NEWS RELEASE
FOR IMMEDIATE RELEASE:		FOR MORE INFORMATION, CONTACT:
October 30, 2013		David D. Brown
		(276) 326-9000

 

First Community Bancshares, Inc. Announces Third Quarter 2013 Results

 

Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) (the “Company”) today reported net income for the quarter and nine months ended September 30, 2013, of $5.41 million and $17.99 million, respectively. Net income available to common shareholders totaled $5.15 million, or $0.26 per diluted common share, for the quarter ended September 30, 2013. Net income available to common shareholders totaled $17.22 million, or $0.85 per diluted common share, for the nine months ended September 30, 2013. Excluding nonrecurring income and expense items, core earnings for the quarter and nine months ended September 30, 2013, totaled $6.11 million and $18.46 million, respectively.

 

On October 22, 2013, the Company announced that the Board of Directors approved a plan to repurchase and hold up to 3.0 million shares, or 15.1%, of its outstanding common stock at September 30, 2013. Considering the 589,849 shares in treasury at September 30, 2013, the new repurchase plan would allow the Company to repurchase approximately 2.4 million additional shares, or 11.5% of as-converted outstanding shares. Additionally, the Board of Directors declared a quarterly cash dividend to common stockholders of 12 cents ($0.12). The year 2013 marks the 28^th consecutive year of cash dividends paid to stockholders. The dividend is payable on November 22, 2013, to shareholders of record on November 8, 2013.

 

Third Quarter 2013 Highlights –

 

·

The non-covered loan portfolio increased $25.85 million compared to the second quarter of 2013 and $15.73 million compared to year end 2012. This marks the second consecutive quarter non-covered loan growth has exceeded covered loan declines. The largest increases in the non-covered portfolio were single family owner occupied and owner occupied construction loans at $19.21 million and $4.07, respectively, compared to the second quarter of 2013. Growth in the non-covered portfolio was seen across all geographical areas of the Company.

·

Non-covered nonperforming loans as a percentage of total non-covered loans decreased 10 basis points to 1.87% compared with year end 2012. Non-covered nonperforming loans continue to decrease as a result of successful resolution efforts.

·

Annualized net charge-offs to average loans decreased 16 basis points to 0.42% compared with the third quarter of 2012. Year-to-date net charge-offs of $8.60 million have been largely driven by four loan relationships.

·

Tangible book value per common share increased $0.15 per share to $11.60 compared with the third quarter of 2012.

·

The Company repurchased 204,388 shares during the third quarter and another 93,032 shares during the first 29 days of October 2013.

 

Net Interest Income

 

Net interest income decreased $4.13 million, or 15.62%, to $22.33 million for the third quarter of 2013 compared with the third quarter of 2012. The tax equivalent net interest margin decreased 49 basis points to 3.99% for the third quarter of 2013 compared with 4.48% for the third quarter of 2012. Total interest income decreased $4.84 million, or 15.35%, to $26.70 million for the third quarter of 2013 compared with the third quarter of 2012. The tax equivalent yield on loans decreased 79 basis points to 5.50% and the average loan balance decreased $96.25 million, or 5.38%, to $1.69 billion for the third quarter of 2013 compared with the third quarter of 2012. The acquired Peoples Bank of Virginia (“Peoples”) and Waccamaw Bank (“Waccamaw”) portfolios declined approximately $116.59 million on average between the third quarters of 2013 and 2012 resulting in an increase in non-acquired average loan balances between the comparable quarters.

 

Loan interest accretion stemming from the Peoples and Waccamaw acquisitions totaled $3.47 million for the third quarter of 2013 compared to $4.71 million for the third quarter of 2012. During the third quarter of 2013, approximately $1.74 million of the $3.47 million in loan interest accretion was actual cash received on the Peoples and Waccamaw portfolios. Normalized net interest margin for the third quarters of 2013 and 2012, which excludes non-cash loan interest accretion, was 3.69% and 4.06%, respectively. Normalized yield on loans for the third quarters of 2013 and 2012 was 5.09% and 5.72%, respectively.

 

 

Total interest expense decreased $707 thousand, or 13.93%, to $4.37 million for the third quarter of 2013 compared with the third quarter of 2012. Deposit costs decreased $456 thousand, or 22.10%, to $2.15 million for the third quarter of 2013 compared with the third quarter of 2012, reflecting an 8 basis point decrease in the average rate paid on interest-bearing deposits. Borrowing costs decreased $251 thousand, or 10.15%, to $2.22 million for the third quarter of 2013 compared with the third quarter of 2012. The average rate paid on interest-bearing liabilities decreased 8 basis points to 0.90% for the third quarter of 2013 compared with the third quarter of 2012. The average balance of interest-bearing liabilities decreased $141.69 million, or 6.86%, to $1.92 billion for the third quarter of 2013 compared with the third quarter of 2012, which included a $92.98 million decrease in average interest-bearing deposits and a $48.74 million decrease in average total borrowings.

 

Noninterest Income

 

Noninterest income decreased $3.05 million, or 27.34%, to $8.11 million for the third quarter of 2013 compared with the third quarter of 2012, which included a $2.39 million out-of-period adjustment recorded during the third quarter of 2012 to correct the overstatement of charge-offs and corresponding understatement of pre-tax income for the years ended December 31, 2009, 2010, and 2011. Wealth management revenues decreased $142 thousand, or 14.13%, for the third quarter of 2013 compared with the third quarter of 2012. The Trust and Wealth Management Divisions reported $891 million in assets under management as of September 30, 2013. Service charges on deposit accounts decreased $313 thousand, or 8.04%, and other service charges and fees increased $146 thousand, or 8.95%, for the third quarter of 2013 compared with the third quarter of 2012. Insurance commissions experienced a slight decrease of $57 thousand, or 3.53%, to $1.56 million for the third quarter of 2013 compared with the same quarter of 2012. The Company realized a $39 thousand net loss on sale of securities for the third quarter of 2013, which was a decrease of $267 thousand compared to a net gain of $228 thousand for the third quarter of 2012. Amortization expense relating to the FDIC indemnification asset totaled $1.09 million during the third quarter of 2013, compared to accretion income of $131 thousand for the third quarter of 2012. Other operating income decreased $2.14 million, or 59.49%, for the third quarter of 2013 compared with the third quarter of 2012, which was primarily due to the $2.39 million out-of-period adjustment recorded during the third quarter of 2012. The Company incurred no other-than-temporary impairment charges during the third quarter of 2013, compared to $942 thousand related to a non-Agency mortgage-backed security for the third quarter of 2012.

 

Noninterest Expense

 

Noninterest expense experienced a decrease of $172 thousand to $20.15 million for the third quarter of 2013 compared with the third quarter of 2012. Salaries and employee benefits increased $220 thousand, or 2.03%, to $11.08 million for the third quarter of 2013 compared with the third quarter of 2012, which included a charge during the third quarter of 2013 to accrue for contractual executive severance of $1.07 million. Absent the one-time severance charge, salaries and employee benefits decreased $852 thousand, or 7.85%, from the third quarter of 2012. Salaries and employee benefits attributed to the Peoples and Waccamaw acquisitions totaled $1.15 million during the third quarter of 2013, which represents an increase of $231 thousand for the quarter ended September 30, 2013, compared with the same quarter of 2012. Occupancy, furniture, and equipment expense increased $279 thousand, or 10.30%, to $2.99 million for the third quarter of 2013 compared with the third quarter of 2012. Other operating expense increased $133 thousand to $5.44 million for the third quarter of 2013 compared with the third quarter of 2012. Other operating expense included a net loss on sales and expenses associated with other real estate owned of $272 thousand for the third quarter of 2013 compared to $490 thousand for the third quarter of 2012. The efficiency ratio for the third quarter of 2013 was 60.35% compared to 52.40% for the third quarter of 2012.

 

Provision for Loan Losses and Asset Quality

 

The provision for loan losses increased $417 thousand, or 21.76%, to $2.33 million for the third quarter of 2013 and $2.22 million, or 49.84%, to $6.68 million for the nine months ended September 30, 2013, compared with the same periods of the prior year. The provision expense for the third quarter of 2013 included an $812 thousand offset to the FDIC indemnification asset to recognize the portion of losses that are expected to be reimbursed by the FDIC related to the acquisition of Waccamaw. Approximately $390 thousand, or 16.72%, of the provision was attributed to new loan production during the third quarter of 2013.

 

The allowance for loan losses decreased to $24.67 million at September 30, 2013, compared with $25.77 million at December 31, 2012, and $25.84 million at September 30, 2012. At September 30, 2013, $22.97 million of the allowance was attributed to the legacy portfolio while $366 thousand and $1.33 million were attributed to the acquired Peoples and Waccamaw portfolios, respectively. 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 1.61% at September 30, 2013, compared with 1.70% at December 31, 2012, and 1.68% at September 30, 2012. For the third quarter of 2013, net charge-offs increased $317 thousand, or 24.67%, compared with the fourth quarter of 2012, and decreased $650 thousand, or 28.86%, compared with the third quarter of 2012. Annualized net charge-offs were 0.42% for the third quarter of 2013, which represents a decrease of 16 basis points compared with 0.58% for the third quarter of 2012.

 

 

Asset quality in the non-covered portfolio continues to improve, as non-covered delinquent loans, which are comprised of loans 30 days or more past due and nonaccrual loans, as a percentage of total non-covered loans decreased to 2.25% at September 30, 2013, compared to 2.52% for the same period of the prior year. Non-covered nonaccrual loans totaled $26.40 million at September 30, 2013, compared to $23.93 million at December 31, 2012, and $26.51 million at September 30, 2012. At quarter end, the Company’s non-covered nonperforming loans as a percentage of total non-covered loans were 1.87% and non-covered nonperforming assets as a percentage of total non-covered assets were 1.37%.

 

Total nonperforming assets, including covered and non-covered loan portfolios, consisted of $29.98 million in nonaccrual loans, $82 thousand in accruing loans past due 90 days or more, $2.23 million in unseasoned, accruing troubled debt restructurings, and $12.83 million in other real estate owned at September 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 September 30, 2013, a decrease of $76.22 million, or 2.79%, compared with $2.73 billion at December 31, 2012. Consolidated liabilities totaled $2.30 billion as of September 30, 2013, a decrease of $70.84 million, or 2.99%, compared with $2.37 billion at December 31, 2012. Total stockholders’ equity decreased to $350.95 million as of September 30, 2013, compared with $356.32 million at December 31, 2012. Book value per as-converted common share decreased slightly to $16.75 as of September 30, 2013, compared with $16.76 as of December 31, 2012. Tangible book value per common share decreased to $11.60 as of September 30, 2013, compared with $11.66 as of December 31, 2012. Additionally, the Company repurchased 204,388 common shares at a cost of $3.19 million and paid a cash dividend of $0.12 per common share during the third quarter of 2013.

 

The Company significantly exceeds regulatory “well capitalized” targets as of September 30, 2013, with a total risk-based capital ratio of 17.80%, Tier 1 risk-based capital ratio of 16.55%, and a Tier 1 leverage ratio of 10.64%.

 

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.

 

 

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 $891 million as of September 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.

 

 

FIRST COMMUNITY BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(Amounts in thousands, except share and per share data)		2013				2012				2013				2012
Interest income
Interest and fees on loans held for investment		$	23,439			$	28,275			$	72,547			$	68,496
Interest on securities — taxable			1,999				1,980				5,754				6,060
Interest on securities — nontaxable			1,216				1,215				3,631				3,667
Interest on deposits in banks			42				66				180				177
Total interest income			26,696				31,536				82,112				78,400
Interest expense
Interest on deposits			2,147				2,603				6,792				7,368
Interest on short-term borrowings			517				675				1,686				1,859
Interest on long-term borrowings			1,706				1,799				5,084				5,253
Total interest expense			4,370				5,077				13,562				14,480
Net interest income			22,326				26,459				68,550				63,920
Provision for loan losses			2,333				1,916				6,680				4,458
Net interest income after provision for loan losses			19,993				24,543				61,870				59,462
Noninterest income
Wealth management income			863				1,005				2,680				2,839
Service charges on deposit accounts			3,582				3,895				10,065				10,237
Other service charges and fees			1,777				1,631				5,356				4,780
Insurance commissions			1,559				1,616				4,533				4,528
Net impairment losses recognized in earnings			-				(942	)			-				(942	)
Net (loss) gain on sale of securities			(39	)			228				191				270
FDIC indemnification asset (amortization) accretion			(1,089	)			131				(4,290	)			131
Other operating income			1,458				3,599				4,285				5,654
Total noninterest income			8,111				11,163				22,820				27,497
Noninterest expense
Salaries and employee benefits			11,080				10,860				31,150				27,974
Occupancy expense of bank premises			1,700				1,754				5,350				4,934
Furniture and equipment			1,288				955				3,931				2,741
Amortization of intangible assets			183				191				545				613
FDIC premiums and assessments			460				611				1,401				1,223
Merger related expense			-				645				56				4,227
Other operating expense			5,442				5,309				15,797				14,938
Total noninterest expense			20,153				20,325				58,230				56,650
Income before income taxes			7,951				15,381				26,460				30,309
Income tax expense			2,539				5,322				8,472				10,171
Net income			5,412				10,059				17,988				20,138
Dividends on preferred stock			261				220				772				786
Net income available to common shareholders		$	5,151			$	9,839			$	17,216			$	19,352
Basic earnings per common share		$	0.26			$	0.49			$	0.86			$	1.03
Diluted earnings per common share		$	0.26			$	0.47			$	0.85			$	1.00
Cash dividends per common share		$	0.12			$	0.11			$	0.36			$	0.32
Weighted average basic shares outstanding			20,008,861				20,013,264				20,013,095				18,812,516
Weighted average diluted shares outstanding			21,136,173				21,333,451				21,203,481				20,123,938
Return on average assets			0.77	%			1.41	%			0.86	%			1.06	%
Return on average common equity			6.06	%			11.91	%			6.71	%			8.38	%

 

 

FIRST COMMUNITY BANCSHARES, INC.

CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)

 

		As of and for the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(Amounts in thousands, except share and per share data)		2013				2013				2013				2012				2012
Interest Income
Interest and fees on loans held for investment		$	23,439			$	24,264			$	24,844			$	28,188			$	28,275
Interest on securities — taxable			1,999				1,869				1,886				1,770				1,980
Interest on securities — nontaxable			1,216				1,207				1,208				1,216				1,215
Interest on deposits in banks			42				72				66				82				66
Total interest income			26,696				27,412				28,004				31,256				31,536
Interest Expense
Interest on deposits			2,147				2,283				2,362				2,604				2,603
Interest on short-term borrowings			517				579				590				656				675
Interest on long-term borrowings			1,706				1,688				1,690				1,860				1,799
Total interest expense			4,370				4,550				4,642				5,120				5,077
Net interest income			22,326				22,862				23,362				26,136				26,459
Provision for loan losses			2,333				3,205				1,142				1,220				1,916
Net interest income after provision for loan losses			19,993				19,657				22,220				24,916				24,543
Noninterest Income
Wealth management income			863				971				846				862				1,005
Service charges on deposit accounts			3,582				3,315				3,168				3,826				3,895
Other service charges and fees			1,777				1,793				1,786				1,682				1,631
Insurance commissions			1,559				1,308				1,666				1,215				1,616
Net impairment losses recognized in earnings			-				-				-				-				(942	)
Net (loss) gain on sale of securities			(39	)			113				117				213				228
FDIC indemnification asset (amortization) accretion			(1,089	)			(1,662	)			(1,539	)			458				131
Other operating income			1,458				1,010				1,817				957				3,599
Total noninterest income			8,111				6,848				7,861				9,213				11,163
Noninterest Expense
Salaries and employee benefits			11,080				9,960				10,110				10,693				10,860
Occupancy expense of bank premises			1,700				1,795				1,855				1,938				1,754
Furniture and equipment			1,288				1,300				1,343				1,404				955
Amortization of intangible assets			183				183				179				191				191
FDIC premiums and assessments			460				469				472				389				611
Merger related expense			-				7				49				866				645
Other operating expense			5,442				4,819				5,536				6,252				5,309
Total noninterest expense			20,153				18,533				19,544				21,733				20,325
Income before income taxes			7,951				7,972				10,537				12,396				15,381
Income tax expense			2,539				2,537				3,396				3,957				5,322
Net income			5,412				5,435				7,141				8,439				10,059
Dividends on preferred stock			261				253				258				272				220
Net income available to common shareholders		$	5,151			$	5,182			$	6,883			$	8,167			$	9,839
Basic earnings per common share		$	0.26			$	0.26			$	0.34			$	0.41			$	0.49
Diluted earnings per common share		$	0.26			$	0.26			$	0.34			$	0.40			$	0.47
Cash dividends per common share		$	0.12			$	0.12			$	0.12			$	0.11			$	0.11
Weighted average basic shares outstanding			20,008,861				19,997,991				20,032,694				20,063,873				20,013,264
Weighted average diluted shares outstanding			21,136,173				21,211,531				21,264,228				21,319,665				21,333,451

 

 

FIRST COMMUNITY BANCSHARES, INC.

RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited)

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2013				2012				2013				2012
(Amounts in thousands, except per share data)
Net income, GAAP		$	5,412			$	10,059			$	17,988			$	20,138
Non-GAAP adjustments:
Net impairment losses recognized in earnings			-				942				-				942
Net loss (gain) on sale of securities			39				(228	)			(191	)			(270	)
Net gain on debt prepayment			-				-				(296	)			-
Merger related expense			-				645				56				4,227
Prospective correction of prior period understatement			-				(2,395	)			-				(2,395	)
Other noncore, nonrecurring items			1,072				-				1,180				-
Total adjustments to core earnings			1,111				(1,036	)			749				2,504
Tax effect			415				(392	)			280				947
Core earnings, non-GAAP		$	6,108			$	9,415			$	18,457			$	21,695
Core return on average assets			0.92	%			1.35	%			0.92	%			1.19	%
Core return on average common equity			7.19	%			11.39	%			7.19	%			9.39	%
Core return on average tangible common equity			10.57	%			16.65	%			10.51	%			13.63	%
Core diluted earnings per common share		$	0.29			$	0.44			$	0.87			$	1.08

 

FIRST COMMUNITY BANCSHARES, INC.

EFFICIENCY RATIO CALCULATION (Unaudited)

 

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2013				2012				2013				2012
(Amounts in thousands)
Noninterest expense, GAAP		$	20,153			$	20,325			$	58,230			$	56,650
Non-GAAP adjustments:
Merger related expense			-				(645	)			(56	)			(4,227	)
OREO expense and net loss			(272	)			(490	)			(1,067	)			(1,581	)
Other noncore, nonrecurring items			(1,072	)			-				(1,180	)			-
Adjusted noninterest expense			18,809				19,190				55,927				50,842
Net interest income, GAAP			22,326				26,459				68,550				63,920
Noninterest income, GAAP			8,111				11,163				22,820				27,497
Non-GAAP adjustments:
Tax equivalency adjustment			691				684				2,079				2,089
Net impairment losses recognized in earnings			-				942				-				942
Net loss (gain) on sale of securities			39				(228	)			(191	)			(270	)
Net gain on debt prepayment			-				-				(296	)			-
Prospective correction of prior period understatement			-				(2,395	)			-				(2,395	)
Other noncore, nonrecurring items			-				-				-				-
Adjusted net interest and noninterest income			31,167				36,625				92,962				91,783
Non-GAAP efficiency ratio			60.35	%			52.40	%			60.16	%			55.39	%

 

 

FIRST COMMUNITY BANCSHARES, INC.

CONDENSED QUARTERLY BALANCE SHEETS (Unaudited)

 

		For the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2013				2013				2013				2012				2012
(Amounts in thousands)
Cash and due from banks		$	47,982			$	44,307			$	41,467			$	50,405			$	44,865
Federal funds sold			33,374				22,876				110,544				66,509				93,005
Interest-bearing deposits in banks			11,219				14,936				15,030				27,933				27,359
Total cash and cash equivalents			92,575				82,119				167,041				144,847				165,229
Securities available-for-sale			545,676				550,158				537,507				534,358				517,161
Securities held-to-maturity			567				627				816				816				816
Loans held for sale			825				4,621				2,794				6,672				4,446
Loans held for investment, net of unearned income:
Covered under loss share agreements			163,425				184,076				195,060				207,106				221,977
Not covered under loss share agreements			1,533,272				1,507,422				1,494,232				1,517,547				1,541,633
Less allowance for loan losses			(24,665	)			(23,122	)			(24,850	)			(25,770	)			(25,835	)
Loans, net			1,672,857				1,672,997				1,667,236				1,705,555				1,742,221
FDIC indemnification asset			37,102				40,389				43,921				48,149				50,606
Property, plant, and equipment, net			63,526				64,085				64,812				64,868				62,191
Other real estate owned:
Covered under loss share agreements			7,381				6,407				6,911				3,255				3,553
Not covered under loss share agreements			5,450				4,743				4,439				5,749				5,957
Interest receivable			7,336				8,010				8,166				7,842				6,038
Goodwill			104,892				104,892				104,689				104,866				104,022
Intangible assets			2,976				3,159				3,344				3,522				3,713
Other assets			112,313				113,149				111,409				105,040				108,143
Total assets		$	2,652,651			$	2,650,735			$	2,720,291			$	2,728,867			$	2,769,650
Deposits:
Noninterest-bearing		$	353,951			$	349,972			$	355,918			$	343,352			$	335,100
Interest-bearing			374,546				354,862				377,445				353,321				360,061
Savings			527,887				513,781				513,322				500,276				496,740
Time			740,181				770,081				800,812				833,226				872,059
Total deposits			1,996,565				1,988,696				2,047,497				2,030,175				2,063,960
Interest, taxes, and other liabilities			24,653				23,019				26,740				28,816				29,538
Securities sold under agreements to repurchase			114,647				121,204				121,506				136,118				146,904
FHLB borrowings			150,000				150,000				150,000				161,558				161,558
Other borrowings			15,839				15,877				15,877				15,877				15,877
Total liabilities			2,301,704				2,298,796				2,361,620				2,372,544				2,417,837
Preferred stock			15,471				15,921				17,421				17,421				17,921
Common stock			20,478				20,447				20,343				20,343				20,309
Additional paid-in capital			215,671				215,139				213,855				213,829				213,320
Retained earnings			123,018				120,273				117,489				113,013				107,055
Treasury stock, at cost			(10,946	)			(7,763	)			(7,517	)			(6,458	)			(5,446	)
Accumulated other comprehensive loss			(12,745	)			(12,078	)			(2,920	)			(1,825	)			(1,346	)
Total stockholders' equity			350,947				351,939				358,671				356,323				351,813
Total liabilities and stockholders' equity		$	2,652,651			$	2,650,735			$	2,720,291			$	2,728,867			$	2,769,650
Shares outstanding at period end			19,888,028				20,060,862				19,985,212				20,053,466				20,086,404
Book value per common share at period end (1)		$	16.75			$	16.63			$	16.93			$	16.76			$	16.50
Tangible book value per common share at period end (2)		$	11.60			$	11.53			$	11.83			$	11.66			$	11.45

   

(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.

 

 

FIRST COMMUNITY BANCSHARES, INC.

SELECTED CREDIT QUALITY INFORMATION (Unaudited)

 

		As of and for the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
(Amounts in thousands)		2013				2013				2013				2012				2012
Allowance for Loan Losses
Beginning balance		$	23,122			$	24,850			$	25,770			$	25,835			$	26,171
Provision for loan losses charged to operations			2,333				3,205				1,142				1,220				1,916
Provision for loan losses recorded through  the FDIC indemnification asset			812				-				-				-				-
Charge-offs			(1,955	)			(5,006	)			(2,759	)			(1,717	)			(2,613	)
Recoveries			353				73				697				432				361
Net charge-offs			(1,602	)			(4,933	)			(2,062	)			(1,285	)			(2,252	)
Ending balance		$	24,665			$	23,122			$	24,850			$	25,770			$	25,835
Summary of Asset Quality
Non-covered loans
Nonaccrual loans		$	26,397			$	29,125			$	30,076			$	23,931			$	26,514
Accruing loans past due 90 days or more			-				-				-				-				-
Troubled debt restructurings ("TDRs") (1)			2,228				276				1,596				6,009				121
Total non-covered nonperforming loans			28,625				29,401				31,672				29,940				26,635
Other real estate owned ("OREO") not covered under FDIC loss share agreements			5,450				4,743				4,439				5,749				5,957
Total non-covered nonperforming assets		$	34,075			$	34,144			$	36,111			$	35,689			$	32,592
Covered Loans
Nonaccrual loans		$	3,579			$	3,889			$	4,567			$	4,323			$	2,849
Accruing loans past due 90 days or more			82				-				-				-				-
Total covered nonperforming loans			3,661				3,889				4,567				4,323				2,849
OREO covered under FDIC loss share agreements			7,381				6,407				6,911				3,255				3,553
Total covered nonperforming assets			11,042				10,296				11,478				7,578				6,402
Total nonperforming assets		$	45,117			$	44,440			$	47,589			$	43,267			$	38,994
Performing TDRs (2)		$	9,697			$	10,927			$	10,272			$	6,038			$	6,742
Total TDRs (3)		$	11,925			$	11,203			$	11,868			$	12,047			$	6,863
Asset Quality Ratios
Excluding covered assets
Nonperforming loans to total loans			1.87	%			1.95	%			2.12	%			1.97	%			1.73	%
Nonperforming assets to total assets			1.37	%			1.39	%			1.43	%			1.42	%			1.28	%
Allowance for loan losses to nonperforming loans			86.17	%			78.64	%			78.46	%			86.07	%			97.00	%
Allowance for loan losses to non-covered total loans			1.61	%			1.53	%			1.66	%			1.70	%			1.68	%
Annualized net charge-offs to average loans			0.42	%			1.31	%			0.56	%			0.34	%			0.58	%
Including covered assets
Nonperforming loans to total loans			1.90	%			1.97	%			2.15	%			1.99	%			1.67	%
Nonperforming assets to total assets			1.70	%			1.68	%			1.75	%			1.59	%			1.41	%
Allowance for loan losses to nonperforming loans			76.40	%			69.46	%			68.57	%			75.21	%			87.62	%
Allowance for loan losses to total loans			1.45	%			1.37	%			1.47	%			1.49	%			1.46	%

  

(1)

Accruing TDRs restructured within the past six months or nonperforming

(2)

Accruing TDRs with six months or more of satisfactory payment performance

(3)

Accruing nonperforming and performing TDRs

 

 

FIRST COMMUNITY BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

 

		As of and for the Quarter Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2013				2013				2013				2012				2012
Selected Ratios
Return on average assets			0.77	%			0.78	%			1.03	%			1.19	%			1.41	%
Return on average common equity			6.06	%			5.97	%			8.11	%			9.59	%			11.91	%
Net interest margin			3.99	%			4.07	%			4.15	%			4.49	%			4.48	%
Non-GAAP efficiency ratio quarter-to-date			60.35	%			60.60	%			59.55	%			57.43	%			52.40	%
Non-GAAP efficiency ratio year-to-date			60.16	%			60.07	%			59.55	%			55.96	%			55.39	%
Total equity to total assets			13.23	%			13.28	%			13.19	%			13.06	%			12.70	%
Average earning assets to average assets			86.51	%			86.72	%			86.96	%			86.87	%			87.02	%
Average loans to average deposits			85.13	%			84.33	%			84.98	%			85.71	%			87.88	%
(Amounts in thousands)
Average Balances
Loans		$	1,694,243			$	1,692,248			$	1,706,296			$	1,745,584			$	1,790,489
Investment securities			548,283				548,101				545,497				519,798				528,126
Earning assets			2,287,785				2,323,517				2,350,686				2,376,805				2,408,442
Total assets			2,644,632				2,679,295				2,703,029				2,736,037				2,767,790
Total deposits			1,990,163				2,006,626				2,007,840				2,036,697				2,037,467
Interest-bearing deposits			1,641,007				1,662,446				1,675,654				1,699,991				1,733,987
Borrowings			281,250				289,289				309,333				314,645				329,958
Interest-bearing liabilities			1,922,257				1,951,735				1,984,987				2,014,636				2,063,945
Stockholders' equity			352,993				365,217				361,549				356,812				347,637
Tax equivalent net interest income			23,017				23,555				24,057				26,832				27,139

 

 

FIRST COMMUNITY BANCSHARES, INC.

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

 

		Three Months Ended September 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)		$	1,694,243			$	23,476				5.50	%		$	1,790,489			$	28,305				6.29	%
Securities available-for-sale			547,686				3,857				2.79	%			525,151				3,819				2.89	%
Securities held-to-maturity			597				12				7.97	%			2,975				26				3.48	%
Interest-bearing deposits			45,259				42				0.37	%			89,827				65				0.29	%
Total earning assets			2,287,785				27,387				4.75	%			2,408,442				32,215				5.32	%
Other assets			356,847												359,348
Total assets		$	2,644,632											$	2,767,790
Liabilities
Interest-bearing deposits
Demand deposits		$	362,548			$	58				0.06	%		$	335,299			$	49				0.06	%
Savings deposits			520,884				142				0.11	%			500,761				171				0.14	%
Time deposits			757,575				1,947				1.02	%			897,927				2,384				1.06	%
Total interest-bearing deposits			1,641,007				2,147				0.52	%			1,733,987				2,604				0.60	%
Borrowings
Retail repurchase agreements			65,382				34				0.21	%			88,484				120				0.54	%
Wholesale repurchase agreements			50,000				473				3.75	%			58,195				544				3.72	%
FHLB advances and other borrowings			165,868				1,716				4.10	%			183,279				1,808				3.92	%
Total borrowings			281,250				2,223				3.14	%			329,958				2,472				2.98	%
Total interest-bearing liabilities			1,922,257				4,370				0.90	%			2,063,945				5,076				0.98	%
Noninterest-bearing demand deposits			349,156												303,480
Other liabilities			20,226												25,728
Total liabilities			2,291,639												2,393,153
Stockholders' equity			352,993												347,637
Total liabilities and stockholders' equity		$	2,644,632											$	2,740,790
Net interest income, tax equivalent						$	23,017											$	27,139
Net interest rate spread (3)											3.85	%											4.34	%
Net interest margin (4)											3.99	%											4.48	%

  

(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.

 

 

FIRST COMMUNITY BANCSHARES, INC.

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

 

		Nine Months Ended September 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)		$	1,697,533			$	72,671				5.72	%		$	1,566,550			$	68,610				5.85	%
Securities available-for-sale			546,603				11,297				2.76	%			496,854				11,547				3.10	%
Securities held-to-maturity			700				43				8.21	%			3,228				155				6.41	%
Interest-bearing deposits			75,577				180				0.32	%			66,579				177				0.36	%
Total earning assets			2,320,413				84,191				4.85	%			2,133,211				80,489				5.04	%
Other assets			355,025												302,136
Total assets		$	2,675,438											$	2,435,347
Liabilities
Interest-bearing deposits
Demand deposits		$	359,439			$	173				0.06	%		$	305,055			$	123				0.05	%
Savings deposits			514,447				444				0.12	%			439,451				400				0.12	%
Time deposits			785,690				6,176				1.05	%			751,167				6,846				1.22	%
Total interest-bearing deposits			1,659,576				6,793				0.55	%			1,495,673				7,369				0.66	%
Borrowings
Federal funds purchased			-				-				0.00	%			654				2				0.41	%
Retail repurchase agreements			71,476				240				0.45	%			78,472				343				0.58	%
Wholesale repurchase agreements			52,521				1,416				3.60	%			54,145				1,482				3.66	%
FHLB advances and other borrowings			169,190				5,113				4.04	%			174,627				5,284				4.04	%
Total borrowings			293,187				6,769				3.09	%			307,898				7,111				3.08	%
Total interest-bearing liabilities			1,952,763				13,562				0.93	%			1,803,571				14,480				1.07	%
Noninterest-bearing demand deposits			341,903												279,987
Other liabilities			20,882												24,241
Total liabilities			2,315,548												2,107,799
Stockholders' equity			359,890												327,548
Total liabilities and stockholders' equity		$	2,675,438											$	2,435,347
Net interest income, tax equivalent						$	70,629											$	66,009
Net interest rate spread (3)											3.92	%											3.97	%
Net interest margin (4)											4.07	%											4.13	%

 

(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.