Attached files
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| 8-K - 8-K - FIRST COMMUNITY BANKSHARES INC /VA/ | v350911_8k.htm |
| NEWS RELEASE | ||
| FOR IMMEDIATE RELEASE: | FOR MORE INFORMATION, CONTACT: | |
| July 25, 2013 | David D. Brown | |
| (276) 326-9000 | ||
First Community Bancshares, Inc. Announces Second Quarter 2013 Results
Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) (the “Company”) today reported net income for the quarter and six months ended June 30, 2013, of $5.44 million and $12.58 million, respectively. Net income available to common shareholders totaled $5.18 million, or $0.25 per diluted common share, for the quarter ended June 30, 2013. Net income available to common shareholders totaled $12.07 million, or $0.59 per diluted common share, for the six months ended June 30, 2013. Excluding nonrecurring income and expense items, core earnings for the quarter and six months ended June 30, 2013, totaled $5.37 million and $12.35 million, respectively.
Second Quarter 2013 Highlights –
| · | Net income was $5.44 million, an increase of $1.36 million, or 33.28%, compared with the second quarter of 2012. |
| · | Net interest income was $22.86 million, an increase of $3.38 million, or 17.34%, compared with the second quarter of 2012. |
| · | The tax equivalent net interest margin increased 14 basis points to 4.07% for the second quarter of 2013 compared with the second quarter of 2012. |
| · | The average loan balance increased $179.80 million, or 11.89%, to $1.69 billion for the second quarter of 2013 compared with the second quarter of 2012. |
| · | Tangible book value per common share increased $0.34 per share to $11.53 for the second quarter of 2013 compared with the second quarter of 2012. |
Net Interest Income
Net interest income increased $3.38 million, or 17.34%, to $22.86 million for the second quarter of 2013 compared with the second quarter of 2012. The tax equivalent net interest margin increased 14 basis points to 4.07% for the second quarter of 2013 compared with 3.93% for the second quarter of 2012. Total interest income increased $3.23 million, or 13.36%, to $27.41 million for the second quarter of 2013 compared with the second quarter of 2012. The increase reflects the addition of loan portfolios from the Peoples Bank of Virginia (“Peoples”) and Waccamaw Bank (“Waccamaw”) acquisitions that occurred during the second quarter of 2012. The tax equivalent yield on loans increased 20 basis points to 5.76% while the average loan balance increased $179.80 million, or 11.89%, to $1.69 billion for the second quarter of 2013 compared with the second quarter of 2012. Interest on loans includes accretion related to the Peoples and Waccamaw acquisitions of $729 thousand and $3.03 million, respectively, for the second quarter of 2013.
Total interest expense decreased $148 thousand, or 3.15%, to $4.55 million for the second quarter of 2013 compared with the second quarter of 2012. Deposit costs decreased $77 thousand, or 3.26%, to $2.28 million for the second quarter of 2013 compared with the second quarter of 2012, reflecting an 11 basis point decrease in the average rate paid on interest-bearing deposits. Borrowing costs decreased $71 thousand, or 3.04%, to $2.27 million for the second quarter of 2013 compared with the second quarter of 2012. The average rate paid on interest-bearing liabilities decreased 16 basis points to 0.93% for the second quarter of 2013 compared with the second quarter of 2012. The average balance of interest-bearing liabilities increased $210.71 million, or 12.10%, to $1.95 billion for the second quarter of 2013 compared with the second quarter of 2012, which included a $224.90 million increase in average interest-bearing deposits and a $14.19 million decrease in average total borrowings. The increase in average interest-bearing liabilities was primarily the result of a full quarter’s impact from the Peoples and Waccamaw acquisitions in the second quarter of 2013 versus a partial impact in the second quarter of 2012.
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Noninterest Income
Noninterest income decreased $1.50 million, or 17.92%, to $6.85 million for the second quarter of 2013 compared with the second quarter of 2012. Wealth management revenues increased $31 thousand, or 3.30%, for the second quarter of 2013 compared with the second quarter of 2012. The Trust and Wealth Management Divisions reported $900 million in assets under management as of June 30, 2013. Service charges on deposit accounts reported a slight decrease of $14 thousand and other service charges and fees increased $229 thousand, or 14.64%, for the second quarter of 2013 compared with the second quarter of 2012. Insurance commissions decreased $28 thousand, or 2.10%, to $1.31 million for the second quarter of 2013 compared with the same quarter of 2012. The Company realized a $113 thousand net gain on sale of securities for the second quarter of 2013, which was an increase of $122 thousand compared to a net loss of $9 thousand for the second quarter of 2012. Amortization expense of $1.66 million was recorded relating to the FDIC indemnification asset during the second quarter of 2013 as a result of improvements in actual and expected cash flows on covered assets. Other operating income included a negative fair value mark of $435 thousand on loans held for sale and the associated secondary market loan production pipeline for the second quarter of 2013 compared to a positive mark of $76 thousand recorded for the second quarter of 2012. The Company incurred no other-than-temporary impairment charges during the second quarters of 2013 or 2012.
Noninterest Expense
Noninterest expense decreased $1.60 million, or 7.94%, to $18.53 million for the second quarter of 2013 compared with the second quarter of 2012. Salaries and employee benefits increased $1.07 million, or 12.01%, to $9.96 million for the second quarter of 2013 compared with the second quarter of 2012. Salaries and employee benefits attributed to the Peoples and Waccamaw acquisitions totaled $1.32 million during the second quarter of 2013, which represents an increase of $831 thousand for the quarter ended June 30, 2013, compared with the same quarter of 2012. Occupancy, furniture, and equipment expense increased $466 thousand, or 17.73%, to $3.10 million for the second quarter of 2013 compared with the second quarter of 2012, reflecting the substantial increase in branch count and facilities associated with the Peoples and Waccamaw acquisitions. Other operating expense increased $105 thousand, or 2.23%, to $4.82 million for the second quarter of 2013 compared with the second quarter of 2012. Other operating expense included a net loss on sales and expenses associated with other real estate owned of $170 thousand for the second quarter of 2013 compared to $270 thousand for the second quarter of 2012. The efficiency ratio for the second quarter of 2013 was 60.60% compared to 57.58% for the second quarter of 2012.
Provision for Loan Losses and Asset Quality
The provision for loan losses increased $1.59 million, or 97.84%, to $3.21 million for the second quarter of 2013 and $1.81 million, or 71.01%, to $4.35 million for the six months ended June 30, 2013, compared with the same periods of the prior year.
The allowance for loan losses decreased to $23.12 million at June 30, 2013, compared with $25.77 million at December 31, 2012, and $26.17 million at June 30, 2012. Non-covered loans and other real estate owned are those assets not covered by loss share agreements between the FDIC and the Bank in relation to the acquisition of Waccamaw. The allowance for loan losses as a percentage of non-covered loans was 1.53% at June 30, 2013, compared with 1.70% at December 31, 2012, and 1.67% at June 30, 2012. For the second quarter of 2013, net charge-offs increased $3.65 million, or 2.84%, compared with the fourth quarter of 2012, and $3.68 million, or 2.95%, compared with the second quarter of 2012. Annualized net charge-offs were 1.31% for the second quarter of 2013, which represents an increase of 93 basis points compared with 0.38% for the second quarter of 2012.
During the second quarter of 2013, net charge-offs totaled $4.93 million which were primarily impacted by four loan relationships; the most significant of which was a $2.10 million write down of a relationship within the construction, development, and other land segment. The Company had previously identified this problem relationship and had established a $1.80 million specific allocation, which was utilized for the write down.
Non-covered delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, as a percentage of total non-covered loans measured 2.53% at June 30, 2013, compared to 2.46% for the same period of the prior year. Non-covered nonaccrual loans totaled $29.13 million at June 30, 2013, compared to $23.93 million at December 31, 2012, and $27.95 million at June 30, 2012. At quarter end, the Company’s non-covered nonperforming loans as a percentage of total non-covered loans were 1.95% and non-covered nonperforming assets as a percentage of total non-covered assets were 1.39%.
Total nonperforming assets, including covered and non-covered loan portfolios, consisted of $33.01 million in nonaccrual loans, $276 thousand in unseasoned, accruing troubled debt restructurings, and $11.15 million in other real estate owned at June 30, 2013. In comparison, total nonperforming assets consisted of $28.25 million in nonaccrual loans, $6.01 million in unseasoned, accruing troubled debt restructurings, and $9.00 million in other real estate owned at December 31, 2012.
Balance Sheet and Capital
Consolidated assets totaled $2.65 billion as of June 30, 2013, a decrease of $78.13 million, or 2.86%, compared with $2.73 billion at December 31, 2012. Consolidated liabilities totaled $2.30 billion as of June 30, 2013, a decrease of $73.75 million, or 3.11%, compared with $2.37 billion at December 31, 2012. Total stockholders’ equity decreased to $351.94 million as of June 30, 2013, compared with $356.32 million at December 31, 2012. Book value per as-converted common share decreased to $16.63 for the quarter ended June 30, 2013, compared with $16.76 for the quarter ended December 31, 2012. Tangible book value per common share decreased to $11.53 for the quarter ended June 30, 2013, compared with $11.66 for the quarter ended December 31, 2012. The decrease was largely a function of declines in investment securities’ market values as a result of the increase in benchmark interest rates noticed at the end of the second quarter of 2013. The Company paid a cash dividend of $0.12 per common share during the second quarter of 2013.
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The Company significantly exceeds regulatory “well capitalized” targets as of June 30, 2013, with a total risk-based capital ratio of 17.71%, Tier 1 risk-based capital ratio of 16.45%, and a Tier 1 leverage ratio of 10.54%.
Non-GAAP Financial Measures
The Company prepares its financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). This press release also refers to certain non-GAAP financial measures that the Company believes provide investors with important information, when used in conjunction with results presented in accordance with GAAP, regarding our operational performance.
Core earnings are a non-GAAP financial measure that excludes certain items from net income. Excluded items include gains, losses, and impairment losses on securities; goodwill and intangible impairment; amortization of intangibles; taxes; and other nonrecurring income and expense items. Management believes that core earnings provide the Company and investors a valuable tool to evaluate the Company’s financial results.
The efficiency ratio is a non-GAAP financial measure that is computed by dividing adjusted noninterest expense by the sum of tax equivalent net interest income and adjusted noninterest income. Management believes this measure provides investors with important information about the Company’s operating expense control and efficiency of operations. Management also believes this ratio focuses attention on the core operating performance of the Company over time and is highly useful in comparing period-to-period operating performance of core business operations. The efficiency ratio used by the Company may not be comparable to efficiency ratios reported by other financial institutions.
Tangible book value per common share is a non-GAAP financial measure that is defined as stockholders’ equity less goodwill and other intangibles, divided by as-converted common shares outstanding. Average tangible common equity is a non-GAAP financial measure that is defined as average stockholders’ equity less average goodwill, other intangibles, and the preferred liquidation preference.
Investor Relations
The Company will host an investor and media teleconference and webcast on Friday, July 26, 2013, at 11:00 a.m. To access the teleconference, the toll-free number is (877) 407-8033. Individuals may listen to the live or archived webcast of the conference call. To listen to the webcast, visit www.fcbinc.com and follow the link under the Investor Relations section. The Company’s press release and financial summary will be available in this section, as well. Copies of the Company’s second quarter 2013 earnings press release and financial summary will be made available upon request via email. To request a copy, contact David D. Brown, Chief Financial Officer, at (276) 326-9000.
About First Community Bancshares, Inc.
First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.65 billion financial holding company and the parent company of First Community Bank. First Community Bank operates seventy-two banking locations throughout Virginia, West Virginia, North Carolina, South Carolina, and Tennessee. First Community Bank offers wealth management and investment services through its Trust Division and First Community Wealth Management, a registered investment advisory firm. The Trust Division and First Community Wealth Management managed assets with a market value of $900 million as of June 30, 2013. The Company is also the parent company of Greenpoint Insurance Group, Inc., a full-service insurance agency headquartered in High Point, North Carolina, that operates seven insurance locations throughout Virginia, West Virginia, and North Carolina. The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol, “FCBC.” Additional investor information can be found on the Company’s website at www.fcbinc.com.
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
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FIRST COMMUNITY BANCSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (Amounts in thousands, except share and per share data) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Interest income | ||||||||||||||||
| Interest and fees on loans held for investment | $ | 24,264 | $ | 20,853 | $ | 49,108 | $ | 40,221 | ||||||||
| Interest on securities — taxable | 1,869 | 2,001 | 3,755 | 4,080 | ||||||||||||
| Interest on securities — nontaxable | 1,207 | 1,256 | 2,415 | 2,452 | ||||||||||||
| Interest on deposits in banks | 72 | 72 | 138 | 111 | ||||||||||||
| Total interest income | 27,412 | 24,182 | 55,416 | 46,864 | ||||||||||||
| Interest expense | ||||||||||||||||
| Interest on deposits | 2,283 | 2,360 | 4,645 | 4,765 | ||||||||||||
| Interest on short-term borrowings | 579 | 589 | 1,169 | 1,184 | ||||||||||||
| Interest on long-term borrowings | 1,688 | 1,749 | 3,378 | 3,454 | ||||||||||||
| Total interest expense | 4,550 | 4,698 | 9,192 | 9,403 | ||||||||||||
| Net interest income | 22,862 | 19,484 | 46,224 | 37,461 | ||||||||||||
| Provision for loan losses | 3,205 | 1,620 | 4,347 | 2,542 | ||||||||||||
| Net interest income after provision for loan losses | 19,657 | 17,864 | 41,877 | 34,919 | ||||||||||||
| Noninterest income | ||||||||||||||||
| Wealth management income | 971 | 940 | 1,817 | 1,834 | ||||||||||||
| Service charges on deposit accounts | 3,315 | 3,329 | 6,483 | 6,342 | ||||||||||||
| Other service charges and fees | 1,793 | 1,564 | 3,579 | 3,149 | ||||||||||||
| Insurance commissions | 1,308 | 1,336 | 2,974 | 2,912 | ||||||||||||
| Net gain (loss) on sale of securities | 113 | (9 | ) | 230 | 42 | |||||||||||
| FDIC indemnification asset amortization | (1,662 | ) | - | (3,201 | ) | - | ||||||||||
| Other operating income | 1,010 | 1,183 | 2,827 | 2,055 | ||||||||||||
| Total noninterest income | 6,848 | 8,343 | 14,709 | 16,334 | ||||||||||||
| Noninterest expense | ||||||||||||||||
| Salaries and employee benefits | 9,960 | 8,892 | 20,070 | 17,114 | ||||||||||||
| Occupancy expense of bank premises | 1,795 | 1,654 | 3,650 | 3,180 | ||||||||||||
| Furniture and equipment | 1,300 | 975 | 2,643 | 1,786 | ||||||||||||
| Amortization of intangible assets | 183 | 189 | 362 | 422 | ||||||||||||
| FDIC premiums and assessments | 469 | 290 | 941 | 612 | ||||||||||||
| Merger related expense | 8 | 3,419 | 57 | 3,582 | ||||||||||||
| Other operating expense | 4,818 | 4,713 | 10,354 | 9,629 | ||||||||||||
| Total noninterest expense | 18,533 | 20,132 | 38,077 | 36,325 | ||||||||||||
| Income before income taxes | 7,972 | 6,075 | 18,509 | 14,928 | ||||||||||||
| Income tax expense | 2,537 | 1,997 | 5,933 | 4,849 | ||||||||||||
| Net income | 5,435 | 4,078 | 12,576 | 10,079 | ||||||||||||
| Dividends on preferred stock | 253 | 283 | 511 | 566 | ||||||||||||
| Net income available to common shareholders | $ | 5,182 | $ | 3,795 | $ | 12,065 | $ | 9,513 | ||||||||
| Basic earnings per common share | $ | 0.26 | $ | 0.20 | $ | 0.60 | $ | 0.52 | ||||||||
| Diluted earnings per common share | $ | 0.25 | $ | 0.20 | $ | 0.59 | $ | 0.52 | ||||||||
| Cash dividends per common share | $ | 0.12 | $ | 0.11 | $ | 0.24 | $ | 0.21 | ||||||||
| Weighted average basic shares outstanding | 19,997,991 | 18,561,714 | 20,015,247 | 18,205,545 | ||||||||||||
| Weighted average diluted shares outstanding | 21,340,521 | 19,909,242 | 21,367,146 | 19,549,582 | ||||||||||||
| Return on average assets | 0.78 | % | 0.65 | % | 0.90 | % | 0.84 | % | ||||||||
| Return on average common equity | 5.97 | % | 5.00 | % | 7.03 | % | 6.41 | % | ||||||||
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FIRST COMMUNITY BANCSHARES, INC.
CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)
| As of and for the Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (Amounts in thousands, except share and per share data) | 2013 | 2013 | 2012 | 2012 | 2012 | |||||||||||||||
| Interest Income | ||||||||||||||||||||
| Interest and fees on loans held for investment | $ | 24,264 | $ | 24,844 | $ | 28,188 | $ | 28,275 | $ | 20,853 | ||||||||||
| Interest on securities -- taxable | 1,869 | 1,886 | 1,770 | 1,980 | 2,001 | |||||||||||||||
| Interest on securities -- nontaxable | 1,207 | 1,208 | 1,216 | 1,215 | 1,256 | |||||||||||||||
| Interest on deposits in banks | 72 | 66 | 82 | 66 | 72 | |||||||||||||||
| Total interest income | 27,412 | 28,004 | 31,256 | 31,536 | 24,182 | |||||||||||||||
| Interest Expense | ||||||||||||||||||||
| Interest on deposits | 2,283 | 2,362 | 2,604 | 2,603 | 2,360 | |||||||||||||||
| Interest on short-term borrowings | 579 | 590 | 656 | 675 | 589 | |||||||||||||||
| Interest on long-term borrowings | 1,688 | 1,690 | 1,860 | 1,799 | 1,749 | |||||||||||||||
| Total interest expense | 4,550 | 4,642 | 5,120 | 5,077 | 4,698 | |||||||||||||||
| Net interest income | 22,862 | 23,362 | 26,136 | 26,459 | 19,484 | |||||||||||||||
| Provision for loan losses | 3,205 | 1,142 | 1,220 | 1,916 | 1,620 | |||||||||||||||
| Net interest income after provision for loan losses | 19,657 | 22,220 | 24,916 | 24,543 | 17,864 | |||||||||||||||
| Noninterest Income | ||||||||||||||||||||
| Wealth management income | 971 | 846 | 862 | 1,005 | 940 | |||||||||||||||
| Service charges on deposit accounts | 3,315 | 3,168 | 3,826 | 3,895 | 3,329 | |||||||||||||||
| Other service charges and fees | 1,793 | 1,786 | 1,682 | 1,631 | 1,564 | |||||||||||||||
| Insurance commissions | 1,308 | 1,666 | 1,215 | 1,616 | 1,336 | |||||||||||||||
| Net impairment losses recognized in earnings | - | - | - | (942 | ) | - | ||||||||||||||
| Net gain (loss) on sale of securities | 113 | 117 | 213 | 228 | (9 | ) | ||||||||||||||
| FDIC indemnification asset amortization | (1,662 | ) | (1,539 | ) | - | - | - | |||||||||||||
| Other operating income | 1,010 | 1,817 | 437 | 3,730 | 1,183 | |||||||||||||||
| Total noninterest income | 6,848 | 7,861 | 8,235 | 11,163 | 8,343 | |||||||||||||||
| Noninterest Expense | ||||||||||||||||||||
| Salaries and employee benefits | 9,960 | 10,110 | 10,693 | 10,860 | 8,892 | |||||||||||||||
| Occupancy expense of bank premises | 1,795 | 1,855 | 1,938 | 1,754 | 1,654 | |||||||||||||||
| Furniture and equipment | 1,300 | 1,343 | 1,404 | 955 | 975 | |||||||||||||||
| Amortization of intangible assets | 183 | 179 | 191 | 191 | 189 | |||||||||||||||
| FDIC premiums and assessments | 469 | 472 | 313 | 611 | 290 | |||||||||||||||
| Merger related expense | 8 | 49 | 866 | 645 | 3,419 | |||||||||||||||
| Other operating expense | 4,818 | 5,536 | 5,350 | 5,309 | 4,713 | |||||||||||||||
| Total noninterest expense | 18,533 | 19,544 | 20,755 | 20,325 | 20,132 | |||||||||||||||
| Income before income taxes | 7,972 | 10,537 | 12,396 | 15,381 | 6,075 | |||||||||||||||
| Income tax expense | 2,537 | 3,396 | 3,957 | 5,322 | 1,997 | |||||||||||||||
| Net income | 5,435 | 7,141 | 8,439 | 10,059 | 4,078 | |||||||||||||||
| Dividends on preferred stock | 253 | 258 | 272 | 220 | 283 | |||||||||||||||
| Net income available to common shareholders | $ | 5,182 | $ | 6,883 | $ | 8,167 | $ | 9,839 | $ | 3,795 | ||||||||||
| Basic earnings per common share | $ | 0.26 | $ | 0.34 | $ | 0.41 | $ | 0.49 | $ | 0.20 | ||||||||||
| Diluted earnings per common share | $ | 0.25 | $ | 0.33 | $ | 0.39 | $ | 0.47 | $ | 0.20 | ||||||||||
| Cash dividends per common share | $ | 0.12 | $ | 0.12 | $ | 0.11 | $ | 0.11 | $ | 0.11 | ||||||||||
| Weighted average basic shares outstanding | 19,997,991 | 20,032,694 | 20,063,873 | 20,013,264 | 18,561,714 | |||||||||||||||
| Weighted average diluted shares outstanding | 21,340,521 | 21,394,066 | 21,452,984 | 21,476,497 | 19,909,242 | |||||||||||||||
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FIRST COMMUNITY BANCSHARES, INC.
RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (Amounts in thousands, except per share data) | ||||||||||||||||
| Net income, GAAP | $ | 5,435 | $ | 4,078 | $ | 12,576 | $ | 10,079 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Net impairment losses recognized in earnings | - | - | - | - | ||||||||||||
| Net (gain) loss on sale of securities | (113 | ) | 9 | (230 | ) | (42 | ) | |||||||||
| Net gain on debt prepayment | - | - | (296 | ) | - | |||||||||||
| Merger related expense | 8 | 3,419 | 57 | 3,582 | ||||||||||||
| Other noncore, nonrecurring items | - | - | 108 | - | ||||||||||||
| Total adjustments to core earnings | (105 | ) | 3,428 | (361 | ) | 3,540 | ||||||||||
| Tax effect | (39 | ) | 1,296 | (135 | ) | 1,338 | ||||||||||
| Core earnings, non-GAAP | $ | 5,369 | $ | 6,210 | $ | 12,350 | $ | 12,281 | ||||||||
| Core return on average assets | 0.80 | % | 1.06 | % | 0.93 | % | 1.09 | % | ||||||||
| Core return on average common equity | 6.19 | % | 8.19 | % | 7.20 | % | 8.27 | % | ||||||||
| Core return on average tangible common equity | 8.97 | % | 11.74 | % | 10.48 | % | 11.84 | % | ||||||||
| Core diluted earnings per common share | $ | 0.25 | $ | 0.31 | $ | 0.58 | $ | 0.63 | ||||||||
FIRST COMMUNITY BANCSHARES, INC.
EFFICIENCY RATIO CALCULATION (Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (Amounts in thousands) | ||||||||||||||||
| Noninterest expense, GAAP | $ | 18,533 | $ | 20,132 | $ | 38,077 | $ | 36,325 | ||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Merger related expenses | (8 | ) | (3,419 | ) | (57 | ) | (3,582 | ) | ||||||||
| OREO expense and net loss | (170 | ) | (270 | ) | (795 | ) | (1,091 | ) | ||||||||
| Other noncore, nonrecurring items | - | - | (108 | ) | - | |||||||||||
| Adjusted noninterest expense | 18,355 | 16,443 | 37,117 | 31,652 | ||||||||||||
| Net interest income, GAAP | 22,862 | 19,484 | 46,224 | 37,461 | ||||||||||||
| Noninterest income, GAAP | 6,848 | 8,343 | 14,709 | 16,334 | ||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||
| Tax equivalency adjustment | 693 | 722 | 1,388 | 1,405 | ||||||||||||
| Net impairment losses recognized in earnings | - | - | - | - | ||||||||||||
| Net (gain) loss on sale of securities | (113 | ) | 9 | (230 | ) | (42 | ) | |||||||||
| Net gain on debt prepayment | - | - | (296 | ) | - | |||||||||||
| Other noncore, nonrecurring items | - | - | - | - | ||||||||||||
| Adjusted net interest and noninterest income | 30,290 | 28,558 | 61,795 | 55,158 | ||||||||||||
| Non-GAAP efficiency ratio | 60.60 | % | 57.58 | % | 60.06 | % | 57.38 | % | ||||||||
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FIRST COMMUNITY BANCSHARES, INC.
CONDENSED QUARTERLY BALANCE SHEETS (Unaudited)
| For the Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2013 | 2013 | 2012 | 2012 | 2012 | ||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
| Cash and due from banks | $ | 44,307 | $ | 41,467 | $ | 50,405 | $ | 44,865 | $ | 54,494 | ||||||||||
| Federal funds sold | 22,876 | 110,544 | 66,509 | 93,005 | 64,815 | |||||||||||||||
| Interest-bearing deposits in banks | 14,936 | 15,030 | 27,933 | 27,359 | 36,856 | |||||||||||||||
| Total cash and cash equivalents | 82,119 | 167,041 | 144,847 | 165,229 | 156,165 | |||||||||||||||
| Securities available-for-sale | 550,158 | 537,507 | 534,358 | 517,161 | 526,607 | |||||||||||||||
| Securities held-to-maturity | 627 | 816 | 816 | 816 | 1,295 | |||||||||||||||
| Loans held for sale | 4,621 | 2,794 | 6,672 | 4,446 | 1,179 | |||||||||||||||
| Loans held for investment, net of unearned income: | ||||||||||||||||||||
| Covered under loss share agreements | 184,076 | 195,060 | 207,106 | 221,977 | 238,777 | |||||||||||||||
| Not covered under loss share agreements | 1,507,422 | 1,494,232 | 1,517,547 | 1,541,633 | 1,568,312 | |||||||||||||||
| Less allowance for loan losses | (23,122 | ) | (24,850 | ) | (25,770 | ) | (25,835 | ) | (26,171 | ) | ||||||||||
| Loans, net | 1,672,997 | 1,667,236 | 1,705,555 | 1,742,221 | 1,782,097 | |||||||||||||||
| FDIC indemnification asset | 40,389 | 43,921 | 48,149 | 50,606 | 49,155 | |||||||||||||||
| Property, plant, and equipment, net | 64,085 | 64,812 | 64,868 | 62,191 | 60,829 | |||||||||||||||
| Other real estate owned: | ||||||||||||||||||||
| Covered under loss share agreements | 6,407 | 6,911 | 3,255 | 3,553 | 5,325 | |||||||||||||||
| Not covered under loss share agreements | 4,743 | 4,439 | 5,749 | 5,957 | 4,938 | |||||||||||||||
| Interest receivable | 8,010 | 8,166 | 7,842 | 6,038 | 8,396 | |||||||||||||||
| Goodwill | 104,892 | 104,689 | 104,866 | 104,022 | 99,402 | |||||||||||||||
| Intangible assets | 3,159 | 3,344 | 3,522 | 3,713 | 3,903 | |||||||||||||||
| Other assets | 113,149 | 111,409 | 105,040 | 108,143 | 112,209 | |||||||||||||||
| Total assets | $ | 2,650,735 | $ | 2,720,291 | $ | 2,728,867 | $ | 2,769,650 | $ | 2,810,321 | ||||||||||
| Deposits: | ||||||||||||||||||||
| Noninterest-bearing | $ | 349,972 | $ | 355,918 | $ | 343,352 | $ | 335,100 | $ | 340,895 | ||||||||||
| Interest-bearing | 354,862 | 377,445 | 353,321 | 360,061 | 335,686 | |||||||||||||||
| Savings | 513,781 | 513,322 | 500,276 | 496,740 | 494,516 | |||||||||||||||
| Time | 770,081 | 800,812 | 833,226 | 872,059 | 934,110 | |||||||||||||||
| Total deposits | 1,988,696 | 2,047,497 | 2,030,175 | 2,063,960 | 2,105,207 | |||||||||||||||
| Interest, taxes, and other liabilities | 23,019 | 26,740 | 28,816 | 29,538 | 22,465 | |||||||||||||||
| Securities sold under agreements to repurchase | 121,204 | 121,506 | 136,118 | 146,904 | 148,367 | |||||||||||||||
| FHLB borrowings | 150,000 | 150,000 | 161,558 | 161,558 | 176,653 | |||||||||||||||
| Other borrowings | 15,877 | 15,877 | 15,877 | 15,877 | 15,918 | |||||||||||||||
| Total liabilities | 2,298,796 | 2,361,620 | 2,372,544 | 2,417,837 | 2,468,610 | |||||||||||||||
| Preferred stock | 15,921 | 17,421 | 17,421 | 17,921 | 18,921 | |||||||||||||||
| Common stock | 20,447 | 20,343 | 20,343 | 20,309 | 20,240 | |||||||||||||||
| Additional paid-in capital | 215,139 | 213,855 | 213,829 | 213,320 | 212,510 | |||||||||||||||
| Retained earnings | 120,273 | 117,489 | 113,013 | 107,055 | 99,418 | |||||||||||||||
| Treasury stock, at cost | (7,763 | ) | (7,517 | ) | (6,458 | ) | (5,446 | ) | (5,672 | ) | ||||||||||
| Accumulated other comprehensive loss | (12,078 | ) | (2,920 | ) | (1,825 | ) | (1,346 | ) | (3,706 | ) | ||||||||||
| Total stockholders' equity | 351,939 | 358,671 | 356,323 | 351,813 | 341,711 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,650,735 | $ | 2,720,291 | $ | 2,728,867 | $ | 2,769,650 | $ | 2,810,321 | ||||||||||
| Shares outstanding at period end | 20,060,862 | 19,985,212 | 20,053,466 | 20,086,404 | 20,008,181 | |||||||||||||||
| Book value per common share at period end (1) | $ | 16.63 | $ | 16.93 | $ | 16.76 | $ | 16.50 | $ | 16.03 | ||||||||||
| Tangible book value per common share at period end (2) | $ | 11.53 | $ | 11.83 | $ | 11.66 | $ | 11.45 | $ | 11.19 | ||||||||||
| (1) | Book value per common share is defined as stockholders' equity divided by as-converted common shares outstanding. |
| (2) | Tangible book value per common share is defined as stockholders' equity less goodwill and other intangibles divided by as-converted common shares outstanding. |
| 7 |
FIRST COMMUNITY BANCSHARES, INC.
SELECTED CREDIT QUALITY INFORMATION (Unaudited)
| As of and for the Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| (Amounts in thousands) | 2013 | 2013 | 2012 | 2012 | 2012 | |||||||||||||||
| Allowance for Loan Losses | ||||||||||||||||||||
| Beginning balance | $ | 24,850 | $ | 25,770 | $ | 25,835 | $ | 26,171 | $ | 25,800 | ||||||||||
| Provision for loan losses | 3,205 | 1,142 | 1,220 | 1,916 | 1,620 | |||||||||||||||
| Charge-offs | (5,006 | ) | (2,759 | ) | (1,717 | ) | (2,613 | ) | (1,612 | ) | ||||||||||
| Recoveries | 73 | 697 | 432 | 361 | 363 | |||||||||||||||
| Net charge-offs | (4,933 | ) | (2,062 | ) | (1,285 | ) | (2,252 | ) | (1,249 | ) | ||||||||||
| Ending balance | $ | 23,122 | $ | 24,850 | $ | 25,770 | $ | 25,835 | $ | 26,171 | ||||||||||
| Summary of Asset Quality | ||||||||||||||||||||
| Non-covered loans | ||||||||||||||||||||
| Nonaccrual loans | $ | 29,125 | $ | 30,076 | $ | 23,931 | $ | 26,514 | $ | 27,947 | ||||||||||
| Accruing loans past due 90 days or more | - | - | - | - | - | |||||||||||||||
| Troubled debt restructurings ("TDRs") (1) | 276 | 1,596 | 6,009 | 121 | 469 | |||||||||||||||
| Total non-covered nonperforming loans | 29,401 | 31,672 | 29,940 | 26,635 | 28,416 | |||||||||||||||
| Other real estate owned ("OREO") not covered under FDIC loss share agreements | 4,743 | 4,439 | 5,749 | 5,957 | 4,938 | |||||||||||||||
| Total non-covered nonperforming assets | $ | 34,144 | $ | 36,111 | $ | 35,689 | $ | 32,592 | $ | 33,354 | ||||||||||
| Covered Loans | ||||||||||||||||||||
| Nonaccrual loans | $ | 3,889 | $ | 4,567 | $ | 4,323 | $ | 2,849 | $ | - | ||||||||||
| Accruing loans past due 90 days or more | - | - | - | - | - | |||||||||||||||
| Total covered nonperforming loans | 3,889 | 4,567 | 4,323 | 2,849 | - | |||||||||||||||
| OREO covered under FDIC loss share agreements | 6,407 | 6,911 | 3,255 | 3,553 | 5,325 | |||||||||||||||
| Total covered nonperforming assets | 10,296 | 11,478 | 7,578 | 6,402 | 5,325 | |||||||||||||||
| Total nonperforming assets | $ | 44,440 | $ | 47,589 | $ | 43,267 | $ | 38,994 | $ | 38,679 | ||||||||||
| Performing TDRs (2) | $ | 10,927 | $ | 10,272 | $ | 6,038 | $ | 6,742 | $ | 6,995 | ||||||||||
| Total TDRs (3) | $ | 11,203 | $ | 11,868 | $ | 12,047 | $ | 6,863 | $ | 7,464 | ||||||||||
| Asset Quality Ratios | ||||||||||||||||||||
| Excluding covered assets | ||||||||||||||||||||
| Nonperforming loans to total loans | 1.95 | % | 2.12 | % | 1.97 | % | 1.73 | % | 1.81 | % | ||||||||||
| Nonperforming assets to total assets | 1.39 | % | 1.43 | % | 1.42 | % | 1.28 | % | 1.30 | % | ||||||||||
| Allowance for loan losses to nonperforming loans | 78.64 | % | 78.46 | % | 86.07 | % | 97.00 | % | 92.10 | % | ||||||||||
| Allowance for loan losses to non-covered total loans | 1.53 | % | 1.66 | % | 1.70 | % | 1.68 | % | 1.67 | % | ||||||||||
| Annualized net charge-offs to average loans | 1.31 | % | 0.56 | % | 0.34 | % | 0.58 | % | 0.38 | % | ||||||||||
| Including covered assets | ||||||||||||||||||||
| Nonperforming loans to total loans | 1.97 | % | 2.15 | % | 1.99 | % | 1.67 | % | 1.57 | % | ||||||||||
| Nonperforming assets to total assets | 1.68 | % | 1.75 | % | 1.59 | % | 1.41 | % | 1.38 | % | ||||||||||
| Allowance for loan losses to nonperforming loans | 69.46 | % | 68.57 | % | 75.21 | % | 87.62 | % | 92.10 | % | ||||||||||
| Allowance for loan losses to total loans | 1.37 | % | 1.47 | % | 1.49 | % | 1.46 | % | 1.45 | % | ||||||||||
| (1) | Accruing TDRs restructured within the past six months |
| (2) | Accruing TDRs with six months or more of satisfactory payment performance |
| (3) | Accruing nonperforming and performing TDRs |
| 8 |
FIRST COMMUNITY BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION (Unaudited)
| As of and for the Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2013 | 2013 | 2012 | 2012 | 2012 | ||||||||||||||||
| Selected Ratios | ||||||||||||||||||||
| Return on average assets | 0.78 | % | 1.03 | % | 1.19 | % | 1.41 | % | 0.65 | % | ||||||||||
| Return on average common equity | 5.97 | % | 8.11 | % | 9.59 | % | 11.91 | % | 5.00 | % | ||||||||||
| Net interest margin | 4.07 | % | 4.15 | % | 4.49 | % | 4.48 | % | 3.93 | % | ||||||||||
| Non-GAAP efficiency ratio quarter-to-date | 60.60 | % | 59.55 | % | 57.43 | % | 52.40 | % | 57.58 | % | ||||||||||
| Non-GAAP efficiency ratio year-to-date | 60.06 | % | 59.55 | % | 55.96 | % | 55.39 | % | 57.38 | % | ||||||||||
| Total equity to total assets | 13.28 | % | 13.19 | % | 13.06 | % | 12.70 | % | 12.16 | % | ||||||||||
| Average earning assets to average assets | 86.72 | % | 86.96 | % | 86.87 | % | 87.02 | % | 87.68 | % | ||||||||||
| Average loans to average deposits | 84.33 | % | 84.98 | % | 85.71 | % | 87.88 | % | 88.57 | % | ||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
| Average Balances | ||||||||||||||||||||
| Loans | $ | 1,692,248 | $ | 1,706,296 | $ | 1,745,584 | $ | 1,790,489 | $ | 1,512,451 | ||||||||||
| Investment securities | 548,101 | 545,497 | 519,798 | 528,126 | 490,219 | |||||||||||||||
| Earning assets | 2,323,517 | 2,350,686 | 2,376,805 | 2,408,442 | 2,069,799 | |||||||||||||||
| Total assets | 2,679,295 | 2,703,029 | 2,736,037 | 2,767,790 | 2,360,567 | |||||||||||||||
| Total deposits | 2,006,626 | 2,007,840 | 2,036,697 | 2,037,467 | 1,707,613 | |||||||||||||||
| Interest-bearing deposits | 1,662,446 | 1,675,654 | 1,699,991 | 1,733,987 | 1,437,548 | |||||||||||||||
| Borrowings | 289,289 | 309,333 | 314,645 | 329,958 | 303,474 | |||||||||||||||
| Interest-bearing liabilities | 1,951,735 | 1,984,987 | 2,014,636 | 2,063,945 | 1,741,022 | |||||||||||||||
| Stockholders' equity | 365,217 | 361,549 | 356,812 | 347,637 | 323,994 | |||||||||||||||
| Tax equivalent net interest income | 23,555 | 24,057 | 26,832 | 27,139 | 20,206 | |||||||||||||||
| 9 |
FIRST COMMUNITY BANCSHARES, INC.
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2013 | 2012 | |||||||||||||||||||||||
| Average | Average Yield/ | Average | Average Yield/ | |||||||||||||||||||||
| (Amounts in thousands) | Balance | Interest (1) | Rate (1) | Balance | Interest (1) | Rate (1) | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||
| Loans (2) | $ | 1,692,248 | $ | 24,308 | 5.76 | % | $ | 1,512,451 | $ | 20,897 | 5.56 | % | ||||||||||||
| Securities available-for-sale | 547,411 | 3,712 | 2.72 | % | 486,742 | 3,872 | 3.20 | % | ||||||||||||||||
| Securities held-to-maturity | 690 | 14 | 8.14 | % | 3,477 | 63 | 7.29 | % | ||||||||||||||||
| Interest-bearing deposits | 83,168 | 71 | 0.34 | % | 67,129 | 72 | 0.43 | % | ||||||||||||||||
| Total earning assets | 2,323,517 | 28,105 | 4.85 | % | 2,069,799 | 24,904 | 4.84 | % | ||||||||||||||||
| Other assets | 355,778 | 290,768 | ||||||||||||||||||||||
| Total assets | $ | 2,679,295 | $ | 2,360,567 | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||
| Demand deposits | $ | 361,993 | $ | 59 | 0.07 | % | $ | 296,647 | $ | 43 | 0.06 | % | ||||||||||||
| Savings deposits | 516,375 | 148 | 0.11 | % | 421,331 | 119 | 0.11 | % | ||||||||||||||||
| Time deposits | 784,078 | 2,077 | 1.06 | % | 719,570 | 2,198 | 1.23 | % | ||||||||||||||||
| Total interest-bearing deposits | 1,662,446 | 2,284 | 0.55 | % | 1,437,548 | 2,360 | 0.66 | % | ||||||||||||||||
| Borrowings | ||||||||||||||||||||||||
| Federal funds purchased | 4 | - | 0.00 | % | - | - | - | |||||||||||||||||
| Retail repurchase agreements | 73,408 | 100 | 0.55 | % | 74,651 | 110 | 0.59 | % | ||||||||||||||||
| Wholesale repurchase agreements | 50,000 | 468 | 3.75 | % | 54,194 | 469 | 3.48 | % | ||||||||||||||||
| FHLB advances and other borrowings | 165,877 | 1,698 | 4.11 | % | 174,629 | 1,759 | 4.05 | % | ||||||||||||||||
| Total borrowings | 289,289 | 2,266 | 3.14 | % | 303,474 | 2,338 | 3.10 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,951,735 | 4,550 | 0.93 | % | 1,741,022 | 4,698 | 1.09 | % | ||||||||||||||||
| Noninterest-bearing demand deposits | 344,180 | 270,065 | ||||||||||||||||||||||
| Other liabilities | 18,163 | 25,486 | ||||||||||||||||||||||
| Total liabilities | 2,314,078 | 2,036,573 | ||||||||||||||||||||||
| Stockholders' equity | 365,217 | 323,994 | ||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,679,295 | $ | 2,360,567 | ||||||||||||||||||||
| Net interest income, tax equivalent | $ | 23,555 | $ | 20,206 | ||||||||||||||||||||
| Net interest rate spread (3) | 3.93 | % | 3.75 | % | ||||||||||||||||||||
| Net interest margin (4) | 4.07 | % | 3.93 | % | ||||||||||||||||||||
| (1) | Fully taxable equivalent at the rate of 35% ("FTE"). The FTE basis adjusts for the tax benefits of income on certain tax exempt loans and investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and nontaxable amounts. |
| (2) | Nonaccrual loans are included in average balances outstanding, but with no related interest income during the period of nonaccrual. |
| (3) | Represents the difference between the yield on earning assets and cost of funds. |
| (4) | Represents tax equivalent net interest income divided by average earning assets. |
| 10 |
FIRST COMMUNITY BANCSHARES, INC.
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
| Six Months Ended June 30, | ||||||||||||||||||||||||
| 2013 | 2012 | |||||||||||||||||||||||
| Average | Average Yield/ | Average | Average Yield/ | |||||||||||||||||||||
| (Amounts in thousands) | Balance | Interest (1) | Rate (1) | Balance | Interest (1) | Rate (1) | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||
| Loans (2) | $ | 1,699,196 | $ | 49,196 | 5.84 | % | $ | 1,453,348 | $ | 40,304 | 5.58 | % | ||||||||||||
| Securities available-for-sale | 546,053 | 7,440 | 2.75 | % | 482,550 | 7,729 | 3.22 | % | ||||||||||||||||
| Securities held-to-maturity | 753 | 30 | 8.03 | % | 3,357 | 125 | 7.49 | % | ||||||||||||||||
| Interest-bearing deposits | 90,987 | 138 | 0.31 | % | 54,827 | 111 | 0.41 | % | ||||||||||||||||
| Total earning assets | 2,336,989 | 56,804 | 4.90 | % | 1,994,082 | 48,269 | 4.87 | % | ||||||||||||||||
| Other assets | 354,107 | 273,203 | ||||||||||||||||||||||
| Total assets | $ | 2,691,096 | $ | 2,267,285 | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||
| Demand deposits | $ | 357,858 | $ | 115 | 0.06 | % | $ | 289,767 | $ | 74 | 0.05 | % | ||||||||||||
| Savings deposits | 511,175 | 302 | 0.12 | % | 408,459 | 229 | 0.11 | % | ||||||||||||||||
| Time deposits | 799,980 | 4,229 | 1.07 | % | 676,980 | 4,462 | 1.33 | % | ||||||||||||||||
| Total interest-bearing deposits | 1,669,013 | 4,646 | 0.56 | % | 1,375,206 | 4,765 | 0.70 | % | ||||||||||||||||
| Borrowings | ||||||||||||||||||||||||
| Federal funds purchased | 2 | - | 0.00 | % | 985 | 2 | 0.41 | % | ||||||||||||||||
| Retail repurchase agreements | 74,573 | 206 | 0.56 | % | 73,411 | 224 | 0.61 | % | ||||||||||||||||
| Wholesale repurchase agreements | 53,802 | 943 | 3.53 | % | 52,097 | 938 | 3.62 | % | ||||||||||||||||
| FHLB advances and other borrowings | 170,879 | 3,397 | 4.01 | % | 170,252 | 3,474 | 4.10 | % | ||||||||||||||||
| Total borrowings | 299,256 | 4,546 | 3.06 | % | 296,745 | 4,638 | 3.14 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,968,269 | 9,192 | 0.94 | % | 1,671,951 | 9,403 | 1.13 | % | ||||||||||||||||
| Noninterest-bearing demand deposits | 338,216 | 254,464 | ||||||||||||||||||||||
| Other liabilities | 21,218 | 23,476 | ||||||||||||||||||||||
| Total liabilities | 2,327,703 | 1,949,891 | ||||||||||||||||||||||
| Stockholders' equity | 363,393 | 317,394 | ||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,691,096 | $ | 2,267,285 | ||||||||||||||||||||
| Net interest income, tax equivalent | $ | 47,612 | $ | 38,866 | ||||||||||||||||||||
| Net interest rate spread (3) | 3.96 | % | 3.74 | % | ||||||||||||||||||||
| Net interest margin (4) | 4.11 | % | 3.92 | % | ||||||||||||||||||||
| (1) | Fully taxable equivalent at the rate of 35% ("FTE"). The FTE basis adjusts for the tax benefits of income on certain tax exempt loans and investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and nontaxable amounts. |
| (2) | Nonaccrual loans are included in average balances outstanding, but with no related interest income during the period of nonaccrual. |
| (3) | Represents the difference between the yield on earning assets and cost of funds. |
| (4) | Represents tax equivalent net interest income divided by average earning assets. |
| 11 |