NEWS RELEASE

 

FOR IMMEDIATE RELEASE:		FOR MORE INFORMATION,
February 1, 2013		CONTACT:	David D. Brown
			(276) 326-9000

 

First Community Bancshares, Inc. Announces Fourth Quarter and Full Year 2012 Results

and Quarterly Cash Dividend to Common Stockholders

 

Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) (the “Company”) today reported net income for the quarter and twelve months ended December 31, 2012, of $8.44 million and $28.58 million, respectively. Net income available to common shareholders totaled $8.17 million, or $0.39 per diluted common share, for the quarter ended December 31, 2012. Net income available to common shareholders totaled $27.52 million, or $1.40 per diluted common share, for the twelve months ended December 31, 2012. Net income for the quarter and twelve months ended December 31, 2012, was impacted by $857 thousand and $5.08 million, respectively, in merger related expenses. Excluding nonrecurring income and expense items, core earnings for the quarter and twelve months ended December 31, 2012, totaled $8.78 million and $30.47 million, respectively.

 

On January 22, 2013, the Company announced that the board of directors declared a quarterly cash dividend to common shareholders of twelve cents ($0.12) per common share. The quarterly dividend is payable to common shareholders of record on February 8, 2013, and is expected to be paid on or about February 22, 2013. The current dividend represents an increase of 20% over the dividend paid during the same quarter of 2012. The current year marks the 28^th consecutive year of cash dividends to shareholders.

 

Fourth Quarter 2012 Highlights –

 

·

Core earnings were $8.78 million for the fourth quarter of 2012, an increase of $3.82 million, or 77.04%, compared with the fourth quarter of 2011.

·

Core return on average assets was 1.28% and core return on average tangible common equity was 15.10% for the fourth quarter of 2012.

·

Core return on average assets was 1.21% and core return on average tangible common equity was 13.95% for the year ended December 31, 2012.

·

Loans held for investment increased $328.38 million, or 23.52%, compared with the fourth quarter of 2012.

·

The tax equivalent net interest margin increased 56 basis points to 4.49% for the fourth quarter of 2012 compared with the fourth quarter of 2011.

·

Net interest income was $26.14 million, an increase of $7.87 million, or 43.09%, compared with fourth quarter 2011.

·

Cash dividends paid per common share increased 7.5% for the year ended December 31, 2012, compared with the year ended December 31, 2011.

 

Net Interest Income

 

Net interest income increased $7.87 million, or 43.09%, to $26.14 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. The tax equivalent net interest margin increased 56 basis points to 4.49% for the fourth quarter of 2012 compared with 3.93% for the fourth quarter of 2011. Total interest income increased $8.06 million, or 34.72%, to $31.26 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. The increase reflects the increases in loan portfolio balances from the acquisitions of Peoples Bank of Virginia (“Peoples”) and Waccamaw Bank (“Waccamaw”) during the second quarter of 2012. The tax equivalent yield on loans increased to 6.43% while the average loan balance increased $352.93 million, or 25.34%, to $1.75 billion for the fourth quarter of 2012 compared with the fourth quarter of 2011.

 

 

Total interest expense increased $185 thousand, or 3.75%, to $5.12 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. Deposit costs decreased $33 thousand, or 1.25%, to $2.60 million for the fourth quarter of 2012 compared with the fourth quarter of 2011, which was primarily due to an 18 basis point decrease in the average rate paid on interest-bearing deposits. Borrowing costs increased $218 thousand, or 9.49%, to $2.52 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. The average rate paid on interest-bearing liabilities decreased 20 basis points to 1.01% for the fourth quarter of 2012 compared with the fourth quarter of 2011. The average balance of interest-bearing liabilities increased $399.15 million, or 24.71%, to $2.01 billion for the fourth quarter of 2012 compared with the fourth quarter of 2011, which included a $379.81 million increase in average interest-bearing deposits and a $19.34 million increase in average total borrowings. The increases were primarily the result of the Peoples and Waccamaw acquisitions that occurred during the second quarter of 2012.

 

Provision for Loan Losses

 

The provision for loan losses for the fourth quarter of 2012 decreased $1.22 million, or 49.92%, to $1.22 million, compared with the same period of the prior year. Provision for the twelve months of 2012 decreased $3.37 million, or 37.24%, to $5.68 million, compared with the same period of the prior year. The fourth quarter of 2012 marks the ninth consecutive quarter of provision decreases when compared to the prior year’s comparable quarter.

 

Noninterest Income

 

Noninterest income increased $1.64 million, or 24.84%, to $8.25 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. The Company realized a $316 thousand net gain on sale of securities for the fourth quarter of 2012, which was an increase of $290 thousand, or 11.15%, compared to the fourth quarter of 2011. Wealth management revenues increased $44 thousand, or 5.38%, for the fourth quarter of 2012 compared with the fourth quarter of 2011. The Trust and Wealth Management Divisions reported $876 million in assets under management as of December 31, 2012. Service charges on deposit accounts increased $376 thousand, or 10.90%, for the fourth quarter of 2012 compared with the fourth quarter of 2011, which are attributable to the addition of Waccamaw. Insurance commissions increased $45 thousand, or 3.85%, to $1.22 million for the fourth quarter of 2012 compared with the same quarter of 2011. The Company incurred no other-than-temporary impairment charges for the fourth quarter of 2012 compared to $1.55 million recorded for the fourth quarter of 2011.

 

Noninterest Expense

 

Noninterest expense increased $3.71 million, or 21.77%, to $20.77 million for the fourth quarter of 2012 compared with the fourth quarter of 2011, due largely to the Peoples and Waccamaw acquisitions. Salaries and employee benefits increased $2.79 million, or 35.30%, to $10.69 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. The Peoples and Waccamaw acquisitions accounted for an increase in salaries and employee benefits of $665 thousand and $1.22 million, respectively, during the fourth quarter of 2012. Occupancy, furniture, and equipment expense increased $949 thousand, or 39.66%, to $3.34 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. During the fourth quarter of 2012, the Company incurred merger related expenses of $857 thousand in connection with the acquisition of Peoples and Waccamaw. Other operating expense increased $446 thousand, or 9.06%, to $5.37 million for the fourth quarter of 2012 compared with the fourth quarter of 2011. Other operating expense included a net loss on sales and expenses associated with other real estate owned of $312 thousand for the fourth quarter of 2012 compared to $455 thousand for the fourth quarter of 2011. The efficiency ratio for the fourth quarter of 2012 was 56.38% compared to 56.73% for the fourth quarter of 2011.

 

Allowance for Loan Losses and Credit Quality on Non-covered Loans

 

Non-covered loans and other real estate owned are those assets not covered by the loss share agreement between the FDIC and the Bank in relation to the acquisition of Waccamaw. The allowance for loan losses on non-covered loans decreased to $25.77 million at December 31, 2012, compared with $26.21 million at December 31, 2011. The allowance for loan losses for non-covered loans as a percentage of non-covered loans decreased to 1.70% at December 31, 2012, compared with 1.88% at December 31, 2011. The decrease in the ratio of allowance for loan losses for non-covered loans as a percentage of non-covered loans for the fourth quarter of 2012 was impacted by loans marked to fair value as part of the Peoples’ acquisition. For the fourth quarter of 2012, net charge-offs decreased $1.35 million, or 51.29%, compared with the fourth quarter of 2011. Annualized net charge-offs as a percentage of average non-covered loans were 0.33% for the fourth quarter of 2012, which represents a decrease compared with 0.76% for the fourth quarter of 2011.

 

Non-covered delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, as a percentage of total non-covered loans measured 2.57% at December 31, 2012, compared to 2.63% for the same period of the prior year. Non-covered nonaccrual loans decreased to $23.93 million at December 31, 2012, compared with $24.49 million at December 31, 2011. At quarter end, the Company’s non-covered nonperforming loans as a percentage of total non-covered loans were 1.89% and non-covered nonperforming assets as a percentage of total non-covered assets were 1.37%, down from 1.43% for the same period of the prior year. Nonperforming assets included $4.73 million in unseasoned, accruing troubled debt restructurings and $9.00 million in other real estate owned, of which $3.26 million was covered under the loss share agreement, at December 31, 2012.

 

 

Balance Sheet and Capital

 

Consolidated assets totaled $2.73 billion as of December 31, 2012, an increase of $566.31 million, or 26.16%, compared with $2.16 billion at December 31, 2011. Consolidated liabilities totaled $2.37 billion as of December 31, 2012, an increase of $515.56 million, or 27.73%, compared with $1.86 billion at December 31, 2011. Total stockholders’ equity increased to $356.47 million as of December 31, 2012, compared with $305.73 million at December 31, 2011. Book value per as-converted common share increased to $16.80 for the quarter ended December 31, 2012, compared with $15.96 for the quarter ended December 31, 2011. Tangible book value per common share increased $0.19 to $11.59 compared with the fourth quarter of 2011. During the fourth quarter of 2012, the Company paid a cash dividend of $0.11 per common share.

 

The Company significantly exceeds regulatory “well capitalized” targets as of December 31, 2012, with a total risk-based capital ratio of 16.6%, Tier 1 risk-based capital ratio of 15.4%, and a Tier 1 leverage ratio of 9.9%.

 

Non-GAAP Financial Measures

 

The Company prepares its financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). This press release also refers to certain non-GAAP financial measures that the Company believes provide investors with important information, when used in conjunction with results presented in accordance with GAAP, regarding our operational performance.

 

Core earnings are a non-GAAP financial measure that excludes certain items from net income. Excluded items include gains, losses, and impairment losses on securities; goodwill and intangible impairment; amortization of intangibles; taxes; and other nonrecurring income and expense items. Management believes that core earnings provide the Company and investors a valuable tool to evaluate the Company’s financial results.

 

The efficiency ratio is a non-GAAP financial measure that is computed by dividing adjusted noninterest expense by the sum of tax equivalent net interest income and adjusted noninterest income. Management believes this measure provides investors with important information about the Company’s operating expense control and efficiency of operations. Management also believes this ratio focuses attention on the core operating performance of the Company over time and is highly useful in comparing period-to-period operating performance of core business operations. The efficiency ratio used by the Company may not be comparable to efficiency ratios reported by other financial institutions.

 

Tangible book value per common share is a non-GAAP financial measure that is defined as stockholders’ equity less goodwill and other intangibles, divided by as-converted common shares outstanding. Average tangible common equity is a non-GAAP financial measure that is defined as average stockholders’ equity less average goodwill, other intangibles, and the preferred liquidation preference.

 

Investor Relations

 

The Company will host an investor and media teleconference and webcast on Friday, February 1, 2013, at 11:00 a.m. To access the teleconference, the toll-free number is (877) 407-8033. Individuals may listen to the live or archived webcast of the conference call. To listen to the webcast, visit www.fcbinc.com and follow the link under the Investor Relations section. The Company’s press release and financial summary will be available in this section, as well. Copies of the Company’s fourth quarter 2012 earnings press release and financial summary will be made available upon request via fax, email, or postal service mail. To request a copy, contact David D. Brown, Chief Financial Officer, at (276) 326-9000.

 

 

About First Community Bancshares, Inc.

 

First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.73 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 $876 million as of December 31, 2012. 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 six insurance offices 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								Year Ended
		December 31,								December 31,
(Amounts in thousands, except share and per share data)		2012				2011				2012				2011
Interest income
Interest and fees on loans held for investment		$	28,188			$	19,947			$	96,684			$	80,580
Interest on securities -- taxable			1,770				2,023				7,830				8,117
Interest on securities -- nontaxable			1,216				1,190				4,883				5,194
Interest on deposits in banks			82				41				259				285
Total interest income			31,256				23,201				109,656				94,176
Interest expense
Interest on deposits			2,604				2,637				9,972				12,788
Interest on short-term borrowings			656				603				2,515				2,475
Interest on long-term borrowings			1,860				1,695				7,113				6,884
Total interest expense			5,120				4,935				19,600				22,147
Net interest income			26,136				18,266				90,056				72,029
Provision for loan losses			1,220				2,436				5,678				9,047
Net interest income after provision for loan losses			24,916				15,830				84,378				62,982
Noninterest income
Wealth management income			862				818				3,701				3,510
Service charges on deposit accounts			3,826				3,450				14,063				13,238
Other service charges and fees			1,682				1,429				6,462				5,722
Insurance commissions			1,215				1,170				5,743				6,197
Net impairment losses recognized in earnings			-				(1,548	)			(942	)			(2,285	)
Net gain on sale of securities			316				26				586				5,264
Other operating income			346				1,261				6,131				3,888
Total noninterest income			8,247				6,606				35,744				35,534
Noninterest expense
Salaries and employee benefits			10,693				7,903				38,667				34,126
Occupancy expense of bank premises			1,938				1,589				6,872				6,280
Furniture and equipment			1,404				804				4,145				3,490
Amortization of intangible assets			191				250				804				1,020
FDIC premiums and assessments			313				344				1,536				1,984
FHLB debt prepayment fees			-				-				-				471
Merger related expense			857				-				5,084				-
Goodwill impairment			-				1,239				-				1,239
Other operating expense			5,371				4,925				20,309				20,305
Total noninterest expense			20,767				17,054				77,417				68,915
Income before income taxes			12,396				5,382				42,705				29,601
Income tax expense			3,957				2,151				14,128				9,573
Net income			8,439				3,231				28,577				20,028
Dividends on preferred stock			272				286				1,058				703
Net income available to common shareholders		$	8,167			$	2,945			$	27,519	#		$	19,325
Basic earnings per common share		$	0.41			$	0.16			$	1.44			$	1.08
Diluted earnings per common share		$	0.39			$	0.17			$	1.40			$	1.07
Cash dividends per common share		$	0.11			$	0.10			$	0.43			$	0.40
Weighted average basic shares outstanding			20,058,998				17,849,286				19,125,839				17,877,421
Weighted average diluted shares outstanding			21,373,669				19,159,090				20,480,172				18,691,081
Return on average assets			1.19	%			0.54	%			1.10	%			0.88	%
Return on average common equity			9.59	%			4.06	%			8.70	%			6.81	%

 

 

FIRST COMMUNITY BANCSHARES, INC.

CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)

                        

		As of and for the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(Amounts in thousands, except share and per share data)		2012				2012				2012				2012				2011
Interest Income
Interest and fees on loans held for investment		$	28,188			$	28,275			$	20,853			$	19,368			$	19,947
Interest on securities -- taxable			1,770				1,980				2,001				2,079				2,023
Interest on securities -- nontaxable			1,216				1,215				1,256				1,196				1,190
Interest on deposits in banks			82				66				72				39				41
Total interest income			31,256				31,536				24,182				22,682				23,201
Interest Expense
Interest on deposits			2,604				2,603				2,360				2,405				2,637
Interest on short-term borrowings			656				675				589				595				592
Interest on long-term borrowings			1,860				1,799				1,749				1,705				1,706
Total interest expense			5,120				5,077				4,698				4,705				4,935
Net interest income			26,136				26,459				19,484				17,977				18,266
Provision for loan losses			1,220				1,916				1,620				922				2,436
Net interest income after provision for loan losses			24,916				24,543				17,864				17,055				15,830
Noninterest Income
Wealth management income			862				1,005				940				894				818
Service charges on deposit accounts			3,826				3,895				3,329				3,013				3,450
Other service charges and fees			1,682				1,631				1,564				1,585				1,429
Insurance commissions			1,215				1,616				1,336				1,576				1,170
Net impairment losses recognized in earnings			-				(942	)			-				-				(1,548	)
Net gain (loss) on sale of securities			316				228				(9	)			51				26
Other operating income			346				3,730				1,183				872				1,261
Total noninterest income			8,247				11,163				8,343				7,991				6,606
Noninterest Expense
Salaries and employee benefits			10,693				10,860				8,892				8,222				7,903
Occupancy expense of bank premises			1,938				1,754				1,654				1,526				1,589
Furniture and equipment			1,404				955				975				811				804
Amortization of intangible assets			191				191				189				233				250
FDIC premiums and assessments			313				611				290				322				344
Merger related expense			857				645				3,419				163				-
Goodwill impairment			-				-				-				-				1,239
Other operating expense			5,371				5,309				4,713				4,916				4,925
Total noninterest expense			20,767				20,325				20,132				16,193				17,054
Income before income taxes			12,396				15,381				6,075				8,853				5,382
Income tax expense			3,957				5,322				1,997				2,852				2,151
Net income			8,439				10,059				4,078				6,001				3,231
Dividends on preferred stock			272				220				283				283				286
Net income available to common shareholders		$	8,167			$	9,839			$	3,795			$	5,718			$	2,945
Basic earnings per common share		$	0.41			$	0.49			$	0.20			$	0.32			$	0.16
Diluted earnings per common share		$	0.39			$	0.47			$	0.20			$	0.31			$	0.17
Cash dividends per common share		$	0.11			$	0.11			$	0.11			$	0.10			$	0.10
Weighted average basic shares outstanding			20,058,998				20,013,264				18,561,714				17,849,376				17,849,286
Weighted average diluted shares outstanding			21,373,669				21,476,497				19,909,242				19,189,923				19,159,090

 

 

FIRST COMMUNITY BANCSHARES, INC.

RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited)

                    

		Three Months Ended								Year Ended
		December 31,								December 31,
		2012				2011				2012				2011
(Amounts in thousands, except per share data)
Net income, GAAP		$	8,439			$	3,231			$	28,577			$	20,028
Non-GAAP adjustments:
Net impairment losses recognized in earnings			-				1,548				942				2,285
Net gain on sale of securities			(316	)			(26	)			(586	)			(5,264	)
FHLB debt prepayment fees			-				-				-				471
Merger related expense			857				-				5,084				-
Goodwill impairment			-				1,239				-				1,239
Prospective correction of prior period understatement			-				-				(2,395	)			-
Other noncore, nonrecurring items			-				-				-				59
Total adjustments to core earnings			541				2,761				3,045				(1,210	)
Tax effect			204				1,035				1,151				(454	)
Core earnings, non-GAAP		$	8,776			$	4,957			$	30,471			$	19,272
Core return on average assets			1.28	%			0.91	%			1.21	%			0.88	%
Core return on average common equity			10.30	%			6.83	%			9.63	%			6.79	%
Core return on average tangible common equity			15.10	%			9.85	%			13.95	%			9.92	%
Core diluted earnings per common share		$	0.41			$	0.26			$	1.49			$	1.03

 

 

FIRST COMMUNITY BANCSHARES, INC.

EFFICIENCY RATIO CALCULATION (Unaudited)

 

		Three Months Ended								Year Ended
		December 31,								December 31,
		2012				2011				2012				2011
(Amounts in thousands)
Noninterest expense, GAAP		$	20,767			$	17,054			$	77,417			$	68,915
Non-GAAP adjustments:
FHLB debt prepayment fees			-				-				-				(471	)
Merger related expenses			(857	)			-				(5,084	)			-
Goodwill impairment			-				(1,239	)			-				(1,239	)
OREO expense and net loss			(312	)			(455	)			(1,893	)			(3,081	)
Other noncore, nonreccuring items			-				-				-				(77	)
Adjusted noninterest expense			19,598				15,360				70,440				64,047
Net interest income, GAAP			26,136				18,266				90,056				72,029
Noninterest income, GAAP			8,247				6,606				35,744				35,534
Non-GAAP adjustments:
Tax equivalency adjustment			696				681				2,747				2,959
Net impairment losses recognized in earnings			-				1,548				942				2,285
Net gain on sale of securities			(316	)			(26	)			(586	)			(5,264	)
Prospective correction of prior period understatement			-				-				(2,395	)			-
Other noncore, nonreccuring items			-				-				-				(18	)
Adjusted net interest and noninterest income			34,763				27,075				126,508				107,525
Efficiency Ratio			56.38	%			56.73	%			55.68	%			59.56	%

  

 

FIRST COMMUNITY BANCSHARES, INC.

CONDENSED QUARTERLY BALANCE SHEETS (Unaudited)

                        

		For the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2012				2012				2012				2012				2011
(Amounts in thousands)
Cash and due from banks		$	50,405			$	44,865			$	54,494			$	36,555			$	34,578
Federal funds sold			66,509				93,005				64,815				61,328				1,909
Interest-bearing deposits in banks			27,933				27,359				36,856				11,729				10,807
Total cash and cash equivalents			144,847				165,229				156,165				109,612				47,294
Securities available-for-sale			534,358				517,161				526,607				478,352				482,430
Securities held-to-maturity			816				816				1,295				2,874				3,490
Loans held for sale			6,672				4,446				1,179				3,522				5,820
Loans held for investment, net of unearned income:
Covered under loss share agreements			207,869				221,977				238,777				-				-
Not covered under loss share agreements			1,516,574				1,541,633				1,568,312				1,386,525				1,396,067
Less allowance for loan losses			25,770				25,835				26,171				25,800				26,205
Loans, net			1,705,345				1,742,221				1,782,097				1,364,247				1,375,682
FDIC receivable under loss share agreements			48,073				49,477				52,067				-				-
Property, plant, and equipment, net			64,868				62,191				60,829				54,616				54,721
Other real estate owned:
Covered under loss share agreements			3,255				3,553				5,325				-				-
Not covered under loss share agreements			5,749				5,957				4,938				3,829				5,914
Interest receivable			5,864				6,038				8,396				5,886				6,193
Goodwill			107,054				104,022				99,402				83,056				83,056
Intangible assets			3,522				3,713				3,903				4,093				4,326
Other assets			107,346				109,272				109,297				96,704				101,683
Total assets		$	2,731,097			$	2,769,650			$	2,810,321			$	2,203,269			$	2,164,789
Deposits:
Noninterest-bearing		$	343,352			$	335,100			$	340,895			$	253,352			$	240,268
Interest-bearing			353,321				360,061				335,686				307,136				275,156
Savings			500,276				496,740				494,516				397,850				394,707
Time			833,226				872,059				934,110				621,412				633,336
Total deposits			2,030,175				2,063,960				2,105,207				1,579,750				1,543,467
Interest, taxes, and other liabilities			30,896				29,538				22,465				23,203				20,452
Securities sold under agreements to repurchase			136,118				146,904				148,367				124,266				129,208
FHLB advances			161,558				161,558				176,653				150,000				150,000
Other borrowings			15,877				15,877				15,918				15,925				15,933
Total liabilities			2,374,624				2,417,837				2,468,610				1,893,144				1,859,060
Preferred stock			17,421				17,921				18,921				18,921				18,921
Common stock			20,343				20,309				20,240				18,083				18,083
Additional paid-in capital			213,829				213,320				212,510				188,149				188,118
Retained earnings			113,013				107,055				99,418				97,588				93,656
Treasury stock, at cost			(6,458	)			(5,446	)			(5,672	)			(5,721	)			(5,721	)
Accumulated other comprehensive loss			(1,675	)			(1,346	)			(3,706	)			(6,895	)			(7,328	)
Total stockholders' equity			356,473				351,813				341,711				310,125				305,729
Total liabilities and stockholders' equity		$	2,731,097			$	2,769,650			$	2,810,321			$	2,203,269			$	2,164,789
Shares outstanding at period end			20,018,966				20,086,404				20,008,181				17,849,376				17,849,376
Book value per common share at period end (1)		$	16.80			$	16.50			$	16.03			$	16.19			$	15.96
Tangible book value per common share
at period end (2)		$	11.59			$	11.45			$	11.19			$	11.64			$	11.40

 

(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
		December 31,				September 30,				June 30,				March 31,				December 31,
(Amounts in thousands)		2012				2012				2012				2012				2011
Allowance for Loan Losses on Non-covered Loans
Beginning balance		$	25,835			$	26,171			$	25,800			$	26,205			$	26,407
Provision for loan losses			1,220				1,916				1,620				922				2,436
Charge-offs			(1,717	)			(2,613	)			(1,613	)			(1,562	)			(2,915	)
Recoveries			432				361				364				235				277
Net charge-offs			(1,285	)			(2,252	)			(1,249	)			(1,327	)			(2,638	)
Ending balance		$	25,770			$	25,835			$	26,171			$	25,800			$	26,205
Summary of Asset Quality
Non-covered loans
Nonaccrual loans		$	23,931			$	26,514			$	27,947			$	24,617			$	24,487
Accruing loans past due 90 days or more			-				-				-				-				-
Troubled debt restructurings ("TDRs") (1)			4,734				121				469				2,668				600
Total non-covered nonperforming loans			28,665				26,635				28,416				27,285				25,087
Other real estate owned ("OREO") not covered
under FDIC loss share agreements			5,749				5,957				4,938				3,829				5,914
Total non-covered nonperforming assets		$	34,414			$	32,592			$	33,354			$	31,114			$	31,001
Covered Loans
Nonaccrual loans		$	4,323			$	2,849			$	-			$	-			$	-
Accruing loans past due 90 days or more			-				-				-				-				-
Total covered nonperforming loans			4,323				2,849				-				-				-
OREO covered under FDIC loss share agreements			3,255				3,553				5,325				-				-
Total covered nonperforming assets			7,578				6,402				5,325				-				-
Total nonperforming assets		$	41,992			$	38,994			$	38,679			$	31,114			$	31,001
Performing TDRs (2)		$	6,038			$	6,742			$	6,995			$	7,052			$	8,854
Total TDRs (3)		$	10,772			$	6,863			$	7,464			$	9,720			$	9,454
Asset Quality Ratios
Excluding covered assets
Nonperforming loans to total loans			1.89	%			1.73	%			1.81	%			1.97	%			1.80	%
Nonperforming assets to total assets			1.37	%			1.28	%			1.30	%			1.41	%			1.43	%
Allowance for loan losses to nonperforming loans			89.90	%			97.00	%			92.10	%			94.56	%			104.46	%
Allowance for loan losses to non-covered total loans			1.70	%			1.68	%			1.67	%			1.86	%			1.88	%
Annualized net charge-offs to average loans			0.33	%			0.57	%			0.38	%			0.38	%			0.76	%
Including covered assets
Nonperforming loans to total loans			1.91	%			1.67	%			1.57	%			1.97	%			1.80	%
Nonperforming assets to total assets			1.54	%			1.41	%			1.38	%			1.41	%			1.43	%
Allowance for loan losses to nonperforming loans			78.12	%			87.62	%			92.10	%			94.56	%			104.46	%
Allowance for loan losses to total loans			1.49	%			1.46	%			1.45	%			1.86	%			1.88	%

 

(1)

Accruing TDRs restructured within the past six months

(2)

Accruing TDRs with six months or more of satisfactory payment performace

(3)

Accruing nonperforming and performing TDRs

 

 

FIRST COMMUNITY BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

                        

		As of and for the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2012				2012				2012				2012				2011
Selected Ratios
Return on average assets			1.19	%			1.41	%			0.65	%			1.06	%			0.54	%
Return on average common equity			9.59	%			11.91	%			5.00	%			7.88	%			4.06	%
Net interest margin			4.49	%			4.48	%			3.93	%			3.91	%			3.93	%
Efficiency ratio for the quarter			56.38	%			55.49	%			57.58	%			57.18	%			56.73	%
Efficiency ratio year-to-date			55.68	%			52.40	%			57.38	%			57.18	%			59.56	%
Total equity to total assets			13.05	%			12.70	%			12.16	%			14.08	%			14.12	%
Average earning assets to average assets			86.87	%			87.02	%			87.68	%			88.24	%			88.27	%
Average loans to average deposits			85.71	%			87.88	%			88.57	%			89.85	%			89.45	%
(Amounts in thousands)
Average Balances
Loans		$	1,745,584			$	1,790,489			$	1,512,451			$	1,394,246			$	1,392,650
Investment securities			519,798				528,126				490,219				481,595				479,638
Earning assets			2,376,805				2,408,442				2,069,799				1,918,366				1,913,768
Total assets			2,736,037				2,767,790				2,360,567				2,174,004				2,168,166
Total deposits			2,036,697				2,037,467				1,707,613				1,551,728				1,556,990
Interest-bearing deposits			1,699,991				1,733,987				1,437,548				1,312,865				1,320,186
Borrowings			314,645				329,958				303,474				290,015				295,303
Interest-bearing liabilities			2,014,636				2,063,945				1,741,022				1,602,880				1,615,489
Stockholders' equity			356,812				347,637				323,994				310,795				306,779
Tax equivalent net interest income			26,832				27,139				20,206				18,660				18,947

 

 

FIRST COMMUNITY BANCSHARES, INC.

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

                              

		Three Months Ended December 31,
		2012												2011
		Average				Average Yield/				Average				Average Yield/
(Amounts in thousands)		Balance				Interest (1)				Rate (1)				Balance				Interest (1)				Rate (1)
Assets
Earning assets
Loans (2)		$	1,745,584			$	28,231				6.43%			$	1,392,650			$	19,987				5.69%
Securities available-for-sale			518,982				3,623				2.78%				476,244				3,784				3.15%
Securities held-to-maturity			816				16				7.80%				3,394				70				8.18%
Interest-bearing deposits			111,423				82				0.29%				41,480				41				0.39%
Total earning assets			2,376,805				31,952				5.35%				1,913,768				23,882				4.95%
Other assets			359,232												254,398
Total assets		$	2,736,037											$	2,168,166
Liabilities
Interest-bearing deposits
Demand deposits		$	351,329			$	62				0.07%			$	277,722			$	27				0.04%
Savings deposits			495,116				156				0.13%				395,530				117				0.12%
Time deposits			853,546				2,386				1.11%				646,934				2,493				1.53%
Total interest-bearing deposits			1,699,991				2,604				0.61%				1,320,186				2,637				0.79%
Borrowings
Federal funds purchased			-				-				0.00%				308				-				0.00%
Retail repurchase agreements			79,014				105				0.53%				79,114				103				0.52%
Wholesale repurchase agreements			58,196				540				3.69%				50,000				479				3.80%
FHLB advances and other borrowings			177,435				1,871				4.19%				165,881				1,716				4.10%
Total borrowings			314,645				2,516				3.18%				295,303				2,298				3.09%
Total interest-bearing liabilities			2,014,636				5,120				1.01%				1,615,489				4,935				1.21%
Noninterest-bearing demand deposits			336,706												236,804
Other liabilities			27,883												9,094
Total liabilities			2,379,225												1,861,387
Stockholders' equity			356,812												306,779
Total liabilities and stockholders' equity		$	2,736,037											$	2,168,166
Net interest income, tax equivalent						$	26,832											$	18,947
Net interest rate spread (3)											4.34%												3.74%
Net interest margin (4)											4.49%												3.93%

 

(1)

Fully taxable equivalent at the rate of 35% ("FTE"). The FTE basis adjusts for the tax benefits of income on certain tax exempt loans and investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and nontaxable amounts.

(2)

Nonaccrual loans are included in average balances outstanding, but with no related interest income during the period of nonaccrual.

(3)

Represents the difference between the yield on earning assets and cost of funds.

(4)

Represents tax equivalent net interest income divided by average earning assets.

 

 

FIRST COMMUNITY BANCSHARES, INC.

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

                              

				Year Ended December 31,
				2012						2011
				Average				Average Yield/		Average				Average Yield/
(Amounts in thousands)				Balance		Interest (1)		Rate (1)		Balance		Interest (1)		Rate (1)
Assets
Earning assets
	Loans (2)			$ 1,611,557		$ 96,803		6.01%		$ 1,382,097		$ 80,742		5.84%
	Securities available-for-sale			502,416		15,170		3.02%		434,583		15,775		3.63%
	Securities held-to-maturity			2,622		171		6.52%		3,999		333		8.33%
	Interest-bearing deposits			77,851		259		0.33%		116,063		285		0.25%
Total earning assets				2,194,446		112,403		5.12%		1,936,742		97,135		5.02%
Other assets				316,485						258,897
	Total assets			$ 2,510,931						$ 2,195,639
Liabilities
Interest-bearing deposits
	Demand deposits			$ 306,019		$ 185		0.06%		$ 277,263		$ 431		0.16%
	Savings deposits			471,406		556		0.12%		410,240		886		0.22%
	Time deposits			776,901		9,231		1.19%		682,997		11,471		1.68%
		Total interest-bearing deposits		1,554,326		9,972		0.64%		1,370,500		12,788		0.93%
Borrowings
	Federal funds purchased			490		2		0.41%		77		-		0.00%
	Retail repurchase agreements			78,608		449		0.57%		83,564		544		0.65%
	Wholesale repurchase agreements			55,163		2,023		3.67%		50,000		1,887		3.77%
	FHLB advances and other borrowings			175,333		7,154		4.08%		168,988		6,928		4.10%
		Total borrowings		309,594		9,628		3.11%		302,629		9,359		3.09%
Total interest-bearing liabilities				1,863,920		19,600		1.05%		1,673,129		22,147		1.32%
Noninterest-bearing demand deposits				286,950						223,233
Other liabilities				25,160						4,127
	Total liabilities			2,176,030						1,900,489
Stockholders' equity				334,901						295,150
	Total liabilities and stockholders' equity			$ 2,510,931						$ 2,195,639
Net interest income, tax equivalent						$ 92,803						$ 74,988
Net interest rate spread (3)								4.07%						3.69%
Net interest margin (4)								4.23%						3.87%

 

(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.