank's total loan portfolio as of early 2024, making them the undeniable engine of the business. C&I loans are extended to local businesses for working capital, equipment purchases, and expansion, while CRE loans finance properties ranging from owner-occupied buildings to investment properties like offices, retail centers, and multi-family housing. The market for these loans is geographically concentrated in the Carolinas, a region that has experienced robust economic growth. However, this market is also intensely competitive, featuring national giants like Bank of America and Truist, other large regional banks, and a multitude of smaller community banks all vying for the same business customers. The profit margins on these loans are dictated by the net interest margin, which has been volatile. The moat for FBNC in this segment is not built on scale or technology but on deep local relationships and personalized service. Business owners often prefer to work with bankers who understand the local market and can offer flexible, timely credit decisions, which is a key advantage community banks have over their larger, more bureaucratic competitors. The primary consumer is the local small-to-medium-sized enterprise (SME) with annual revenues typically under $50 million. These customers value the relationship and are less likely to switch banks over minor price differences, creating a degree of stickiness. However, this focus also creates significant concentration risk, as the bank's fortunes are tied to the economic health of local businesses and the volatile commercial real estate market.
Another significant product line for First Bancorp is its Residential Mortgage lending, which constitutes approximately 15% of its loan portfolio. The bank originates mortgages for home purchases and refinancings, primarily for customers within its branch footprint. While a smaller piece of the loan book compared to commercial lending, it is a crucial service for attracting and retaining retail customers, who then bring valuable, low-cost deposits. The U.S. residential mortgage market is vast but hyper-competitive and largely commoditized. FBNC competes with national mortgage originators, online lenders, and every other bank in its territory. Profitability in this segment is highly sensitive to interest rate fluctuations, which affect both loan demand and the potential for gains on the sale of mortgages to the secondary market. The bank's competitive edge is minimal and relies on cross-selling to its existing customer base and leveraging relationships with local real estate agents. The typical consumer is a homebuyer in the Carolinas. While the initial loan decision is important, the subsequent servicing relationship can create stickiness, especially if the customer uses other bank products like checking accounts and credit cards. However, with the rise of online mortgage platforms, pricing and speed have become paramount, eroding the traditional relationship advantage. Therefore, the moat in this segment is quite weak, and its primary strategic value is as a gateway product for acquiring core retail banking relationships rather than as a standalone profit center.
The foundation of any bank's business model is its deposit franchise, and for First Bancorp, this is a core strength. The bank's primary service on the funding side is offering a range of deposit products, including checking accounts, savings accounts, and time deposits (CDs) for both retail and commercial customers. These deposits fund the bank's lending activities. As of the first quarter of 2024, approximately 26% of the bank's $10.3 billion in deposits were noninterest-bearing, meaning the bank pays nothing for these funds. This base of low-cost core deposits is a significant competitive advantage, as it lowers the bank's overall cost of funding and supports a healthier net interest margin. The market for deposits is local and intensely competitive. Stickiness comes from the hassle of switching primary banking relationships; for a small business, this involves changing payroll systems, payment processing, and other integrated services, creating high switching costs. For retail customers, direct deposits and automatic bill payments create similar, albeit lower, hurdles. This inertia gives FBNC a stable funding base that is less sensitive to market shocks than wholesale funding sources. This core deposit franchise is arguably the strongest component of First Bancorp's moat. However, the recent environment of rapidly rising interest rates has put pressure on this advantage, forcing the bank to pay more to retain deposits and causing a decline in the proportion of noninterest-bearing accounts, a trend seen across the industry.
Finally, First Bancorp offers several services that generate noninterest, or fee-based, income. These include service charges on deposit accounts, wealth management and trust services, and mortgage banking income. While strategically important for diversifying revenue away from interest rate-sensitive lending, this part of the business remains underdeveloped. Noninterest income accounted for only about 15% of total revenue in the most recent quarter, which is below the 20-25% average for many of its regional peers. This low contribution makes the bank more vulnerable to periods of net interest margin compression, which can occur when interest rates fall or when its cost of funding rises faster than the yield on its assets. The customers for these services are existing banking clients, representing an opportunity for cross-selling. Wealth management clients, in particular, are very sticky and provide a stable, recurring revenue stream. However, building a significant presence in wealth management requires scale and specialized talent, areas where FBNC faces stiff competition from larger banks and established investment firms. The lack of a strong fee income stream is a notable weakness in its business model, limiting its ability to generate consistent earnings through different economic cycles.
In conclusion, First Bancorp's business model is a durable, time-tested one that relies on community engagement and relationship banking to build a defensible niche in the Carolinas. Its strength is rooted in its ability to gather a loyal, low-cost core deposit base, which provides a stable and advantageous funding source for its lending operations. This local focus and customer intimacy form the basis of its narrow economic moat, allowing it to compete effectively against larger, less personal institutions for small business and retail customers. However, the moat's durability is tested by several factors. The bank's heavy reliance on net interest income and its significant concentration in commercial real estate lending create vulnerabilities to economic downturns and interest rate volatility. Its underdeveloped fee income streams mean it lacks a significant cushion to absorb shocks to its core lending business. While the business model is resilient enough to survive, its limited diversification and geographic concentration prevent it from having a truly wide and durable competitive advantage. The model is solid but not exceptional, and its success is heavily tied to the economic prosperity of its home markets.
First Bancorp's financial health presents a tale of two businesses: a solid core lending operation and a challenged investment portfolio. On the revenue front, Net Interest Income (NII) has shown robust growth, increasing to $102.5M in the most recent quarter, up 23.42% from the prior year. This indicates the bank is successfully navigating the interest rate environment by earning more on its loans than it pays for deposits. However, this strength is undermined by its non-interest income, which included a significant -$27.9M loss from the sale of investments in the same quarter. This has led to volatile profitability, with Return on Equity fluctuating from 10.07% to 5.16% over the last two reported quarters.
The bank's balance sheet reveals both resilience and risk. A key strength is its liquidity position. With total loans of $8.3B against total deposits of $10.9B, its loan-to-deposit ratio is a conservative 76.3%, well below the industry norm. This provides a stable funding base and flexibility for future lending. On the other hand, its capital base is under pressure. The tangible common equity to total assets ratio stands at an average 8.7%. More concerning is the accumulated other comprehensive loss of -$193.4M, which represents unrealized losses on securities that directly reduce the bank's tangible book value, making it more sensitive to interest rate shifts.
From a risk management perspective, the bank appears to be prudently managing credit risk. It has consistently provisioned for potential loan losses, and its allowance for credit losses covers 1.44% of its total loan portfolio, a healthy cushion against potential defaults. The company also maintains a stable dividend for shareholders. The most significant red flag remains the realized and unrealized losses within its securities portfolio, which have been a major drag on both reported earnings and its capital base. This suggests that while the day-to-day community banking operations are sound, the bank's broader asset-liability management has faced significant headwinds.
Overall, First Bancorp's financial foundation is stable but not without weaknesses. The core business of taking deposits and making loans is generating healthy, growing income. However, investors should be cautious about the bank's high cost structure, evidenced by an efficiency ratio near 67%, and the material impact that interest rate changes have had on its investment portfolio. The financial position is not immediately risky, but these factors limit its profitability and add a layer of vulnerability compared to more efficient peers with less rate-sensitive balance sheets.
Over the past five fiscal years (FY2020-FY2024), First Bancorp's performance has been a tale of two periods: strong growth through 2022 followed by a significant decline in profitability. The bank expanded its balance sheet aggressively, with total assets growing from $7.3 billion to $12.1 billion. This growth was fueled by acquisitions, which contributed to steady increases in loans and deposits. However, the financial results have not kept pace, revealing underlying issues with cost control and earnings power in a changing interest rate environment.
From a growth and profitability perspective, the record is inconsistent. While revenue grew at a compound annual growth rate (CAGR) of 6.0% over the five years, earnings per share (EPS) had a negative CAGR of approximately -10.0% over the same period. The disparity is explained by rising expenses and significant share issuance. Net interest income has stagnated recently, while the efficiency ratio, a measure of a bank's overhead, worsened dramatically from 49.7% in FY2022 to 67.3% in FY2024. This decline in efficiency directly impacted profitability, with Return on Equity (ROE) plummeting from a healthy 12.99% in FY2022 to a weak 5.41% in FY2024, underperforming key competitors.
Shareholder returns and capital allocation tell a similar story of dilution and stalled progress. While the company has a history of paying dividends, dividend per share growth has been flat since 2022 at $0.88. The payout ratio has climbed to 47.6% not because of dividend hikes, but because earnings have fallen. More critically, the bank's growth has been funded with stock, leading to substantial shareholder dilution. Diluted shares outstanding increased by over 40% between FY2020 and FY2024, from 29 million to 41 million. This dilution has suppressed EPS growth and contributed to total shareholder returns that lag behind peers like United Community Banks and SouthState Corporation.
In conclusion, First Bancorp's historical record shows a bank capable of growing its physical footprint and customer base but struggling to translate that growth into consistent, profitable results for shareholders. The recent sharp deterioration in efficiency and earnings suggests that integrating acquisitions and managing costs in the current economic climate have been major challenges. While the bank has prudently managed credit risk, the overall track record does not inspire high confidence in its operational execution and resilience compared to top-tier regional banks.
The regional banking industry is navigating a period of significant change, with the next 3-5 years expected to be defined by several key trends. First, the battle for low-cost deposits will remain fierce. After a long period of low rates, customers are more actively seeking higher yields, forcing banks to pay more for funding and compressing net interest margins (NIMs). Second, technology and digital adoption are no longer optional. Banks must invest heavily in digital platforms to meet customer expectations and improve operational efficiency, which can be a challenge for smaller institutions with limited budgets. Third, regulatory scrutiny has increased, particularly around capital and liquidity, which may constrain aggressive growth or M&A. Finally, industry consolidation is likely to continue as banks seek scale to overcome these cost pressures. The market for regional banking services is projected to grow modestly, with overall loan growth expected in the 2-4% CAGR range, closely tracking nominal GDP growth. Catalysts for increased demand include a potential easing of monetary policy, which could reignite mortgage activity and encourage more business investment.
Despite these broad trends, the competitive landscape is intensifying. Entry into the banking sector is difficult due to high regulatory hurdles and capital requirements, but competition from non-bank fintech lenders and large national banks with massive technology budgets is growing. Fintechs are capturing market share in personal loans and payment services, while large banks leverage their scale to offer more competitive pricing on loans and deposits. For a community bank like First Bancorp, the primary competitive advantages remain local market knowledge and personalized customer service, which are difficult for larger, more centralized institutions to replicate. Success over the next 3-5 years will depend on a bank's ability to defend its core deposit franchise while finding profitable niches for loan growth and successfully expanding noninterest income streams.
First Bancorp's primary growth engine is its Commercial Lending portfolio, which includes both Commercial & Industrial (C&I) and Commercial Real Estate (CRE) loans. Currently, consumption is constrained by the high-interest-rate environment, which has made new projects less economically viable and caused some businesses to delay expansion plans. The bank's heavy concentration in CRE, particularly in the Carolinas, makes it highly sensitive to local real estate cycles. Over the next 3-5 years, growth will likely shift more towards C&I loans as businesses invest in operations, and within CRE, there will be a preference for less cyclical property types like multi-family and industrial over office and retail. We expect C&I loan demand from small and medium-sized businesses in high-growth areas of the Carolinas to increase, while demand for speculative construction loans may decrease. A key catalyst for accelerated growth would be a sustained period of lower interest rates. The market for commercial loans in the Southeast is expected to grow at a CAGR of 3-5%. Customers in this space choose between banks based on relationship, speed of decision-making, and loan structure flexibility, areas where FBNC can outperform larger rivals. However, in a price-sensitive environment, larger banks like Truist and Bank of America can win share with more aggressive terms. A key future risk is a regional economic downturn in the Carolinas (medium probability), which would directly hit loan demand and credit quality.
Residential Mortgage lending is another important service for FBNC, though its growth is highly cyclical. Current consumption is severely limited by high mortgage rates, which have crushed both purchase and refinance activity. Affordability challenges and low housing inventory in many of FBNC's markets are also significant constraints. Looking ahead, any meaningful increase in mortgage origination volume is almost entirely dependent on the Federal Reserve cutting interest rates. Should rates fall to the 5-6% range, we would expect a significant increase in purchase activity from sidelined buyers. The mix of business has already shifted almost entirely to purchase mortgages, and this will continue. Refinance activity will remain dormant until rates fall substantially below current levels. The U.S. mortgage origination market is forecast to grow significantly from its depressed 2023 levels, but this is highly contingent on rate movements. Competition is fierce, coming from national non-bank lenders like Rocket Mortgage who compete on speed and digital experience, and large banks that compete on price. FBNC's advantage is its ability to cross-sell to its existing deposit customers. The most significant risk to this business line is a 'higher for longer' interest rate scenario (medium probability), which would keep origination volumes depressed and pressure profitability for an extended period.
The foundation of the bank's growth model is its ability to gather low-cost Deposits. Currently, this area is facing its greatest challenge in over a decade. Consumption is constrained by intense competition for funds, not just from other banks but also from money market funds and other high-yield alternatives. This has led to a significant shift in the deposit mix, with customers moving funds from noninterest-bearing checking accounts to higher-cost products like Certificates of Deposit (CDs) and savings accounts. This trend is expected to continue, though the pace of change may slow as interest rates stabilize. The portion of deposits that are noninterest-bearing will likely continue to decline from the current ~26% level, settling closer to a historical norm of 20-22%. The key to future growth in deposits will be less about volume and more about managing the cost and stability of the funding base. Success will depend on strengthening customer relationships and providing superior digital tools to enhance convenience. Customers choose their primary bank based on convenience, service, and, increasingly, deposit rates. FBNC's branch network provides a strong local presence, but it will likely lose rate-sensitive customers to online banks or larger institutions offering more aggressive promotions. A primary risk is continued margin pressure as the cost of deposits rises faster than asset yields (high probability).
Finally, the most significant long-term growth opportunity—and current weakness—is in Fee-Based Services like wealth management, treasury services, and insurance. Current consumption of these services by FBNC's customer base is low, as evidenced by fee income only making up ~15% of total revenue. This is limited by the bank's current scale, product offerings, and a historical focus on traditional lending. The greatest potential for an increase in consumption over the next 3-5 years lies in cross-selling wealth management services to its existing base of successful small business owners and affluent retail clients. To achieve this, the bank must invest in talent and technology to build a competitive platform. The U.S. wealth management market is large and growing, with assets under management expected to grow at a 5-7% CAGR, but it is also highly competitive. FBNC competes against large, established players like Morgan Stanley and Merrill Lynch, as well as independent advisory firms. Customers choose wealth managers based on trust, performance, and the breadth of advice. FBNC's existing banking relationship is a significant advantage in building that initial trust. However, the risk of failing to execute this strategy is high (medium probability), as building a scalable and profitable fee-income business is a difficult and lengthy process that could fail to generate meaningful returns for several years.
Based on a stock price of $49.06 as of October 27, 2025, a comprehensive valuation analysis suggests that First Bancorp's shares are trading at a premium. A triangulated approach using multiples, dividend yield, and asset-based valuation indicates that the current market price exceeds its estimated intrinsic value, suggesting a limited margin of safety for new investors. With a fair value estimate of $32–$40, the stock appears overvalued with a notable downside, suggesting investors should exercise caution. First Bancorp's trailing P/E ratio of 20.57 is substantially higher than the U.S. Banks industry average of approximately 11.2x to 11.7x. This premium valuation suggests high expectations for future profit growth. While the forward P/E of 12.1 is more in line with industry norms, it is predicated on a significant increase in earnings per share (EPS) of nearly 70%, a forecast that carries a high degree of uncertainty given that five-year average earnings growth has been just 0.8%. On an asset basis, FBNC trades at 1.84x its tangible book value per share of $26.67. This is above the average for regional banks and is not strongly supported by the bank's recent profitability. The dividend yield of 1.88% is modest and may not be sufficient to attract income-focused investors. A simple dividend discount model suggests the stock is overvalued, and while the payout ratio of 37.73% is healthy, the low starting yield limits its valuation support. This overvaluation concern is confirmed by the asset-based approach, which is central to bank valuation. A P/TBV multiple of 1.84x is typically reserved for banks that consistently generate a high Return on Tangible Common Equity (ROTCE), well above 15%. FBNC's recent ROE figures of 5.16% (TTM) and 10.07% (quarterly) do not justify such a high multiple. In conclusion, after triangulating these methods, the valuation appears stretched. The most weight is given to the asset-based (P/TBV) approach, which suggests a fair value range of $32.00–$40.00. The current market price of $49.06 is therefore well above this estimated intrinsic value. The valuation is most sensitive to investor sentiment regarding growth, which is currently propping up the high P/E and P/TBV multiples.
In 2025, Bill Ackman would view First Bancorp (FBNC) as a fundamentally uninteresting investment, as it fits neither of his preferred archetypes: a dominant, high-quality platform or an undervalued company with a clear catalyst. Ackman's thesis for the banking sector would be to identify institutions with superior, predictable earning power, demonstrated by metrics like a Return on Average Assets (ROAA) well above 1.5% and a best-in-class efficiency ratio below 50%. FBNC, with its average ROAA of ~1.1% and efficiency ratio near ~59%, represents mediocrity, not excellence. The primary risks he would identify are its geographic concentration in the Carolinas and its lack of scale, which puts it at a competitive disadvantage against larger, more efficient rivals. Therefore, Ackman would decisively avoid the stock. If forced to choose top regional banks, Ackman would favor Home BancShares (HOMB) for its unparalleled profitability (ROAA >1.6%), SouthState Corporation (SSB) for its powerful high-growth franchise, or Cadence Bank (CADE) as a potential catalyst-driven play on successful merger integration. A potential shift in Ackman's view would only occur if FBNC were to announce a value-accretive sale to a superior operator or if its shares fell to a significant discount to tangible book value, creating a deep value opportunity.
Warren Buffett's investment thesis for banks centers on finding simple, predictable businesses with a durable moat, typically in the form of a low-cost deposit franchise, and conservative management. In 2025, he would view First Bancorp (FBNC) as a solid but ultimately unremarkable community bank. He would appreciate its straightforward business model focused on the growing Carolinas region, but its financial performance would not meet his high standards. Specifically, its efficiency ratio of around 58% and Return on Average Assets (ROAA) of 1.1% are merely average, lagging far behind best-in-class peers. Furthermore, trading at ~1.5x its tangible book value, the stock offers no significant margin of safety. If forced to choose the best banks, Buffett would likely point to superior operators like Home BancShares (HOMB) for its incredible 1.6%+ ROAA and sub-45% efficiency ratio, or SouthState Corporation (SSB) for its scale and 1.3% ROAA in the high-growth Southeast. For retail investors, the takeaway is that while FBNC is a decent bank, Buffett would almost certainly pass on it in favor of higher-quality institutions that demonstrate superior profitability and are available at a fair price. Buffett's decision would only change if FBNC's stock price dropped significantly, perhaps to below its tangible book value, creating the deep discount he requires for an investment in an average-quality business.
Charlie Munger would approach First Bancorp (FBNC) with a focus on its fundamental business quality, seeking a simple, understandable bank with a durable moat. He would view FBNC as a respectable, conservatively managed regional bank operating in the attractive Southeastern U.S. market. The bank's steady performance and avoidance of major errors align with his principle of minimizing stupidity. However, Munger would be concerned that FBNC's key performance metrics, such as its Return on Average Assets (ROAA) of around 1.1% and an efficiency ratio near 58%, are merely average for the industry and not indicative of a truly 'great' business. For a bank, ROAA shows how much profit it generates for every dollar of assets; a figure above 1.5% is exceptional, while 1.1% is just solid. A lower efficiency ratio is better, and FBNC's 58% means it spends 58 cents to make a dollar of revenue, which is less efficient than top-tier peers who operate below 50%. He would likely conclude that while FBNC is a good company, it lacks the exceptional profitability and wide moat of competitors like Home BancShares or SouthState Corporation. For retail investors, the takeaway is that FBNC is a stable but likely unexceptional investment; Munger would prefer to pay a fair price for a demonstrably superior franchise. If forced to pick the three best stocks in this sector, Munger would likely choose: 1) Home BancShares (HOMB) for its industry-leading ROAA above 1.6% and efficiency ratio below 45%, making it a true compounding machine. 2) SouthState Corporation (SSB) for its powerful scale, top-tier 1.3% ROAA, and dominant market position. 3) United Community Banks (UCBI), which offers superior profitability (1.25% ROAA) and scale compared to FBNC. Munger's decision on FBNC could change if it demonstrated a clear path to improving its ROAA above 1.3% consistently or if its valuation fell to a significant discount, perhaps near its tangible book value.
First Bancorp has established itself as a significant community-focused financial institution, primarily serving North and South Carolina. This concentrated geographic strategy is a double-edged sword. On one hand, it allows the bank to develop deep local relationships and gain intimate market knowledge, fostering a loyal customer base and a stable, low-cost deposit franchise. This is a key advantage in community banking, where personal service can differentiate a bank from larger, more impersonal national players. This focus has enabled FBNC to grow steadily, both organically and through strategic, in-market acquisitions that bolster its footprint without straying from its core competency.
On the other hand, this geographic concentration exposes the bank to the economic fortunes of a specific region. Any localized downturn in the Carolinas could disproportionately affect FBNC's loan portfolio and growth prospects compared to more diversified regional banks. When compared to peers that operate across a wider swath of the Southeast or other high-growth states, FBNC's growth ceiling may appear lower. Its competitive standing, therefore, hinges on its ability to continue outperforming within its chosen markets and wisely managing the inherent concentration risk.
From a performance standpoint, FBNC typically lands in the middle of the pack. It doesn't usually boast the industry-leading profitability or efficiency metrics of some of its more aggressive competitors. For instance, its efficiency ratio, which measures noninterest expenses as a percentage of revenue, is often higher than that of the most streamlined banks, suggesting there is room for operational improvement. Similarly, its return on assets, a key indicator of how effectively a bank is using its assets to generate profit, is solid but not exceptional. This positions FBNC not as a high-growth disruptor, but as a traditional, reliable banking institution focused on long-term, sustainable value creation for shareholders through dividends and steady book value growth.
United Community Banks, Inc. (UCBI) is a close competitor to First Bancorp, with both banks focusing on the high-growth Southeastern U.S. market. UCBI is slightly larger by market capitalization and has a more diversified geographic footprint across Georgia, the Carolinas, Tennessee, and Florida, giving it broader exposure to different economic centers. While both banks employ a community-focused service model, UCBI often demonstrates superior profitability and efficiency metrics. FBNC's strength lies in its deep entrenchment in the Carolinas, but UCBI's larger scale and slightly better performance record present a more compelling case for investors seeking a strong, diversified Southeastern regional bank.
In the realm of Business & Moat, both banks rely on strong local brands and customer relationships, creating moderate switching costs. UCBI's larger scale, with assets around $27 billion compared to FBNC's $12 billion, provides a tangible advantage in operational efficiency and technology investment. For instance, UCBI’s larger branch and ATM network across five states creates a modest network effect that FBNC, concentrated in two states, cannot match. Both operate under the same stringent regulatory barriers typical for banks. However, UCBI’s top 10 deposit market share in several major metropolitan statistical areas (MSAs) like Greenville, SC, demonstrates a stronger competitive position than FBNC's more rural and suburban focus. Overall winner for Business & Moat is UCBI due to its superior scale and broader geographic diversification.
Financially, UCBI consistently shows an edge. Its revenue growth over the past three years has averaged ~12% annually, slightly ahead of FBNC's ~10%. More importantly, UCBI operates more efficiently, with an efficiency ratio typically around 54-56%, while FBNC's is often closer to 58-60%. A lower efficiency ratio means a bank is spending less to generate a dollar of revenue. On profitability, UCBI's Return on Average Assets (ROAA) is consistently higher at ~1.25% versus FBNC's ~1.10%, making UCBI the better performer. Both maintain strong liquidity and capital, with Tier 1 capital ratios well above the 8% regulatory minimum, but UCBI’s slightly higher net interest margin (~3.4% vs. ~3.2%) allows for better core earnings generation. The overall Financials winner is UCBI, thanks to its superior efficiency and profitability.
Looking at Past Performance, UCBI has delivered stronger results. Over the last five years, UCBI's earnings per share (EPS) have grown at a compound annual growth rate (CAGR) of ~8%, compared to ~6% for FBNC. In terms of shareholder returns, UCBI's 5-year total shareholder return (TSR) stands at approximately +45%, comfortably ahead of FBNC's +30%. This outperformance reflects UCBI's stronger operational execution. From a risk perspective, both stocks exhibit similar volatility with betas around 1.1-1.2, typical for regional banks. However, UCBI’s consistent outperformance in core metrics suggests a higher quality of earnings. The winner for Past Performance is UCBI due to its superior growth and shareholder returns.
For Future Growth, both banks are positioned in attractive, high-growth markets in the Southeast. However, UCBI's multi-state footprint provides more avenues for organic growth and bolt-on acquisitions. Analyst consensus projects UCBI's long-term EPS growth around 6-7%, while FBNC is projected closer to 4-5%. UCBI has been more active in M&A, successfully integrating acquisitions to enter new markets like Florida, which gives it an edge. FBNC’s growth is more tied to the economic health of the Carolinas. Therefore, UCBI has the edge in future growth opportunities. The overall Growth outlook winner is UCBI, though its M&A strategy carries integration risk.
From a Fair Value perspective, the stocks often trade at similar valuations, reflecting their similar business models. UCBI typically trades at a slight premium, with a Price-to-Tangible-Book-Value (P/TBV) ratio of ~1.6x compared to FBNC's ~1.5x. Its Price-to-Earnings (P/E) ratio is also slightly higher at ~11x versus FBNC's ~10x. UCBI's dividend yield is around 3.0%, slightly lower than FBNC's 3.2%. The premium valuation on UCBI seems justified given its superior profitability, efficiency, and growth profile. An investor is paying a little more for a higher-quality operation. For an investor seeking a slight discount, FBNC might seem attractive, but the better value today on a risk-adjusted basis is UCBI, as its premium is more than covered by its stronger fundamentals.
Winner: United Community Banks, Inc. over First Bancorp. UCBI wins due to its superior operational metrics, stronger historical growth, and more diversified geographic footprint. Its efficiency ratio is consistently better (~55% vs. ~59%), and its ROAA is higher (~1.25% vs. ~1.10%), indicating more profitable use of its assets. While FBNC is a solid bank deeply rooted in the Carolinas, its performance lags slightly behind UCBI. The primary risk for UCBI is successfully integrating its acquisitions, while FBNC's main risk is its economic concentration in two states. Overall, UCBI's stronger financial engine and broader growth platform make it the more compelling investment.
SouthState Corporation (SSB) is a regional banking powerhouse in the Southeast, significantly larger than First Bancorp with a market capitalization often more than triple that of FBNC. Operating across six states with a major presence in Florida, Georgia, and the Carolinas, SSB competes directly with FBNC in its home markets. The primary difference is scale; SSB's asset base of over $45 billion dwarfs FBNC's $12 billion. This scale provides SSB with significant advantages in efficiency, technology, and product offerings, making it a formidable competitor. FBNC positions itself as a more local, community-centric alternative, but it struggles to match SSB's financial performance and market power.
Regarding Business & Moat, SSB's moat is substantially wider than FBNC's. SSB's brand is recognized across the Southeast, and its scale creates significant economies. It holds a top 5 deposit market share in many key Florida and South Carolina markets, a feat FBNC cannot replicate. Both banks benefit from regulatory barriers, but SSB's larger compliance and legal teams can navigate the complex environment more efficiently. Switching costs are similar for retail customers at both banks. However, SSB's extensive network of over 280 branches creates a much stronger network effect for commercial clients operating across the region. The winner for Business & Moat is unequivocally SouthState Corporation due to its immense scale and dominant market positioning.
In a Financial Statement Analysis, SSB demonstrates the power of its scale. Its revenue growth is robust, often exceeding 15% annually due to a mix of organic growth and major acquisitions. SSB's efficiency ratio is world-class for a bank its size, frequently dipping below 50%, whereas FBNC operates closer to 58%. This means SSB spends far less to generate each dollar of revenue. On profitability, SSB’s ROAA is typically around 1.3%, superior to FBNC's 1.1%, making SSB a more profitable institution. In terms of its balance sheet, SSB maintains a very strong capital position with a Common Equity Tier 1 ratio around 12%, providing a massive buffer against economic shocks. The clear Financials winner is SouthState Corporation, which outclasses FBNC on nearly every key metric.
Analyzing Past Performance reveals SSB's consistent execution. Over the past five years, SSB has compounded its earnings per share at over 10% annually, driven by its successful merger-of-equals with CenterState Bank. This is substantially higher than FBNC's ~6% EPS growth. Consequently, SSB's 5-year total shareholder return has been approximately +60%, doubling FBNC's +30%. Both banks have seen their margins fluctuate with interest rates, but SSB has managed the cycles more adeptly due to its sophisticated balance sheet management. From a risk perspective, SSB's larger, more diversified loan book makes it inherently less risky than the Carolina-focused FBNC. The winner for Past Performance is SouthState Corporation, reflecting its superior growth and returns.
Looking at Future Growth, SSB has a clear, proven strategy of growing through large, strategic acquisitions while also driving organic growth in fast-growing markets like Florida and Georgia. Analysts expect SSB to continue this playbook, forecasting long-term EPS growth of 7-9%. FBNC’s growth is more modest and largely tied to the economic health of the Carolinas, with consensus estimates around 4-5%. SSB has more financial firepower and a deeper management bench to pursue growth opportunities that are unavailable to FBNC. The edge for future growth is decisively with SSB. The overall Growth outlook winner is SouthState Corporation, whose scale provides a platform for continued expansion.
In terms of Fair Value, SSB's superior quality commands a premium valuation. It typically trades at a P/TBV ratio of ~1.8x, significantly higher than FBNC's ~1.5x. Its P/E ratio is also higher, often around 12x compared to FBNC's 10x. SSB's dividend yield is lower, around 2.5%, as it retains more earnings to fund its aggressive growth. While FBNC appears cheaper on a relative basis, the valuation gap is warranted. SSB is a higher-growth, higher-quality, and more profitable institution. Therefore, while some value investors might be drawn to FBNC's lower multiples, SouthState Corporation represents better value for long-term investors, as its premium is justified by its superior growth prospects and operational excellence.
Winner: SouthState Corporation over First Bancorp. SSB is the clear winner due to its commanding scale, superior profitability, and proven growth strategy. It operates more efficiently (efficiency ratio <50% vs. FBNC's ~58%), generates higher returns on its assets (ROAA ~1.3% vs. ~1.1%), and has a much stronger track record of creating shareholder value. FBNC is a well-run community bank, but it simply does not have the competitive advantages that SSB has built through its larger and more diversified franchise. The primary risk for SSB is execution on future large-scale M&A, while FBNC's risk remains its geographic concentration. SSB's dominant market position and financial strength make it a superior investment.
Renasant Corporation (RNST) is another Southeastern regional bank that competes with First Bancorp, though its geographic focus is more on Mississippi, Alabama, Tennessee, Georgia, and Florida. With an asset base of around $17 billion, it is larger than FBNC and offers a more diversified geographic loan portfolio. Renasant has pursued a strategy of growth through acquisitions in major metropolitan markets like Nashville and Atlanta. This makes it a useful comparison for FBNC, highlighting the differences between a bank focused on building density in a couple of states versus one spreading its reach across a wider, but perhaps less concentrated, territory. Renasant's performance has been solid, but it has faced some challenges with credit quality and integration that make the comparison with FBNC more nuanced.
From a Business & Moat perspective, both banks have similar models based on local brand recognition and service. Renasant’s moat comes from its presence in several fast-growing metro areas, holding a respectable deposit market share in cities like Tupelo, MS (#1) and Huntsville, AL (#5). This provides access to diverse economies. FBNC's moat is its density and top 10 market share in many mid-sized North and South Carolina markets. Renasant’s scale is a slight advantage, allowing for greater investment in technology. Regulatory barriers are identical for both. The winner for Business & Moat is a tie, as Renasant's geographic diversity is balanced by FBNC's concentrated market strength.
Financially, the two banks are closely matched, with each having distinct strengths. Renasant’s revenue growth has been slightly lumpier due to its M&A cycle, averaging ~8% over the past three years, compared to FBNC's steadier ~10%. Renasant’s net interest margin (NIM) is often slightly wider, around 3.5%, due to its loan mix, compared to FBNC's 3.2%. However, FBNC has historically been more efficient, with an efficiency ratio around 58% versus Renasant's, which can sometimes exceed 60%, especially during acquisition integrations. Profitability is very close, with both banks typically reporting an ROAA of around 1.1%. Renasant has at times carried a slightly higher level of non-performing loans, creating a modest credit risk concern. Overall, the Financials winner is FBNC, but by a very narrow margin due to its better efficiency and more consistent performance.
When examining Past Performance, the picture is mixed. Over a five-year period, FBNC has delivered a slightly better total shareholder return (+30%) compared to Renasant (+20%). This reflects periods where investors were concerned about Renasant’s credit quality or the cost of its expansion. In terms of earnings growth, both have been in a similar range, with 5-year EPS CAGRs of 5-6%. Margin trends have also been similar, expanding and contracting with the interest rate cycle. From a risk standpoint, Renasant’s stock has shown slightly higher volatility, and its credit rating has occasionally been under scrutiny more than FBNC's. For these reasons, the winner for Past Performance is First Bancorp, due to its steadier execution and superior shareholder returns.
Looking ahead at Future Growth, Renasant’s strategy provides it with more options. Its presence in high-growth markets like Nashville, Atlanta, and central Florida gives it a larger playing field for organic growth. The bank has also signaled it is open to further acquisitions. Analyst estimates for Renasant's long-term EPS growth are around 5-6%, slightly ahead of FBNC's 4-5%. FBNC's growth is more dependent on the continued economic expansion of the Carolinas. While this is a strong market, it is less diversified than Renasant’s multi-state footprint. The overall Growth outlook winner is Renasant, as its broader geographic reach offers more potential upside.
From a Fair Value standpoint, both banks tend to trade at very similar valuations, reflecting their comparable performance profiles. Both typically trade at a P/TBV of ~1.5x and a P/E ratio of ~10-11x. Their dividend yields are also very close, usually in the 3.1-3.3% range. Given the similarities, an investor's choice may come down to strategy preference: FBNC's Carolina concentration versus Renasant’s multi-state diversification. Since FBNC has demonstrated slightly better historical performance and efficiency, its current valuation appears slightly more attractive. On a risk-adjusted basis, First Bancorp is the better value today, as it offers similar metrics for a slightly lower operational risk profile.
Winner: First Bancorp over Renasant Corporation. This is a very close contest, but FBNC takes the win due to its more consistent operational performance and stronger shareholder returns over the past five years. While Renasant has a more attractive and diversified geographic footprint for future growth, its execution has been less steady, with higher efficiency ratios and occasional credit concerns. FBNC's focus on the Carolinas has produced a more predictable and efficient banking operation (efficiency ratio ~58% vs. Renasant's ~60%+). The primary risk for FBNC is its geographic concentration, while Renasant's risk lies in managing its diverse footprint and integrating future deals effectively. FBNC's track record of steady, disciplined execution makes it the slightly better choice.
Hancock Whitney Corporation (HWC) operates primarily along the Gulf Coast, with a strong presence in Louisiana, Mississippi, Alabama, Florida, and Texas. With an asset base over $35 billion, HWC is substantially larger than First Bancorp and possesses a unique geographic focus tied to the energy sector and coastal economies. This makes for an interesting comparison, as HWC's performance is often linked to energy prices and hurricane-related economic disruptions, creating a different risk profile than FBNC's, which is more tied to general economic activity in the Carolinas. HWC has a long history and a powerful brand in its core markets, but its profitability can be more volatile than FBNC's.
In terms of Business & Moat, HWC has a very strong and deep-rooted moat in its Gulf Coast markets. It was founded in the 19th century and holds the #1 deposit market share in both Louisiana and Mississippi, a dominant position FBNC does not enjoy in its states. This long history and market leadership create a powerful brand and significant switching costs for its deeply embedded commercial clients. While FBNC has a solid community brand, it doesn't have the same level of market dominance. HWC's larger scale also provides advantages in technology and product breadth. Regulatory barriers are the same for both. The clear winner for Business & Moat is Hancock Whitney Corporation due to its commanding market share and entrenched brand.
Financially, HWC's results can be more cyclical. While its revenue base is much larger, its growth can be volatile, linked to the health of the energy industry. A key differentiator is HWC's lower net interest margin (NIM), which is often around 3.0%, below FBNC's 3.2%, partly due to its balance sheet composition. However, HWC is a very efficient operator, with an efficiency ratio frequently in the low-50% range, significantly better than FBNC's ~58%. On profitability, HWC's ROAA is strong, typically around 1.2%, edging out FBNC's 1.1%. HWC's balance sheet is more exposed to potentially volatile energy loans, but it maintains strong capital ratios to offset this risk. The Financials winner is Hancock Whitney, as its superior efficiency and profitability outweigh its slightly lower margin and cyclical revenue.
Looking at Past Performance, HWC has had a rockier journey. The stock was hit hard during downturns in the energy market, leading to higher volatility and larger drawdowns for shareholders. Over the last five years, HWC's total shareholder return is approximately +25%, lagging FBNC's +30%. However, HWC's earnings growth has been strong during periods of economic recovery. Its 5-year EPS CAGR is around 7%, slightly ahead of FBNC's 6%. The key trade-off is higher growth for higher risk. FBNC has provided a smoother ride for investors. The winner for Past Performance is First Bancorp because it delivered comparable returns with significantly lower volatility.
For Future Growth, HWC is well-positioned to benefit from growth in the Texas and Florida markets, as well as any strength in the energy sector. Its diverse Gulf Coast economy provides multiple levers for loan growth. Analysts project HWC's long-term EPS growth in the 6-7% range, which is higher than FBNC's 4-5% forecast. FBNC's growth is tied to the strong, but less diversified, economies of the Carolinas. HWC's management has also proven adept at navigating economic cycles to capitalize on growth opportunities when they arise. The overall Growth outlook winner is Hancock Whitney, due to its exposure to larger and more dynamic markets.
From a Fair Value perspective, HWC often trades at a discount to peers to compensate for its perceived risk. Its P/TBV ratio is typically around 1.4x, lower than FBNC's 1.5x. Its P/E ratio is also frequently lower, around 9x versus FBNC's 10x. HWC also offers a higher dividend yield, often close to 3.6%. This valuation suggests that the market is pricing in the volatility associated with its energy exposure. For an investor willing to take on that cyclical risk, HWC appears to be the better value. It offers higher growth potential and better profitability for a lower price. Therefore, Hancock Whitney is the better value today for investors with a higher risk tolerance.
Winner: Hancock Whitney Corporation over First Bancorp. HWC wins this matchup due to its dominant market position, superior operational efficiency, and higher growth potential. Its command of the Gulf Coast market gives it a wider moat, and its efficiency ratio in the low 50s is a testament to its excellent management. While FBNC offers a more stable and less risky investment profile, HWC's higher ROAA (~1.2% vs ~1.1%) and stronger growth outlook come at a cheaper valuation (P/E of 9x vs 10x). The primary risk for HWC is its exposure to the cyclical energy sector and coastal weather events. For FBNC, the risk is slower growth and geographic concentration. For an investor seeking higher potential returns and willing to accept more volatility, HWC is the superior choice.
Cadence Bank (CADE) is a large regional bank with a significant presence across the Southeast and Texas, created through a merger of equals between Cadence Bancorporation and BancorpSouth Bank. With assets over $50 billion, Cadence is significantly larger than First Bancorp and offers a much more diversified geographic and business mix, including a sizable wealth management division. The bank's recent history has been defined by the complex integration of this large merger. This makes it a useful case study against FBNC's simpler, more focused business model, highlighting the trade-offs between scale and complexity.
Analyzing Business & Moat, Cadence's moat is derived from its large scale and diversified footprint across nine states. It has a strong presence in key markets like Houston, TX, and Birmingham, AL, with a top 10 deposit share in many areas. This broad network provides a stable deposit base and cross-selling opportunities that FBNC cannot match. FBNC's moat is its deep penetration in the Carolinas. However, the complexity of integrating two large banks has been a headwind for Cadence, creating potential service disruptions and operational challenges. Despite these challenges, Cadence's scale is a powerful long-term advantage. The winner for Business & Moat is Cadence Bank, on the basis of its scale and diversification, assuming it successfully completes its integration.
From a Financial Statement Analysis perspective, the comparison is complex. Cadence's reported financials have been noisy due to merger-related expenses. Its revenue growth has been high on paper due to the merger, but organic growth has been more modest. Cadence’s efficiency ratio has been elevated, often running above 65% post-merger, as it works to strip out costs. This is significantly worse than FBNC's ~58%. However, management has a clear target to bring this down. On profitability, Cadence’s ROAA has been compressed by these costs, hovering around 0.9%, which is below FBNC's 1.1%. Cadence has a more diversified loan book, but the integration process introduces operational risk. The winner for Financials, based on current, clean performance, is First Bancorp, due to its superior efficiency and profitability today.
In Past Performance, FBNC has been the more stable performer. The legacy Cadence and BancorpSouth entities had their own performance histories, but as a combined company, CADE's track record is short and messy. Over the last three years, CADE's stock has underperformed, with a total shareholder return of approximately +15% as the market waits for the merger benefits to materialize. This compares to +25% for FBNC over the same period. FBNC has delivered more consistent EPS growth and a smoother ride for investors. The merger-related execution risk at Cadence has been a clear overhang on the stock. The winner for Past Performance is First Bancorp due to its stability and better recent returns.
For Future Growth, Cadence has a much larger platform. The potential for revenue and cost synergies from the merger is significant. If management successfully integrates the two banks and brings the efficiency ratio down to its target of ~55%, the earnings power of the combined franchise could be substantial. Its presence in high-growth Texas markets also offers a strong organic growth runway. Analyst estimates for CADE's long-term growth are in the 7-8% range, contingent on this execution. This is well above FBNC's 4-5% potential. The overall Growth outlook winner is Cadence Bank, but it comes with significant execution risk.
In Fair Value terms, Cadence trades at a notable discount due to the uncertainty surrounding its merger integration. Its P/TBV ratio is often around 1.2x, and its P/E ratio is around 9x, both significantly lower than FBNC's 1.5x and 10x, respectively. Its dividend yield is attractive, often above 3.8%. This low valuation reflects the market's skepticism about its ability to achieve its synergy targets. For a patient, value-oriented investor who believes in the merger's long-term strategic rationale, Cadence represents a compelling turnaround story. It offers a much larger franchise at a lower price. Therefore, Cadence Bank is the better value today for an investor willing to bet on a successful integration.
Winner: Cadence Bank over First Bancorp. This verdict is based on a longer-term, risk-tolerant perspective. Cadence wins because it offers investors the potential for significantly higher returns if its merger integration is successful. The bank trades at a steep discount (P/TBV of 1.2x) that prices in much of the execution risk, while offering exposure to a larger, more diversified, and higher-growth franchise. FBNC is the safer, more stable choice today, with better current profitability (ROAA of 1.1% vs 0.9%). However, its upside is more limited. The primary risk for Cadence is failing to realize merger synergies, while FBNC's risk is being outgrown by larger rivals. For investors with a multi-year horizon, Cadence's risk/reward profile is more attractive.
Based on industry classification and performance score:
First Bancorp operates a traditional community banking model focused on the Carolinas, building its business on local relationships to gather deposits and make loans. The bank's primary strength is its solid, low-cost core deposit base, which provides stable funding, although this advantage is narrowing as interest rates rise. Its main weaknesses are a low level of fee-based income, making it highly dependent on lending profits, and a loan portfolio heavily concentrated in commercial real estate, which carries economic cycle risk. The investor takeaway is mixed; while FBNC is a solid community operator with a defensible local market position, its lack of revenue diversification and real estate focus present notable risks.
The bank's revenue is heavily dependent on lending, as its fee-based income is underdeveloped and represents a smaller share of revenue than the sub-industry average.
A strong stream of noninterest income from fees provides revenue diversification and a buffer when lending margins are tight. First Bancorp's noninterest income was approximately 15.2% of its total revenue in the first quarter of 2024. This is significantly below the typical regional bank average, which often ranges from 20% to 25%. This heavy reliance on net interest income (currently ~85% of revenue) makes the bank's earnings more volatile and highly sensitive to changes in interest rates. While the bank generates fees from service charges, wealth management, and mortgage banking, none of these areas are currently at a scale to meaningfully offset fluctuations in its core lending business. This lack of diversification is a clear weakness in its business model compared to peers who have successfully built out more robust fee-generating lines of business.
First Bancorp maintains a healthy and diverse deposit base with minimal reliance on risky, high-cost brokered deposits, providing a stable funding profile.
A diversified deposit base from various customer types—such as retail, small business, and public funds—provides stability and reduces concentration risk. First Bancorp's funding is overwhelmingly sourced from core customer relationships within its local communities. The bank has historically maintained a very low percentage of brokered deposits, which are funds sourced from third-party brokers that are typically more expensive and less loyal than core deposits. As of its latest filings, brokered deposits remain a small fraction of total funding, a significant strength compared to some peers who rely more heavily on this volatile source. This demonstrates a strong ability to fund its operations organically through its branch network and customer relationships. This conservative funding approach reduces sensitivity to market shocks and is a key pillar of its business model's resilience.
First Bancorp operates as a generalist community bank with a heavy focus on commercial real estate, lacking a distinct, specialized lending niche that would provide a stronger competitive edge.
Excelling in a specific lending niche like SBA loans, agriculture, or a particular industry can create a competitive advantage through specialized expertise and pricing power. An analysis of First Bancorp's loan portfolio shows a focus on general commercial lending rather than a specialized niche. The portfolio's largest concentration is in Commercial Real Estate (non-owner and owner-occupied), which totals over 44% of all loans, with an additional 12% in construction and development loans. While serving local businesses is its focus, this heavy CRE concentration is common among community banks and represents a risk tied to the health of the real estate market, rather than a differentiated strength. The bank does not highlight significant activity in specialized areas like national SBA lending programs or agricultural lending that would set it apart from its many competitors. This generalist approach means it competes on relationship and service, but lacks the deeper, expertise-based moat that a true niche focus could provide.
The bank has a valuable base of low-cost core deposits, but this advantage has been eroding as rising interest rates have pushed its funding costs higher, closer to the industry average.
A bank's ability to attract and retain low-cost, stable deposits is a critical competitive advantage. As of Q1 2024, First Bancorp's noninterest-bearing deposits made up 26% of its total deposits. While this is a solid figure, it has decreased from higher levels in previous years, a common trend as customers seek higher yields. This percentage is roughly in line with the current peer average, suggesting its historical advantage has diminished. The bank's cost of total deposits was 2.08%, which is slightly below the average for many US banks, indicating it still retains some pricing power. However, the rapid increase in this cost highlights the competitive pressure in the current rate environment. Furthermore, with an estimated 32% of deposits being uninsured, the bank is in line with peers but still carries a degree of risk from large depositor flight. Because the low-cost funding advantage is no longer decisively superior to peers, this factor warrants a cautious assessment.
First Bancorp maintains a solid and efficient branch network in the Carolinas, demonstrated by strong deposits per branch that are in line with or above peers.
First Bancorp operates a network of 118 branches, primarily in North and South Carolina. With total deposits of approximately $10.3 billion, the bank achieves average deposits per branch of around $87 million. This figure is a key indicator of branch efficiency and is considered strong for a community bank, comparing favorably to the regional bank average which often hovers between $75 million and $90 million. This high level of deposits per location suggests that the bank's branches are well-placed in their communities and are effective at gathering local funds, which is the lifeblood of a community bank. The bank's moat is derived from this local scale; it has a dense enough presence in its core markets to be a convenient and recognizable option for local customers, creating a barrier to entry for banks without a similar physical footprint. While the industry is shifting towards digital banking, a physical presence remains crucial for building trust and relationships with small business owners and older demographics, who are key customer segments.
First Bancorp's recent financial statements show a mixed picture. The bank's core lending business is performing well, with Net Interest Income growing a strong 23.42% year-over-year in the latest quarter. However, significant unrealized losses on its investment portfolio, reflected in a comprehensive income adjustment of -$193.4M, are pressuring its capital levels. While liquidity is solid with a low loans-to-deposits ratio of 76.3%, a high efficiency ratio around 67% suggests cost control challenges. For investors, the takeaway is mixed: the fundamental banking operations are healthy, but vulnerability to interest rate changes and cost inefficiencies introduce notable risks.
The bank maintains a strong liquidity position with a conservative loan-to-deposit ratio, though its tangible capital ratio is merely average and is being pressured by investment portfolio losses.
First Bancorp's liquidity is a clear strength. Its loan-to-deposit ratio in the most recent quarter was 76.3% ($8.3B in net loans vs. $10.9B in deposits). This is well below the industry benchmark, which often hovers between 80-90%. A lower ratio like this is strong, as it indicates the bank is not overly reliant on its loan book and has ample low-cost deposit funding available to support future growth or absorb potential deposit outflows. Data on uninsured deposits is not provided, but a strong deposit base is a positive indicator.
On the capital side, performance is more average. The Tangible Common Equity (TCE) to Total Assets ratio is 8.7% ($1106M in TCE vs. $12.75B in assets). While this is in line with the typical 8-10% range for regional banks, it does not provide a particularly thick cushion, especially considering the erosion from unrealized securities losses discussed previously. While specific regulatory capital ratios like CET1 are not provided, the TCE ratio suggests a sufficient but not robust capital buffer. The bank's strong liquidity provides a significant offset to its average capital levels.
The bank appears well-prepared for potential credit losses, maintaining a strong reserve level relative to its total loans.
First Bancorp demonstrates disciplined credit management through its loan loss reserves. As of the latest quarter, the bank's allowance for credit losses stood at -$121.0M against a gross loan portfolio of $8.42B. This results in an allowance to total loans ratio of 1.44%. This level of reserves is strong compared to the industry average, which is often between 1.25% and 1.50%, suggesting a prudent and conservative approach to potential defaults. The bank consistently adds to this reserve, with a provision for loan losses of $3.44M in the most recent quarter.
While specific metrics like net charge-offs or nonperforming loans (NPLs) as a percentage of loans are not provided in the data, the proactive provisioning and robust reserve coverage are positive signs. The balance sheet does show $1.72M in 'Other Real Estate Owned and Foreclosed,' which is minimal compared to the bank's $12.75B asset base. Given the healthy reserve ratio, the bank appears well-capitalized to handle potential downturns in its loan portfolio.
The bank's tangible equity is significantly reduced by large unrealized losses on its investment securities, highlighting a major vulnerability to interest rate fluctuations.
First Bancorp's balance sheet shows considerable sensitivity to interest rates, primarily through its securities portfolio. The comprehensiveIncomeAndOther line item, which largely reflects unrealized gains or losses on investments (AOCI), was a negative -$193.4M in the latest quarter. This figure represents a significant drag on the bank's tangible common equity of $1106M, with AOCI making up about -17.5% of tangible equity. This is a substantial erosion of capital and is well below the ideal for a conservative bank, indicating that rising rates have severely diminished the value of its bond holdings.
Further evidence of this pressure is found on the income statement, where the bank realized a -$27.9M loss on the sale of investments in Q3 2025, following a -$38.0M loss for the full year 2024. This shows the bank has been forced to sell securities at a loss, likely to reposition its balance sheet or manage liquidity. While specific data on the portfolio's duration or the bank's deposit beta isn't available, these realized and unrealized losses are clear proof of a mismatch between its assets and liabilities in the current rate environment.
The bank's core earnings power is strong, demonstrated by impressive double-digit growth in its Net Interest Income.
First Bancorp's core profitability from lending and funding activities appears very healthy. Net Interest Income (NII)—the difference between interest earned on assets like loans and interest paid on liabilities like deposits—grew by a robust 23.42% year-over-year in the most recent quarter, reaching $102.5M. This strong growth is a clear positive and significantly outpaces the typical growth rate for the banking sector, suggesting the bank is effectively pricing its loans and managing its funding costs in the current interest rate environment. This trend is also visible sequentially, with NII growing from $96.7M in Q2 2025.
While the specific Net Interest Margin (NIM) percentage is not provided, the powerful growth in NII is a strong proxy for margin health. It shows that the bank's yield on earning assets is increasing faster than its cost of funds. This is the fundamental driver of earnings for a community bank, and First Bancorp is demonstrating strong performance in this critical area. The bank's ability to grow its core interest-based revenue provides a solid foundation that helps offset weaknesses in other areas, such as noninterest income and efficiency.
The bank's cost structure is a key weakness, with a high efficiency ratio indicating that its operating expenses are consuming too much of its revenue.
A bank's efficiency ratio measures the cost to generate a dollar of revenue, with lower being better. For Q3 2025, First Bancorp's efficiency ratio was 67.2% ($60.2M in noninterest expense divided by $89.6M in net revenue). For the full fiscal year 2024, it was similar at 67.3%. These figures are weak compared to the industry benchmark, where a ratio below 60% is considered efficient. This indicates that the bank's overhead, including salaries and occupancy costs, is high relative to the revenue it generates.
Looking closer, salaries and employee benefits ($36.8M in Q3) represent 61% of total noninterest expenses, which is a significant but typical component for a bank. However, the overall high ratio suggests that the bank may lack the scale or operational leverage of its peers. This cost inefficiency directly pressures profitability, as more money is spent on running the bank rather than flowing to the bottom line for shareholders. This is a notable disadvantage compared to leaner competitors.
First Bancorp's past performance presents a mixed picture for investors. The bank has successfully grown its loan portfolio at a 3-year compound annual growth rate of 10.2%, supported by solid deposit growth. However, this expansion has come at a cost, with significant shareholder dilution from acquisitions and a sharp decline in profitability. Earnings per share (EPS) have collapsed over the past two years, and the efficiency ratio has deteriorated from a strong 49.7% in FY2022 to a poor 67.3% in FY2024, lagging behind more efficient competitors. The investor takeaway is mixed; while the core franchise is growing, recent financial performance shows significant operational challenges and weakening shareholder returns.
First Bancorp has achieved strong and consistent growth in its core balance sheet, with both loans and deposits expanding at a healthy pace over the past several years.
The bank has successfully executed on its growth strategy, as evidenced by its balance sheet trends. Analyzing the period from fiscal year-end 2021 to 2024, gross loans increased from $6.1 billion to $8.1 billion, a compound annual growth rate (CAGR) of 10.2%. Over the same period, total deposits grew from $9.1 billion to $10.5 billion, a CAGR of 6.8%. This demonstrates the bank's ability to gain market share and expand its customer base, both organically and through acquisitions.
While this growth is a clear strength, loan growth has outpaced deposit growth. This has caused the loan-to-deposit ratio to increase from 72.2% in FY2022 to 76.9% in FY2024. Although this level is not yet concerning, a continued trend in this direction could increase the bank's reliance on more expensive funding sources and put pressure on its net interest margin.
The bank's profitability has been squeezed from both sides, with net interest income growth stalling while the efficiency ratio has deteriorated to alarmingly high levels.
The bank's operational performance has weakened significantly in recent years. Its efficiency ratio, which measures non-interest expenses as a percentage of revenue, worsened from a very strong 49.7% in FY2022 to a poor 67.3% in FY2024. A lower number is better, and this sharp increase indicates a loss of cost control, likely related to difficulties in integrating acquisitions. This efficiency level is much weaker than best-in-class peers like HOMB, which operates below 45%.
At the same time, revenue generation from its core lending business has faltered. Net Interest Income (NII) grew at a CAGR of just 1.1% between FY2022 and FY2024. This stagnation, combined with soaring costs, has severely compressed the bank's profitability and is a major concern for investors looking for consistent operational execution.
Despite strong earnings growth through 2022, earnings per share (EPS) have collapsed in the last two years, resulting in a negative multi-year growth rate that substantially underperforms peers.
The bank's earnings track record is highly volatile and ultimately disappointing. After peaking at $4.12 per share in FY2022, EPS plummeted by 38.6% to $2.54 in FY2023 and fell another 27.2% to $1.85 in FY2024. This dramatic decline has wiped out all prior growth, leading to a negative 5-year compound annual growth rate (CAGR) of approximately -10.0% (from FY2020 to FY2024). This performance contrasts sharply with competitors like SouthState Corporation and Home BancShares, which have generated strong positive EPS growth over the same period.
The bank's average Return on Equity (ROE) reflects this weakness, falling from a strong 12.99% in FY2022 to a very low 5.41% in FY2024. This indicates a significant drop in the bank's ability to generate profits from its shareholders' capital.
The bank has demonstrated a prudent and conservative approach to credit risk, consistently building its loan loss reserves to stay ahead of potential issues in its growing portfolio.
First Bancorp's credit management has been a historical strength. The bank's allowance for loan losses (a reserve set aside for bad loans) as a percentage of total gross loans has steadily increased from 1.11% in FY2020 to 1.51% in FY2024. This proactive reserving is a positive indicator of disciplined risk management, especially as the loan portfolio has expanded significantly. This shows management is not sacrificing credit quality for growth.
The provision for credit losses, which is the expense booked for potential loan defaults, has remained at manageable levels outside of a spike in 2020 that was likely related to caution during the COVID-19 pandemic. A stable and adequately reserved balance sheet is crucial for a bank, and FBNC's track record here is solid.
The bank has consistently paid its dividend, but growth has stalled in the last three years, and returns have been severely hampered by significant shareholder dilution from acquisitions.
First Bancorp's dividend per share grew from $0.72 in FY2020 to $0.88 by FY2022, representing a solid track record. However, the dividend has remained flat at $0.88 through FY2024, indicating a pause in growth. The dividend payout ratio has increased from 25.7% to 47.6% over the five-year period, a rise driven by declining earnings rather than a more generous payout policy. This suggests the dividend is becoming less covered by profits.
The most significant weakness in its capital return history is shareholder dilution. To fund its growth, the company's diluted shares outstanding swelled from 29 million in FY2020 to 41 million in FY2024, an increase of over 40%. Minimal share repurchases have done little to offset this, meaning each share's claim on earnings has been diminished. This dilution is a primary reason for the stock's underperformance relative to less dilutive peers.
First Bancorp's future growth outlook is mixed, presenting a picture of steady but unspectacular potential. The bank is poised to benefit from the solid economic expansion in its core markets of North and South Carolina, which should drive moderate loan demand. However, significant headwinds remain, including intense industry-wide pressure on net interest margins due to rising deposit costs and a critical need to develop its underdeveloped fee-income businesses. While FBNC is a competent local operator, it lacks the scale and diversified revenue streams of larger regional competitors, limiting its upside. For investors, this suggests a stable but slow-growth trajectory, heavily dependent on the health of the local economy and management's ability to execute on diversifying its revenue.
The bank is positioned for moderate loan growth driven by the favorable economic conditions in its core Carolina markets, though this is tempered by its concentration in the cyclical commercial real estate sector.
First Bancorp operates in some of the fastest-growing markets in the United States, providing a natural tailwind for loan demand. Management guidance typically points to low-to-mid single-digit annual loan growth, a realistic target reflecting both the healthy economic backdrop and the competitive environment. The loan pipeline for C&I and owner-occupied real estate is likely to remain solid. However, the bank's significant exposure to commercial real estate, including construction loans, introduces a higher level of risk should the economy or property markets cool. While the outlook is generally positive due to its geographic focus, the lack of diversification in its loan book prevents a more enthusiastic assessment.
As a regional bank, disciplined M&A is a primary avenue for growth, and First Bancorp is well-positioned with healthy capital levels to pursue strategic acquisitions.
For a bank of FBNC's size, strategic, in-market acquisitions are a key tool to grow earnings per share and build scale. The bank maintains a solid capital position, with a CET1 ratio comfortably above regulatory requirements, providing the financial flexibility to act on acquisition opportunities. While no major deals have been announced recently, a disciplined M&A strategy focused on acquiring smaller banks within the Carolinas would be a logical path to enhance its franchise value, achieve cost synergies, and expand its market presence. The ability to deploy this capital effectively through either accretive acquisitions or share buybacks will be a critical determinant of future shareholder returns. The bank's solid capital base supports a positive outlook for this factor.
The bank operates an efficient physical branch network but must accelerate its digital investments to meet evolving customer expectations and drive future growth.
First Bancorp demonstrates strong operational effectiveness in its physical footprint, with average deposits per branch of ~87 million, a healthy figure that suggests its locations are well-positioned and productive. However, the future of banking growth is increasingly tied to digital channels. While the bank has digital offerings, there are no explicitly stated, aggressive targets for digital user growth or significant cost-saving initiatives tied to channel optimization. To compete effectively against larger banks and nimble fintechs, FBNC needs a clear and ambitious plan to enhance its mobile and online platforms, using technology to deepen relationships and improve efficiency. The current strength in the branch network provides a solid foundation, but the lack of a clear, forward-looking digital growth strategy introduces risk.
Like its peers, the bank faces significant headwinds from rising deposit costs, which are compressing its net interest margin and will likely pressure profitability in the near term.
The bank's net interest margin (NIM) is under pressure from the industry-wide shift of deposits into higher-cost accounts. While FBNC has historically benefited from a low-cost deposit base, that advantage is eroding as its cost of funds rises to compete for deposits. Management guidance will likely reflect continued pressure on NIM in the coming quarters. While a portion of its loan portfolio is variable-rate, it may not be enough to fully offset the rapid increase in funding costs. The repricing dynamics in the current interest rate environment are a significant headwind, and a meaningful expansion of NIM is unlikely until the Federal Reserve begins to lower interest rates.
The bank's heavy reliance on interest income is a strategic weakness, and there is little evidence of a clear, aggressive plan to substantially grow its underdeveloped fee-based businesses.
First Bancorp's noninterest income consistently accounts for only about 15% of its total revenue, well below the 20-25% level of more diversified regional peers. This makes its earnings highly vulnerable to the interest rate cycle and NIM compression. While management acknowledges the desire to grow fee income from areas like wealth management and treasury services, the bank has not provided specific growth targets or outlined a major strategic initiative to achieve this. Building these businesses to a meaningful scale requires significant investment in talent and technology and competes against entrenched, larger players. Without a demonstrated plan and track record of execution, the prospect of diversifying revenue remains more of an aspiration than a likely outcome in the next 3-5 years.
As of October 27, 2025, based on a closing price of $49.06, First Bancorp (FBNC) appears to be overvalued. The stock's trailing P/E ratio of 20.57 is significantly higher than the regional bank industry average, as is its Price-to-Tangible-Book-Value (P/TBV) of 1.84x. While the forward P/E of 12.1 suggests optimism for future earnings, it relies on substantial growth that has not been consistently demonstrated historically. With the stock trading in the upper half of its 52-week range, much of the positive outlook may already be priced in. The takeaway for investors is cautious; the current valuation appears stretched compared to the bank's fundamental asset value and historical profitability.
The stock trades at a high premium to its tangible book value, which is not justified by the company's current level of profitability (Return on Tangible Common Equity).
Price to Tangible Book Value (P/TBV) is a primary valuation metric for banks. First Bancorp's P/TBV is 1.84x, calculated from its price of $49.06 and its tangible book value per share of $26.67. A P/TBV this high typically requires a high Return on Tangible Common Equity (ROTCE) to be justified, often in the mid-to-high teens. While the company's most recent quarterly ROE (a proxy for ROTCE) was 10.07%, its trailing annual ROE is a much lower 5.16%. Neither of these figures supports a P/TBV multiple of 1.84x. High-quality regional banks that generate consistent returns might trade closer to a 1.5x multiple. FBNC's current pricing implies a level of profitability and franchise value that is not reflected in its recent financial performance, indicating it is overvalued on an asset basis.
There is a clear misalignment between the stock's Price-to-Book ratio and its Return on Equity, with the market awarding it a multiple that its profitability does not support.
A bank's Price-to-Book (P/B) ratio should logically be correlated with its Return on Equity (ROE). A higher ROE demonstrates greater profitability and justifies a higher P/B multiple. First Bancorp has a P/B ratio of 1.27 based on its total book value per share of $38.67. However, its trailing twelve-month ROE is only 5.16%. A P/B ratio of 1.27 would typically be associated with an ROE closer to the 10-12% range. Even using the more favorable single-quarter ROE of 10.07%, the P/B ratio appears rich. This disconnect suggests that investors are paying a price for the book value of the company that is not being justified by the returns generated on that equity, signaling a significant overvaluation.
The stock's trailing P/E ratio is significantly elevated compared to industry peers, and the attractive forward P/E relies on highly optimistic growth forecasts that appear disconnected from historical performance.
The trailing twelve-month (TTM) P/E ratio stands at a high 20.57, which is nearly double the average of 11.2x - 11.7x for the US Banks industry. This suggests the stock is expensive based on its recent earnings. While the forward P/E of 12.1 seems much more reasonable, it is based on analyst expectations of earnings growing by nearly 70% in the next year. This is a very aggressive forecast, especially when considering the bank's five-year average earnings growth was only 0.8%. This large discrepancy between trailing reality and forward-looking optimism creates a significant risk. If the bank fails to deliver on these lofty growth expectations, the stock's valuation could contract sharply. Therefore, the reliance on such a speculative earnings jump makes this a clear fail.
The dividend yield is modest, and the lack of share repurchases results in a total yield that is not compelling enough to offer strong valuation support.
First Bancorp offers a dividend yield of 1.88%, which is a reasonable but not particularly attractive income stream for investors. The dividend is supported by a healthy payout ratio of 37.73%, indicating that it is well-covered by current earnings and sustainable. However, a key component of shareholder return, share buybacks, is absent. In fact, the share count has seen a slight dilution of 0.41% over the last year. For a bank, returning capital to shareholders through both dividends and buybacks is a sign of financial strength and management's belief that the stock is undervalued. The absence of buybacks and the presence of slight dilution detract from the total return profile, making this factor a fail.
On key relative metrics like P/E and P/TBV, First Bancorp appears expensive compared to typical valuations for the regional and community bank sub-industry.
When stacked against its peers, FBNC's valuation appears stretched. Its trailing P/E of 20.57 is significantly above the peer average, which is closer to the 11x-14x range. Similarly, its P/TBV of 1.84x is also at a premium. While top-performing banks can command higher multiples, their profitability metrics are usually superior. FBNC's dividend yield of 1.88% is not high enough to compensate for the premium valuation on other metrics. The stock's beta of 1.02 indicates it moves in line with the broader market, offering no special defensive characteristics. Overall, the snapshot shows a stock priced for a level of performance that exceeds what its current fundamentals and peer comparisons would suggest is reasonable.
The primary risk for First Bancorp, like most regional banks, is tied to macroeconomic conditions and Federal Reserve policy. The prolonged period of high interest rates has significantly increased funding costs, as customers move their money from low-yield checking accounts to higher-yielding alternatives. This pressure on deposit costs compresses the bank's net interest margin (NIM)—the core measure of its profitability. Looking ahead to 2025 and beyond, if a potential economic downturn materializes, the risk shifts from margin compression to credit quality. A recession would likely increase loan delinquencies and defaults, forcing the bank to set aside more money for potential losses, which would directly reduce its earnings.
The competitive and regulatory landscape presents long-term structural challenges. First Bancorp competes directly with banking giants like Bank of America and Truist in its home markets of the Carolinas. These larger institutions possess superior scale, marketing budgets, and technology platforms, making the fight for low-cost deposits intense and perpetual. Simultaneously, non-bank fintech lenders are chipping away at profitable lending segments. On the regulatory front, following the banking failures of 2023, regulators have increased their scrutiny of regional banks. This will likely lead to higher compliance costs and potentially stricter capital and liquidity requirements, which could restrain the bank's ability to lend and grow, ultimately impacting its return on equity.
From a company-specific perspective, First Bancorp's geographic concentration is a key vulnerability. Its performance is heavily dependent on the economic health of North and South Carolina. A regional economic slowdown in these states would disproportionately affect the bank compared to a more geographically diversified competitor. The bank's loan portfolio also carries concentration risk, particularly its significant exposure to commercial real estate (CRE). While currently performing, the CRE sector, especially office and certain retail properties, faces secular headwinds that could lead to future credit problems. Finally, the bank has historically relied on acquisitions to fuel growth. While this strategy can be effective, it introduces integration risk and a dependence on finding suitable M&A targets, which may become more difficult in a stricter regulatory environment.
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