News Column

First Community reports decline in 4Q profit, loan revenue

January 31, 2014

By Richard Craver, Winston-Salem Journal, N.C.

Jan. 31 --A combination of lower fee and loan revenue and branch-closing expenses contributed to a 37.9 percent decline in net income for First Community Bancshares Inc. in the fourth quarter. The bank reported Friday having $5.1 million in profit for the quarter compared with $8.2 million a year ago. It was the second consecutive quarter with an earnings bump in the road for the Bluefield, Va. , bank, which has its North Carolina operational hub and five branches in Forsyth County . Also for the second consecutive quarter, the bank did not provide comment on its performance from William Stafford II , its chairman and chief executive. Revenue from loans fell 13.5 percent to $21.6 million , with its loan-loss provision up 21.7 percent to $1.53 million . The provision is a key measuring stick for a bank's financial health since it directly affects the bottom line. Revenue from fees was down 21.1 percent to $7.27 million , with service-charge fees declining 8.7 percent to $3.49 million and wealth-management income falling 15.1 percent to $732,000 . The bank took a $1.5 million charge related to preparations for closing or consolidating seven of its 71 branches during the first half of 2014. Bank officials could not be reached for comment on whether they are closing a branch in Forsyth , the Triad or Northwest North Carolina . Net charge-offs rose to $1.75 million on Dec. 31 compared with $1.6 million on Sept. 30 and $1.28 million on Dec. 31, 2012 . Nonperforming assets were at $38.8 million on Dec. 31 , $45.1 million on Sept. 30 and $43.3 million on Dec. 31, 2012 . For the full year, First Community had net income of $22.3 million , down 19 percent Tony Plath , a finance professor at UNC Charlotte , said it is understandable why the bank has kept a lower profile since the ouster of long-time chief executive John Mendez in August. Dave Brown , the bank's chief financial officer, said at that time that the board of directors and Mendez had similar strategic goals, "but the paths to get to the goals had started to diverge." " First Community's grown a little messy in the last few years with the acquisitions of troubled Peoples Bank and Waccamaw," Plath said. "The bank's territory is scattered in mostly rural markets stretching all over the Southeast (the Carolinas, Tennessee , Virginia and West Virginia ), and they're still cleaning up the balance sheets at Peoples and Waccamaw to bring the franchise together as a single business." The bank had total assets of $2.6 billion on Dec. 31 , down $50 million from Sept. 30 . First Community said it repurchased 1.4 million shares during the quarter, bringing the total number of shares repurchased in 2013 to 1.74 million. This year, the bank has repurchased 117,500 shares for a combined expenditure of $1.92 million , as of Wednesday. A company typically buys back its share from the marketplace to reduce the number of outstanding shares. Because there are fewer outstanding shares, those remaining in the marketplace can become more valuable. Companies also buy back shares when they believe the shares are undervalued. (336) 727-7376 ___ (c)2014 Winston-Salem Journal (Winston Salem, N.C.) Visit Winston-Salem Journal (Winston Salem, N.C.) at Distributed by MCT Information Services

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Source: Winston-Salem Journal (NC)

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