News Column

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

January 30, 2014

BLUEFIELD, Va. , Jan. 30, 2014 (GLOBE NEWSWIRE) -- 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. CONTACT: David D. Brown (276) 326-9000 Source: First Community Bancshares, Inc.


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Source: GlobeNewswire


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