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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2001
or
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from:__________________ to __________________
Commission File Number 0-19297
First Community Bancshares, Inc.
(Exact name of Registrant as specified in its charter)
Nevada 55-0694814
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
One Community Place, Bluefield, Virginia 24605-0989
(Address of principal executive offices) ( Zip Code)
Registrant's telephone number, including area code: (276) 326-9000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
Common stock, par value $1 per share
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ___
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 14, 2002.
$242,739,718 based on the closing sales price at that date
Common Stock, $1 par value
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 14, 2002.
Common Stock, $1 par value - 9,951,592 (Adjusted for a 10% stock dividend
declared February 19, 2002, payable March 28, 2002, to shareholders of record
March 1, 2002).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the First Community Bancshares, Inc. 2001 Annual Report to Security
Holders are incorporated by reference in Part I and II hereof.
Portions of the Proxy Statement for the annual meeting of shareholders to be
held April 16, 2002 are incorporated by reference in Part III of this Form 10-K.
Form 10-K Information
Table of Contents
2001 Form 10-K Annual Report
Part I. Page
Item 1. Business .......................................................................... 3
Item 2. Properties ........................................................................ 18
Item 3. Legal Proceedings ................................................................. 18
Item 4. Submission of Matters to a Vote of Security Holders ............................... 18
Part II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters ............. 19
Item 6. Selected Financial Data ........................................................... 19
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations...................................................................... 19
Item 7A. Quantitative and Qualitative Disclosures About Market Risk......................... 19
Item 8. Financial Statements and Supplementary Data ....................................... 19
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................................... 19
Part III.
Item 10. Directors and Executive Officers of the Registrant ................................ 19
Item 11. Executive Compensation ............................................................ 19
Item 12. Security Ownership of Certain Beneficial Owners and Management .................... 19
Item 13. Certain Relationships and Related Transactions .................................... 20
Part IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ................... 20
Signatures......................................................................... 21
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PART I
Item 1. BUSINESS
General
First Community Bancshares, Inc. ("FCBI" or the "Company", "Corporation" or
"Registrant") is a one-bank holding company incorporated in the State of Nevada
and serves as the holding company for First Community Bank, N. A. ("FCBNA" or
the "Bank"), a national association that conducts commercial banking operations
within the states of Virginia, West Virginia and North Carolina. United First
Mortgage, Inc. ("UFM"), acquired in the latter part of 1999, is a wholly owned
subsidiary of FCBNA and serves as a wholesale and retail distribution channel
for FCBNA's mortgage banking business segment. First Community Bancshares, Inc.
and its wholly-owned subsidiary have total assets of approximately $1.48 billion
at December 31, 2001 and conduct commercial and mortgage banking business
throughout the three-state area of Virginia, West Virginia and North Carolina
through the 38 branches of FCBNA and 11 mortgage brokerage offices which are
located throughout the state of Virginia.
On December 7, 2001, the Company completed the acquisition of several branch
facilities of Branch Banking and Trust Company of Virginia (BB&T) and F & M Bank
- - Southern Virginia (F&M) located in Clifton Forge, Emporia, and Drakes Branch,
Virginia. The completion of this transaction resulted in $77 million in cash, an
additional $114 million in deposits to the Bank, and added $31 million to the
loan portfolio.
Forward-Looking Statements
This report contains forward-looking statements with respect to the financial
condition, results of operations and business of FCBI. This Annual Report on
Form 10-K should be read in conjunction with the consolidated financial
statements, notes and tables included throughout this report and the First
Community Bancshares, Inc. (the "Company" or "First Community") Annual Report to
shareholders. All statements other than statements of historical fact included
in this Annual Report, including statements in the Letter to Shareholders and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations are, or may be deemed to be, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Exchange Act of 1934. Generally, the words "believe," "expect," "intend,"
"estimate," "anticipate," "project," "will" and similar expressions identify
forward-looking statements, which generally are not historical in nature. All
statements that address operating performance, events or developments that we
expect or anticipate will occur in the future -- including statements relating
to growth, share of revenues and earnings per share growth and statements
expressing general optimism about future operating results -- are
forward-looking statements. Forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from our Company's historical experience and our present expectations or
projections. As and when made, management believes that these forward-looking
statements are reasonable. However, caution should be taken not to place undue
reliance on any such forward-looking statements since such statements speak only
as of the date when made.
Many factors could cause the Company's actual results to differ materially from
the results contemplated by the forward-looking statements. Some factors, which
could negatively affect the results, include: (1) general economic conditions,
either nationally or within the Company's markets, could be less favorable than
expected, (2) changes in market interest rates could affect interest margins and
profitability, (3) competitive pressures could be greater than anticipated, (4)
legal or accounting changes could affect the Company's results, (5) acquisition
cost savings may not be realized or the anticipated income may not be achieved,
and (6) adverse changes could occur in the securities and investments markets.
The foregoing list of important factors is not exclusive.
3
Forward-looking statements made herein reflect management's expectations as of
the date such statements are made. Such information is provided to assist
stockholders, and potential investors in understanding current and anticipated
financial operations of the Company and is included pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Currently, the Registrant is a bank holding company and the banking operations
are expected to remain the principal business and major source of revenue. The
Registrant provides a mechanism for ownership of the subsidiary banking
operations, provides capital funds as required and serves as a conduit for
distribution of dividends to stockholders. The Registrant also considers and
evaluates options for growth and expansion of the existing subsidiary banking
operations.
The Registrant currently derives substantially all of its revenues from
dividends paid by its subsidiary bank. Dividend payments by the bank are
determined in relation to earnings, asset growth and capital position and are
subject to certain restrictions by regulatory agencies as described more fully
under Supervision and Regulation of this item.
FIRST COMMUNITY BANK, N. A. (A NATIONAL ASSOCIATION)
- ----------------------------------------------------
At December 31, 2001, the principal assets of FCBI included all of the
outstanding shares of common stock of FCBNA, Bluefield, Virginia. FCBNA is a
nationally chartered bank organized under the banking laws of the United States.
FCBNA engages in general commercial and retail banking business in West
Virginia, Virginia and North Carolina through 38 branch facilities. It provides
safe deposit services and makes all types of loans, including commercial,
mortgage and personal loans. FCBNA also provides trust services and its deposits
are insured by the FDIC. FCBNA is a member of the Federal Reserve System and is
a member of the Federal Home Loan Bank (FHLB) of Atlanta. Regulatory oversight
of the banking subsidiary is conducted by the Office of the Comptroller of the
Currency (OCC). FCBNA, through its wholly owned subsidiary, UFM, provides for
the origination and sale of mortgages to secondary sources. The required
information concerning reportable segments and the required disclosures are
incorporated herein by reference to Note 18 of the financial statements included
in the Annual Report to Shareholders.
Competition
The financial services industry is highly competitive and dramatic change
continues to occur. FCBI's banking subsidiary competes actively with national
and state banks, savings and loan associations, securities dealers, mortgage
bankers, finance companies and insurance companies. Competition for financial
products and services continues to grow as clients select from a variety of
traditional and nontraditional alternatives. The industry continues to rapidly
consolidate which affects competition by eliminating some regional and local
institutions.
Market Area
As described above, the market region served by the Company and its subsidiary
consists of West Virginia, Virginia and North Carolina. The area's economic base
is diverse and primarily consists of manufacturing, mining, general services,
agricultural, wholesale/retail trade, and financial services. Due to the diverse
geographic region and industries served, FCBI believes its current market area
is economically strong and will support consistent growth in assets and deposits
into the future. Management feels that its community bank approach to providing
personalized client service offers a competitive advantage,
4
which strengthens the Corporation's ability to serves its markets and
effectively provide products and services to the businesses and individuals in
these markets.
Lending Activities
The Company's banking subsidiary generates revenues primarily through the
investment of borrowed and deposited funds in earning assets. These assets are
comprised of securities available for sale, investment securities, short-term
investment vehicles and loans to businesses and individuals. Average loans held
for investment represent approximately 70% of average earning assets and present
a higher level of credit risk to the Company when contrasted with investment
securities.
The principal lending activities of the bank are concentrated primarily within
its market areas in West Virginia, Virginia, North Carolina and the surrounding
mid-Atlantic area. These are areas with which bank personnel are most acquainted
and are within reasonable distances of the bank that allows for timely
communications with customers as well as periodic inspections of collateral.
The held for investment loan portfolio total of $904.5 million at December 31,
2001 and is comprised of commercial, real estate and consumer loans including
home equity loans. Commercial and commercial real estate loans comprise 46.6% of
the total loan portfolio. Commercial loans include loans to small to mid-size
industrial, commercial and service companies that include but are not limited
to, coal mining companies, manufacturers, real estate developers, automobile
dealers, and retail and wholesale merchants. Collateral securing these loans
includes equipment, machinery, inventory, receivables, vehicles and commercial
real estate. Commercial loans are considered to contain a higher level of risk
than other loan types although care is taken to minimize these risks.
Underwriting standards require a comprehensive review and independent evaluation
of virtually all commercial loans by Credit Administration and Loan Committees
prior to approval with updates to these credit reviews performed periodically on
a quarterly or annual basis depending on the size of the loan relationship.
The mortgage offices of UFM provide a distribution outlet for origination and
sale of loans to wholesale and retail purchasers. UFM originates residential
mortgage loans through its production offices located in eastern Virginia and,
consequently, the loans held for sale portfolio at December 31, 2001 was $65.5
million. Risks associated with this lending function include interest rate risk,
which is mitigated or hedged through the utilization of financial instruments to
offset and equalize the effect of changing interest rates. As of December 31,
2001, UFM held an investment in the underlying notional value of investments in
securities ("forwards") of $21 million and interest rate lock commitments of $32
million. The combined market value of the commitments on forwards and loan
commitments as of December 31, 2001 is $480,000. This hedging strategy is
managed through a series of mathematical tools that are used to quantify the
exposure to changes in interest rates and UFM simultaneously enters into forward
transactions to minimize the potential volatility of losses as rates change.
Employees
The Registrant and its subsidiary, FCBNA, employed 498 full time equivalent
employees at December 31, 2001. Additionally, UFM employed 109 people in the
mortgage subsidiary. Management considers employee relations to be excellent.
Supervision and Regulation
General
The Registrant is a bank holding company within the meaning of the Bank Holding
Act of 1956 (Act), as
5
amended, and is registered as such with the Board of Governors of the Federal
Reserve System. The Registrant is required to file with the Board of Governors
quarterly reports of the Registrant and the subsidiary and such other
information as the Board of Governors may require. The Federal Reserve makes
periodic examinations of the Registrant typically on an annual basis. The Act
requires every bank holding company to obtain prior approval of the Board of
Governors before acquiring substantially all the assets or direct or indirect
ownership or control of more than 5% of the voting shares of any bank that is
not already majority-owned. The Act also prohibits a bank holding company, with
certain exceptions, from engaging in, or acquiring direct or indirect control of
more than 5% of the voting shares of any company engaged in non-banking
activities.
Bank holding companies and their subsidiary banks are also subject to the
provisions of the Community Reinvestment Act of 1977 ("CRA"). Under the CRA, the
Federal Reserve Board is required, in connection with its examination of a bank,
to assess such bank's record in meeting the credit needs of the communities
served by that bank, including low and moderate-income neighborhoods. Further,
such assessment is also required of any bank holding company which has applied
to (i) charter a National bank, (ii) obtain deposit insurance coverage for a
newly chartered institution, (iii) establish a new branch office that will
accept deposits, (iv) relocate an office, or (v) merge or consolidate with, or
acquire the assets or assume the liabilities of a federally-regulated financial
institution. In the case of a bank holding company applying for approval to
acquire a bank or other bank holding company, the Federal Reserve Board will
assess the record of each subsidiary of the applicant bank holding company, and
such records may be the basis for denying the application or imposing conditions
in connection with approval of the application. On July 1, 1995, the federal
bank regulators amended the CRA regulations to simplify enforcement of the CRA
by substituting the prior twelve assessment categories with three performance
categories for use in calculating CRA ratings. The federal bank regulators will
evaluate banks under the lending, investment, and service tests. Additional data
collection and reporting requirements under the Home Mortgage Disclosure Act are
imposed on institutions that accept mortgage loan applications within
metropolitan statistical areas.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA") was enacted by Congress on August 9, 1989. Among the more significant
consequences of FIRREA with respect to bank holding companies is the impact of
the "cross-guarantee" provision and the significantly expanded enforcement
powers of bank regulatory agencies. Under the cross-guarantee provision, if one
depository institution subsidiary of a multi-unit holding company fails or
requires FDIC assistance, the FDIC may assess a commonly controlled depository
institution for the estimated losses suffered by the FDIC. While the FDIC's
claim is junior to the claims of non-affiliated depositors, holders of secured
liabilities, general creditors, and subordinated creditors, it is superior to
the claims of shareholders. Among the significantly expanded enforcement powers
of the bank regulatory agencies are the powers to (i) obtain cease and desist
orders, (ii) remove officers and directors, (iii) approve new directors and
senior executive officers of certain depository institutions, and (iv) assess
criminal and civil money penalties for violations of law, regulations. or
conditions imposed by, or agreements with, regulatory agencies.
The earnings of the Corporation's subsidiary, and therefore the earnings of the
Corporation, are affected by general economic conditions, management policies
and the legislative and governmental actions of various regulatory authorities,
including the Federal Reserve Board, the OCC and the FDIC. In addition, there
are numerous governmental requirements and regulations that affect the
activities of the Corporation and its subsidiary.
Payment of Dividends
The Corporation is a legal entity separate and distinct from its banking
subsidiary. A major portion of the revenues of the Corporation result from
amounts paid as dividends to the Corporation by its national bank subsidiary.
The prior approval of the Comptroller is required if the total of all dividends
declared by a national bank in any calendar year will exceed the sum of such
bank's net profits for that year and its retained net profits for the preceding
two calendar years, less any required transfers to surplus. Federal law also
prohibits national banks from paying dividends that would be greater than the
bank's undivided profits
6
after deducting statutory bad debts in excess of the bank's allowance for
loan losses.
Capital Adequacy
In addition, the Corporation and its banking subsidiary are subject to various
general regulatory policies and requirements relating to the payment of
dividends, including requirements to maintain adequate capital above regulatory
minimums. The appropriate federal regulatory authority is authorized to
determine under certain circumstances relating to the financial condition of a
bank or bank holding company that the payment of dividends would be an unsafe or
unsound practice and to prohibit payment thereof. The appropriate federal
regulatory authorities have indicated that paying dividends that deplete a
bank's capital base to an inadequate level would be an unsound and unsafe
banking practice and that banking organizations should generally pay dividends
only out of current operating earnings.
Under the risk-based capital requirements for bank holding companies, the
minimum requirement for the ratio of capital to risk-weighted assets (including
certain off-balance-sheet activities, such as standby letters of credit) is
eight percent. At least half of the total capital is to be composed of common
stockholders' equity, retained earnings, a limited amount of qualifying
perpetual preferred stock and minority interests in the equity accounts of
consolidated subsidiaries, less goodwill and certain intangibles ("tier 1
capital" and together with tier 2 capital "total capital"). The remainder of
total capital may consist of mandatory convertible debt securities and a limited
amount of subordinated debt, qualifying preferred stock and loan loss allowance
("tier 2 capital"). At December 31, 2001, the Corporation's tier 1 capital and
total capital ratios were 10.82 percent and 12.10 percent, respectively.
In addition, the Federal Reserve Board has established minimum leverage ratio
guidelines for bank holding companies. These requirements provide for a minimum
leverage ratio of tier 1 capital to adjusted average quarterly assets less
certain amounts ("leverage ratio") equal to three percent for bank holding
companies that meet certain specified criteria, including having the highest
regulatory rating. All other bank holding companies will generally be required
to maintain a leverage ratio of from at least four to five percent. The
Corporation's leverage ratio at December 31, 2001, was 7.93 percent. The
guidelines also provide that bank holding companies experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. Furthermore, the guidelines indicate that the Federal
Reserve Board will continue to consider a "tangible tier 1 leverage ratio"
(deducting all intangibles) in evaluating proposals for expansion or new
activity.
The Corporation's subsidiary bank is subject to similar capital requirements
adopted by the Comptroller of the Currency. The capital ratios of the bank
subsidiary of the Corporation are set forth in Note 14 in the Annual Report and
are incorporated herein by reference.
7
Support of Subsidiary Bank
The Federal Deposit Insurance Corporation Improvement Act, as amended
("FDICIA"), among other things, imposes liability on an institution the deposits
of which are insured by the FDIC, such as the Corporation's subsidiary bank, for
certain potential obligations to the FDIC incurred in connection with other
FDIC-insured institutions under common control with such institution.
Under the National Bank Act, if the capital stock of a national bank is impaired
by losses or otherwise, the Comptroller is authorized to require payment of the
deficiency by assessment upon the bank's stockholders, pro rata, and to the
extent necessary, if any such assessment is not paid by any stockholder after
three months notice, to sell the stock of such stockholder to make good the
deficiency. Under Federal Reserve Board policy, the Corporation is expected to
act as a source of financial strength to its subsidiary bank and to commit
resources to support the subsidiary. This support may be required at times when,
absent such Federal Reserve Board policy, the Corporation may not find itself
able to provide it.
Any capital loans by a bank holding company to its subsidiary bank are
subordinate in right of payment to deposits and to certain other indebtedness of
such subsidiary bank. In the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a subsidiary bank will be assumed by the bankruptcy
trustee and entitled to a priority of payment.
Depositor Preference Statute
Under federal law, deposits and certain claims for administrative expenses and
employee compensation against an insured depository institution would be
afforded a priority over other general unsecured claims against such an
institution, including federal funds and letters of credit, in the "liquidation
or other resolution" of such an institution by any receiver.
Borrowings by the Corporation
The banking subsidiary of the Registrant is subject to certain restrictions by
regulatory bodies which limit the amounts and the manner in which it may loan
funds to the Registrant. The bank is further subject to restrictions on the
amount of dividends that can be paid to the Registrant in any one calendar year
without prior approval by primary regulators. Payment of dividends by the
subsidiary bank to the Registrant cannot exceed net profits, as defined, for the
current year combined with net profits for the two preceding years. In addition,
any distribution that might reduce the bank's equity capital to unsafe levels or
which, in the opinion of regulatory agencies, is not in the best interests of
the public, could be prohibited. (For additional information concerning these
restrictions, see Note 14 of the Notes to the 2001 Consolidated Financial
Statements incorporated herein by reference.)
Prompt Corrective Action
The FDICIA, among other things, requires the federal banking agencies to take
"prompt corrective action" in respect of depository institutions that do not
meet minimum capital requirements. FDICIA establishes five capital tiers: "well
capitalized", "adequately capitalized", "undercapitalized", "significantly
undercapitalized" and "critically undercapitalized". A depository institution's
capital tier will depend upon where its capital levels compare to various
relevant capital measures and certain other factors, as established by
regulation.
Federal regulatory authorities have adopted regulations establishing relevant
capital measures and relevant capital levels applicable to FDIC-insured banks.
The relevant capital measures are the total capital ratio, the tier 1 capital
ratio and the leverage ratio. Under the regulations, an FDIC-insured bank will
be: (i) "well capitalized" if it has a total capital ratio of ten percent or
greater, a tier 1 capital ratio of six percent or greater and a leverage ratio
of five percent or greater and is not subject to any order or written directive
by
8
any such regulatory authority to meet and maintain a specific capital level
for any capital measure; (ii) "adequately capitalized" if it has a total capital
ratio of eight percent or greater, a tier 1 capital ratio of four percent or
greater and a leverage ratio of four percent or greater (three percent in
certain circumstances) and is not "well capitalized"; (iii) "undercapitalized"
if it has a total capital ratio of less than eight percent, a tier 1 capital
ratio of less than four percent or a leverage ratio of less than four percent
(three percent in certain circumstances); (iv) "significantly undercapitalized"
if it has a total capital ratio of less than six percent, a tier 1 capital ratio
of less than three percent or a leverage ratio of less than three percent; and
(v) "critically undercapitalized" if its tangible equity is equal to or less
than two percent of average quarterly tangible assets. An institution may be
downgraded to, or deemed to be in, a capital category that is lower than is
indicated by its capital ratios if it is determined to be in an unsafe or
unsound condition or if it receives an unsatisfactory examination rating with
respect to certain matters. As of December 31, 2001, the Corporation's
deposit-taking subsidiary bank had capital levels that qualify it as being "well
capitalized" under such regulations.
The FDICIA generally prohibits an FDIC-insured depository institution from
making any capital distribution (including payment of a dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be "undercapitalized". "Undercapitalized" depository institutions are
subject to growth limitations and are required to submit a capital restoration
plan. The federal banking agencies may not accept a capital plan without
determining, among other things, that the plan is based on realistic assumptions
and is likely to succeed in restoring the depository institution's capital. In
addition, for a capital restoration plan to be acceptable, the depository
institution's parent holding company must guarantee that the institution will
comply with such capital restoration plan. The aggregate liability of the parent
holding company is limited to the lesser of (i) an amount equal to five percent
of the depository institution's total assets at the time it became
"undercapitalized", and (ii) the amount which is necessary (or would have been
necessary) to bring the institution into compliance with all capital standards
applicable with respect to such institution as of the time it fails to comply
with the plan. If a depository institution fails to submit an acceptable plan,
it is treated as if it is "significantly undercapitalized".
"Significantly undercapitalized" depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become "adequately capitalized", requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
"Critically undercapitalized" institutions are subject to the appointment of a
receiver or conservator. A bank that is not "well capitalized" is subject to
certain limitations relating to so-called "brokered" deposits.
Recent Legislation
Update on The Gramm-Leach-Bliley Act of 1999
The Gramm-Leach-Bliley Act of 1999 added important new consumer protections
related to financial privacy. The law, which modernized financial services by
allowing commercial banks, securities firms and insurance industries to compete
with each other, also requires banks and other financial institutions to create
and disclose privacy policies to their customers.
These policies, which institutions began mailing this year, spelled out how each
bank collects, uses and safeguards customer information. To the extent any bank
may share information with an unaffiliated company, such as to offer you related
products that may be of interest to you, in some cases customers have the right
to "opt out." The policies explain how to opt out by providing a response form
or special phone number consumers may call.
The protection of personal identifying information is an ongoing challenge for
consumers, the government and the private sector. Like other businesses, banks
are using technologies to make their products and
9
services more convenient than ever. At the same time, banks are working to
ensure their policies and practices are in sync with our customers' expectations
of privacy.
Additionally, the GLB Act also protects consumers by directing regulators to
establish standards that ensure the security and confidentiality of customer
information; prohibit the transfer of credit card or other account numbers to
third-party marketers; and outlawing pretext calling (which involves information
brokers calling banks to obtain customer information with the intent to defraud
the bank or customer).
First Community, as well as the industry, supported these provisions in the GLB
Act and remain committed to continuing its tradition of safeguarding
confidential financial information.
Basel Committees Capital Accord
The Basel Committee continues to work toward the development of the "New Basel
Accord." The Accord provides the conceptual framework for assessing capital
adequacy in a bank through three mutually reinforcing "pillars". The pillars
address the adequate capitalization of a bank through risk assessment capital
charges for risk inherent in the balance sheet and off balance sheet positions
held, the strength of the control environment operated by the institution and
market discipline of the bank to adequately disclose the risk and capital
positions of the bank in such a way that these positions are more transparent.
The proposed implementation of the Basel Committee's new Capital Accord (final
document anticipated in 2002) is not until 2005. However, financial institutions
affected by the Accord are preparing to make systems and process changes much
sooner. The Accord, that is intended to provide banks with incentives to evolve
toward an advanced Internal Risk Based framework while ensuring that banking
organizations remain competitive and adequately capitalized. However, the
proposals are complex and are not fully developed; therefore, the full impact of
this legislation is not entirely understood at this time but will be studied in
great detail to understand the necessary preplanning and implementation concerns
and their overall impact. Additionally, continued consultations and lobbying
relating to the issues are anticipated as well as subsequent proposals from the
Basel Committee.
Anti-Terrorism Legislation and Developments as a Result of September
11, 2001
Although there were a number of rules and proposals that were introduced
subsequent to September 11, 2001, two that have a more significant impact upon
the banking industry include House Resolutions (H.R.) 3004 and 3162. Banks
strongly support the legislative developments embodied within H. R. 3004, the
"Financial Anti-Terrorism Act of 2001" that cracks down on money launderers and
terrorists. The Nation's war on terrorism has had a major impact on the urgency
placed on understanding and knowing customers. Importantly, H.R. 3004 extends
the reach of current laws applicable to banks to other sectors of the financial
system. In order to assist identification of certain transactions, the Federal
Bureau of Investigation has developed a new model, which is intended to spot
suspicious activity and money laundering schemes. H.R. 3004 is currently under
consideration in the U.S. Senate after being passed in the House. Rule 3162
entitled "Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001," or the USA Patriot
Act, provides a number of provisions including enhanced domestic security
against terrorism, enhanced surveillance procedures, an act entitled
"International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001", provisions for protecting the border, removing obstacles to investigating
terrorism, providing for victims of terrorism and their families, the
requirement for increased information sharing for critical infrastructure
protection, strengthening the criminal laws against terrorism and improved
intelligence, among other provisions.
10
Governmental Monetary Policies and Economic Controls
The earnings of the Registrant and its subsidiary are affected by the monetary
policies of the Federal Reserve System. An important function of the Federal
Reserve System is to regulate the National supply of credit in order to deal
with economic conditions. The instruments employed by the Federal Reserve are
open market operations of U.S. Government securities, changes in the discount
rate on member bank borrowings, changes in Federal Funds rates and changes in
reserve requirements. These policies influence, in various ways, the level of
the company's investments, loans and deposits and rates earned on its earning
assets and interest rates paid on liabilities.
11
I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY, INTEREST
RATES AND INTEREST DIFFERENTIAL A.& B. AVERAGE BALANCE SHEETS-NET INTEREST
INCOME ANALYSIS (AMOUNTS IN THOUSANDS, EXCEPT %)
2001 2000 1999
------------- ------------- -----------
AVERAGE INTEREST YIELD/RATE AVERAGE INTEREST YIELD/RATE AVERAGE INTEREST YIELD/RATE
BALANCE (1) (1) BALANCE (1) (1) BALANCE (1) (1)
------------------------------------------------------------------------------------------------------------
Earning Assets:
Loans:
Held for Sale $ 41,511 $ 2,956 7.12% $ 3,503 $ 281 8.02% $ 700 $ 58 8.29%
Held for Investment (2)
Taxable 836,807 72,120 8.62% 736,519 67,568 9.17% 626,168 57,288 9.15%
Tax-Exempt 7,118 711 9.99% 8,051 869 10.79% 10,043 1,062 10.57%
------------- ----------- ---------- ----------- ------------ -------- ------------ ---------- -------
843,925 72,831 8.63% 744,570 68,437 9.19% 636,211 58,350 9.17%
Reserve for Loan
Losses (12,753) (12,195) (11,239)
------------- ----------- ---------- ----------- ------------ -------- ------------ ---------- -------
Net Total 831,172 72,831 8.76% 732,375 68,437 9.34% 624,972 58,350 9.34%
Securities Available For
Sale:
Taxable 167,672 10,094 6.02% 172,079 11,228 6.52% 186,379 11,417 6.13%
Tax-Exempt 81,507 6,269 7.69% 36,171 2,464 6.81% 35,627 2,769 7.77%
------------- ----------- ---------- ----------- ------------ -------- ------------ ---------- -------
Total 249,179 16,363 6.57% 208,250 13,692 6.57% 222,006 14,186 6.39%
Investment Securities:
Taxable 2,511 165 6.57% 4,467 314 7.03% 6,782 465 6.86%
Tax-Exempt 39,755 3,253 8.18% 70,213 6,113 8.71% 73,938 5,983 8.09%
------------- ----------- ---------- ----------- ------------ -------- ------------ ---------- -------
Total 42,266 3,418 8.09% 74,680 6,427 8.61% 80,720 6,448 7.99%
Interest Bearing
Deposits 22,197 842 3.79% 6,075 393 6.47% 9,866 482 4.89%
Fed Funds Sold - - - 330 20 6.06% 8,800 403 4.58%
------------- ----------- ---------- ----------- ------------ -------- ------------ ---------- -------
Total Earning Assets 1,186,325 $ 96,410 8.13% 1,025,213 $ 89,250 8.71% 947,064 $ 79,927 8.44%
Other Assets 99,989 102,466 95,119
------------- ----------- ------------
Total $ 1,286,314 $ 1,127,679 $ 1,042,183
============= =========== ============
Interest-Bearing Liabilities:
Demand Deposits $ 145,107 2,150 1.48% $ 131,432 2,936 2.23% $ 137,816 2,974 2.16%
Savings Deposits 131,699 1,698 1.29% 135,417 2,905 2.15% 145,526 3,257 2.24%
Time Deposits 528,267 28,036 5.31% 461,813 24,878 5.39% 451,079 22,912 5.08%
Short-term Borrowings 191,660 9,913 5.17% 149,193 8,050 5.40% 58,365 2,326 3.99%
Long-term Borrowings 10,171 612 6.02% 10,204 611 5.99% 12,905 781 6.05%
------------- ----------- ---------- ----------- ------------ -------- ------------ ---------- -------
Total Interest-bearing
Liabilities 1,006,904 42,409 4.21% 888,059 39,380 4.43% 805,691 32,250 4.00%
Demand Deposits 134,726 117,165 119,576
Other Liabilities 15,401 13,788 13,070
Stockholders' Equity 129,283 108,667 103,846
------------- ----------- ------------
Total $ 1,286,314 $ 1,127,679 $ 1,042,183
============= ----------- =========== ------------ ============ ----------
Net Interest Income $ 54,001 $ 49,870 $ 47,677
=========== ============ ==========
Net Interest Rate Spread (3) 3.91% 4.27% 4.44%
========== ======== =====
Net Interest Margin (4) 4.55% 4.86% 5.03%
========== ======== =====
(1) Fully Taxable Equivalent-Using the Federeal statuatory rate of 35%.
(2) Non-accrual loans are included in average balances outstanding but with no
related interest income.
(3) Represents the difference between the yield on earning assets and cost of
funds.
(4) Represents tax equivalent net interest income divided by average interest
earning assets.
12
C. RATE AND VOLUME ANALYSIS OF INTEREST (1)
(Amounts in Thousands)
2001 Compared to 2000 2000 Compared to 1999
$ Increase/(Decrease) due to $ Increase/(Decrease) due to
-------------------------------------- --------------------------------------
Volume Rate Total Volume Rate Total
----------- ----------- ---------- ------------ ---------- -----------
Interest Earned On:
Loans $ 11,430 $ (4,361) $ 7,069 $ 10,160 $ 150 $ 10,310
Investment securities available
for sale 3,168 (497) 2,671 (865) 371 (494)
Investement securities
held to maturitiy (2,642) (367) (3,009) (473) 452 (21)
Interest-bearing deposits
with other banks 670 (221) 449 (218) 129 (89)
Federal funds sold (10) (10) (20) (482) 99 (383)
----------- ----------- ---------- ------------ ---------- -----------
Total interest-earning assets 12,616 (5,456) 7,160 8,122 1,201 9,323
----------- ----------- ---------- ------------ ---------- -----------
Interest Paid On:
Demand deposits 281 (1,067) (786) (141) 103 (38)
Savings deposits (78) (1,129) (1,207) (220) (132) (352)
Time deposits 3,532 (374) 3,158 555 1,411 1,966
Short-term borrowings 2,483 (615) 1,868 4,663 1,061 5,724
Long-term debt (2) (2) (4) (162) (8) (170)
----------- ----------- ---------- ------------ ---------- -----------
Total interest-bearing liabilitites 6,216 (3,187) 3,029 4,695 2,435 7,130
----------- ----------- ---------- ------------ ---------- -----------
Change in net interest income $ 6,400 $ (2,269) $ 4,131 $ 3,427 $ (1,234) $ 2,193
=========== =========== ========== ============ ========== ===========
(1) Fully taxable Equivalent using the federal statutory rate of 35%.
The preceding table sets forth a summary of the changes in interest earned and
paid resulting from changes in volume of earning assets and paying liabilities
and changes in rates thereon. For purposes of this analysis, the change in
interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amounts.
13
II. INVESTMENT PORTFOLIO
A. Amortized Cost of Investment Securities Held to Maturity:
December 31,
(Amounts in Thousands) 2001 2000 1999
---------- ----------- ----------
U. S. Treasury Securities $ - $ - $ 100
U. S Government Agencies and Corporations 743 2,103 3,663
States and Political Subdivisions 39,768 72,264 73,640
Other Securities 1,373 1,369 1,365
---------- ----------- ----------
$ 41,884 $ 75,736 $ 78,768
========== =========== ==========
Market Value of Securities Available for Sale:
December 31,
(Amounts in Thousands) 2001 2000 1999
---------- ----------- ----------
U. S Government Agencies and Corporations $ 196,203 $ 134,157 $ 143,636
States and Political Subdivisions 97,449 34,648 33,355
Other Securities 60,355 38,757 35,114
---------- ----------- ----------
$ 354,007 $ 207,562 $ 212,105
========== =========== ==========
B. Maturity and Yields:
The required information is incorporated by reference to pages 37 through 40 of
the 2001 Annual Report.
C. There are no issues included in obligations of states and political
subdivisions or other securities that exceed ten percent of
stockholders' equity.
III. HELD FOR INVESTMENT LOAN PORTFOLIO
A. Loan Summary:
December 31,
---------------------------------------------------------------------------------------
(Amounts in Thousands) 2001 2000 1999 1998 1997
------------ ---------- ---------- ----------- ----------
Commercial, Financial and
Agricultural $ 162,173 $ 86,887 $ 92,739 $ 77,233 $ 82,445
Real Estate-Commercial 259,717 222,571 208,228 170,683 202,625
Real Estate-Construction 77,402 73,087 24,684 8,988 9,612
Real Estate-Residential 267,139 293,732 248,952 228,540 227,465
Consumer 138,426 135,692 128,541 127,169 151,429
Other 961 649 62 894 1,185
----------- ---------- ---------- ----------- ----------
Total 905,818 812,618 703,206 613,507 674,761
Less Unearned Income 1,322 1,362 1,490 2,014 2,944
----------- ---------- ---------- ----------- ----------
904,496 811,256 701,716 611,493 671,817
Less Reserve for Loan Losses 13,952 12,303 11,900 11,404 11,406
----------- ---------- ---------- ----------- ----------
Net Loans $ 890,544 $ 798,953 $ 689,816 $ 600,089 $ 660,411
=========== ========== ========== =========== ==========
14
B. Maturities and Rate Sensitivity of Loan Portfolio at December 31, 2001:
(Amounts in Thousands) Remaining Maturities
------------------------------------------------
Over One
One Year to Over Five
and Less Five Years Years Total Percent
------------ ------------ ------------ ------------- -------------
Commercial, Financial and
Agricultural $ 110,311 $ 37,928 $ 13,934 $ 162,173 17.93%
Real Estate-Commercial 104,184 74,176 81,357 259,717 28.71%
Real Estate-Construction 45,260 15,748 16,394 77,402 8.56%
Real Estate-Mortgage 44,023 65,484 157,632 267,139 29.53%
Consumer 22,644 103,248 11,212 137,104 15.16%
Other 356 587 18 961 0.11%
------------ ------------ ------------ ------------- -------------
$ 326,778 $ 297,171 $ 280,547 $ 904,496 100.00%
============ ============ ============ ============= =============
Rate Sensitivity:
Pre-determined Rate $ 105,166 $ 244,513 $ 271,470 $ 621,149 68.67%
Floating or Adjustable Rate 221,612 52,658 9,077 283,347 31.33%
------------ ------------ ------------ ------------- -------------
$ 326,778 $ 297,171 $ 280,547 $ 904,496 100.00%
============ ============ ============ ============= =============
36.13% 32.85% 31.02% 100.00%
C. Risk Elements: The required information for risk elements is included
below and incorporated by reference to pages 19, 20 and 43 of the 2001
Annual Report.
Nonperforming Assets:
December 31,
(Amounts in Thousands) 2001 2000 1999 1998 1997
------------ ------------ ------------ ------------- -------------
Non-accruing Loans $ 3,633 $ 5,397 $ 7,889 $ 7,763 $ 9,988
Loans Past Due Over 90 Days 1,351 1,208 1,259 377 4,391
Restructured Loans Performing
in Accordance with Modified
Terms 518 502 505 509 534
Gross Interest Income Which
Would Have Been Recorded
Under Original Terms of
Non-Accruing and Restructured
Loans 291 409 436
Actual Interest Income During
the Period 97 105 78
15
IV. SUMMARY OF LOAN LOSS EXPERIENCE
A. 1. Summary of Loan Loss Experience: Years Ended December 31,
--------------------------------------------------------------------------
(Amounts in Thousands, Except Percent Data) 2001 2000 1999 1998 1997
------------ ------------ ------------ ----------- ------------
Balance of reserve at beginning of period $ 12,303 $ 11,900 $ 11,404 $ 11,406 $ 8,987
Acquisition balances 484 1,051 - 1,981
Charge-offs:
Commercial, financial and agricultural 1,979 2,911 562 3,602 2,052
Real estate-residential 720 629 268 367 385
Installment 2,181 1,996 2,178 3,019 2,761
------------ ------------ ------------ ----------- ------------
Total Charge-offs 4,880 5,536 3,008 6,988 5,198
------------ ------------ ------------ ----------- ------------
Recoveries:
Commercial, financial and agricultural 155 267 74 190 130
Real estate-residential 298 82 60 31 31
Installment 458 553 477 515 512
------------ ------------ ------------ ----------- ------------
Total Charge-offs 911 902 611 736 673
------------ ------------ ------------ ----------- ------------
Net charge-offs 3,969 4,634 2,397 6,252 4,525
Provision charged to operations 5,134 3,986 2,893 6,250 4,963
------------ ------------ ------------ ----------- ------------
Balance of reserve at end of period $ 13,952 $ 12,303 $ 11,900 $ 11,404 $ 11,406
============ ============ ============ =========== ============
Ratio of net charge-offs to average loans
held for investment 0.47% 0.62% 0.38% 0.97% 0.73%
Ratio of reserve to loans held for investment 1.54% 1.52% 1.70% 1.86% 1.70%
16
A. 2. The required information is incorporated by reference to pages 18,
33 & 34 of the 2001 Annual Report.
B. Allocation of Reserve for Loan Losses:
(Amounts in Thousands, Except Percent Data)
December 31,
-------------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997
---------------- ------------------ ----------------- ----------------- ---------------------
Commercial, Financial
and Agricultural $ 8,399 47.00% $ 6,798 38.00% $ 4,919 43.00% $ 4,054 40.00% $ 4,795 42.00%
Real Estate-Mortgage 3,543 38.00% 3,289 46.00% 2,578 39.00% 2,297 39.00% 2,819 35.00%
Consumer 2,010 15.00% 1,861 16.00% 1,413 18.00% 1,378 21.00% 1,979 23.00%
Unallocated - 0.00% 355 0.00% 2,990 0.00% 3,675 0.00% 1,813 0.00%
---------------- ------------------ ----------------- ----------------- ---------------------
Total $13,952 100.00% $ 12,303 100.00% $ 11,900 100.00% $ 11,404 100.00% $ 11,406 100.00%
======= ====== ======== ====== ======== ====== ======== ====== ======== ======
The percentages in the table above represent the percent of loans in each
category of total loans.
V. Deposits
A. The required information for average deposits and rates paid by type is
included on page 12 of this report.
B. Not applicable.
C. Not applicable.
D. The required information is incorporated by reference to page 45 of the
2001 Annual Report.
E. Not applicable.
VI. Return on Equity and Assets
A. The required information is incorporated by reference to page 8 of the
2001 Annual Report.
17
VII. Short-Term Borrowings
A. Securities Sold Under Agreements to Repurchase and Other Short-Term
Borrowings:
The Company uses various short-term funding sources including term
repurchase agreements, structured term borrowings from the FHLB, customer
repurchase agreements and Federal funds purchased. The Company's short-term
borrowings and rates paid are summarized as follows (Amounts in Thousands,
Except Percent Data):
2001 2000 1999
----------------------- ---------------------- -----------------------
Amount Rate Amount Rate Amount Rate
----------------------- ---------------------- -----------------------
At year-end $ 240,918 5.78% $ 174,016 5.52% $ 127,762 3.99%
Average during the year 191,660 5.17% 149,193 5.40% 58,365 3.26%
Maximum month-end balance 240,918 182,187 127,762
B. Long-Term Advances From the FHLB and Long-Term Debt
The required information is incorporated by reference to pages 20 and
44 of the 2001 Annual Report.
Item 2. Properties
The principal offices of the Corporation and FCBNA are located at One
Community Place, Bluefield, Virginia, where the Company owns and occupies
approximately 36,000 square feet of office space. Additional details regarding
the physical location and number of banking offices is located on pages 65 - 66
in the 2001 Annual Report and incorporated herein by reference. The
Corporation's banking subsidiary owns in fee 38 offices while others are leased
or are located on leased land. United First Mortgage, Inc., a wholly-owned
subsidiary of FCBNA, maintains 11 leased office facilities in eastern Virginia
throughout a geographic area ranging from Virginia Beach, Virginia to
Harrisonburg, Virginia.
Item 3. Legal Proceedings
In the normal course of business, the Company is a defendant in various
legal actions and asserted claims most of which involve lending and collection
activities. While the Company and legal counsel are unable to assess the
ultimate outcome of each of these matters with certainty, they are of the belief
that the resolution of these actions should not have a material adverse affect
on the financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of 2001.
18
PART II.
Item 5. Market for Registrant's Common Equity and Related Matters
The number of common stockholders of record on December 31, 2001 was 2,439 and
outstanding shares (adjusted for the 10% stock dividend) totaled 9,951,592. The
required information is incorporated by reference to page 9 of the 2001 Annual
Report.
Item 6. Selected Financial Data
The required information is incorporated by reference to page 8 of the 2001
Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The required information is incorporated by reference to pages 4 through 25 of
the 2001 Annual Report.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The required information is incorporated by reference to pages 21 through 23 of
the 2001 Annual Report.
Item 8. Financial Statements and Supplementary Data
The required information is incorporated by reference to pages 26 through 60 of
the 2001 Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The required information concerning directors has been omitted in accordance
with General Instruction G. Such information regarding directors appears on
pages 3, 4, 5, and 6 of the Proxy Statement relating to the 2002 Annual Meeting
of Stockholders and is incorporated herein by reference.
A portion of the information relating to executive officers has been omitted in
accordance with General Instruction G. Such information regarding executive
officers appears on pages 7, 8, 10 and 11 of the Proxy Statement relating to the
2002 Annual Meeting of Stockholders and is incorporated herein by reference.
Item 11. Executive Compensation
The required information concerning management remuneration has been omitted in
accordance with General Instruction G. Such information appearing on pages 8 and
10 through 14 of the Proxy Statement relating to the 2002 Annual Meeting of
Stockholders is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The required information concerning security ownership of certain beneficial
owners and management has been omitted in accordance with General Instruction G.
Such information appearing on page 6 of the Proxy Statement relating to the 2002
Annual Meeting of Stockholders is incorporated herein by reference.
19
Item 13. Certain Relationships and Related Transactions
The required information concerning certain relationships and related
transactions has been omitted in accordance with General Instruction G. Such
information appearing on pages 5 and 6 of the Proxy Statement relating to the
2002 Annual Meeting of Stockholders is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)(1) Financial Statements
The Consolidated Financial Statements of First Community Bancshares,
Inc. and subsidiaries together with the independent Auditors' Report
dated February 8, 2002 are incorporated by reference to pages 26
through 62 of the 2001 Annual Report which is included herein as
Exhibit 13.
(2) Financial Statement Schedules
All applicable financial statement schedules required by Regulation S-X
are included in the Notes to the 2001 Consolidated Financial
Statements.
(b) Reports on Form 8-K filed during the last quarter of the period
covered by this report were as follows:
On October 17, 2001 a report on Form 8-K was filed in conjunction
with announcement of the Companies third quarter operating results.
(c) Exhibits:
(3) Articles of Incorporation and Bylaws
The Registrant's Articles of Incorporation and By-laws were previously
filed as exhibits (3)(i) and (3)(ii), respectively, with the Annual
Report on Form 10-K for the year ending 12/31/97 in connection with the
change of corporate domicile to a Nevada corporation.
(11) Statement Regarding Computation of Per Share Earnings
The statement regarding computation of per share earnings is included
as Note 1 of the Notes to Consolidated Financial Statements in the 2001
Annual Report to Stockholders and is incorporated herein by reference.
(12) Computation of Ratios
(13) Annual Report to Security Holders
(21) Subsidiary of Registrant:
First Community Bank, N.A. (a National Association organized under the
laws of the United States)
(23)(a) Independent Auditors' Consent - Ernst & Young LLP
(23)(b) Independent Auditors' Consent - Deloitte & Touche LLP
(99) Report of Deloitte & Touche LLP, Independent Auditors
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BY: /s/ John M. Mendez
------------------------------------------
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
BY: /s/ Kenneth P. Mulkey
------------------------------------------
Principal Accounting Officer
Signature Title Date
/s/ Sam Clark Director 03/26/2002
- -------------------------------------
(Sam Clark)
/s/ Allen T. Hamner Director 03/26/2002
- -------------------------------------
(Allen T. Hamner)
/s/ B. W. Harvey Director 03/26/2002
- -------------------------------------
(B.W. Harvey)
/s/ I. Norris Kantor Director 03/26/2002
- -------------------------------------
(I. Norris Kantor)
/s/ John M. Mendez President, Chief Executive 03/26/2002
- ------------------------------------- Officer and Director (Principal
(John M. Mendez) Executive Officer)
/s/ A. A. Modena. Director 03/26/2002
- -------------------------------------
(A. A. Modena)
/s/ Robert E. Perkinson, Jr. Director 03/26/2002
- -------------------------------------
(Robert E. Perkinson, Jr.)
/s/ William P. Stafford Chairman of the Board and Directors 03/26/2002
- -------------------------------------
(William P. Stafford)
/s/ William P. Stafford, II Director 03/26/2002
- -------------------------------------
(William P. Stafford, II)
/s/ W. W. Tinder, Jr. Director 03/26/2002
- -------------------------------------
(W. W. Tinder, Jr.)
21