Stephens raises First Bancorp target to $50, keeps Overweight rating

On Monday, Stephens analyst Russell Gunther increased the price target on First Bancorp (NASDAQ:FBNC) shares from $48.00 to $50.00, while maintaining an Overweight rating on the company’s stock. The $1.66 billion market cap regional bank, which InvestingPro analysis suggests is slightly overvalued at current levels, has seen its stock surge 8.12% in the past week. Gunther’s adjustment came after First Bancorp reported core pre-provision net revenue (PPNR) of $48.3 million, surpassing Wall Street’s expectations by approximately 6% or $0.05. The favorable results were attributed to a net interest income (NII) that was $0.04 higher than anticipated, fee income that missed estimates by $0.02, and expenses that were $0.04 below forecasts. Additionally, expenses showed a decline both quarterly and year-over-year. InvestingPro data reveals that two analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the bank’s performance.

The analyst noted that First Bancorp’s net interest margin (NIM) expanded by 20 basis points quarter-over-quarter, reaching 3.27%, which was 10 basis points higher than the consensus. The NIM is expected to continue its upward trend, bolstered by favorable organic asset and liability management, including repricing dynamics. Furthermore, the potential for securities repositioning and the company’s excess capital position, alongside a larger available-for-sale (AFS) portfolio compared to its peers, could provide additional upside.

In terms of loan growth, end-of-period loans showed a modest increase of 0.4% from the last quarter, with balances being 0.6% below Street estimates. Nonetheless, loan growth is anticipated to pick up during the year, potentially reaching mid-single-digit figures. This projection is supported by recent commercial and industrial (C&I) lender liftouts and an increased appetite for loan growth.

Gunther also highlighted the quality of First Bancorp’s loan portfolio, noting a slight decrease in non-performing assets (NPAs), which dropped 3 basis points quarter-over-quarter to just 0.27%. Net charge-offs (NCOs) were reported at 17 basis points, aligning with expectations. The bank’s strong reserve levels, at 1.49%, and a robust Common Equity Tier 1 (CET-1) capital ratio of 14.5% were emphasized as key factors providing stability amid current economic uncertainties. This financial strength is reflected in the bank’s impressive 39-year streak of consecutive dividend payments, with a current yield of 2.2%, and an exceptionally low debt-to-equity ratio of 0.07. InvestingPro assigns the bank a "GOOD" financial health score of 2.52, with particularly strong ratings in cash flow and price momentum metrics.

Based on these findings, the Stephens analyst has raised the PPNR estimates for 2025 and 2026 by 4.5% and 6.0%, respectively, and reiterated the Overweight rating on First Bancorp’s stock. The positive adjustment in the price target and earnings estimates reflect an optimistic outlook for the bank’s financial performance in the coming years.

In other recent news, First Bancorp has reported a strong financial performance for the first quarter, surpassing both Keefe, Bruyette & Woods’ and consensus estimates. The company’s net interest income increased by 4% from the previous quarter, driven by factors such as robust deposit growth and favorable asset repricing. Keefe, Bruyette & Woods adjusted their price target for First Bancorp from $51.00 to $50.00, while maintaining an Outperform rating, reflecting confidence in the bank’s future performance. Additionally, First Bancorp has declared a cash dividend of $0.22 per share, scheduled for payment on April 25, 2025, to shareholders on record as of March 31, 2025. In a strategic leadership change, G. Adam Currie has been promoted to Chief Executive Officer of First Bank (NASDAQ:FRBA), succeeding Michael G. Mayer, who will continue as President of First Bancorp until early 2026. The company also announced the signing of an Amended and Restated Employment Agreement with Mayer and a new Employment Agreement with Christian Wilson as Chief Operating Officer. These developments indicate First Bancorp’s ongoing commitment to shareholder returns and strategic growth.

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