First Bancorp Agrees to Acquire First Carolina Bancshares in $166 Million All-Stock-and-Cash Merger Deal

Structure of the First Bancorp and First Carolina Bancshares Merger Agreement

Under the terms of the merger agreement dated July 14, 2026, First Carolina Bancshares Corporation will merge with and into First Bancorp, with First Bancorp surviving as the combined holding company. Simultaneously, First Carolina's banking subsidiary, Carolina Bank & Trust Company, will merge with and into First Bank, the banking subsidiary of First Bancorp. The announcement marks a notable expansion for First Bancorp into the South Carolina market.

The merger agreement specifies that First Carolina shareholders will receive a mixed consideration package consisting of both stock and cash. Specifically, each share of First Carolina common stock will be converted into 14.5340 shares of First Bancorp common stock and a cash payment of $294.94 per share. Based on these terms, the filing states that the aggregate merger consideration currently carries a total value of approximately $166 million, equating to $64.22 per share of First Carolina common stock at current valuations.

Unanimous Board Approvals and Expected Closing Timeline

The disclosure confirms that the merger agreement received unanimous approval from the boards of directors of both First Bancorp and First Carolina. This unanimous support from both governing bodies signals strong institutional alignment around the transaction's terms and strategic rationale, though investors should note that final completion remains contingent on several conditions beyond board endorsement.

The parties have indicated they anticipate closing the merger during the fourth quarter of 2026 or early in the first quarter of 2027. The filing notes that closing is subject to approval by First Carolina's shareholders, the receipt of requisite regulatory approvals, and the effectiveness of a registration statement to be filed by First Bancorp covering the shares of First Bancorp common stock to be issued in connection with the transaction, alongside other customary closing conditions.

Conditions That Must Be Satisfied Before the Deal Closes

Beyond unanimous board approval, a number of conditions must be fulfilled before the merger can be completed. First Carolina's shareholders must vote in favor of the transaction, making the forthcoming shareholder meeting a key milestone for the deal's progress. Regulatory approvals from relevant authorities must also be obtained, and First Bancorp's registration statement covering the shares to be issued in the merger must be declared effective by regulators.

Other customary closing conditions also apply, as is standard in transactions of this nature. Investors should note that the merger agreement stipulates a longstop date of June 30, 2027, meaning that either party may terminate the agreement if the merger has not been consummated by that date. The deal's trajectory will therefore depend heavily on the pace of regulatory review and the scheduling of the First Carolina shareholder vote.

Termination Rights and the $6.4 Million Break Fee Provision

The merger agreement outlines several circumstances under which either party may terminate the deal. These include termination by mutual written agreement, termination by either party in the event of an uncured material breach by the other party following a 30-day cure period, and termination if any required regulatory consent is denied by final action or if a law or order prohibiting the merger becomes final and nonappealable. Either party may also terminate if First Carolina's shareholders do not vote to approve the transaction.

Notably, First Carolina retains the right to terminate the agreement prior to shareholder approval if its board determines it has received a superior proposal from a third party. However, such a termination triggers a financial consequence: under certain circumstances, First Carolina may be required to pay First Bancorp a termination fee of $6.4 million. This provision is designed to compensate First Bancorp for transaction costs and to provide a degree of deal protection against competing bids for First Carolina.

Support Agreements Binding Key First Carolina Shareholders and Directors

In connection with signing the merger agreement, each of First Carolina's directors, as well as certain executive officers and shareholders, have entered into Support Agreements. These agreements generally obligate the signing parties to vote at least 40% of the outstanding shares of First Carolina common stock in favor of the merger and against any competing alternative transactions. The Support Agreements also restrict these shareholders from transferring their First Carolina shares prior to shareholders' approval of the merger.

The Support Agreements are set to terminate upon the earliest of: the consummation of the merger, any amendment to the merger agreement that materially and adversely affects the shareholders' rights under those agreements (including a reduction in merger consideration not contemplated in the merger agreement), termination of the merger agreement in accordance with its terms, or July 14, 2028. The existence of these binding commitments covering at least 40% of outstanding First Carolina shares provides First Bancorp with a meaningful degree of confidence regarding the outcome of the shareholder vote.

Claims Letters and the Release of Pre-Closing Obligations

Alongside the Support Agreements, the filing discloses that First Carolina's directors, certain executive officers, and certain shareholders have also executed Claims Letters as part of the suite of ancillary agreements connected to this transaction. These Claims Letters are designed to provide a release of any claims that the signing individuals may have against First Carolina, Carolina Bank, their respective directors and officers, and their successors and assigns.

The release contemplated under the Claims Letters is structured to become effective only upon the consummation of the merger, meaning it does not take legal effect unless and until the transaction actually closes. This mechanism is a common feature in bank merger transactions intended to resolve potential outstanding claims at the holding company or subsidiary bank level as part of a clean handover of the combined institution.

Non-Competition and Non-Disclosure Commitments from First Carolina Insiders

The announcement also confirms that First Carolina's directors, certain executive officers, and certain shareholders have entered into Non-Competition and Non-Disclosure Agreements as further ancillary documents to the merger. These agreements prohibit the signing parties from disclosing or using any confidential information or trade secrets as defined in those agreements. They also prohibit soliciting customers or prospective customers of Carolina Bank for the purpose of providing competitive products or services.

In addition, the non-competition provisions prohibit the signing parties from acting as a shareholder, director, manager, officer, or employee of any competing business located within a defined restricted territory, or from soliciting or recruiting employees of First Bancorp or Carolina Bank. These restrictions remain in force for a period of two years, providing First Bancorp with a level of protection for the customer relationships and human capital of the acquired institution following the closing of the transaction.

Registration Statement and Proxy Statement Process Ahead for First Bancorp

As part of the steps required to complete the merger, First Bancorp will need to file a registration statement with regulators covering the shares of First Bancorp common stock to be issued to First Carolina shareholders as part of the merger consideration. The filing notes that this registration statement will include a proxy statement from First Carolina and a prospectus from First Bancorp, combined in a single document commonly referred to in bank mergers as a proxy statement/prospectus.

The filing also cautions investors that the representations, warranties, and covenants contained in the merger agreement were made solely for purposes of allocating contractual risk between the transacting parties and should not be relied upon as statements of fact about either company's actual state of affairs. Investors are advised to read the merger agreement in conjunction with other public filings and disclosures made by First Bancorp and First Carolina rather than relying on the merger agreement in isolation.

First Bancorp's Geographic Footprint Expands into South Carolina

First Bancorp, headquartered at 205 SE Broad Street, Southern Pines, North Carolina, operates First Bank as its principal banking subsidiary. First Carolina Bancshares Corporation is headquartered in Florence, South Carolina, and operates Carolina Bank & Trust Company. The combination of these two institutions would extend First Bancorp's geographic presence further into South Carolina, adding the Florence market to its existing footprint.

Florence, South Carolina serves as a regional hub in the Pee Dee region of the state, and the addition of Carolina Bank & Trust Company's operations would represent a strategic broadening of First Bancorp's community banking reach across the Carolinas. The immediate share price impact of this announcement was not clear from available public information at the time of this report. Investors may be watching closely for additional financial details about Carolina Bank & Trust Company to be disclosed through the forthcoming registration and proxy statement process.

Deal Protection Mechanisms and Shareholder Voting Threshold Details

The merger agreement incorporates a number of protective provisions that are standard in transactions of this scale within the banking sector. The requirement that First Carolina's shareholders approve the merger, the commitment by key insiders to vote at least 40% of outstanding shares in favor, and the $6.4 million termination fee collectively create a framework that provides First Bancorp with meaningful protections against deal failure or disruption by a competing acquirer.

Investors following the transaction should also note that First Bancorp itself does not require a separate shareholder vote to issue the shares contemplated under the merger consideration, based on the terms as disclosed. The focus of the shareholder approval process, as described in the filing, is specifically on First Carolina's shareholder base. The closing timeline targeting Q4 2026 or early Q1 2027 will depend on how efficiently both the regulatory review process and the First Carolina proxy statement process can be executed, per the disclosed terms of the agreement.