First Community Bancshares, Inc. Announces Second Quarter 2013 Results


BLUEFIELD, Va., July 25, 2013 (GLOBE NEWSWIRE) -- First Community Bancshares, Inc. (Nasdaq:FCBC) (www.fcbinc.com) (the "Company") today reported net income for the quarter and six months ended June 30, 2013, of $5.44 million and $12.58 million, respectively. Net income available to common shareholders totaled $5.18 million, or $0.25 per diluted common share, for the quarter ended June 30, 2013. Net income available to common shareholders totaled $12.07 million, or $0.59 per diluted common share, for the six months ended June 30, 2013. Excluding nonrecurring income and expense items, core earnings for the quarter and six months ended June 30, 2013, totaled $5.37 million and $12.35 million, respectively.

Second Quarter 2013 Highlights –

  • Net income was $5.44 million, an increase of $1.36 million, or 33.28%, compared with the second quarter of 2012.
  • Net interest income was $22.86 million, an increase of $3.38 million, or 17.34%, compared with the second quarter of 2012.
  • The tax equivalent net interest margin increased 14 basis points to 4.07% for the second quarter of 2013 compared with the second quarter of 2012.
  • The average loan balance increased $179.80 million, or 11.89%, to $1.69 billion for the second quarter of 2013 compared with the second quarter of 2012.
  • Tangible book value per common share increased $0.34 per share to $11.53 for the second quarter of 2013 compared with the second quarter of 2012.

Net Interest Income

Net interest income increased $3.38 million, or 17.34%, to $22.86 million for the second quarter of 2013 compared with the second quarter of 2012. The tax equivalent net interest margin increased 14 basis points to 4.07% for the second quarter of 2013 compared with 3.93% for the second quarter of 2012. Total interest income increased $3.23 million, or 13.36%, to $27.41 million for the second quarter of 2013 compared with the second quarter of 2012. The increase reflects the addition of loan portfolios from the Peoples Bank of Virginia ("Peoples") and Waccamaw Bank ("Waccamaw") acquisitions that occurred during the second quarter of 2012. The tax equivalent yield on loans increased 20 basis points to 5.76% while the average loan balance increased $179.80 million, or 11.89%, to $1.69 billion for the second quarter of 2013 compared with the second quarter of 2012. Interest on loans includes accretion related to the Peoples and Waccamaw acquisitions of $729 thousand and $3.03 million, respectively, for the second quarter of 2013.

Total interest expense decreased $148 thousand, or 3.15%, to $4.55 million for the second quarter of 2013 compared with the second quarter of 2012. Deposit costs decreased $77 thousand, or 3.26%, to $2.28 million for the second quarter of 2013 compared with the second quarter of 2012, reflecting an 11 basis point decrease in the average rate paid on interest-bearing deposits. Borrowing costs decreased $71 thousand, or 3.04%, to $2.27 million for the second quarter of 2013 compared with the second quarter of 2012. The average rate paid on interest-bearing liabilities decreased 16 basis points to 0.93% for the second quarter of 2013 compared with the second quarter of 2012. The average balance of interest-bearing liabilities increased $210.71 million, or 12.10%, to $1.95 billion for the second quarter of 2013 compared with the second quarter of 2012, which included a $224.90 million increase in average interest-bearing deposits and a $14.19 million decrease in average total borrowings. The increase in average interest-bearing liabilities was primarily the result of a full quarter's impact from the Peoples and Waccamaw acquisitions in the second quarter of 2013 versus a partial impact in the second quarter of 2012.

Noninterest Income

Noninterest income decreased $1.50 million, or 17.92%, to $6.85 million for the second quarter of 2013 compared with the second quarter of 2012. Wealth management revenues increased $31 thousand, or 3.30%, for the second quarter of 2013 compared with the second quarter of 2012. The Trust and Wealth Management Divisions reported $900 million in assets under management as of June 30, 2013. Service charges on deposit accounts reported a slight decrease of $14 thousand and other service charges and fees increased $229 thousand, or 14.64%, for the second quarter of 2013 compared with the second quarter of 2012. Insurance commissions decreased $28 thousand, or 2.10%, to $1.31 million for the second quarter of 2013 compared with the same quarter of 2012. The Company realized a $113 thousand net gain on sale of securities for the second quarter of 2013, which was an increase of $122 thousand compared to a net loss of $9 thousand for the second quarter of 2012. Amortization expense of $1.66 million was recorded relating to the FDIC indemnification asset during the second quarter of 2013 as a result of improvements in actual and expected cash flows on covered assets. Other operating income included a negative fair value mark of $435 thousand on loans held for sale and the associated secondary market loan production pipeline for the second quarter of 2013 compared to a positive mark of $76 thousand recorded for the second quarter of 2012. The Company incurred no other-than-temporary impairment charges during the second quarters of 2013 or 2012.

Noninterest Expense

Noninterest expense decreased $1.60 million, or 7.94%, to $18.53 million for the second quarter of 2013 compared with the second quarter of 2012. Salaries and employee benefits increased $1.07 million, or 12.01%, to $9.96 million for the second quarter of 2013 compared with the second quarter of 2012. Salaries and employee benefits attributed to the Peoples and Waccamaw acquisitions totaled $1.32 million during the second quarter of 2013, which represents an increase of $831 thousand for the quarter ended June 30, 2013, compared with the same quarter of 2012. Occupancy, furniture, and equipment expense increased $466 thousand, or 17.73%, to $3.10 million for the second quarter of 2013 compared with the second quarter of 2012, reflecting the substantial increase in branch count and facilities associated with the Peoples and Waccamaw acquisitions. Other operating expense increased $105 thousand, or 2.23%, to $4.82 million for the second quarter of 2013 compared with the second quarter of 2012. Other operating expense included a net loss on sales and expenses associated with other real estate owned of $170 thousand for the second quarter of 2013 compared to $270 thousand for the second quarter of 2012. The efficiency ratio for the second quarter of 2013 was 60.60% compared to 57.58% for the second quarter of 2012.

Provision for Loan Losses and Asset Quality

The provision for loan losses increased $1.59 million, or 97.84%, to $3.21 million for the second quarter of 2013 and $1.81 million, or 71.01%, to $4.35 million for the six months ended June 30, 2013, compared with the same periods of the prior year.

The allowance for loan losses decreased to $23.12 million at June 30, 2013, compared with $25.77 million at December 31, 2012, and $26.17 million at June 30, 2012. Non-covered loans and other real estate owned are those assets not covered by loss share agreements between the FDIC and the Bank in relation to the acquisition of Waccamaw. The allowance for loan losses as a percentage of non-covered loans was 1.53% at June 30, 2013, compared with 1.70% at December 31, 2012, and 1.67% at June 30, 2012. For the second quarter of 2013, net charge-offs increased $3.65 million, or 2.84%, compared with the fourth quarter of 2012, and $3.68 million, or 2.95%, compared with the second quarter of 2012. Annualized net charge-offs were 1.31% for the second quarter of 2013, which represents an increase of 93 basis points compared with 0.38% for the second quarter of 2012.

During the second quarter of 2013, net charge-offs totaled $4.93 million which were primarily impacted by four loan relationships; the most significant of which was a $2.10 million write down of a relationship within the construction, development, and other land segment. The Company had previously identified this problem relationship and had established a $1.80 million specific allocation, which was utilized for the write down. 

Non-covered delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, as a percentage of total non-covered loans measured 2.53% at June 30, 2013, compared to 2.46% for the same period of the prior year. Non-covered nonaccrual loans totaled $29.13 million at June 30, 2013, compared to $23.93 million at December 31, 2012, and $27.95 million at June 30, 2012. At quarter end, the Company's non-covered nonperforming loans as a percentage of total non-covered loans were 1.95% and non-covered nonperforming assets as a percentage of total non-covered assets were 1.39%.

Total nonperforming assets, including covered and non-covered loan portfolios, consisted of $33.01 million in nonaccrual loans, $276 thousand in unseasoned, accruing troubled debt restructurings, and $11.15 million in other real estate owned at June 30, 2013. In comparison, total nonperforming assets consisted of $28.25 million in nonaccrual loans, $6.01 million in unseasoned, accruing troubled debt restructurings, and $9.00 million in other real estate owned at December 31, 2012.

Balance Sheet and Capital

Consolidated assets totaled $2.65 billion as of June 30, 2013, a decrease of $78.13 million, or 2.86%, compared with $2.73 billion at December 31, 2012. Consolidated liabilities totaled $2.30 billion as of June 30, 2013, a decrease of $73.75 million, or 3.11%, compared with $2.37 billion at December 31, 2012. Total stockholders' equity decreased to $351.94 million as of June 30, 2013, compared with $356.32 million at December 31, 2012. Book value per as-converted common share decreased to $16.63 for the quarter ended June 30, 2013, compared with $16.76 for the quarter ended December 31, 2012. Tangible book value per common share decreased to $11.53 for the quarter ended June 30, 2013, compared with $11.66 for the quarter ended December 31, 2012. The decrease was largely a function of declines in investment securities' market values as a result of the increase in benchmark interest rates noticed at the end of the second quarter of 2013. The Company paid a cash dividend of $0.12 per common share during the second quarter of 2013.

The Company significantly exceeds regulatory "well capitalized" targets as of June 30, 2013, with a total risk-based capital ratio of 17.71%, Tier 1 risk-based capital ratio of 16.45%, and a Tier 1 leverage ratio of 10.54%.

Non-GAAP Financial Measures

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

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

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

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

Investor Relations

The Company will host an investor and media teleconference and webcast on Friday, July 26, 2013, at 11:00 a.m. To access the teleconference, the toll-free number is (877) 407-8033. Individuals may listen to the live or archived webcast of the conference call. To listen to the webcast, visit www.fcbinc.com and follow the link under the Investor Relations section. The Company's press release and financial summary will be available in this section, as well. Copies of the Company's second quarter 2013 earnings press release and financial summary will be made available upon request via email. To request a copy, contact David D. Brown, Chief Financial Officer, at (276) 326-9000.

About First Community Bancshares, Inc.

First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.65 billion financial holding company and the parent company of First Community Bank. First Community Bank operates seventy-two banking locations throughout Virginia, West Virginia, North Carolina, South Carolina, and Tennessee. First Community Bank offers wealth management and investment services through its Trust Division and First Community Wealth Management, a registered investment advisory firm. The Trust Division and First Community Wealth Management managed assets with a market value of $900 million as of June 30, 2013. The Company is also the parent company of Greenpoint Insurance Group, Inc., a full-service insurance agency headquartered in High Point, North Carolina, that operates seven insurance locations throughout Virginia, West Virginia, and North Carolina. The Company's common stock is traded on the NASDAQ Global Select Market under the symbol, "FCBC." Additional investor information can be found on the Company's website at www.fcbinc.com.

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

FIRST COMMUNITY BANCSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
(Amounts in thousands, except share and per share data) 2013 2012 2013 2012
Interest income        
Interest and fees on loans held for investment  $ 24,264  $ 20,853  $ 49,108  $ 40,221
Interest on securities --- taxable  1,869  2,001  3,755  4,080
Interest on securities --- nontaxable  1,207  1,256  2,415  2,452
Interest on deposits in banks  72  72  138  111
Total interest income  27,412  24,182  55,416  46,864
Interest expense        
Interest on deposits  2,283  2,360  4,645  4,765
Interest on short-term borrowings  579  589  1,169  1,184
Interest on long-term borrowings  1,688  1,749  3,378  3,454
Total interest expense  4,550  4,698  9,192  9,403
Net interest income  22,862  19,484  46,224  37,461
Provision for loan losses  3,205  1,620  4,347  2,542
Net interest income after provision for loan losses  19,657  17,864  41,877  34,919
Noninterest income        
Wealth management income  971  940  1,817  1,834
Service charges on deposit accounts  3,315  3,329  6,483  6,342
Other service charges and fees  1,793  1,564  3,579  3,149
Insurance commissions  1,308  1,336  2,974  2,912
Net gain (loss) on sale of securities  113  (9)  230  42
FDIC indemnification asset amortization  (1,662)  --  (3,201)  --
Other operating income  1,010  1,183  2,827  2,055
Total noninterest income   6,848  8,343  14,709  16,334
Noninterest expense        
Salaries and employee benefits  9,960  8,892  20,070  17,114
Occupancy expense of bank premises  1,795  1,654  3,650  3,180
Furniture and equipment   1,300  975  2,643  1,786
Amortization of intangible assets  183  189  362  422
FDIC premiums and assessments  469  290  941  612
Merger related expense  8  3,419  57  3,582
Other operating expense  4,818  4,713  10,354  9,629
Total noninterest expense  18,533  20,132  38,077  36,325
Income before income taxes  7,972  6,075  18,509  14,928
Income tax expense  2,537  1,997  5,933  4,849
Net income   5,435  4,078  12,576  10,079
Dividends on preferred stock  253  283  511  566
Net income available to common shareholders  $ 5,182  $ 3,795  $ 12,065  $ 9,513
         
Basic earnings per common share   $ 0.26  $ 0.20  $ 0.60  $ 0.52
Diluted earnings per common share   $ 0.25  $ 0.20  $ 0.59  $ 0.52
Cash dividends per common share  $ 0.12  $ 0.11  $ 0.24  $ 0.21
         
Weighted average basic shares outstanding  19,997,991  18,561,714  20,015,247  18,205,545
Weighted average diluted shares outstanding  21,340,521  19,909,242  21,367,146  19,549,582
         
Return on average assets 0.78% 0.65% 0.90% 0.84%
Return on average common equity 5.97% 5.00% 7.03% 6.41%
 
FIRST COMMUNITY BANCSHARES, INC.
CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)
           
   As of and for the Quarter Ended
  June 30, March 31, December 31, September 30, June 30,
(Amounts in thousands, except share and per share data) 2013 2013 2012 2012 2012
Interest Income          
Interest and fees on loans held for investment  $ 24,264  $ 24,844  $ 28,188  $ 28,275  $ 20,853
Interest on securities --- taxable  1,869  1,886  1,770  1,980  2,001
Interest on securities --- nontaxable  1,207  1,208  1,216  1,215  1,256
Interest on deposits in banks  72  66  82  66  72
Total interest income  27,412  28,004  31,256  31,536  24,182
Interest Expense          
Interest on deposits  2,283  2,362  2,604  2,603  2,360
Interest on short-term borrowings  579  590  656  675  589
Interest on long-term borrowings  1,688  1,690  1,860  1,799  1,749
Total interest expense  4,550  4,642  5,120  5,077  4,698
Net interest income  22,862  23,362  26,136  26,459  19,484
Provision for loan losses  3,205  1,142  1,220  1,916  1,620
Net interest income after provision for loan losses  19,657  22,220  24,916  24,543  17,864
Noninterest Income          
Wealth management income  971  846  862  1,005  940
Service charges on deposit accounts  3,315  3,168  3,826  3,895  3,329
Other service charges and fees  1,793  1,786  1,682  1,631  1,564
Insurance commissions  1,308  1,666  1,215  1,616  1,336
Net impairment losses recognized in earnings  --  --  --  (942)  --
Net gain (loss) on sale of securities  113  117  213  228  (9)
FDIC indemnification asset amortization  (1,662)  (1,539)  --  --  --
Other operating income  1,010  1,817  437  3,730  1,183
Total noninterest income   6,848  7,861  8,235  11,163  8,343
Noninterest Expense          
Salaries and employee benefits  9,960  10,110  10,693  10,860  8,892
Occupancy expense of bank premises  1,795  1,855  1,938  1,754  1,654
Furniture and equipment  1,300  1,343  1,404  955  975
Amortization of intangible assets  183  179  191  191  189
FDIC premiums and assessments   469  472  313  611  290
Merger related expense  8  49  866  645  3,419
Other operating expense  4,818  5,536  5,350  5,309  4,713
Total noninterest expense  18,533  19,544  20,755  20,325  20,132
Income before income taxes  7,972  10,537  12,396  15,381  6,075
Income tax expense  2,537  3,396  3,957  5,322  1,997
Net income   5,435  7,141  8,439  10,059  4,078
Dividends on preferred stock  253  258  272  220  283
Net income available to common shareholders  $ 5,182  $ 6,883  $ 8,167  $ 9,839  $ 3,795
           
Basic earnings per common share  $ 0.26  $ 0.34  $ 0.41  $ 0.49  $ 0.20
Diluted earnings per common share  $ 0.25  $ 0.33  $ 0.39  $ 0.47  $ 0.20
Cash dividends per common share  $ 0.12  $ 0.12  $ 0.11  $ 0.11  $ 0.11
           
Weighted average basic shares outstanding  19,997,991  20,032,694  20,063,873  20,013,264  18,561,714
Weighted average diluted shares outstanding  21,340,521  21,394,066  21,452,984  21,476,497  19,909,242
 
FIRST COMMUNITY BANCSHARES, INC.
RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2013 2012 2013 2012
(Amounts in thousands, except per share data)        
Net income, GAAP  $ 5,435  $ 4,078  $ 12,576  $ 10,079
Non-GAAP adjustments:        
Net impairment losses recognized in earnings  --  --  --  --
Net (gain) loss on sale of securities  (113)  9  (230)  (42)
Net gain on debt prepayment   --  --  (296)  --
Merger related expense  8  3,419  57  3,582
Other noncore, nonrecurring items  --  --  108  --
Total adjustments to core earnings  (105)  3,428  (361)  3,540
Tax effect   (39)  1,296  (135)  1,338
Core earnings, non-GAAP  $ 5,369  $ 6,210  $ 12,350  $ 12,281
         
Core return on average assets 0.80% 1.06% 0.93% 1.09%
Core return on average common equity 6.19% 8.19% 7.20% 8.27%
Core return on average tangible common equity 8.97% 11.74% 10.48% 11.84%
Core diluted earnings per common share $0.25 $0.31 $0.58 $0.63
 
FIRST COMMUNITY BANCSHARES, INC.
EFFICIENCY RATIO CALCULATION (Unaudited)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2013 2012 2013 2012
(Amounts in thousands)        
Noninterest expense, GAAP  $ 18,533  $ 20,132  $ 38,077  $ 36,325
Non-GAAP adjustments:        
Merger related expenses  (8)  (3,419)  (57)  (3,582)
OREO expense and net loss  (170)  (270)  (795)  (1,091)
Other noncore, nonrecurring items  --  --  (108)  --
Adjusted noninterest expense  18,355  16,443  37,117  31,652
         
Net interest income, GAAP  22,862  19,484  46,224  37,461
Noninterest income, GAAP  6,848  8,343  14,709  16,334
Non-GAAP adjustments:        
Tax equivalency adjustment  693  722  1,388  1,405
Net impairment losses recognized in earnings  --  --  --  --
Net (gain) loss on sale of securities  (113)  9  (230)  (42)
Net gain on debt prepayment  --  --  (296)  --
Other noncore, nonrecurring items  --  --  --  --
Adjusted net interest and noninterest income  30,290  28,558  61,795  55,158
         
Non-GAAP efficiency ratio 60.60% 57.58% 60.06% 57.38%
 
FIRST COMMUNITY BANCSHARES, INC.
CONDENSED QUARTERLY BALANCE SHEETS (Unaudited)
           
   For the Quarter Ended
  June 30, March 31, December 31, September 30, June 30,
  2013 2013 2012 2012 2012
(Amounts in thousands)          
Cash and due from banks  $ 44,307  $ 41,467  $ 50,405  $ 44,865  $ 54,494
Federal funds sold  22,876  110,544  66,509  93,005  64,815
Interest-bearing deposits in banks  14,936  15,030  27,933  27,359  36,856
Total cash and cash equivalents  82,119  167,041  144,847  165,229  156,165
Securities available-for-sale   550,158  537,507  534,358  517,161  526,607
Securities held-to-maturity   627  816  816  816  1,295
Loans held for sale  4,621  2,794  6,672  4,446  1,179
Loans held for investment, net of unearned income:          
Covered under loss share agreements  184,076  195,060  207,106  221,977  238,777
Not covered under loss share agreements  1,507,422  1,494,232  1,517,547  1,541,633  1,568,312
Less allowance for loan losses  (23,122)  (24,850)  (25,770)  (25,835)  (26,171)
Loans, net  1,672,997  1,667,236  1,705,555  1,742,221  1,782,097
FDIC indemnification asset  40,389  43,921  48,149  50,606  49,155
Property, plant, and equipment, net  64,085  64,812  64,868  62,191  60,829
Other real estate owned:          
Covered under loss share agreements  6,407  6,911  3,255  3,553  5,325
Not covered under loss share agreements  4,743  4,439  5,749  5,957  4,938
Interest receivable  8,010  8,166  7,842  6,038  8,396
Goodwill  104,892  104,689  104,866  104,022  99,402
Intangible assets  3,159  3,344  3,522  3,713  3,903
Other assets  113,149  111,409  105,040  108,143  112,209
Total assets  $ 2,650,735  $ 2,720,291  $ 2,728,867  $ 2,769,650  $ 2,810,321
           
Deposits:          
Noninterest-bearing   $ 349,972  $ 355,918  $ 343,352  $ 335,100  $ 340,895
Interest-bearing   354,862  377,445  353,321  360,061  335,686
Savings  513,781  513,322  500,276  496,740  494,516
Time  770,081  800,812  833,226  872,059  934,110
Total deposits  1,988,696  2,047,497  2,030,175  2,063,960  2,105,207
Interest, taxes, and other liabilities  23,019  26,740  28,816  29,538  22,465
Securities sold under agreements to repurchase  121,204  121,506  136,118  146,904  148,367
FHLB borrowings  150,000  150,000  161,558  161,558  176,653
Other borrowings  15,877  15,877  15,877  15,877  15,918
Total liabilities  2,298,796  2,361,620  2,372,544  2,417,837  2,468,610
           
Preferred stock  15,921  17,421  17,421  17,921  18,921
Common stock  20,447  20,343  20,343  20,309  20,240
Additional paid-in capital  215,139  213,855  213,829  213,320  212,510
Retained earnings  120,273  117,489  113,013  107,055  99,418
Treasury stock, at cost  (7,763)  (7,517)  (6,458)  (5,446)  (5,672)
Accumulated other comprehensive loss  (12,078)  (2,920)  (1,825)  (1,346)  (3,706)
Total stockholders' equity  351,939  358,671  356,323  351,813  341,711
Total liabilities and stockholders' equity  $ 2,650,735  $ 2,720,291  $ 2,728,867  $ 2,769,650  $ 2,810,321
           
Shares outstanding at period end  20,060,862  19,985,212  20,053,466  20,086,404  20,008,181
Book value per common share at period end (1)  $ 16.63  $ 16.93  $ 16.76  $ 16.50  $ 16.03
Tangible book value per common share at period end (2)  $ 11.53  $ 11.83  $ 11.66  $ 11.45  $ 11.19
           
(1) Book value per common share is defined as stockholders' equity divided by as-converted common shares outstanding.
(2) Tangible book value per common share is defined as stockholders' equity less goodwill and other intangibles divided by as-converted common shares outstanding.
 
FIRST COMMUNITY BANCSHARES, INC.
SELECTED CREDIT QUALITY INFORMATION (Unaudited)
           
  As of and for the Quarter Ended
  June 30, March 31, December 31, September 30, June 30,
(Amounts in thousands) 2013 2013 2012 2012 2012
Allowance for Loan Losses           
Beginning balance  $ 24,850  $ 25,770  $ 25,835  $ 26,171  $ 25,800
Provision for loan losses  3,205  1,142  1,220  1,916  1,620
Charge-offs  (5,006)  (2,759)  (1,717)  (2,613)  (1,612)
Recoveries  73  697  432  361  363
Net charge-offs  (4,933)  (2,062)  (1,285)  (2,252)  (1,249)
Ending balance  $ 23,122  $ 24,850  $ 25,770  $ 25,835  $ 26,171
           
Summary of Asset Quality          
Non-covered loans          
Nonaccrual loans   $ 29,125  $ 30,076  $ 23,931  $ 26,514  $ 27,947
Accruing loans past due 90 days or more  --  --  --  --  --
Troubled debt restructurings ("TDRs") (1)  276  1,596  6,009  121  469
Total non-covered nonperforming loans  29,401  31,672  29,940  26,635  28,416
Other real estate owned ("OREO") not covered under FDIC loss share agreements  4,743  4,439  5,749  5,957  4,938
Total non-covered nonperforming assets  $ 34,144  $ 36,111  $ 35,689  $ 32,592  $ 33,354
Covered Loans          
Nonaccrual loans   $ 3,889  $ 4,567  $ 4,323  $ 2,849  $ --
Accruing loans past due 90 days or more  --  --  --  --  --
Total covered nonperforming loans  3,889  4,567  4,323  2,849  --
OREO covered under FDIC loss share agreements  6,407  6,911  3,255  3,553  5,325
Total covered nonperforming assets  10,296  11,478  7,578  6,402  5,325
Total nonperforming assets  $ 44,440  $ 47,589  $ 43,267  $ 38,994  $ 38,679
           
Performing TDRs (2)  $ 10,927  $ 10,272  $ 6,038  $ 6,742  $ 6,995
Total TDRs (3)  $ 11,203  $ 11,868  $ 12,047  $ 6,863  $ 7,464
           
Asset Quality Ratios          
Excluding covered assets           
Nonperforming loans to total loans 1.95% 2.12% 1.97% 1.73% 1.81%
Nonperforming assets to total assets 1.39% 1.43% 1.42% 1.28% 1.30%
Allowance for loan losses to nonperforming loans 78.64% 78.46% 86.07% 97.00% 92.10%
Allowance for loan losses to non-covered total loans 1.53% 1.66% 1.70% 1.68% 1.67%
Annualized net charge-offs to average loans 1.31% 0.56% 0.34% 0.58% 0.38%
Including covered assets          
Nonperforming loans to total loans 1.97% 2.15% 1.99% 1.67% 1.57%
Nonperforming assets to total assets 1.68% 1.75% 1.59% 1.41% 1.38%
Allowance for loan losses to nonperforming loans 69.46% 68.57% 75.21% 87.62% 92.10%
Allowance for loan losses to total loans 1.37% 1.47% 1.49% 1.46% 1.45%
           
           
(1) Accruing TDRs restructured within the past six months
(2) Accruing TDRs with six months or more of satisfactory payment performance
(3) Accruing nonperforming and performing TDRs 
 
FIRST COMMUNITY BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION (Unaudited)
           
  As of and for the Quarter Ended
  June 30, March 31, December 31, September 30, June 30,
  2013 2013 2012 2012 2012
Selected Ratios          
Return on average assets 0.78% 1.03% 1.19% 1.41% 0.65%
Return on average common equity 5.97% 8.11% 9.59% 11.91% 5.00%
Net interest margin 4.07% 4.15% 4.49% 4.48% 3.93%
Non-GAAP efficiency ratio quarter-to-date 60.60% 59.55% 57.43% 52.40% 57.58%
Non-GAAP efficiency ratio year-to-date 60.06% 59.55% 55.96% 55.39% 57.38%
Total equity to total assets  13.28% 13.19% 13.06% 12.70% 12.16%
Average earning assets to average assets 86.72% 86.96% 86.87% 87.02% 87.68%
Average loans to average deposits 84.33% 84.98% 85.71% 87.88% 88.57%
           
(Amounts in thousands)          
Average Balances          
Loans   $ 1,692,248  $ 1,706,296  $ 1,745,584  $ 1,790,489  $ 1,512,451
Investment securities  548,101  545,497  519,798  528,126  490,219
Earning assets  2,323,517  2,350,686  2,376,805  2,408,442  2,069,799
Total assets  2,679,295  2,703,029  2,736,037  2,767,790  2,360,567
Total deposits  2,006,626  2,007,840  2,036,697  2,037,467  1,707,613
Interest-bearing deposits  1,662,446  1,675,654  1,699,991  1,733,987  1,437,548
Borrowings  289,289  309,333  314,645  329,958  303,474
Interest-bearing liabilities  1,951,735  1,984,987  2,014,636  2,063,945  1,741,022
Stockholders' equity  365,217  361,549  356,812  347,637  323,994
Tax equivalent net interest income  23,555  24,057  26,832  27,139  20,206
 
FIRST COMMUNITY BANCSHARES, INC.
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
             
  Three Months Ended June 30,
  2013 2012
  Average    Average Yield/ Average    Average Yield/
(Amounts in thousands) Balance Interest (1) Rate (1) Balance Interest (1) Rate (1)
Assets            
Earning assets            
Loans (2)  $ 1,692,248  $ 24,308 5.76%  $ 1,512,451  $ 20,897 5.56%
Securities available-for-sale  547,411  3,712 2.72%  486,742  3,872 3.20%
Securities held-to-maturity  690  14 8.14%  3,477  63 7.29%
Interest-bearing deposits  83,168  71 0.34%  67,129  72 0.43%
Total earning assets  2,323,517  28,105 4.85%  2,069,799  24,904 4.84%
Other assets   355,778      290,768    
Total assets  $ 2,679,295      $ 2,360,567    
             
Liabilities            
Interest-bearing deposits            
Demand deposits   $ 361,993  $ 59 0.07%  $ 296,647  $ 43 0.06%
Savings deposits   516,375  148 0.11%  421,331  119 0.11%
Time deposits  784,078  2,077 1.06%  719,570  2,198 1.23%
Total interest-bearing deposits  1,662,446  2,284 0.55%  1,437,548  2,360 0.66%
Borrowings            
Federal funds purchased  4  -- 0.00%  --  --  --
Retail repurchase agreements  73,408  100 0.55%  74,651  110 0.59%
Wholesale repurchase agreements  50,000  468 3.75%  54,194  469 3.48%
FHLB advances and other borrowings  165,877  1,698 4.11%  174,629  1,759 4.05%
Total borrowings  289,289  2,266 3.14%  303,474  2,338 3.10%
Total interest-bearing liabilities  1,951,735  4,550 0.93%  1,741,022  4,698 1.09%
Noninterest-bearing demand deposits  344,180      270,065    
Other liabilities  18,163      25,486    
Total liabilities  2,314,078      2,036,573    
Stockholders' equity  365,217      323,994    
Total liabilities and stockholders' equity  $ 2,679,295      $ 2,360,567    
Net interest income, tax equivalent    $ 23,555      $ 20,206  
Net interest rate spread (3)     3.93%     3.75%
Net interest margin(4)     4.07%     3.93%
             
(1) Fully taxable equivalent at the rate of 35% ("FTE"). The FTE basis adjusts for the tax benefits of income on certain tax exempt loans and investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and nontaxable amounts.
(2) Nonaccrual loans are included in average balances outstanding, but with no related interest income during the period of nonaccrual.
(3) Represents the difference between the yield on earning assets and cost of funds.
(4) Represents tax equivalent net interest income divided by average earning assets.
 
FIRST COMMUNITY BANCSHARES, INC.
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
             
  Six Months Ended June 30,
  2013 2012
  Average    Average Yield/ Average    Average Yield/
(Amounts in thousands) Balance Interest (1) Rate (1) Balance Interest (1) Rate (1)
Assets            
Earning assets            
Loans (2)  $ 1,699,196  $ 49,196 5.84%  $ 1,453,348  $ 40,304 5.58%
Securities available-for-sale  546,053  7,440 2.75%  482,550  7,729 3.22%
Securities held-to-maturity  753  30 8.03%  3,357  125 7.49%
Interest-bearing deposits  90,987  138 0.31%  54,827  111 0.41%
Total earning assets  2,336,989  56,804 4.90%  1,994,082  48,269 4.87%
Other assets   354,107      273,203    
Total assets  $ 2,691,096      $ 2,267,285    
             
Liabilities            
Interest-bearing deposits            
Demand deposits   $ 357,858  $ 115 0.06%  $ 289,767  $ 74 0.05%
Savings deposits   511,175  302 0.12%  408,459  229 0.11%
Time deposits  799,980  4,229 1.07%  676,980  4,462 1.33%
Total interest-bearing deposits  1,669,013  4,646 0.56%  1,375,206  4,765 0.70%
Borrowings            
Federal funds purchased  2  -- 0.00%  985  2 0.41%
Retail repurchase agreements  74,573  206 0.56%  73,411  224 0.61%
Wholesale repurchase agreements  53,802  943 3.53%  52,097  938 3.62%
FHLB advances and other borrowings  170,879  3,397 4.01%  170,252  3,474 4.10%
Total borrowings  299,256  4,546 3.06%  296,745  4,638 3.14%
Total interest-bearing liabilities  1,968,269  9,192 0.94%  1,671,951  9,403 1.13%
Noninterest-bearing demand deposits  338,216      254,464    
Other liabilities  21,218      23,476    
Total liabilities  2,327,703      1,949,891    
Stockholders' equity  363,393      317,394    
Total liabilities and stockholders' equity  $ 2,691,096      $ 2,267,285    
Net interest income, tax equivalent    $ 47,612      $ 38,866  
Net interest rate spread (3)     3.96%     3.74%
Net interest margin(4)     4.11%     3.92%
             
(1) Fully taxable equivalent at the rate of 35% ("FTE"). The FTE basis adjusts for the tax benefits of income on certain tax exempt loans and investments using the federal statutory rate of 35% for each period presented. The Company believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and nontaxable amounts.
(2) Nonaccrual loans are included in average balances outstanding, but with no related interest income during the period of nonaccrual.
(3) Represents the difference between the yield on earning assets and cost of funds.
(4) Represents tax equivalent net interest income divided by average earning assets.


            

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