UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. _____)

Filed by the Registrantý

Filed by a Party other than the Registranto

Check the appropriate box:

First Bancorp

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

300 SW Broad Street

Southern Pines, North Carolina 28387

Telephone (910) 246-2500

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD THURSDAY, MAY 12, 20163, 2017

To Our Shareholders:

The annual meeting of shareholders of First Bancorp (the “Company”) will be held at the James H. Garner Conference Center, 211 Burnette Street, Troy,Mid-Pines Inn and Golf Club, 1010 Midland Road, Southern Pines, North Carolina (see map on outside back cover) on Thursday,Wednesday, May 12, 20163, 2017 at 10:00 a.m.4:30 p.m. local time, for the purpose of considering and acting on the following matters:

Only shareholders of record as of the close of business on March 23, 201614, 2017 are entitled to notice of and to vote at the annual meeting and any adjournment thereof.

Whether or not you expect to be present at the annual meeting, please complete, date and sign the enclosed form of proxy and return it promptly in the enclosed envelope. If you attend the meeting, your proxy will be returned to you upon request. You may also vote by telephone or on the Internet, as described in the proxy statement and on the proxy card.

Please note that the attached form of proxy includes a request from the Company to indicate whether or not you plan to attend the annual meeting. For planning purposes, management of the Company would appreciate you filling in the appropriate box indicating whether or not you plan to attend the annual meeting. If you initially indicate that you are not planning to attend and later want to, or do not indicate one way or the other, you are still welcome and invited to attend the meeting.

The proxy statement accompanying this notice sets forth further information concerning the proposals to be considered at the annual meeting. You are urged to study this information carefully.

Included in this package, in compliance with applicable regulations, is the Company’s 20152016 Annual Report, which includes a letter from the chief executive officer, and the Company’s Form 10-K. The Form 10-K includes the Company’s financial statements and other required disclosures.

By Order of the Board of Directors

Elizabeth B. Bostian

Important notice regarding the availability of proxy materials

for the shareholder meeting to be held on May 12, 2016.3, 2017.

The Proxy Statement and 20152016 Annual Report on Form 10-K

are also available at www.edocumentview.com/FBNC

First Bancorp

300 SW Broad Street

Southern Pines, North Carolina 28387

Telephone (910) 246-2500

PROXY STATEMENT

INTRODUCTION

This proxy statement is furnished to the shareholders of First Bancorpthe Company by the Board of Directors (hereinafter sometimes referred to as the “Company”“Board” or the “Board of Directors”) by the Board of Directors in connection with its solicitation of proxies for use at the annual meeting of shareholders of the Company to be held on Thursday,Wednesday, May 12, 20163, 2017 at 10:00 a.m.4:30 p.m. local time, at the James H. Garner Conference Center, 211 Burnette Street, Troy,Mid-Pines Inn and Golf Club, 1010 Midland Road, Southern Pines, North Carolina, (see map on outside back cover), and at any adjournment thereof. Action will be taken at the annual meeting on the items described in this proxy statement and on any other business that properly comes before the meeting.

This proxy statement and accompanying form of proxy are first being mailed to shareholders on or about April 4, 2016.March 27, 2017.

The accompanying proxy is for use at the 20162017 Annual Meeting if a shareholder either will be unable to attend in person or will attend but wishes to vote by proxy. Most shareholders have a choice of voting by completing the enclosed proxy card and mailing it in the postage-paid envelope provided, voting over the Internet or using a toll-free number. Shareholders should refer to the proxy card or the information forwarded by the shareholder’s bank, broker or other holder of record to see which voting options are available. Shareholders who vote over the Internet may incur costs, such as telephone and Internet access charges, for which the shareholder is responsible. The Internet and telephone voting facilities for eligible shareholders of record will close at 11:59 p.m. Eastern Daylight Time on May 11, 2016.2, 2017. Specific instructions to be followed by any eligible shareholder interested in voting via the Internet or telephone are shown on the enclosed proxy card. The Internet and telephone voting procedures are designed to authenticate the shareholder’s identity and to allow shareholders to vote their shares and confirm that their instructions have been properly recorded. In the event that the proxy card does not reference Internet or telephone voting information because the recipient is not the registered owner of the shares, the proxy card must be completed and returned in the self-addressed, postage-paid envelope provided.

If you hold your shares in street name, it is critical that you cast your vote if you want it to count in the election of our director nominees (Proposal 1 of this Proxy Statement). Previously, if you held your shares in street name and you did not indicate how you wanted your shares voted in the election of directors, your bank or broker was allowed to vote those shares on your behalf in the election of directors as they felt appropriate. Changes in regulations were made to take away the ability of your bank or broker to vote your uninstructed shares in the election of directors on a discretionary basis. Thus, if you hold your shares in street name and you do not instruct your bank or broker how to vote in the election of directors, no votes will be cast on your behalf.

Any shareholder giving a proxy may revoke it at any time before a vote is taken by (i) duly executing a proxy bearing a later date; (ii) executing a notice of revocation in a written instrument filed with the secretary of the Company; or (iii) appearing at the meeting and notifying the secretary of the shareholder’s intention to vote in person. Unless a contrary choice is specified, all shares represented by valid proxies received pursuant to this solicitation, and not revoked before they are exercised, will be voted as set forth in this proxy statement. In addition, the proxy confers discretionary authority upon the persons named therein, or their substitutes, with respect to any other business that may properly come before the meeting.

The presence, in person or by proxy, of the holders of a majority of the outstanding shares of the Company’s common stock entitled to vote is necessary to constitute a quorum at the annual meeting. If a quorum is not present or represented at the annual meeting, the shareholders present and entitled to vote have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At any such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally notified. Abstentions from the vote on a

particular proposal and broker non-votes will be counted as present for purposes of determining if a quorum is present, but will not be counted as votes on the proposal in question.

The Company will bear the entire cost of preparing this proxy statement and of soliciting proxies. Proxies may be solicited by employees of the Company, either personally, by special letter, or by telephone. Employees will not receive additional compensation for the solicitation of proxies. The Company also will request brokers and others to send solicitation material to beneficial owners of stock and will reimburse their costs for this purpose.

Only shareholders of record as of the close of business on March 23, 201614, 2017 (the “Record Date”) will be entitled to vote at the annual meeting or any adjournment thereof. The number of outstanding shares of the Company’s common stock entitled to vote at the annual meeting is 19,750,969.24,650,076. Shareholders are entitled to one vote for each share of the Company’s common stock.

PRINCIPAL HOLDERS OF VOTING SECURITIES

The Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires that any person who acquires the beneficial ownership of more than five percent of the Company’s common stock notify the Securities and Exchange Commission (the “SEC”) and the Company.  Following is certain information, as of the most recent practicable date, regarding those persons or groups who held of record, or who are known to the Company to own beneficially, more than five percent of the Company’s outstanding common stock.

PROPOSAL 1 - ELECTION OF DIRECTORS

Section 3.02 of the Company’s bylaws provides that the number of directors on the Board of Directors of the Company will be not less than threeseven nor more than 18,25, as may be fixed by resolution duly adopted by the Board of Directors at or prior to the annual meeting at which such directors are to be elected. In accordance with the bylaws, the size of the board has been fixed at ninetwelve members.

In the absence of any specifications to the contrary, proxies will be voted for the election of all ninetwelve of the nominees listed in the table below by casting an equal number of votes for each such nominee. If, at or before the time of the meeting, any of the nominees listed below becomes unavailable for any reason, the proxyholders have the discretion to vote for a substitute nominee or nominees. The board currently knows of no reason why any nominee listed below is likely to become unavailable. The ninetwelve nominees receiving a plurality of votes cast shall be elected. This means that the ninetwelve nominees with the most votes will be elected. Only votes “FOR” a nominee will affect the outcome.

The Company’s Articles of Incorporation provide that, if cumulative voting applies, each shareholder is “entitled to multiply the number of votes he is entitled to cast by the number of directors for whom he is entitled to vote and cast the product for a single candidate or distribute the product among two or more candidates.” Cumulative voting procedures will not be followed at the annual meeting unless a shareholder calls for cumulative voting as provided in the Company’s Articles of Incorporation, by announcing at the meeting before the voting for directors starts, his or her intention to vote cumulatively. If cumulative voting is properly invoked by a shareholder, the chair shall declare that all shares entitled to vote have the right to vote cumulatively and shall thereupon grant a recess of not less than two days, nor more than seven days, as the chair shall determine, or of such other period of time as is unanimously agreed upon. If cumulative voting applies, the proxyholders may, in their discretion, vote the shares to which such proxies relate on a basis other than equally for each of the nominees named below and for less than all such nominees, but the proxyholders will cast such votes in a manner that would tend to elect the greatest number of such nominees (or any substitutes therefor in the case of unavailability) as the number of votes cast by them would permit.

NOMINATIONS FOR DIRECTOR

Nominees for election to the Board of Directors are selected by the incumbent board prior to each annual meeting, and the nominees listed below were selected in that manner. Nominations from shareholders must be made in accordance with the Company’s bylaws, which generally require such nominations to be made in writing and not less than 6050 nor more than 9075 days prior tobefore the first anniversary of the date of the Company’s proxy statement distributed in connection with the last meeting at which directors are to be elected and to include certain information aboutof shareholders called for the proposed nominee, in addition to other requirements.election of directors.

A copy of the bylaw provision setting forth the complete procedure for shareholder nominations of directors may be obtained upon written request to First Bancorp, 300 SW Broad Street, Southern Pines, North Carolina 28387, Attention: Elizabeth B. Bostian, Secretary.

The Company’s bylaws state that no individual may be elected to, or may serve on, the Board of Directors any time after his or her 75th birthday, except that ifmaximum age at which a director may stand for election is elected to72, absent specific approval of an exception by the Board of Directors prior to his or her 75th birthdayBoard. All current and reachesnominee directors are less than the age of 75 while serving as a director, such director’s term shall continue until the next annual meeting of shareholders, at which time the director shall retire. The bylaws allow the Board of Directors to make exceptions to this limitation in connection with mergers or acquisitions. The bylaws also state that the foregoing provisions do not apply to any individual during the time such individual is serving as chief executive officer of the Company.72.

See also “Director Nomination Process” included in the section entitled “Corporate Governance Policies and Practices” below.

DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS

Except as noted below, the following table sets forth certain information as of December 31, 2015,2016, with respect to the Company's current directors, the ninetwelve nominees for election to the Board of Directors and the executive officers of the Company (all of these persons may be contacted at 300 SW Broad Street, Southern Pines, North Carolina 28387). The ninetwelve nominees are each current directors, and havewith nine of the twelve having served on the Board of Directors since the 20152016 Annual Meeting. Michael G. Mayer was appointed to the Board of Directors on February 7, 2017, while Donald H. Allred and Abby J. Donnelly were appointed to the Board of Directors on March 3, 2017 upon completion of the Company’s acquisition of Carolina Bank Holdings, Inc. (“Carolina Bank”). In accordance with the Company’s bylaws, the size of the board has been fixed at ninetwelve members.

Each of the ninetwelve nominees has indicated a willingness to serve if elected. The Board of Directors recommends a vote “FOR” the election of these nominees.

TABLE OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS

Notes to Table of Directors, Nominees and Executive Officers:

Director Nominees

Donald H. Allred, 71, a resident of Asheboro, NC, is the is the Retired President and former owner of Duel, Inc., a media production company located in Asheboro, NC, which specialized in audio and video projects for individuals and businesses. Mr. Allred served as a board member of Carolina Bank Holdings, Inc. from 2012 until the merger with the Company on March 3, 2017, at which time he joined the Company’s board of directors. Mr. Allred also served on Carolina Bank’s Asheboro Advisory Board of Directors beginning in 2004. An Air Force veteran, Mr. Allred served four years of active duty during the Vietnam War.  Mr. Allred is very active in the Rotary Club and has volunteered with numerous civic organizations in the Asheboro area. Mr. Allred has attended the North Carolina Bank Directors’ College and the North Carolina Bank Directors’ Assembly.

Mr. Allredbrings to the Company 13 years of bank oversight experience with Carolina Bank Holdings, Inc., and business leadership, innovation, executive decision making and oversight skills as a result his experience in the Air Force and his ownership of a commercial business.

Daniel T. Blue, Jr., 66,67, is the managing partner of the law firm Blue Stephens and Fellers LLP, located in Raleigh, North Carolina, where he has been an attorney since 1973. In 1980, Mr. Blue was elected to the North Carolina House of Representatives and was re-elected twelve times. From 1991 – 1995, Mr. Blue was twice elected Speaker of the North Carolina House of Representatives. Mr. Blue currently serves in the North Carolina Senate, representing Wake County, and was elected in March 2014 as the Senate Minority Leader. Mr. Blue is the immediate past Chair of the Board of Trustees of Duke University. He is a former member of the Duke University Health System and a former director of Duke University Management Company. Mr. Blue has been a director of the Company and First Bank since 2010.

Mr. Blue has an extensive background in law and public service, and has skills related to executive decision making, as well as oversight, governance and management of large organizations.

Mary Clara Capel, 57,58, is a member of senior management as the director of administration and marketing at Capel, Incorporated, a rug manufacturer, importer and exporter located in Troy, North Carolina, where she has been employed since 1981, including fifteen15 years in her current position. She is a past member of the North Carolina Banking Commission and attended the North Carolina Bank Directors College. Ms. Capel has been a director of the Company and First Bank since 2005. Ms. Capel is the currentimmediate past chairman of the Board of Directors of the Company.

Ms. Capel brings business executive decision making and oversight skills as a result of her 35 years of experience with a third-generation family business, which has grown from its rug manufacturing operation in Troy, North Carolina to importing and exporting rugs worldwide.

James C. Crawford, III, 59,60, served on the Board of Directors, including as its Chairman, of Great Pee Dee Bancorp, Inc., a bank holding company headquartered in Cheraw, South Carolina, from 1992 until its acquisition by the Company in April 2008. Mr. Crawford is the retired Chief Executive Officer of B.C. Moore and Sons, Inc., a department store chain. Mr. Crawford has been a director of the Company and First Bank since 2008. Mr. Crawford is the current chairman of the Board of Directors of the Company and First Bank.

Mr. Crawford brings extensive experience with accounting and finance, as well as oversight and management of multiple businesses.

Abby J. Donnelly, 54,is founder and Chief Executive Officer of The Leadership & Legacy Group, a consulting practice in leadership development and executive succession. She is the internationally recognized author of Networking Works!, a workbook and training curriculum on building strong business relationships. Ms. Donnelly served as a board member of Carolina Bank Holdings, Inc. from 2014 until the merger with the Company on March 3, 2017, at which time she joined the Company’s board of directors. Ms. Donnelly has been active in volunteering and serving in many leadership roles in various civic organizations in the Greensboro area. She has attended the North Carolina Bank Directors’ College and the North Carolina Bank Directors’ Assembly.

Ms. Donnellybrings to the Company business leadership, innovation, executive decision making and oversight skills as a result of her work history, community leadership and ownership of a business.

Michael G. Mayer, 57, was named the President of First Bank effective March 10, 2014, was appointed as a director of First Bank in October 2014, and was named the Chief Executive Officer of First Bank on February 7, 2017. Mr. Mayer was named the President of the Company on February 23, 2016 and was appointed to the Board of Directors of the Company on February 7, 2017. Prior to joining the Company, Mr. Mayer most recently served as Chief Executive Officer of 1^st Financial Services Corporation, parent company of Mountain 1^st Bank & Trust, a position he held from January 2010 until 1^st Financial Services Corporation’s acquisition in January of 2014. Mr. Mayer previously served as President and Chief Executive Officer of Carolina Commerce Bank from 2009 until 2010 and Colony Signature Bank (In Organization) from 2007 to 2009, and has held various senior banking positions over his 30 year banking career.

Mr. Mayer has had an extensive career in the banking industry and brings experience, leadership, and managerial skills as a result of his work history.

Richard H. Moore,55,, 56, was named as President and Chief Executive Officer of the Company in June 2012. Prior to joining the Company, he served as a managing director of San Diego-based Relational Investors LLC, a Registered Investment Advisor that advises the investment decisions of some of the largest pension funds in the world.LLC. Prior to joining Relational Investors, Mr. Moore served two terms as State Treasurer of North Carolina and served for four years as the Secretary of Crime Control and Public Safety. Mr. Moore also previously served as Chair of the North Carolina State Banking Commission for eight years. Mr. Moore served two termsserves on the Board of Executives of thenumerous New York Stock Exchange boards and committees and is currently the past chair of the New York Stock ExchangeNYSE Regulation Board.Board of Directors. Mr. Moore was previously an Assistant U.S. Attorney and also practiced corporate, real estate and tax law for many years. Mr. Moore is a former trustee of Wake Forest University and served on its Investment Committee. Mr. Moore is also a director of the Durham-based North Carolina Mutual Life Insurance Company. Mr. Moore has been a director of the Company and First Bank since 2010.

Mr. Moore’s career has provided him with extensive financial and accounting experience and gives him keen insight with respect to budget and audit matters, as well as the oversight, governance and management of larger organizations.

Thomas F. Phillips, 70,71, is ana retired automobile dealer and owner of Phillips Ford, located in Carthage, North Carolina.dealer. He served as a director of First Savings Bancorp, Inc. from 1985 until its merger with the Company in 2000. Mr. Phillips has served as a director of the Company and First Bank since 2000.2000 and is a former chairman of both boards of directors.

Mr. Phillips brings over 30 years of financial experience gained during his director terms with First Savings Bancorp and the Company. Mr. Phillips has extensive skills in accounting, finance and risk management.

O. Temple Sloan, III,55,56, is the former Chief Executive Officer and President for General Parts, Inc. (GPI), the largest privately-owned auto parts supplier in the United States, which owned and operated more than 3,100 CARQUEST Auto Parts stores and over 80 WORLDPAC branches in the United States, Canada and Puerto Rico.Prior to GPI’s acquisition by Advance Auto Parts, Inc., Mr. Sloan served as President and Chief Executive Officer of GPI from 2008 to January 2, 2014 and as President of GPI from 2001 to 2008. Mr. Sloan is currently a director of Advance Auto Parts, Inc. and Golden Corral Corporation, and previously served as a director of Advance Auto Parts, Inc. and Car Care Council. He is currently a member of the Board of Trustees of Northwood University and a member of The University of North Carolina Board of Governors.Governors a former member of the Board of Trustees of Northwood University.

Mr. Sloan brings to the Company business leadership, innovation, executive decision making and oversight skills as a result of 30 years of experience in a commercial business.

Frederick L. Taylor, II, 46,47, is President of Troy Lumber Company, located in Troy, North Carolina, where he has been employed since 1992. Mr. Taylor has been a director of the Company and First Bank since 2005.

Mr. Taylor brings business-building skills and experience to the Company. Additionally, Mr. Taylor has experience in overseeing the preparation of financial statements and review of accounting matters.

Virginia Thomasson, 64,65, is a Certified Public Accountant with the firm Holden, Thomasson, & Longfellow, P.C., located in Southern Pines, North Carolina, where she has been a partner since 1988. She served as a director of First Savings Bancorp, Inc. from 1997 until its merger with the Company in 2000. Ms. Thomasson has served as a director of the Company and First Bank since 2000. Ms. Thomasson has been designated as an “audit committee financial expert” in accordance with SEC regulations.

Ms. Thomasson brings to the Company experience and skills in public accounting and over 18 years of financial industry experience.

Dennis A. Wicker, 63,64, is a partner in the law firm Nelson Mullins Riley and Scarborough, LLP, located in Raleigh, North Carolina, a position he has held since 2009. From 2008 to 2009, Mr. Wicker was a shareholder and a member of the Executive Committee of the law firm of SZD Wicker, LPA, and from 2001 to 2008 he was a partner in the law firm of Helms, Mullis & Wicker, LLP. Mr. Wicker served as Lieutenant Governor of North Carolina from 1993 to 2001. Mr. Wicker has been a director of the Company and First Bank since 2001. Mr. Wicker currently serves as a director of Coca Cola Bottling Company Consolidated and within the past five years served as a director of Air T, Inc.

Mr. Wicker has an extensive background in law and public service and brings to the Company executive decision making, governance and risk assessment skills.

Executive Officers

In addition to Mr. Mayer and Mr. Moore, the executive officers of the Company and First Bank are currentlyduring 2016 were as follows:

Eric P. Credle, 47,48, is an Executive Vice President of the Company and First Bank and has served as the Chief Financial Officer of the Company and First Bank since joining the Company in 1997.

Michael G. Mayer, 56, was named the President of First Bank effective March 10, 2014 and was appointed as a director of First Bank in October 2014. Mr. Mayer was named the President of the Company on February 23, 2016. Prior to joining the Company, Mr. Mayer most recently served as Chief Executive Officer of 1^st Financial Services Corporation, parent company of Mountain 1^st Bank & Trust, a position he held from January 2010 until 1^st Financial Services Corporation’s acquisition in January of 2014. Mr. Mayer previously served as President and Chief Executive Officer of Carolina Commerce Bank from 2009 until 2010 and Colony Signature Bank (In Organization) from 2007 to 2009, and has held various senior banking positions over his thirty year banking career.

Edward F. Soccorso, 43, is44, was an Executive Vice President of First Bank and iswas the Chief Strategy Officer of the Company and First Bank.Bank until January 20, 2017.  Mr. Soccorso joined the Company in 2012 and served as Co-Chief Credit Officer of First Bank from January 2013 until November 2014 when he was named to the Chief Strategy Officer position.  Prior to joining First Bank, Mr. Soccorso was Director at Piedmont Investment Advisors, LLC where he managed the team dedicated to advising the U.S. Treasury on bank investments made under the Troubled Asset Relief Program (TARP).  Prior to joining Piedmont in 2009, Mr. Soccorso was a Senior Vice President at Four Corners Capital Management, LLC, a Registered Investment Advisor that managed asset backedasset-backed and fixed income portfolios for institutional investors.

BOARD COMMITTEES AND ATTENDANCE

The Board of Directors has established four standing committees: the Executive and Loan Committee, the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. In addition, the Board of Directors may establish other committees from time to time for specific purposes. The following table presents the 2016 membership of the committees that are described below. The chair of each committee is noted with a “(c)”. Following the table is additional information regarding each committee.

Executive and Loan Committee

The Executive and Loan Committee is authorized, between meetings of the Board of Directors, to perform all duties and exercise all authority of the Board of Directors, except those duties and authorities exclusively reserved to the Board of Directors by the Company’s bylaws or by statute. The Executive and Loan Committee also serves as Loan Committee for First Bank. The Executive and Loan Committee held 1614 meetings during 2015.2016.

Audit Committee

The Audit Committee is responsible for the appointment, compensation and oversight of the Company’s independent auditors, and must approve in advance all audit fees and the terms of all non-audit services provided by the independent auditors. The Audit Committee also reviews and presents to the Board of Directors information regarding the effectiveness of the Company’s policies and procedures with respect to auditing, accounting, and internal controls. The Audit Committee also reviews the Company’s financial reporting process on behalf of the Board of Directors. All of the current members of the Audit Committee are independent, as defined byunder the rules of The Nasdaq Stock Market (“NASDAQ”) and the Exchange Act, as well as the Company’s Corporate Governance Guidelines. The Audit Committee held fivesix meetings during 2015.2016.

The Board of Directors has determined that Ms. Thomasson is an “audit committee financial expert” within the meaning of SEC rules and regulations. The Audit Committee reviews and ratifies its charter on an annual basis. The Audit Committee charter is available on the Company’s website at www.LocalFirstBank.com under the tab “About Us – Investor Relations – Governance Documents.”

Compensation Committee

Generally, the Compensation Committee is responsible for reviewing the compensation policies and benefit plans of the Company and for making recommendations regarding the compensation of its executive officers. The Compensation Committee also administers the Company’s equity compensation plans. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees. Each of the current members of this committee is independent under the rules and regulations of NASDAQ and the Exchange Act, as well as the Company’s Corporate Governance Guidelines. The Compensation Committee held twothree meetings during 2015.2016. The Compensation Committee operates under a charter that has been approved by the Board of Directors. The Compensation Committee reviews and ratifies its charter on an annual basis, and the charter is available on the Company’s website at www.LocalFirstBank.com under the tab “About Us – Investor Relations – Governance Documents.”

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is responsible for i) identifying qualified individuals to become Board members, ii) determining the composition of the Board and its committees, and iii) developing and implementing the Company’s corporate governance guidelines. The Nominating and Corporate Governance Committee will consider shareholder nominees for Board membership. Any shareholder wishing to nominate a candidate for director must follow the procedures described in the section “Nominations For Director” above. The section below entitled “Corporate Governance Policies and Practices - Director Nomination Process” describes the process utilized by the Nominating and Corporate Governance Committee for identifying and evaluating candidates to be nominated as directors. The Nominating and Corporate Governance Committee reviews and ratifies its charter on an annual basis, and the charter is available on the Company’s website at www.LocalFirstBank.com under the tab “About Us – Investor Relations – Governance Documents.” Each of the current members of this committee is independent as defined by the rules of NASDAQ rules and the Company’s Corporate Governance Guidelines. The Nominating and Corporate Governance Committee held threetwo meetings during 2015.2016.

Attendance

The Board of Directors held 14ten meetings during 2015.2016. All of the directors and nominees for re-election attended at least 75% of the aggregate of the meetings of the Board of Directors and the committees described above on which they served during the period they were directors and members of such committees.

CORPORATE GOVERNANCE POLICIES AND PRACTICES

The Company has developed, and operates under, corporate governance principles and practices that are designed to maximize long-term shareholder value, align the interests of the board and management with those of the Company’s shareholders, and promote the highest ethical conduct among the Company’s directors and employees. Highlights of the Company’s corporate governance policies, practices and procedures are described below.

Director Independence

The Board of Directors believes that a substantial majority of the board should consist of directors who are independent under the rules and regulations set forth by NASDAQ and as defined in our Corporate Governance Guidelines. The Board of Directors makes an annual determination regarding the independence of each of the Company’s directors. The Board last made these determinations for each member of the board in March 2016,2017, based on the review of director questionnaires designed to elicit information regarding independence. The Board has determined that eightten of its ninetwelve current directors are independent as contemplated byunder the rules and regulations of NASDAQ and our Corporate Governance Guidelines. The individualindividuals who isare not independent isare Mr. Moore and Mr. Mayer because he is athey are current employeeemployees of the Company. For 2015, Mr. Wicker was also considered to not be independent because of payments made by the Company to a family member in 2011 and 2012.

Annual Director Re-Election

Since the Company’s inception, its bylaws have required that directors must stand for re-election to the Board of Directors at each annual shareholders’ meeting. The Board of Directors believes that this policy makes it easier for shareholders to hold directors more directly accountable for corporate performance compared to the staggered-board structure in use at many public companies, which permits directors to hold their positions for several years.

Separation of the Offices of Chairman and Chief Executive Officer

The Board of Directors believes that one of its main purposes is to protect shareholders’ interests by providing independent oversight of management, including the Chief Executive Officer. Although not required by the Company’s bylaws, the Board of Directors has historically believed, and continues to believe, that this objective is facilitated by having an independent director serve as Chairman, thereby separating the offices of Chairman of the Board of Directors and Chief Executive Officer. The Chairman of the Board is responsible for approving meeting schedules and agendas, as well as acting as a liaison between the Chief Executive Officer and the independent directors.

The Board’s Role in Risk Oversight

The Board of Directors believes that each member in his or her fiduciary capacity has a responsibility to monitor and manage risks faced by the Company. At a minimum, this requires the members of our Board of Directors to be actively engaged in board discussions, review materials provided to them, and know when it is appropriate to request further information from management and/or engage the assistance of outside advisors. Furthermore, because the banking industry is highly regulated, certain risks to the Company are monitored by the Board of Directors and the Audit Committee through its review of the Company’s compliance with regulations set forth by its regulatory authorities and recommendations contained in regulatory examinations.

Because we believe risk oversight is a responsibility for each member of the Board of Directors, we do not concentrate the Board’s responsibility for risk oversight in a single committee. Instead, each of our committees concentrates on specific risks for which they have an expertise, and each committee is required to regularly report to the Board of Directors on its findings. For example, the Audit Committee regularly monitors the Company’s exposure to fraud and internal control risk. Our Compensation Committee’s role in monitoring the risks related to our compensation structure is discussed in further detail below. See “Compensation Committee Report” on page 26.

Executive Sessions

The Board of Directors has adopted a resolution requiring that the independent directors of the Company meet at least twice a year in executive session with no non-independent directors or employees of the Company present. At these meetings, the independent directors discuss strategic or other key issues regarding the Company. Two of these executive sessions were held in 2015.2016.

Director Nomination Process

The Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become Board members and recommending to the Board the individuals for nomination as members of the Board. The goal of the Nominating and Corporate Governance Committee is to create a Board that will demonstrate objectivity and the highest degree of integrity on an individual and collective basis. In evaluating current members and new candidates, the Nominating and Corporate Governance Committee considers the needs of the Board and the Company in light of the current mix of director skills and attributes. In addition to requiring that each director possess the highest integrity and character, the Nominating and Corporate Governance Committee’s evaluation of director candidates includes an assessment of issues and factors regarding an individual’s familiarity with the Company’s geographic market area, independence as defined by the various regulatory authorities, business experience, accounting and financial expertise, diversity, and awareness of the Company’s responsibilities to its customers, employees, regulatory bodies, and the communities in which it operates. The Nominating and Corporate Governance Committee also takes into consideration the Board’s established policies relating to the Board’s retirement policy and the ability of directors to devote adequate time to Board and committee matters. When the Nominating and Corporate Governance Committee is considering current Board members for nomination for re-election, the Committee also considers prior Board contributions and performance, as well as meeting attendance records.

The Nominating and Corporate Governance Committee does not have any formal guidelines regarding how it should consider diversity in identifying nominees for director. However, the Committee values the diversity on our current board and is generally cognizant of the benefits of a diverse board.

The Nominating and Corporate Governance Committee may seek the input of the other members of the Board and management in identifying and attracting director candidates that are consistent with the criteria outlined above. In addition, the Committee may use the services of consultants or a search firm, although it has not done so in the past. The Nominating and Corporate Governance Committee also will consider recommendations by Company shareholders of qualified director candidates for possible nomination to the Board. Shareholders may recommend qualified director candidates by writing to the Company’s Corporate Secretary at 300 SW Broad Street, Southern Pines, North Carolina 28387. Submissions should include information regarding a candidate’s background, qualifications, experience, and willingness to serve as a director. Based on a preliminary assessment of a candidate’s qualifications, the Nominating and Corporate Governance Committee may conduct interviews with the candidate and request additional information from the candidate. The Committee uses the same process for evaluating all nominees, including those recommended by shareholders.

In addition, the Company’s bylaws contain specific conditions under which persons may be nominated directly by shareholders as directors at an annual meeting of shareholders. The provisions include the condition that shareholders comply with the advance notice time-frame requirements described under the section entitled “Nominations for Director” above.

Stock Ownership Requirements

The Company’s Board of Directors has adopted a common stock ownership policy for members of the board. This policy requires that any candidate for the Board must either own, or commit to acquire, common stock of the Company with a monetary value at least equal to an established minimum. Prior to March 2016, the minimum value established by the policy was $50,000. In March 2016, the minimum was increased to $100,000. In March 2017, the minimum value established by the policy increased to five times the cash value of director compensation. Newly elected directors have oneuntil January 1^st of the third year fromfollowing the date of their election to acquire the necessary stock. Once the minimum ownership requirement is met, the Board member is deemed to have satisfied this requirement even if subsequent decreases in the Company’s stock price cause the value of the member’s holdings to fall below the minimum. All current directors are currently in compliance with the current policy except for Mr. Sloan, who complied with the previous policy of $50,000 and is expected to comply with the new policy within the next year.policy. The Board believes that this stock ownership policy substantially enhances shareholder value by materially aligning the Board’s interests with those of the shareholders.

Mandatory Retirement

The Company’s bylaws state that no individual may be elected to, or may serve on, the Board of Directors any time after his or her 75th birthday, except that ifmaximum age at which a director may stand for election is elected to72, absent specific approval of an exception by the Board prior to his or her 75th birthdayBoard. All current and reachesnominee directors are less than the age of 75 while serving as a director, such director’s term shall continue until the next annual meeting of shareholders, at which time the director shall retire. The bylaws allow for the Board to make exceptions to this limitation in connection with mergers or acquisitions. The bylaws also state that the foregoing provisions do not apply to any individual during the time such individual is serving as chief executive officer of the Company.72.

Communications with Directors

The Board of Directors believes that it is important that a direct and open line of communication exist between the Board and the shareholders and other interested parties. Any shareholder or other interested party who desires to contact one or more of the Company’s directors may send a letter to the following address:

First Bancorp Board of Directors

P.O. Box 417

Troy, North Carolina 27371

In addition, any shareholder or other interested party who has any concerns or complaints relating to accounting, internal controls or auditing matters may contact the Audit Committee by writing to the following address:

First Bancorp Audit Committee

P.O. Box 417

Troy, North Carolina 27371

All such communications will be forwarded to the appropriate party as soon as practicable without being screened.

Annual Meeting Policy

Directors are expected to attend the Company’s annual meeting of shareholders. All members of the 20152016 Board attended the Company’s 20152016 annual meeting of shareholders.shareholders except for Mary Clara Capel.

Cumulative Voting

The Company’s bylaws provide for the availability of “cumulative voting” in the election of directors. Under cumulative voting, each shareholder calculates the number of votes available to such shareholder by multiplying the number of votes to which his or her shares are normally entitled by the number of directors for whom the shareholder is entitled to vote. The shareholder can then cast the sum for a single candidate or can distribute it in any manner among any number of candidates. For example, if nine directors are to be elected, a shareholder who owns 1,000 shares will have 9,000 votes. This shareholder can cast all of these votes for one candidate, or 1,000 for nine candidates, or 3,000 for each of three candidates, or any other mathematically possible combination.

The purpose of cumulative voting is to preserve the right of minority shareholders, or a group of shareholders acting together, to obtain representation on the Board of Directors that is roughly proportional to their ownership interest in the corporation. The Company’s Board of Directors believes that the minority representation guaranteed by cumulative voting is an appropriate feature of corporate democracy and is not likely to cause harmful factionalism on the board.

Cumulative voting procedures will not be followed at the annual meeting unless a shareholder calls for cumulative voting as provided in the Company’s Articles of Incorporation, by announcing at the meeting before the voting for directors starts, his or her intention to vote cumulatively. See the third paragraph under “Proposal 1- Election of Directors” above for additional information regarding cumulative voting.

Code of Ethics

The Board of Directors has adopted a Code of Ethics that applies to the Company’s directors and employees, including the Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer. The Code includes guidelines relating to ethical handling of actual or potential conflicts of interest, compliance with laws, accurate financial reporting, and procedures for promoting compliance with, and reporting violations of, the Code of Ethics. The Code of Ethics is available on the Company’s websiteat www.LocalFirstBank.com under the tab “About Us – Investor Relations – Governance Documents.” Any amendments or waivers to the Code of Ethics will be disclosed in the same location on the Company’s website.

The nominees who receive the highest number of votes cast, up to the number of directors to be elected, shall be elected as directors. The Board of Directors recommends that shareholders vote “FOR” the proposal to elect the ninetwelve nominees as directors. Unless indicated to the contrary, proxies will be voted “FOR” the ninetwelve nominees listed above.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

In this section, we discuss our compensation program as it pertains to our principal executive officer, our principal financial officer and our two other most highly compensated executive officers in 20152016 (“NEOs”). As discussed below, the compensation policies relating to our current Chief Executive Officer, who joined our company in June 2012, are discussed separately in cases where theythe policies differ materially from those for our other three named executive officers (“Other NEOs”). Our discussion focuses on compensation and practices relating to 2015,2016, our most recently completed fiscal year.

Structure and Role of the Compensation Committee

The Compensation Committee of our Board of Directors consists entirely of independent directors. It operates under a written charter that the board has adopted.

The Compensation Committee is primarily responsible for the following:

Compensation Philosophy and Objectives

The objectives of our executive compensation programs are:

Our compensation program seeks to reward our executives’ contributions to corporate performance, including contributions of leadership, effort, creative ideas, industry and operational knowledge, and ethical behavior, all in pursuit of increasing shareholder value. The committee’s general philosophy is that we should compensate our executive officers at approximately the same average level as corresponding officers at similarly situated peer financial service companies. While that is our general philosophy, we may position a base salary in the upper quartile of the market due to experience, performance, or competitive situations. Also, we provide incentives that may result in compensation reaching the upper quartile of the market when performance exceeds targets.

Because the Compensation Committee bases its compensation decisions on the objectives and philosophy described above, it does not take into account an individual’s net worth or the wealth the individual has accumulated from prior compensation.

Competitive Positioning

Periodically, the Compensation Committee engages outside compensation consultants to evaluate whether our compensation practices are consistent with meeting our objectives. In these engagements, the Compensation Committee has instructed the outside consultant to compare our compensation practices and compensation levels to those of a peer group of similarly situated financial service companies. The consultant then provides the Compensation Committee with analysis and recommendations.

In November 2013, the Compensation Committee engaged and met with Blanchard Consulting Group who had been engaged by the Committee to review and advise the Committee on executive compensation matters. At this meeting, Blanchard Consulting Group presented the Committee with its findings, which it based on a study of 2012 data (the most recent data then available).

The Blanchard Consulting Group analysis compared the compensation of our NEOs to a representative sample of 23 publicly traded financial institutions that were comparable to the Company in either location and asset size or in performance measures. This peer group consisted of the following companies:

The results of the analysis were considered by the Compensation Committee in determining the appropriate components and amounts of executive compensation, as described below.

Executive Compensation Program Overview

The five primary components of our executive compensation program are:

In the information that follows, we discuss the compensation of our Chief Executive Officer and then we discuss the compensation of our Other NEOs.

Compensation of Richard H. Moore, Chief Executive Officer

Base Salary – When Mr. Moore entered into an employment agreement with the Company in August 2012 after joining the Company in June 2012, his initial annual base salary was set at $475,000. His base salary remained at that same amount for 2013. In 2014, the Compensation Committee increased his baseset Mr. Moore’s salary toat $525,000 based on the Committee’s review of the Company’s performance since Mr. Moore joined the Company and the results of a November 2013 Blanchard Consulting Group peer study (discussed above) that indicated Mr. Moore’s base salary. In 2015 and total compensation were below that of the peer group. Following the increase in Mr. Moore’s base salary for 2014,2016, the Compensation Committee believed that itthis salary remained appropriate, for 2015, and thus Mr. Moore’s base salary was $525,000 for 2015.

2016.

Performance Incentive Plan – Mr. Moore’s employment agreement statesin effect in 2016 stated that he hashad the opportunity to earn an annual bonus with a value of between $150,000 and $600,000 based on the Company’s attainment of an annual earnings goalperformance goals established by the Compensation Committee for that year. According to the employment agreement, the bonus earned is to be paid 50% in cash and 50% in restricted stock, with the stock vesting in one-third increments at each of the following three year ends. If the actual earningsperformance goals for a year are at the “Threshold” level, Mr. Moore will earn a bonus with a value of $150,000; if they are at the “Target” level, he will earn a bonus with a value of $300,000; and if they are at the “Maximum” level, he will earn a bonus with a value of $600,000. The amount payable where performance is greater than Threshold but less than Target or greater than Target but less than Maximum areis to be determined on the basis of straight line interpolation between points. The payment of the bonus is conditioned on the Company having achieved a satisfactory regulatory review as of such date as determined by the Board of Directors. Any bonuses granted in accordance with this plan are subject to clawback provisions that allow the Company to recoup amounts paid under the plan if the Company is required to restate its financial statements within three years of the payment. The amount of the clawback is computed by calculating the difference in the award payment based on the restated financial statement amounts compared to the originally stated amounts that were used to calculate the award.

As noted above, the bonus underfor Mr. Moore’s employment agreementMoore is based on the Company’s attainment of an earnings goal. The earnings goal for 2015 was defined byperformance goals. For 2016, the Compensation Committee asdetermined that his goals would be consistent with the Company’s earnings per common basic share as computed under generally accepted accounting principles. For 2015, the Compensation Committee established a Target earnings per share goal of $1.45, which was the same as the Company’s corporate budget for 2015. The Threshold goal of $1.23 was set at 85%goals of the Target goal andOther NEOs – for more detail, see discussion below as it relates to the Maximum goal of $2.18 earnings per share was set at 150% of the Target earnings per share goal.

Other NEO. At a meeting held on February 23, 2016,7, 2017, the Compensation Committee reviewed the Company’s actual earnings per common basic shareperformance for 2015, which amounted to $1.34. Accordingly,2016 and determined that Mr. Moore’s performance was determined to be at 75.0%payout according the formulas noted above resulted in a bonus of the Target goal and his bonus was computed to be $225,000. Additionally, in light of an assessment of his performance and in recognition of the Company’s achievement of other goals, the Compensation Committee elected to increase Mr. Moore’s bonus by $100,000 to $325,000.$355,500. In accordance with the terms described above, he was paid 50% of that amount in cash, which amounted to $162,500,$177,750, and he was granted 8,745 shares5,921shares of the Company’s restricted common stock, with a value of $162,500,$177,750, which will vest in equal one-third increments on December 31, 2016,2017, December 31, 20172018 and December 31, 2018.2019. Additionally, based on the Committee’s review of Mr. Moore’s other achievements and the Company’s performance for 2016, the Compensation Committee granted Mr. Moore an additional cash bonus of $250,000.

Long-Term Incentive Compensation – Upon the execution of his employment agreement in August 2012, Mr. Moore was granted 40,000 shares of restricted stock of the Company. The 40,000 shares would have vested on December 31, 2015 if the Company had achieved a specified earnings goal in 2015. The earnings goal set was defined by the Compensation Committee as an earnings per share goal that was to be measured in a manner consistent with generally accepted accounting principles, except that it excluded certain items of income and expense that are volatile, unpredictable and generally relate to actions taken by the Company that occurred prior to Mr. Moore’s employment and are almost entirely out of his control. Accordingly, loan discount accretion related to two-failed bank transactions, provisions for loan losses, securities gains/losses, foreclosed property write-downs, indemnification asset income/expense and other gains/losses are examples of items that the Compensation Committee believed should be excluded from the measurement (as well as the related tax impact). The 2015 earnings goal, computed as just described, was set by the Compensation Committee for the vesting of the options at a level that the Committee estimated would be a 50% improvement from the Company’s approximate level of performance at the time the award was granted. At a Compensation Committee meeting held on February 23, 2016, the Committee determined that the Company’s earnings for 2015 fell below the targeted goal for the stock to vest. Accordingly, the shares did not vest and were forfeited.

As discussed in the section “Equity Grants” below, in February 2015,August 2016, Mr. Moore, along with tenthirteen other officers of the Company, was granted shares of the Company’s restricted common stock in an effort to promote share ownership and management retention. The terms of the grants called for the shares to vest in one-third incrementsafter three years on December 31, 2015, December 31, 2016 and December 31, 2017.August 30, 2019.

In addition to the financial terms discussed above, other provisions of Mr. Moore’s employment agreement are as originally executed, included the following terms (see the “Changes for 2016” section below for terms that will be modified by amendment in 2016):

follows:

Any Long-Term Incentive Compensation awards realized by Mr. Moore are expected to be under the Company’s 2014 Equity Plan, which has clawback provisions – see discussion under “Equity Grants” below.

Changes for 20162017

At itsOn February 2016 meeting,7, 2017, the Compensation Committee determined thatreviewed the compensation of Mr. Moore and Mr. Mayer. Due to Mr. Mayer’s assumption of more of the day-to-day operations of the Company and Mr. Moore’s base salary would remain at $525,000continued emphasis on the strategic aspects of the business, the Committee engaged the executive compensation firm Pearl Meyer to make recommendations to the Committee based on a study of the market for 2016. other companies with similar arrangements. Pearl Meyer performed a market study and found nine peer companies with similar arrangements, as follows:

Based on the results of a November 2013 Blanchard Consulting Group peerthis study, (discussed above), the Committee concluded that his current salary remains appropriate.

In March 2016, based on a review of current market terms with a compensation consultant,Pearl Meyer recommended to the Compensation Committee that Mr. Moore’s 2017 salary be reduced to $400,000 with revised incentive opportunities which more directly align his compensation to the success of the Company. This recommendation is at approximately the 50^th percentile for the peer group. The Committee accepted the salary recommendation and Mr. Moore reached an agreement in principle to amend his employment agreement to changetook the following:short-term and long-term incentive opportunities under advisement.

Additionally, Mr. Moore’s employment agreement will be amended to change the performance criteria for the Performance Incentive Plan from being a single goal, based solely on earnings, to being multiple goals that are consistent with those set under the Annual Incentive Plan that is applicable to the Other NEOs.

Except as otherwise described, the following section discusses the compensation of our Other NEOs.

We pay each officer a base salary because it provides a minimum level of compensation and is necessary for recruitment and retention. The Compensation Committee intends that our Other NEOs’ base salaries will provide them with a competitive baseline level of compensation based on their individual experience, performance and scope of responsibility. An important aspect of base salary is the ability of the Compensation Committee, the board and the CEO (in the case of other officers’ salaries) to use annual base salary adjustments to reflect an individual’s performance or changed responsibilities.

Base salary levels are also important because we generally tie incentive and long-term compensation to an officer’s base salary. For example, awards under our annual bonus plan, the Annual Incentive Plan, are denominated as a percentage of base salary.

The results of the Blanchard study discussed above indicated that, except for the Chief Credit Officer position, base salaries for our Other NEOs were at or near the peer average. The study indicated that the peer average for base salary for the Chief Credit Officer position was significantly higher than the salary of Edward F. Soccorso, who fulfilled many of those same roles for the Company as the Co-Chief Credit Officer (his position at the time). Based on their review in prior years of the Blanchard Consulting Group study at a meeting held on February 24, 2015discussed above and an assessment of the responsibilities and performance of our Other NEOs, in a meeting held on February 23, 2016, the Compensation Committee determined that the base salary of our Other NEOs would remain the same as the annual salary they were earning at the end of 2014,be as follows:

At a Compensation Committee meeting held on February 23, 2016, the Committee determined that the base salary for each of the NEO’s continued to be appropriate and would remain unchangedThe increase in 2016, except that Mr. Mayer’s salary was adjusted to $425,000 as a result of an assessment of hisexemplary performance and in recognition of his promotion asto President of the Company’s President.Company in February 2016.

In order to set salaries for Mr. Mayer and Mr. Credle for 2017, the Compensation Committee engaged Pearl Meyer to provide analysis and recommendations. In February 2017, Pearl Meyer presented the committee with its findings, which it based on a study of 2016 proxy data (the most recent data then available).

The Pearl Meyer analysis compared the compensation of our NEOs to a representative sample of 20 publicly traded financial institutions that were comparable to the Company in either location and asset size or in performance measures. This peer group consisted of the following companies:

Based on the Pearl Meyer analysis and in light of Mr. Mayer’s increased responsibilities, including being named the Chief Executive Officer of First Bank on February 7, 2017, Mr. Mayer’s salary for 2017 was increased from $425,000 to $450,000. This salary was at approximately the 75^th percentile compared to executives in the peer group with the title of Chief Operating Officer or President and was in approximately the 25^th percentile for Chief Executive Officers. Based on Mr. Mayer’s increased responsibilities, the Compensation Committee concluded the $450,000 salary was appropriate. Based on the same Pearl Meyer analysis, Mr. Credle’s salary for 2017 was increased from $325,000 to $335,000, which was between the 50^th and 75^th percentile for peer Chief Financial Officers, which the Compensation Committee believed was appropriate.

2.       Annual Incentive

The Compensation Committee designed our Annual Incentive Plan to provide our Other NEOs with the opportunity to earn an annual cash and/or stock bonus of 40% to 50% of their base salary if we achieved targeted levels of financial performance, with the opportunity for each officer to earn up to twice1.5 times the target percentage if certain goals were met. The Committee and the board believe that a meaningful, but not overwhelming, amount of each of our Other NEO’sNEOs’ annual direct compensation should be tied to achieving corporate performance targets. The Committee believes this structure reflects a proper balance of direct compensation that provides our officers with a baseline level of financial stability (in the form of base salary), while also providing an appropriate incentive for achieving annual targets that drive our corporate performance. Amounts of annual incentive earned were included in the Blanchard Consulting Group analysis described above, which the Committee considers in determining the appropriateness of amounts of annual incentive awards that are able to be earned by our NEOs.

Our Annual Incentive Plan pays cash and/or stock bonuses within the first 75 days of each year based on corporate performance in the preceding fiscal year. Each participant’s total possible bonus is based on a target bonus percentage set for each participant. The plan uses multiple performance measures to determine the amount of each participant’s total bonus. The Committee assigns a weight to each performance measure, with the sum of the weights equal to 100%. The weight is the percentage of each participant’s total bonus that will be based on that particular performance measure. The Committee also sets threshold, target and maximum performance levels for each measure. If we do not achieve the threshold performance level, participants earn no bonus for that measure. Participants earn 50% of their target bonus for the measure if we meet the threshold level, 100% if we meet the target level and 200%150% if we achieve the maximum level. Prior to 2016, the percentage for reaching the maximum level was 200%. For 2016, the Compensation Committee determined it was appropriate to reduce that percentage to 150%. Bonuses are directly proportional to performance between any of these set points. Thus, an officer’s bonus amount could range from 0% to 200%150% of the officer’s target bonus percentage under the terms of the plan.

The Compensation Committee approved a newCompany’s annual incentive plan in February 2015, which did not contain significant changes from the prior annual incentive plan in place. However the new plan includes clawback provisions that allow the Company to recoup amounts paid to certain employees under the plan if the Company is required to restate its financial statements. The amount of the clawback is computed by calculating the difference in the award payment based on the restated financial statement amounts compared to the originally stated amounts that were used to calculate the award. The employees subject to the clawback provision are to be notified in writing that this provision applies to them. Each of our Other NEOs have been notified that this provision applies to them.

Prior to 2010, the Compensation Committee recommended, and the board approved, the target bonuses in the table below for our Other NEOs. In order to determine each officer’s cash bonus, the percentage listed below is multiplied by the officer’s base salary, which is then multiplied by the sum of the performance percentages earned that are described above. Based on the challenging economic conditions facing the banking industry and the Company’s lower levels of expected profitability in recent years, for each of the years 2010 - 2013, the Compensation Committee decided that every participant’s target bonus percentage would be reduced by two-thirds of its established level. For 2014, as a result of increased profitability and a recovering economy, the percentage was only reduced by one-third of its established level, which the Committee has determined would alsoto be appropriate for 2015.each subsequent year. Accordingly, each Other NEO’s target bonus was reduced as reflected in the table below.

The following table shows the thresholds, targets, maximums, and weightings for each performance goal that the Committee approved for 20152016 for the Company’s officers (other than those classified as regional, line of business, or branch officers) and the performance percentages that resulted from the actual results:

(1) The Compensation Committee determined that the impact of the following events would be adjusted for in the earnings per share measure – 1) the accounting loss incurred upon the Company’s early termination of FDIC loss-share agreements, and 2) the accounting gain recorded in the Company’s exchange of branches with another community bank. The net impact of these two events was determined to result in a reduction of basic earnings per share of $0.16, and thus that amount was added to the Company’s reported basic earnings per share of $1.37 to arrive at $1.53.

(2) The referral goals include a combination of number of referrals and revenue realized from the referrals among four business lines – 1) wealth management, 2) mortgage, 3) credit card, and 4) cash management. The sum of the goals attained resulted in a performance percentage of 9.9% for 2016.

We selected each of the above goals for our executive officer compensation because we selected those same types of goals for our branch employees and we desired to have the interests of our executive officers aligned as much as possible with our employees in the field. The following includes some of the specific reasons we selected each goal:

The term “non-covered” means that we exclude from the calculation assets assumed in two failed-bank acquisitions that are covered by loss-share agreements with the FDIC. We believed it was appropriate to exclude those assets from the measurement criteria due to their unique characteristics.

In addition to the goals noted above, the Compensation Committee also set two triggers that the Company had to meet for any of the above-described bonuses to be paid. In other words, if the Company did not achieve both triggers, no bonuses would be paid to our Other NEOs no matter what the results were for the four goals noted above. The two triggers were:

As shown above, the total payout percentage according to the terms of the Annual Incentive Plan was 110%106.6% and the Compensation Committee determined that the two triggers noted above were achieved.

Accordingly, the following table illustrates how each Other NEO’s incentive bonus for 20152016 was calculated. These payments were made in March 2016.2017.

In addition to the amount shown above, the Compensation Committee granted Mr. Mayer a discretionary bonus of $18,000 in recognition of 2015 performance, which was paid in the same mix of cash and stock and subject to the same terms as the incentive discussed above.

For 2016,2017, the Compensation Committee determined that the target bonus percentage for each officer participating in the Annual Incentive Plan, including each of our Other NEOs, would again be reduced by one-third of the original percentage. Additionally, the Compensation Committee determined that participants would earn 150% of their target bonus for achieving the maximum level for each goal, which is a change from the 200% previously earned for achieving the maximum level.

As previously discussed, during 20162017 we made equity grants to Mr. Moore, Mr. SoccorsoMayer and Mr. Credle related to performance for 2015.2016.

Additionally, in 2015,August 2016, in consultation with a compensation consultant and in ancontinued effort to promote share ownership and management retention and consistent with past consultations with our compensation consultant, the Compensation Committee granted shares of restricted common stock to 1114 officers, including each of our NEOs, equal to either 15% or 20% of their base salary, with each of our NEOs being at the 20% level. The Committee determined those percentages based on the recommendation of the compensation consultant, who stated that the percentages were reflective of industry norms. The shares vest in one-third incrementsthree years from the date of grant, or on December 31, 2015, December 31, 2016 and December 31, 2017.August 30, 2019. The following are the number of shares that were granted on February 24, 2015August 30, 2016 to the Company NEOs, with the shares granted having a value equal to 20% of the NEO’s annual base salary:

Mr. Moore – 6,1155,226 shares

Mr. Mayer – 4,6594,230 shares

Mr. Credle – 3,235 shares

Mr. Soccorso – 3,7853,235 shares

Mr. Credle – 3,785Soccorso’s shares were forfeited upon his separation from the Company in 2017.

While it is anticipated that similar grants may be made in future years, no similar grants have been made thus far in 2016.2017. Depending on the Company’s performance during 2016,2017, similar grants may be made later in the year.

All equity grants currently made, including the grants just described, are under the Company’s 2014 Equity Plan. That plan has standard clawback provisions that provide that any compensation paid pursuant to the plan which is subject to recovery under any law, government regulation or stock exchange listing requirement, including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations of that Act, will be subject to such deductions, recovery and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement. Participants shall, upon written demand by the Company, promptly repay any such compensation or take such other action as the Company may require for compliance with these provisions.

We provide a competitive benefits program for our NEOs, including our CEO. We provide these benefits in order to retain and attract an appropriate caliber of talent and recognize that other companies with which we compete for talent provide similar benefits to their executive officers.

The following table lists our current benefit programs and shows, for each, the employees eligible for each benefit:

Supplemental Executive Retirement Plan

We sponsor a supplemental executive retirement plan, or SERP, for the benefit of certain members of our senior management, including Mr. Credle. Due to their hire dates, the other NEOs are not participants in the SERP. The purpose of the SERP is to provide additional monthly pension benefits to ensure that each participant will receive lifetime pension benefits beyond the amounts that we can pay under our qualified pension plan. The SERP generally provides participants with an annual benefit at retirement equal to 3% of final average compensation multiplied by years of service, up to a maximum of 60% of final average compensation. The amount of a participant’s SERP benefit is reduced by (1) the amount payable under our qualified pension plan, and (2) 50% of the participant’s primary Social Security benefit.

We set the benefits payable under the SERP in 1993 at the inception of the plan, in consultation with an employee benefits consultant who assisted us with plan design. At that time, the employee benefits consultant provided peer information and gave his expert opinion that the benefits payable under this plan were reasonable and would further our objectives of attracting and retaining senior management executives.

During 2012, we decided that we wanted to offer a uniform set of retirement benefits that would be applicable to all employees and not just those that were hired after June 11, 2009 or those that had achieved a certain level within the Company. Accordingly, effective December 31, 2012, in addition to freezing the qualified defined benefit pension plan (as noted above), we also froze our SERP, which means that the participants of that plan will not earn future benefits under the plan.

Perquisites

We provide only very limited perquisites. During 2015, the onlyNone of our NEOs received in excess of $10,000 in perquisites provided to any of the NEOs were as follows:during 2016.

Accelerated Vesting

Our current equity plan and the SERP have change in control provisions that automatically vest all participants in the benefits of each plan in the event of a change in the control of our Company. We believe that other companies with which we compete for executive talent provide a similar acceleration benefit, and that these provisions therefore assist us in attracting and retaining talent.

Employment Agreements

We have employment agreements with each of our Other NEOs. The employment agreement with our CEO has been previously described. See “Compensation of Richard H. Moore, Chief Executive Officer” above.

As of December 31, 2015,2016, our Other NEOs each had employment agreements with one year terms that renew annually unless either party gives written notice of non-renewal. Each of these agreements provides for the payment of certain severance benefits to the officer upon termination of employment in certain circumstances, including following a change in the control of our company. For more information about these benefits, see the section below captioned “Executive Compensation – Potential Payments Upon Termination.” Eachagreement also contains non-competition and confidentiality covenants that protect our company if the officer leaves.

The objectives of the Other NEO employment agreements were as follows:

The Compensation Committee and the board believe the amount of the severance benefits potentially payable to each NEO under these agreements is reasonable and consistent with industry standards.

The above discussion describes the five primary components of our executive compensation program. The following section describes other guidelines and procedures affecting executive compensation.

Other Guidelines and Procedures Affecting Executive Compensation

Stock Option Grants

When we approve a stock option grant, we set a date in the future as the measurement date for the exercise price of the stock option. We do not “back-date” stock option grants. We do not have a policy or practice of making stock option grants during periods in which there is material non-public information about our Company.

Tax Considerations

It has been and continues to be our intent that all incentive payments be deductible unless maintaining deductibility would undermine our ability to meet our primary compensation objectives or is otherwise not in our best interest. At this time, essentially all compensation we have paid to the NEOs is deductible under the federal tax code, except for income realized from exercise of incentive stock options by some NEOs.

Share Ownership Guidelines for Named Executive Officers

Until February 2015, we encouraged, but did not require, our NEOs to own shares of our common stock. At a Compensation Committee meeting held on February 24, 2015, the Committee adopted a Stock Ownership and Retention Policy. This policy requiresrequired the CEO to own shares of common stock of the Company with a value of at least two times his or her annual base salary and for all Other NEOs to own Company stock with a value equal to their base salary. NEOs who have not met the ownership requirements within five years of being subject to the policy (i.e. becoming aan NEO) are subject to restrictions on future stock sales until they are in compliance with the policy.

At the Company’s Compensation Committee meeting held in February 2017, the Compensation Committee changed the stock ownership guidelines for Mr. Moore and Mr. Mayer to require them to retain 50% of all shares of common stock they have been granted by the Company until retirement.

Consideration of Prior-Year Shareholder Advisory Vote

At the 20152016 annual meeting of shareholders, on the proposal approving, on an advisory basis, the compensation paid to our named executive officers as disclosed in the proxy statement for that annual meeting, 98 percent of the votes cast were cast in favor of the proposal. The Compensation Committee considered this high level of support as providing confirmation that the shareholders support our compensation policies and decisions for our named executive officers, and determined that its approach to the 20162017 compensation policies and decisions would remain generally consistent with the approach in 2015.2016.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Company has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on its review and discussion, the Compensation Committee recommended to the board that the Compensation Discussion and Analysis be included in this proxy statement and in the Company’s annual report on Form 10-K for filing with the SEC.

The Compensation Committee has conducted a risk-based assessment of the Company’s compensation plans, policies and practices to determine whether such plans, policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. Based on this assessment, the Committee has concluded that the Company’s compensation plans, policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. As part of its assessment, the Compensation Committee evaluated the Company’s compensation plans and programs to determine their propensity to cause undue risk taking by employees, including senior executive officers, relative to the level of risk associated with the Company’s business model and operations. The Committee believes that the Company does not use highly leveraged short-term incentives that encourage high risk behavior at the expense or to the detriment of long-term value, or which are reasonably likely to create a material adverse effect. The Committee completed its assessment in 2016 as part of its obligation to oversee the compensation risk assessment process for the Company.

Submitted by the Compensation Committee of the Company’s Board of Directors.

Summary Compensation Table

The following table shows the compensation we paid in each of the last three fiscal years to the NEOs.

20152016 SUMMARY COMPENSATION TABLE

Notes:

We have entered into employment agreements with 12eight of our officers, including each of the NEOs. Each employment agreement provides for post-termination benefits that we must pay in certain circumstances. See “Potential Payments Upon Termination” below for more information about these potential benefits, and about the non-competition and confidentiality covenants contained in the agreements.

Grants of Plan-Based Awards

The amounts shown in the table below relate to 1) the range of possible non-equity and equity payouts in 20162017 for 20152016 performance under the Performance Incentive Plan for Mr. Moore and the Annual Incentive Plan for Other NEOs, and 2) grants of stock made on February 24, 2015August 30, 2016 to promote share ownership and management retention.

Under both incentive plans, we pay cash bonuses within the first 75 days following year end based on corporate performance in the preceding fiscal year. According to the Performance Incentive Plan, Mr. Moore’s bonus is payable in an equal mix of cash and restricted stock, while payments under the Annual Incentive Plan can be paid in cash or restricted stock or a mix of the two. In February 2015,2016, the Compensation Committee determined that 1113 members of senior management, including each NEO, would be paid their award in a mix of 50% cash and 50% restricted stock.

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Notes:

Outstanding Equity Awards at Fiscal Year-End

The following table provides information about the equity awards our NEOs held as of the end of 2015.

2016.

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Notes:

Option Exercises and Stock Vested

None of our NEOs exercised stock options during 2015.2016. The following table shows the number of shares of stock that vested and the value realized on the date of vesting, as determined by the Company’s stock price at the close of business on the date the stock vested.

Pension Benefits

The following table shows information about the NEOs’ accrued benefits as of December 31, 20152016 under our tax-qualified pension plan and our supplemental executive retirement plan, or SERP.

Pension Plan

Our tax-qualified pension plan covers all full-time employees hired on or before June 11, 2009 and provides each participant with an annual retirement benefit paid monthly in cash. Based on their hire dates, Mr. Credle is the only NEO who participates in the plan. At normal retirement age of 65, this benefit is equal to the sum of:

“Final average compensation” means the average of the participant’s highest consecutive five years of compensation during his or her last 10 years of employment. For purposes of this plan, “compensation” generally means base salary plus bonuses. However, the federal tax code limits the amount of compensation we can take into account for purposes of the pension plan. The limit was $265,000 for 2015.plan, and that amount has been taken into account in the amounts provided.

Each participant becomes fully vested in his or her plan benefits after five years of service. Early retirement, with reduced monthly benefits, is available to any participant who leaves the company at or after age 55 with 15 years of service. The plan also provides a death benefit to a vested participant’s surviving spouse.

As required by federal pension laws, benefits under the pension plan are funded by assets held in a tax-exempt trust. Effective December 31, 2012, the Compensation Committee froze the benefits payable under the pension plan.

SERP

Our SERP is for the benefit of our senior management, including the NEOs (excluding Mr. Moore, Mr. Mayer and Mr. Soccorso, who based on their hire dates, are not participants). The purpose of the SERP is to provide additional monthly pension benefits to ensure that each participant will receive lifetime pension benefits beyond the amounts that we can pay under our qualified pension plan. The SERP generally provides participants with an annual benefit at normal retirement age of 65, payable monthly in cash, equal to 3% of final average compensation multiplied by years of service (up to a maximum of 20 years). For purposes of the SERP, “final average compensation” has the same meaning as under our pension plan. The amount of a participant’s SERP benefit is reduced by (1) the amount payable under our qualified pension plan, and (2) 50% of the participant’s primary social security benefit.

Each participant becomes fully vested in his or her SERP benefits at retirement, death, disability or a change in control. Early retirement, with reduced monthly benefits, is available to any participant who leaves the company at or after age 55 with 15 years of service. The plan also provides a death benefit to a vested participant’s surviving spouse.

Because the SERP is a non-qualified plan, its benefits are unsecured, and a participant’s claim for benefits under the plan is no greater than the claim of a general creditor.

As a general rule, we do not grant extra years of credited service under either the pension plan or the SERP. On one occasion, we credited two officers of an acquired company with three extra years of service under the SERP. None of the NEOs has received any extra years of credited service under either plan.

Effective December 31, 2012, the Compensation Committee froze the benefits payable under the SERP.

Potential Payments Upon Termination or Change in Control

This section contains information about arrangements that provide for compensation to our NEOs in connection with their termination. Actual circumstances resulting in the departure of an NEO cannot be predicted and may differ from the assumptions used in the information outlined below.

Employment Agreements

As noted above, we are party to employment agreements with 12eight of our officers, including each of our NEOs. The term for all agreements is one year, and they automatically renew for an additional one year period on each anniversary date.

Under each of the employment agreements, if we terminate the officer without cause, we have agreed to pay the officer’s base salary for the greater of 1) the remainder of the agreement term, or 2) three months for Mr. Moore and six months for all others. In addition, for Mr. Moore, we have agreed to reimburse him for the costs of his participation in the health plan of a previous employer for the same period of time as described in the preceding sentence.

The definition of “without cause,” as provided in each NEOs agreement, would generally be anything excluding the following – an employee’s:

Pursuant to these employment agreements, we have also agreed to pay a lump sum payment if employment ends due to a long-term disability. For Mr. Moore, in the event of termination due to disability, we would owe him a lump sum payment equal to three months of base salary. All other officers would receive a lump sum payment equal to the greater of 1) base salary for the remaining contractual term, or 2) base salary for six months.

Each employment agreement also provides for severance payments to the officer if we terminate his/her employment within 12 months after a change in control without cause (as defined above) or if the employee terminates employment for good reason within 12 months after a change in control. For Mr. Moore, the amount of the severance payment is 2.99 times his annual salary, (this multiple was 2.00 until March 2016), and in addition the Company will reimburse Mr. Moore for the costs he incurs to participate in the health plan of a previous employer for twelve months. For our Other NEOs with agreements, the amount of the severance payment, which we would be required to pay after termination following a change of control, is equal to 2.99x2.99 times the officer’s base salary as of the date of the change in control. Mr. Soccorso’s agreement also limitslimited that payment to no more than 2.99 multiplied by the officer’s “base amount” under Section 280G(b)(3) of the Internal Revenue Code.Code; however, because Mr. Soccorso is no longer employed by the Company, his employment agreement is no longer in effect. Additionally, for our Other NEOs with agreements, we have agreed to reimburse their COBRA health care premiums until the earliest of: 1) the twelve12 month anniversary of the last date of employment with the Company, 2) the date the officer is no longer eligible to participate in COBRA coverage, and 3) the date on which the officer becomes eligible to receive substantially similar coverage from another employer.

The definition of “good reason” in each agreement is:

Provided that, in order for the employee to be able to terminate for good reason, the employee must first provide notice to the Company of the condition within thirty30 days of the initial existence of such condition with no remedy to the condition being provided by the Company within thirty30 days of such notice.

The agreements define “control” as the power, either directly or indirectly, to direct our management or policies or to vote 40% or more of any class of our securities. In general, any change in control of our Company triggers the change in control provisions of the employment agreements. However, the agreements expressly exclude as a “change in control” any merger, consolidation or reorganization following which the owners of our capital stock who were previously entitled to vote in the election of our directors own 61% or more of the resulting entity’s voting stock.

The following table shows the lump sum cash severance amounts we would have owed our NEOs under their employment agreements if they had terminated employment on December 31, 20152016 under various circumstances.

Our current equity plan and the SERP have change in control provisions that, under certain circumstances, automatically vest all participants in the benefits of each plan in the event of a change in control of our Company. See “Outstanding Equity Awards at Fiscal Year End” for information about the equity awards that our NEOs held as of the end of 2015 that would be subject to accelerated vesting upon a change in control. See “Pension Benefits – SERP” for information about the NEO benefits that would be subject to accelerated vesting upon a change in control.

The employment agreements also contain non-competition, non-solicitation and confidentiality covenants by the officers. The non-competition and non-solicitation covenants prohibit each officer from:

For Mr. Moore, the restricted period is one yearsix months irrespective of the circumstances of termination and the restricted territory includes (i) a 60-mile radius around the Company’s headquarters, (ii) any city, metropolitan area, county, or state in which Mr. Moore’s substantial services were provided, or for which Mr. Moore had substantial responsibility, or in which Mr. Moore worked on Company projects, while employed by the Company, or (iii) any city, metropolitan area, county or state in which the Company is located or does or, during Mr. Moore’s employment with Company, did business. Pursuant to a 2016 amendment to Mr. Moore’s employment agreement, the restricted period will be reduced to six months.

For Mr. Mayer, Mr. Soccorso, and Mr. Credle the restricted period is six months irrespective of the circumstances of termination and the restricted territory is a 60-mile radius of the location of the Company’s headquarters during the officer’s employment with the Company, and also includes a 25-mile radius of the location of any bank branch.

The confidentiality covenants contained in each employment agreement prohibit the officer from disclosing any confidential business secrets or other confidential data both during the term of the employment agreement and for a defined term thereafter. The term of these covenants is for fifteen15 years after termination for Mr. Moore, and five years for Mr. Mayer, Mr. Soccorso, and Mr. Credle.

COMPENSATION OF DIRECTORS

The Board of Directors establishes compensation for board members based primarily on consultation with an outside consultant, who assists the Board of Directors in evaluating whether its members are receiving fair compensation for the services they perform. This evaluation is based primarily on a comparison to other financial services companies of a similar size. The peer companies that were used in the most recent comparison prior to 2017 were the same as those used during the evaluation of NEO compensation described on page 15 above.

Based on this evaluation, the Board set the following fees for 2016. These fees are only paid to non-employee directors.

Annual Retainer

Additional Fees

Non-employee directors of the Company also participate in the Company’s equity plan. In June 2015,2016, each non-employee director of the Company received 1,022823 shares of the Company’s common stock. The number of shares of stock granted produced a value that was approximately the same as stock option grants that each director had received in years prior to 2010. The Board of Directors intends to make similar grants of common stock, in June of each year, to non-employee directors.

Directors who retire from the board and are named Director Emeritus receive fees of $4,000 per year for three years.

The following table sets forth compensation we paid to our directors in 2015:2016: