First Community Bancshares, Inc. Announces Second Quarter 2013 Results

First Community Bancshares, Inc. Logo

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.

CONTACT: David D. Brown (276) 326-9000

Source:First Community Bancshares, Inc.