NEWS RELEASE

 

FOR IMMEDIATE RELEASE:		FOR MORE INFORMATION, CONTACT:
January 30, 2014		David D. Brown
		(276) 326-9000

 

First Community Bancshares, Inc. Announces Fourth Quarter and Full Year 2013 Results

 

Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) (the “Company”) today reported net income for the quarter and year ended December 31, 2013, of $5.32 million and $23.31 million, respectively. Net income available to common shareholders totaled $5.07 million, or $0.26 per diluted common share, for the quarter ended December 31, 2013. Net income available to common shareholders totaled $22.29 million, or $1.11 per diluted common share, for the year ended December 31, 2013. Excluding nonrecurring income and expense items, core earnings for the quarter and year ended December 31, 2013, totaled $6.35 million and $24.80 million, respectively.

 

On January 28, 2014, the Board of Directors declared a quarterly cash dividend to common stockholders of 12 cents ($0.12). The current year marks the 29^th consecutive year of cash dividends paid to stockholders. The dividend is payable on February 21, 2014, to shareholders of record on February 7, 2014.

 

Fourth Quarter 2013 Highlights –

 

·

The non-covered loan portfolio increased $25.77 million compared to the third quarter of 2013 and $41.49 million compared to year end 2012. The increase is primarily attributed to new commercial real estate volume in West Virginia, Central North Carolina, and Eastern Virginia. This marks the third consecutive quarter non-covered loan growth has exceeded covered loan declines.

·

Annualized non-covered loan growth was 6.67% during the fourth quarter.

·

Non-covered nonaccrual loans totaled $19.16 million as of December 31, 2013, compared to $23.93 million as of December 31, 2012, which is the lowest level reported since the first quarter of 2011.

·

Non-covered nonperforming loans as a percentage of total non-covered loans decreased 66 basis points to 1.31% compared with year end 2012, which is the lowest level reported since the third quarter of 2009. Non-covered nonperforming loans continue to decrease as a result of successful resolution efforts.

·

The Company incurred expenses of $1.52 million related to the closure/consolidation of seven branches, which are expected to occur during the first half of 2014 and estimated to realize pre-tax annualized net cost savings of over $900 thousand.

·

The Company repurchased 1,404,409 shares during the fourth quarter of 2013 bringing the total number of shares repurchased in 2013 to 1,739,601. The Company continued to repurchase shares in 2014, with 117,500 shares repurchased for $1.92 million through January 29, 2014.

 

Net Interest Income

 

Net interest income decreased $3.04 million, or 11.65%, to $23.09 million for the fourth quarter of 2013 compared with the same quarter of 2012. The tax equivalent net interest margin decreased 34 basis points to 4.15% for the fourth quarter of 2013 compared with 4.49% for the same quarter of 2012. Total interest income decreased $3.89 million, or 12.45%, to $27.36 million for the fourth quarter of 2013 compared with the same quarter of 2012. The tax equivalent yield on loans decreased 83 basis points to 5.60% and the average loan balance decreased $39.79 million, or 2.28%, to $1.71 billion for the fourth quarter of 2013 compared with the same quarter of 2012.

 

Loan interest accretion stemming from the Peoples and Waccamaw acquisitions totaled $4.39 million for the fourth quarter of 2013 compared to $8.16 million for the same quarter of 2012. During the fourth quarter of 2013, approximately $1.80 million of the loan interest accretion from the Peoples and Waccamaw portfolios was received in cash. The normalized net interest margin for the fourth quarters of 2013 and 2012, which excludes non-cash loan interest accretion, was 3.70% and 3.46%, respectively. The normalized yield on loans for the fourth quarters of 2013 and 2012 was 5.00% and 5.03%, respectively.

 

 

Total interest expense decreased $848 thousand, or 16.56%, to $4.27 million for the fourth quarter of 2013 compared with the same quarter of 2012. Deposit costs decreased $573 thousand, or 22.00%, to $2.03 million for the fourth quarter of 2013 compared with the same quarter of 2012, reflecting an 11 basis point decrease in the average rate paid on interest-bearing deposits. Borrowing costs decreased $275 thousand, or 10.93%, to $2.24 million for the fourth quarter of 2013 compared with the same quarter of 2012. The average rate paid on interest-bearing liabilities decreased 12 basis points to 0.89% for the fourth quarter of 2013 compared with the same quarter of 2012. The average balance of interest-bearing liabilities decreased $103.56 million, or 5.14%, to $1.91 billion for the fourth quarter of 2013 compared with the same quarter of 2012, which included a $74.57 million decrease in average interest-bearing deposits and a $28.99 million decrease in average total borrowings.

 

Noninterest Income

 

Noninterest income decreased $1.94 million, or 21.08%, to $7.27 million for the fourth quarter of 2013 compared with the same quarter of 2012, which is largely due to a $320 thousand net impairment loss related to securities and a $1.63 million increase in the net amortization of the FDIC indemnification asset as a result of improved loss estimates. Wealth management revenues decreased $130 thousand, or 15.08%, for the fourth quarter of 2013 compared with the same quarter of 2012. The Trust and Wealth Management Divisions reported $706 million in combined assets under management as of December 31, 2013. Service charges on deposit accounts decreased $333 thousand, or 8.70%, while other service charges and fees increased $113 thousand, or 6.72%, for the fourth quarter of 2013 compared with the same quarter of 2012. Insurance commissions increased $185 thousand, or 15.23%, to $1.40 million for the fourth quarter of 2013 compared with the same quarter of 2012. The Company realized a $208 thousand net gain on sale of securities for the fourth quarter of 2013, which was a slight decrease compared to the same quarter of 2012. Amortization expense relating to the FDIC indemnification asset totaled $1.31 million during the fourth quarter of 2013, compared to accretion income of $327 thousand for the same quarter of 2012. Other operating income increased $182 thousand, or 16.73%, for the fourth quarter of 2013 compared with the same quarter of 2012. The Company incurred other-than-temporary impairment charges of $320 thousand during the fourth quarter of 2013 related to a non-Agency mortgage-backed security.

 

Noninterest Expense

 

Noninterest expense experienced a decrease of $658 thousand, or 3.03%, to $21.08 million for the fourth quarter of 2013 compared with the same quarter of 2012. Salaries and employee benefits decreased $608 thousand, or 5.69%, to $10.09 million for the fourth quarter of 2013 compared with the same quarter of 2012. Salaries and employee benefits attributed to the Peoples and Waccamaw branches decreased $559 thousand to $1.33 million for the fourth quarter of 2013 compared with the same quarter of 2012, which was largely due to a $296 thousand decrease in employee salaries and a $176 thousand decrease in employee benefits, primarily medical insurance, coupled with a reduction of 6 full-time equivalent employees. Occupancy, furniture, and equipment expense decreased $624 thousand, or 18.67%, to $2.72 million for the fourth quarter of 2013 compared with the same quarter of 2012. Other operating expense increased $1.52 million, or 24.31%, to $7.77 million for the fourth quarter of 2013 compared with the same quarter of 2012. Other operating expense included a net loss on sales and expenses associated with other real estate owned of $970 thousand for the fourth quarter of 2013 compared to $312 thousand for the same quarter of 2012. The Company incurred $1.52 million in charges related to seven scheduled branch closures/consolidations that are slated to occur during the first half of 2014. The Company anticipates those branch closures/consolidations to result in pre-tax annualized net cost savings of over $900 thousand. The efficiency ratio for the fourth quarter of 2013 was 58.84% compared to 57.43% for the fourth quarter of 2012.

 

Allowance for Loan Losses and Asset Quality

 

The allowance for loan losses was reduced to $24.08 million as of December 31, 2013, compared with $25.77 million as of December 31, 2012. As of December 31, 2013, $22.82 million of the allowance was attributed to the legacy portfolio while $183 thousand and $1.07 million were attributed to the acquired Peoples and Waccamaw portfolios, respectively. Non-covered loans and other real estate owned are those assets not covered by loss share agreements between the FDIC and the Bank in relation to the acquisition of Waccamaw. The allowance for loan losses as a percentage of non-covered loans was 1.54% as of December 31, 2013, compared with 1.70% as of December 31, 2012. Activity in the allowance in the fourth quarter of 2013 included a $308 thousand, or 25.25%, increase in the provision for loan losses charged to operations compared with the same period of the prior year. Activity in the fourth quarter also included a net recovery of previous impairments recorded through the FDIC indemnification asset of $361 thousand as a result of better than expected performance in the Waccamaw purchased credit impaired loan portfolio. There was no provision related to purchased credit impaired loans prior to 2013. Net charge-offs increased $470 thousand, or 36.58%, in the fourth quarter of 2013 compared with the same quarter of 2012. Annualized net charge-offs were 0.45% for the fourth quarter of 2013, which represents an increase of 11 basis points compared with 0.34% for the fourth quarter of 2012. Two loan relationships accounted for 25.68% of annual net charge-offs of $10.35 million in 2013.

 

Asset quality in the non-covered portfolio continues to improve, as non-covered delinquent loans, which are comprised of loans 30 days or more past due and nonaccrual loans, as a percentage of total non-covered loans decreased to 1.98% as of December 31, 2013, compared to 2.57% for the same period of the prior year. Non-covered nonaccrual loans totaled $19.16 million as of December 31, 2013, compared to $23.93 million as of December 31, 2012, which is the lowest level reported since the first quarter of 2011. At quarter end, the Company’s non-covered nonperforming loans as a percentage of total non-covered loans were 1.31% and non-covered nonperforming assets as a percentage of total non-covered assets were 1.14%.

 

 

Total nonperforming assets, including covered and non-covered loan portfolios, consisted of $22.51 million in nonaccrual loans, $86 thousand in accruing loans past due 90 days or more, $1.31 million in unseasoned, accruing troubled debt restructurings, and $14.86 million in other real estate owned as of December 31, 2013. In comparison, total nonperforming assets consisted of $28.25 million in nonaccrual loans, $6.01 million in unseasoned, accruing troubled debt restructurings, and $9.00 million in other real estate owned as of December 31, 2012. In addition, total non-covered nonperforming assets decreased $7.90 million, or 22.13%, and total covered nonperforming assets decreased $4.50 million, or 10.39%, as of December 31, 2013, compared to December 31, 2012.

 

Balance Sheet and Capital

 

Consolidated assets totaled $2.60 billion as of December 31, 2013, a decrease of $126.35 million, or 4.63%, compared with $2.73 billion as of December 31, 2012. Consolidated liabilities totaled $2.27 billion as of December 31, 2013, a decrease of $98.64 million, or 4.16%, compared with $2.37 billion as of December 31, 2012. Total stockholders’ equity decreased to $328.61 million as of December 31, 2013, compared with $356.32 million as of December 31, 2012. Book value per as-converted common share increased to $16.79 as of December 31, 2013, compared with $16.76 as of December 31, 2012. Tangible book value per common share decreased to $11.26 as of December 31, 2013, compared with $11.66 as of December 31, 2012. Additionally, the Company repurchased 1,404,409 common shares for $23.21 million and paid a cash dividend of $0.12 per common share during the fourth quarter of 2013.

 

The Company significantly exceeds regulatory “well capitalized” targets as of December 31, 2013, with a total risk-based capital ratio of 16.44%, a Tier 1 risk-based capital ratio of 15.19%, and a Tier 1 leverage ratio of 9.95%.

 

Non-GAAP Financial Measures

 

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

 

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

 

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

 

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

 

 

About First Community Bancshares, Inc.

 

First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.60 billion financial holding company and the parent company of First Community Bank. First Community Bank operates seventy-one 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 combined market value of $706 million as of December 31, 2013. The Company is also the parent company of Greenpoint Insurance Group, Inc., a full-service insurance agency headquartered in High Point, North Carolina, that operates nine insurance locations throughout Virginia, West Virginia, and North Carolina. The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol, “FCBC.” Additional investor information can be found on the Company’s website at www.fcbinc.com.

 

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

 

 

FIRST COMMUNITY BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

		Three Months Ended								Year Ended
		December 31,								December 31,
(Amounts in thousands, except share and per share data)		2013				2012				2013				2012
Interest income
Interest and fees on loans held for investment		$	24,053			$	28,188			$	96,600			$	96,684
Interest on securities -- taxable			2,121				1,770				7,875				7,830
Interest on securities -- nontaxable			1,159				1,216				4,790				4,883
Interest on deposits in banks			31				82				211				259
Total interest income			27,364				31,256				109,476				109,656
Interest expense
Interest on deposits			2,031				2,604				8,823				9,972
Interest on short-term borrowings			536				656				2,222				2,515
Interest on long-term borrowings			1,705				1,860				6,789				7,113
Total interest expense			4,272				5,120				17,834				19,600
Net interest income			23,092				26,136				91,642				90,056
Provision for loan losses			1,528				1,220				8,208				5,678
Net interest income after provision for loan losses			21,564				24,916				83,434				84,378
Noninterest income
Wealth management income			732				862				3,412				3,701
Service charges on deposit accounts			3,493				3,826				13,558				14,063
Other service charges and fees			1,795				1,682				7,151				6,462
Insurance commissions			1,400				1,215				5,933				5,743
Net impairment losses recognized in earnings			(320	)			-				(320	)			(942	)
Net gain on sale of securities			208				213				399				483
Net FDIC indemnification asset (amortization) accretion			(1,307	)			327				(5,597	)			458
Other operating income			1,270				1,088				5,555				6,742
Total noninterest income			7,271				9,213				30,091				36,710
Noninterest expense
Salaries and employee benefits			10,085				10,693				41,235				38,667
Occupancy expense of bank premises			1,683				1,938				7,033				6,872
Furniture and equipment			1,035				1,404				4,966				4,145
Amortization of intangible assets			184				191				729				804
FDIC premiums and assessments			316				389				1,717				1,612
Merger related expense			-				866				56				5,093
Other operating expense			7,772				6,252				23,569				21,190
Total noninterest expense			21,075				21,733				79,305				78,383
Income before income taxes			7,760				12,396				34,220				42,705
Income tax expense			2,436				3,957				10,908				14,128
Net income			5,324				8,439				23,312				28,577
Dividends on preferred stock			252				272				1,024				1,058
Net income available to common shareholders		$	5,072			$	8,167			$	22,288			$	27,519
Basic earnings per common share		$	0.27			$	0.41			$	1.13			$	1.44
Diluted earnings per common share			0.26				0.40				1.11				1.40
Cash dividends per common share			0.12				0.11				0.48				0.43
Weighted average basic shares outstanding			19,136,317				20,063,873				19,792,099				19,127,065
Weighted average diluted shares outstanding			20,233,737				21,314,023				20,961,800				20,419,569
Return on average assets			0.77	%			1.19	%			0.84	%			1.10	%
Return on average common equity			6.14	%			9.59	%			6.57	%			8.70	%

 

 

FIRST COMMUNITY BANCSHARES, INC.

CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)

 

		Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
(Amounts in thousands, except share and per share data)		2013				2013				2013				2013				2012
Interest Income
Interest and fees on loans held for investment		$	24,053			$	23,439			$	24,264			$	24,844			$	28,188
Interest on securities -- taxable			2,121				1,999				1,869				1,886				1,770
Interest on securities -- nontaxable			1,159				1,216				1,207				1,208				1,216
Interest on deposits in banks			31				42				72				66				82
Total interest income			27,364				26,696				27,412				28,004				31,256
Interest Expense
Interest on deposits			2,031				2,147				2,283				2,362				2,604
Interest on short-term borrowings			536				517				579				590				656
Interest on long-term borrowings			1,705				1,706				1,688				1,690				1,860
Total interest expense			4,272				4,370				4,550				4,642				5,120
Net interest income			23,092				22,326				22,862				23,362				26,136
Provision for loan losses			1,528				2,333				3,205				1,142				1,220
Net interest income after provision for loan losses			21,564				19,993				19,657				22,220				24,916
Noninterest Income
Wealth management income			732				863				971				846				862
Service charges on deposit accounts			3,493				3,582				3,315				3,168				3,826
Other service charges and fees			1,795				1,777				1,793				1,786				1,682
Insurance commissions			1,400				1,559				1,308				1,666				1,215
Net impairment losses recognized in earnings			(320	)			-				-				-				-
Net gain (loss) on sale of securities			208				(39	)			113				117				213
Net FDIC indemnification asset (amortization) accretion			(1,307	)			(1,089	)			(1,662	)			(1,539	)			327
Other operating income			1,270				1,458				1,010				1,817				1,088
Total noninterest income			7,271				8,111				6,848				7,861				9,213
Noninterest Expense
Salaries and employee benefits			10,085				11,080				9,960				10,110				10,693
Occupancy expense of bank premises			1,683				1,700				1,795				1,855				1,938
Furniture and equipment			1,035				1,288				1,300				1,343				1,404
Amortization of intangible assets			184				183				183				179				191
FDIC premiums and assessments			316				460				469				472				389
Merger related expense			-				-				7				49				866
Other operating expense			7,772				5,442				4,819				5,536				6,252
Total noninterest expense			21,075				20,153				18,533				19,544				21,733
Income before income taxes			7,760				7,951				7,972				10,537				12,396
Income tax expense			2,436				2,539				2,537				3,396				3,957
Net income			5,324				5,412				5,435				7,141				8,439
Dividends on preferred stock			252				261				253				258				272
Net income available to common shareholders		$	5,072			$	5,151			$	5,182			$	6,883			$	8,167
Basic earnings per common share		$	0.27			$	0.26			$	0.26			$	0.34			$	0.41
Diluted earnings per common share			0.26				0.26				0.26				0.34				0.40
Cash dividends per common share			0.12				0.12				0.12				0.12				0.11
Weighted average basic shares outstanding			19,136,317				20,008,861				19,997,991				20,032,694				20,063,873
Weighted average diluted shares outstanding			20,233,737				21,123,788				21,205,078				21,258,490				21,314,023

 

 

FIRST COMMUNITY BANCSHARES, INC.

RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited)

 

		Three Months Ended								Year Ended
		December 31,								December 31,
		2013				2012				2013				2012
(Amounts in thousands, except per share data)
Net income, GAAP		$	5,324			$	8,439			$	23,312			$	28,577
Non-GAAP adjustments:
Net impairment losses recognized in earnings			320				-				320				942
Net gain on sale of securities			(208	)			(213	)			(399	)			(483	)
Net gain on debt prepayment			-				-				(296	)			-
Merger related expense			-				866				56				5,093
Branch closure/consolidation expense			1,520				-				1,520				-
Prospective correction of prior period understatement			-				-				-				(2,395	)
Other noncore, nonrecurring items			-				-				1,180				-
Total adjustments to core earnings			1,632				653				2,381				3,157
Tax effect			610				247				889				1,193
Core earnings, non-GAAP		$	6,346			$	8,845			$	24,804			$	30,541
Core return on average assets			0.96	%			1.29	%			0.93	%			1.22	%
Core return on average common equity			7.69	%			10.38	%			7.31	%			9.66	%
Core return on average tangible common equity			11.47	%			15.22	%			10.74	%			13.98	%
Core diluted earnings per common share		$	0.31			$	0.41			$	1.18			$	1.50

 

FIRST COMMUNITY BANCSHARES, INC.

EFFICIENCY RATIO CALCULATION (Unaudited)

 

		Three Months Ended								Year Ended
		December 31,								December 31,
		2013				2012				2013				2012
(Amounts in thousands)
Noninterest expense, GAAP		$	21,075			$	21,733			$	79,305			$	78,383
Non-GAAP adjustments:
Merger related expense			-				(866	)			(56	)			(5,093	)
OREO expense and net loss			(970	)			(312	)			(2,037	)			(1,893	)
Branch closure/consolidation expense			(1,520	)			-				(1,520	)			-
Other noncore, nonrecurring items			-				-				(1,180	)			-
Adjusted noninterest expense			18,585				20,555				74,512				71,397
Net interest income, GAAP			23,092				26,136				91,642				90,056
Noninterest income, GAAP			7,722				9,213				30,542				36,710
Non-GAAP adjustments:
Tax equivalency adjustment			662				658				2,741				2,747
Net impairment losses recognized in earnings			320				-				320				942
Net gain on sale of securities			(208	)			(213	)			(399	)			(483	)
Net gain on debt prepayment			-				-				(296	)			-
Prospective correction of prior period understatement			-				-				-				(2,395	)
Adjusted net interest and noninterest income			31,588				35,794				124,550				127,577
Non-GAAP efficiency ratio			58.84	%			57.43	%			59.82	%			55.96	%

 

 

FIRST COMMUNITY BANCSHARES, INC.

CONDENSED QUARTERLY BALANCE SHEETS (Unaudited)

 

		As of the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2013				2013				2013				2013				2012
(Amounts in thousands)
Cash and due from banks		$	43,598			$	47,982			$	44,307			$	41,467			$	50,405
Federal funds sold			1,817				33,374				22,876				110,544				66,509
Interest-bearing deposits in banks			11,152				11,219				14,936				15,030				27,933
Total cash and cash equivalents			56,567				92,575				82,119				167,041				144,847
Securities available-for-sale			519,820				545,676				550,158				537,507				534,358
Securities held-to-maturity			568				567				627				816				816
Loans held for sale			883				825				4,621				2,794				6,672
Loans held for investment, net of unearned income:
Covered under loss share agreements			151,682				163,425				184,076				195,060				207,106
Not covered under loss share agreements			1,559,039				1,533,272				1,507,422				1,494,232				1,517,547
Less allowance for loan losses			(24,077	)			(24,665	)			(23,122	)			(24,850	)			(25,770	)
Loans, net			1,687,527				1,672,857				1,672,997				1,667,236				1,705,555
FDIC indemnification asset			34,691				37,102				40,389				43,921				48,149
Property, plant, and equipment, net			61,116				63,526				64,085				64,812				64,868
Other real estate owned:
Covered under loss share agreements			7,541				7,381				6,407				6,911				3,255
Not covered under loss share agreements			7,318				5,450				4,743				4,439				5,749
Interest receivable			7,521				7,336				8,010				8,166				7,842
Goodwill			105,455				104,892				104,892				104,689				104,866
Intangible assets			2,866				2,976				3,159				3,344				3,522
Other assets			111,524				112,313				113,149				111,409				105,040
Total assets		$	2,602,514			$	2,652,651			$	2,650,735			$	2,720,291			$	2,728,867
Deposits:
Noninterest-bearing		$	339,680			$	353,951			$	349,972			$	355,918			$	343,352
Interest-bearing			361,821				374,546				354,862				377,445				353,321
Savings			524,010				527,887				513,781				513,322				500,276
Time			725,231				740,181				770,081				800,812				833,226
Total deposits			1,950,742				1,996,565				1,988,696				2,047,497				2,030,175
Interest, taxes, and other liabilities			22,770				24,653				23,019				26,740				28,816
Federal funds purchased			16,000				-				-				-				-
Securities sold under agreements to repurchase			118,308				114,647				121,204				121,506				136,118
FHLB borrowings			150,000				150,000				150,000				150,000				161,558
Other borrowings			16,088				15,839				15,877				15,877				15,877
Total liabilities			2,273,908				2,301,704				2,298,796				2,361,620				2,372,544
Preferred stock			15,251				15,471				15,921				17,421				17,421
Common stock			20,493				20,478				20,447				20,343				20,343
Additional paid-in capital			215,663				215,671				215,139				213,855				213,829
Retained earnings			125,826				123,018				120,273				117,489				113,013
Treasury stock, at cost			(33,887	)			(10,946	)			(7,763	)			(7,517	)			(6,458	)
Accumulated other comprehensive loss			(14,740	)			(12,745	)			(12,078	)			(2,920	)			(1,825	)
Total stockholders' equity			328,606				350,947				351,939				358,671				356,323
Total liabilities and stockholders' equity		$	2,602,514			$	2,652,651			$	2,650,735			$	2,720,291			$	2,728,867
Shares outstanding at period end			18,514,579				19,888,028				20,060,862				19,985,212				20,053,466
Book value per common share at period end(1)		$	16.79			$	16.75			$	16.63			$	16.93			$	16.76
Tangible book value per common share at period end(2)		$	11.26			$	11.60			$	11.53			$	11.83			$	11.66

 

(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)		2013				2013				2013				2013				2012
Allowance for Loan Losses
Beginning balance		$	24,665			$	23,122			$	24,850			$	25,770			$	25,835
Provision for loan losses charged to operations			1,528				2,333				3,205				1,142				1,220
(Recovery of) provision for loan losses recorded through the FDIC indemnification asset			(361	)			812				-				-				-
Charge-offs			(2,807	)			(1,955	)			(5,006	)			(2,759	)			(1,717	)
Recoveries			1,052				353				73				697				432
Net charge-offs			(1,755	)			(1,602	)			(4,933	)			(2,062	)			(1,285	)
Ending balance		$	24,077			$	24,665			$	23,122			$	24,850			$	25,770
Summary of Asset Quality
Non-covered loans
Nonaccrual loans		$	19,161			$	26,397			$	29,125			$	30,076			$	23,931
Accruing loans past due 90 days or more			-				-				-				-				-
Troubled debt restructurings ("TDRs")(1)			1,311				2,228				276				1,596				6,009
Total non-covered nonperforming loans			20,472				28,625				29,401				31,672				29,940
Other real estate owned ("OREO") not covered under FDIC loss share agreements			7,318				5,450				4,743				4,439				5,749
Total non-covered nonperforming assets		$	27,790			$	34,075			$	34,144			$	36,111			$	35,689
Covered Loans
Nonaccrual loans		$	3,353			$	3,579			$	3,889			$	4,567			$	4,323
Accruing loans past due 90 days or more			86				82				-				-				-
Total covered nonperforming loans			3,439				3,661				3,889				4,567				4,323
OREO covered under FDIC loss share agreements			7,541				7,381				6,407				6,911				3,255
Total covered nonperforming assets			10,980				11,042				10,296				11,478				7,578
Total nonperforming assets		$	38,770			$	45,117			$	44,440			$	47,589			$	43,267
Performing TDRs(2)		$	10,900			$	9,697			$	10,927			$	10,272			$	6,038
Total TDRs(3)			12,211				11,925				11,203				11,868				12,047
Asset Quality Ratios
Excluding covered assets
Nonperforming loans to total loans			1.31	%			1.87	%			1.95	%			2.12	%			1.97	%
Nonperforming assets to total assets			1.14	%			1.37	%			1.39	%			1.43	%			1.42	%
Allowance for loan losses to nonperforming loans			117.61	%			86.17	%			78.64	%			78.46	%			86.07	%
Allowance for loan losses to non-covered total loans			1.54	%			1.61	%			1.53	%			1.66	%			1.70	%
Annualized net charge-offs to average loans			0.45	%			0.42	%			1.31	%			0.56	%			0.34	%
Including covered assets
Nonperforming loans to total loans			1.40	%			1.90	%			1.97	%			2.15	%			1.99	%
Nonperforming assets to total assets			1.49	%			1.70	%			1.68	%			1.75	%			1.59	%
Nonperforming assets to total loans and other real estate owned			145.60	%			149.60	%			160.70	%			166.08	%			232.81	%
Allowance for loan losses to nonperforming loans			100.69	%			76.40	%			69.46	%			68.57	%			75.21	%
Allowance for loan losses to total loans			1.41	%			1.45	%			1.37	%			1.47	%			1.49	%

 

(1)

Accruing TDRs restructured within the past six months or nonperforming

(2)

Accruing TDRs with six months or more of satisfactory payment performance

(3)

Accruing nonperforming and performing TDRs

 

 

FIRST COMMUNITY BANCSHARES, INC.

SELECTED FINANCIAL INFORMATION (Unaudited)

 

		As of and for the Quarter Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2013				2013				2013				2013				2012
Selected Ratios
Return on average assets			0.77	%			0.77	%			0.78	%			1.03	%			1.19	%
Return on average common equity			6.14	%			6.06	%			5.97	%			8.11	%			9.59	%
Core return on average assets, non-GAAP			0.96	%			0.92	%			0.80	%			1.05	%			1.29	%
Core return on average common equity, non-GAAP			7.69	%			7.19	%			6.19	%			8.23	%			10.38	%
Net interest margin			4.15	%			3.99	%			4.07	%			4.15	%			4.49	%
Non-GAAP efficiency ratio quarter-to-date			58.84	%			60.35	%			60.60	%			59.55	%			57.43	%
Non-GAAP efficiency ratio year-to-date			59.82	%			60.16	%			60.07	%			59.55	%			55.96	%
Total equity to total assets			12.63	%			13.23	%			13.28	%			13.19	%			13.06	%
Average earning assets to average assets			86.60	%			86.51	%			86.72	%			86.96	%			86.87	%
Average loans to average deposits			86.53	%			85.13	%			84.33	%			84.98	%			85.71	%
(Amounts in thousands)
Average Balances
Loans		$	1,705,790			$	1,694,243			$	1,692,248			$	1,706,296			$	1,745,584
Investment securities			535,641				548,283				548,101				545,497				519,798
Earning assets			2,269,354				2,287,785				2,323,517				2,350,686				2,376,805
Total assets			2,620,543				2,644,632				2,679,295				2,703,029				2,736,037
Total deposits			1,971,358				1,990,163				2,006,626				2,007,840				2,036,697
Interest-bearing deposits			1,625,421				1,641,007				1,662,446				1,675,654				1,699,991
Borrowings			285,658				281,250				289,289				309,333				314,645
Interest-bearing liabilities			1,911,079				1,922,257				1,951,735				1,984,987				2,014,636
Stockholders' equity			342,912				352,993				365,217				361,549				356,812
Tax equivalent net interest income			23,754				23,017				23,555				24,057				26,832

 

 

FIRST COMMUNITY BANCSHARES, INC.

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

 

		Three Months Ended December 31,
		2013												2012
		Average								Average Yield/				Average								Average Yield/
(Amounts in thousands)		Balance				Interest (1)				Rate (1)				Balance				Interest (1)				Rate (1)
Assets
Earning assets
Loans(2)		$	1,705,790			$	24,097				5.60	%		$	1,745,584			$	28,231				6.43	%
Securities available-for-sale			535,074				3,887				2.88	%			518,982				3,623				2.78	%
Securities held-to-maturity			567				11				7.70	%			816				16				7.80	%
Interest-bearing deposits			27,923				31				0.44	%			111,423				82				0.29	%
Total earning assets			2,269,354				28,026				4.90	%			2,376,805				31,952				5.35	%
Other assets			351,189												359,232
Total assets		$	2,620,543											$	2,736,037
Liabilities
Interest-bearing deposits
Demand deposits		$	369,516			$	66				0.07	%		$	351,329			$	62				0.07	%
Savings deposits			521,589				140				0.11	%			495,116				156				0.13	%
Time deposits			734,316				1,825				0.99	%			853,546				2,386				1.11	%
Total interest-bearing deposits			1,625,421				2,031				0.50	%			1,699,991				2,604				0.61	%
Borrowings
Federal funds purchased			2,505				2				0.32	%			-				-				-
Retail repurchase agreements			62,212				25				0.16	%			79,014				105				0.53	%
Wholesale repurchase agreements			50,000				473				3.76	%			58,196				540				3.69	%
FHLB advances and other borrowings			170,941				1,741				4.04	%			177,435				1,871				4.19	%
Total borrowings			285,658				2,241				3.11	%			314,645				2,516				3.18	%
Total interest-bearing liabilities			1,911,079				4,272				0.89	%			2,014,636				5,120				1.01	%
Noninterest-bearing demand deposits			345,937												336,706
Other liabilities			20,615												27,883
Total liabilities			2,277,631												2,379,225
Stockholders' equity			342,912												356,812
Total liabilities and stockholders' equity		$	2,620,543											$	2,736,037
Net interest income, tax equivalent						$	23,754											$	26,832
Net interest rate spread(3)											4.01	%											4.34	%
Net interest margin(4)											4.15	%											4.49	%

 

(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,
		2013												2012
		Average								Average Yield/				Average								Average Yield/
(Amounts in thousands)		Balance				Interest(1)				Rate(1)				Balance				Interest(1)				Rate(1)
Assets
Earning assets
Loans(2)		$	1,699,614			$	96,768				5.69	%		$	1,611,557			$	96,803				6.01	%
Securities available-for-sale			543,697				15,184				2.79	%			502,416				15,170				3.02	%
Securities held-to-maturity			667				54				8.10	%			2,622				171				6.52	%
Interest-bearing deposits			63,566				211				0.33	%			77,851				259				0.33	%
Total earning assets			2,307,544				112,217				4.86	%			2,194,446				112,403				5.12	%
Other assets			354,058												316,485
Total assets		$	2,661,602											$	2,510,931
Liabilities
Interest-bearing deposits
Demand deposits		$	361,979			$	240				0.07	%		$	306,019			$	185				0.06	%
Savings deposits			516,247				584				0.11	%			471,406				556				0.12	%
Time deposits			772,741				7,999				1.04	%			776,901				9,231				1.19	%
Total interest-bearing deposits			1,650,967				8,823				0.53	%			1,554,326				9,972				0.64	%
Borrowings
Federal funds purchased			632				2				0.32	%			490				2				0.41	%
Retail repurchase agreements			69,141				265				0.38	%			78,608				449				0.57	%
Wholesale repurchase agreements			51,885				1,890				3.64	%			55,163				2,023				3.67	%
FHLB advances and other borrowings			169,632				6,854				4.04	%			175,333				7,154				4.08	%
Total borrowings			291,290				9,011				3.09	%			309,594				9,628				3.11	%
Total interest-bearing liabilities			1,942,257				17,834				0.92	%			1,863,920				19,600				1.05	%
Noninterest-bearing demand deposits			342,919												286,950
Other liabilities			20,815												25,160
Total liabilities			2,305,991												2,176,030
Stockholders' equity			355,611												334,901
Total liabilities and stockholders' equity		$	2,661,602											$	2,510,931
Net interest income, tax equivalent						$	94,383											$	92,803
Net interest rate spread(3)											3.94	%											4.07	%
Net interest margin(4)											4.09	%											4.23	%

 

(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.

RECONCILIATION OF GAAP NET INTEREST MARGIN TO NORMALIZED NET INTEREST MARGIN (Unaudited)

 

		Three Months Ended December 31,
		2013								2012
						Average Yield/								Average Yield/
(Amounts in thousands)		Interest(1)				Rate(1)				Interest(1)				Rate(1)
Earning assets
Loans(2)		$	24,097				5.60	%		$	28,231				6.43	%
Accretion income			4,395								8,160
Less: cash accretion income			1,796								2,020
Non-cash accretion income			2,599								6,140
Loans, excluding non-cash accretion income			21,498				5.00	%			22,091				5.03	%
Other earning assets			3,929				2.77	%			3,721				2.35	%
Total earning assets			25,427				4.45	%			25,812				4.32	%
Total interest-bearing liabilities			4,272				0.89	%			5,120				1.01	%
Net interest income, tax equivalent		$	21,155							$	20,692
Net interest rate spread(3)							3.56	%							3.31	%
Net interest margin(4)							3.70	%							3.46	%

 

		Year Ended December 31,
		2013								2012
						Average Yield/								Average Yield/
		Interest(1)				Rate(1)				Interest(1)				Rate(1)
Earning assets
Loans(2)		$	96,768				5.69	%		$	96,803				6.01	%
Accretion income			15,472								12,871
Less: cash accretion			7,023								4,158
Non-cash accretion			8,449								8,713
Loans, excluding non-cash accretion			88,319				5.20	%			88,090				6.01	%
Other earning assets			15,449				2.54	%			15,600				2.68	%
Total earning assets			103,768				4.50	%			103,690				4.73	%
Total interest-bearing liabilities			17,834				0.92	%			19,600				1.05	%
Normalized net interest income, tax equivalent		$	85,934							$	84,090
Normalized net interest rate spread(3)							3.58	%							3.67	%
Normalized net interest margin(4)							3.72	%							3.83	%

 

(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.