BLUEFIELD, Va., Oct. 27, 2015 (GLOBE NEWSWIRE) — First Community Bancshares, Inc. (NASDAQ:FCBC) (www.fcbinc.com) (the “Company”) today announced financial results for the quarter and nine months ended September 30, 2015. The Company reported net income of $6.26 million for the quarter and $18.39 million for the nine months ended September 30, 2015. Net income available to common shareholders totaled $6.26 million, or $0.34 per diluted common share, for the quarter and $18.29 million, or $0.97 per diluted common share, for the nine months ended September 30, 2015. Core earnings totaled $6.24 million for the quarter and $18.35 million for the nine months ended September 30, 2015.
The Company also announced today that the Board of Directors declared a quarterly cash dividend to common shareholders of fourteen cents ($0.14) per common share. The quarterly dividend is payable to common shareholders of record on November 6, 2015, and is expected to be paid on or about November 20, 2015. The current year marks the 30th consecutive year of cash dividends paid to stockholders.
Third Quarter 2015 Highlights –
- The third quarter of 2015 marks the 3rd consecutive quarter of growth in linked quarter earnings per share.
- The Company’s non-covered loan portfolio as of September 30, 2015, increased $35.62 million, or 2.28%, compared with June 30, 2015, and increased $33.10 million, or 2.11%, compared with December 31, 2014.
- The Company repurchased 334,319 common shares during the third quarter, bringing total repurchased shares to 1,018,726 during the first nine months of 2015.
- The Company significantly exceeds regulatory “well capitalized” targets as of September 30, 2015.
Net Interest Income
Net interest income decreased $346 thousand, or 1.57%, to $21.67 million for the third quarter of 2015 compared with the same quarter of 2014. The tax equivalent net interest margin decreased to 4.05% for the third quarter of 2015 compared with 4.06% for the same quarter of 2014. Total interest income decreased $1.40 million, or 5.45%, to $24.35 million for the third quarter of 2015 compared with the same quarter of 2014. The tax equivalent yield on loans increased one basis point to 5.28% while the average loan balance decreased $90.98 million, or 5.15%, to $1.68 billion for the third quarter of 2015 compared with the same quarter of 2014. The decrease in net interest income and the average loan balance is primarily due to loans sold in divestiture activities during the fourth quarter of 2014 and decreases in the covered loan portfolio compared to the third quarter of 2014.
Purchased credit impaired (“PCI”) loan interest accretion totaled $8.77 million for the third quarter of 2015, of which $3.33 million was received in cash, compared to accretion income of $8.72 million for the same quarter of 2014, of which $3.21 million was received in cash. The normalized net interest margin, which excludes non-cash loan interest accretion, was 3.59% for the third quarter of 2015 and 3.75% for same quarter of 2014. The normalized yield on loans was 4.84% for the third quarter of 2015 compared to 4.93% for the same quarter of 2014.
Total interest expense decreased $1.06 million, or 28.29%, to $2.68 million for the third quarter of 2015 compared with the same quarter of 2014. Deposit costs decreased $398 thousand, or 22.33%, to $1.38 million for the third quarter of 2015 compared with the same quarter of 2014, reflecting a 9 basis point decrease in the average rate paid on interest-bearing deposits. Borrowing costs decreased $659 thousand, or 33.73%, to $1.30 million for the third quarter of 2015 compared with the same quarter of 2014 primarily due to Federal Home Loan Bank (“FHLB”) debt prepayments. The average rate paid on interest-bearing liabilities decreased 19 basis points to 0.63% for the third quarter of 2015 compared with the same quarter of 2014. The average balance of interest-bearing liabilities decreased $121.94 million, or 6.75%, to $1.69 billion for the third quarter of 2015 compared with the same quarter of 2014, which included a $63.93 million decrease in average interest-bearing deposits and a $58.02 million decrease in average total borrowings.
Noninterest Income
Noninterest income decreased $593 thousand, or 7.73%, to $7.07 million for the third quarter of 2015 compared with the same quarter of 2014, which was largely due to a $672 thousand, or 61.31%, increase in the net amortization expense related to the FDIC indemnification asset as a result of continuing better than expected performance in the covered loan portfolio. Wealth management revenues increased $120 thousand, or 17.91%, for the third quarter of 2015 compared with the same quarter of 2014. The Trust and Wealth Management Divisions reported $710 million in combined assets under management as of September 30, 2015. Service charges on deposits and other service charges and fees increased $260 thousand, or 4.76%, to $5.72 million for the third quarter of 2015 compared with the same quarter of 2014. Insurance commissions decreased $45 thousand, or 2.65%, for the third quarter of 2015 compared with the same quarter of 2014. The Company incurred no other-than-temporary impairment charges during the third quarter of 2015 compared to $219 thousand during the same quarter of 2014 related to a non-Agency mortgage-backed security that was sold during the fourth quarter of 2014. The Company realized a $39 thousand net loss on the sale of securities in the third quarter of 2015 compared to a net gain of $320 thousand in the same quarter of 2014. Other operating income decreased $116 thousand, or 13.83%, for the third quarter of 2015 compared with the same quarter of 2014.
Noninterest Expense
Noninterest expense decreased $2.45 million, or 11.41%, to $19.02 million for the third quarter of 2015 compared with the same quarter of 2014, which was largely due to the absence of FHLB debt prepayment fees. The Company incurred fees of $3.05 million related to the prepayment of FHLB convertible advances during the third quarter of 2014. Salaries and employee benefits increased $47 thousand, or 0.47%, to $9.97 million for the third quarter of 2015 compared with the same quarter of 2014. Full-time equivalent employees totaled 677 as of September 30, 2015, a decrease of 14 employees compared with the same period of the prior year. The decrease was primarily due to branch consolidation and divestiture activities offset by the Bank of America branch acquisition that occurred during the fourth quarter of 2014. Occupancy, furniture, and equipment expenses increased $21 thousand, or 0.78%, to $2.70 million for the third quarter of 2015 compared with the same quarter of 2014. Other operating expenses increased $754 thousand, or 15.28%, to $5.69 million for the third quarter of 2015 compared with the same quarter of 2014, which included a $641 thousand increase in the net loss on sales and expenses associated with other real estate owned (“OREO”). The non-GAAP efficiency ratio for the third quarter of 2015 was 60.26% compared to 58.21% for the same quarter of 2014.
Allowance for Loan Losses and Asset Quality
The allowance for loan losses totaled $20.13 million as of September 30, 2015, a decrease of $100 thousand compared to $20.23 million as of December 31, 2014, and a decrease of $1.03 million compared to $21.16 million as of September 30, 2014. As of September 30, 2015, $20.11 million of the allowance was attributed to the non-PCI loan portfolio and $20 thousand was attributed to the PCI loan portfolio. Non-covered loans and OREO are those assets not covered by FDIC loss share agreements. The allowance for loan losses, excluding PCI loans, as a percentage of non-covered loans was 1.26% as of September 30, 2015, compared with 1.29% as of December 31, 2014, and 1.28% as of September 30, 2014. Allowance activity in the third quarter of 2015 included a $381 thousand provision for loan losses compared to a $2.44 million recovery of loan losses for the same quarter of 2014. Activity in the allowance also included a recovery of loan losses recorded through the FDIC indemnification asset of $75 thousand in the third quarter of 2015, a decrease of $35 thousand compared to the recovery in the third quarter of 2014. The Company realized net charge-offs of $437 thousand in the third quarter of 2015, an increase of $234 thousand compared to $203 thousand in the same quarter of 2014. The ratio of annualized net charge-offs to average non-covered loans was 0.11% for the third quarter of 2015, which represents an increase of 6 basis points compared with 0.05% for the third quarter of 2014.
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 increased to 1.44% as of September 30, 2015, compared to 1.28% for the same period of the prior year. Non-covered nonaccrual loans totaled $17.10 million as of September 30, 2015, compared to $10.56 million as of December 31, 2014, and $11.48 million as of September 30, 2014. At quarter-end, the Company’s non-covered nonaccrual loans as a percentage of total non-covered loans were 1.07%, compared to 0.67% at year-end 2014 and 0.70% for the same period of the prior year. As of September 30, 2015, the Company’s non-covered nonperforming loans as a percentage of total non-covered loans were 1.07% and non-covered nonperforming assets as a percentage of total non-covered assets were 0.93%.
As of September 30, 2015, total nonperforming assets, including the covered and non-covered loan portfolios, consisted of $17.10 million in nonaccrual loans, $3 thousand in accruing loans past due 90 days or more, $74 thousand in unseasoned, accruing troubled debt restructurings, and $5.09 million in OREO. In comparison, total nonperforming assets consisted of $12.99 million in nonaccrual loans, $2.73 million in unseasoned, accruing troubled debt restructurings, and $12.96 million in OREO as of December 31, 2014. In addition, total non-covered nonperforming assets increased $1.72 million, or 8.39%, and total covered nonperforming assets decreased $3.86 million, or 44.07%, as of September 30, 2015, compared to December 31, 2014.
Balance Sheet and Capital
Consolidated assets totaled $2.48 billion as of September 30, 2015, a decrease of $129.82 million, or 4.98%, compared with $2.61 billion as of December 31, 2014. The change in consolidated assets was primarily driven by a $169.76 million, or 86.23%, decrease in federal funds sold as liquidity was used to reduce high cost borrowings and deposits, redeem the Company’s convertible preferred shares and repurchase common stock. As of September 30, 2015, securities available for sale increased $56.10 million and securities held to maturity increased $14.65 million compared to December 31, 2014.
Consolidated liabilities totaled $2.13 billion as of September 30, 2015, a decrease of $123.27 million, or 5.45%, compared with $2.26 billion as of December 31, 2014. The change in consolidated liabilities was driven by a $97.86 million decrease in deposits and a $27.04 million decrease in FHLB and other borrowings. The Company prepaid an additional $25 million of a $50 million FHLB convertible advance with a May 2017 maturity and 4.15% interest rate during the second quarter of 2015. The prepayment resulted in a pre-tax penalty of $1.70 million.
Stockholders’ equity totaled $344.83 million as of September 30, 2015, a decrease of $6.55 million, or 1.86%, compared with $351.37 million as of December 31, 2014. The Company redeemed all outstanding shares of its convertible preferred stock during the first quarter of 2015, resulting in the redemption of 2,367 preferred shares totaling $2.37 million. Additionally, the Company repurchased 1,018,726 common shares at a weighted average cost of $17.13 per share and paid a cash dividend of $0.40 per common share during the first nine months of 2015. Book value per common share increased 4.26% to $18.83 as of September 30, 2015, compared with $18.06 as of December 31, 2014. Tangible book value per common share increased 3.66% to $13.02 as of September 30, 2015, compared with $12.56 as of December 31, 2014.
The Company significantly exceeds regulatory “well capitalized” targets as of September 30, 2015.
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 its 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 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 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 defined as average stockholders’ equity less average goodwill, other intangibles, and the preferred liquidation preference.
The normalized net interest margin and the normalized yield on loans are non-GAAP financial measures that exclude non-cash loan interest accretion related to PCI loans.
About First Community Bancshares, Inc.
First Community Bancshares, Inc., a financial holding company headquartered in Bluefield, Virginia, provides banking products and services through its wholly-owned subsidiary First Community Bank. First Community Bank operated 52 banking locations throughout Virginia, West Virginia, North Carolina, and Tennessee as of September 30, 2015. First Community Bank offers wealth management and investment services through its wholly-owned subsidiary First Community Wealth Management, a registered investment advisory firm, and the Bank’s Trust Division, which collectively managed $710 million in combined assets as of September 30, 2015. The Company provides insurance services through its wholly-owned subsidiary Greenpoint Insurance Group, Inc., a full-service insurance agency headquartered in High Point, North Carolina, that operated 11 insurance locations throughout Virginia, West Virginia, and North Carolina as of September 30, 2015. The Company’s common stock is listed on the NASDAQ Global Select Market under the trading symbol, “FCBC”. The Company reported consolidated assets of $2.48 billion as of September 30, 2015. Additional investor information is available 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 fiscal year end. 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 | Nine Months Ended | ||||||||||||||||||
| September 30, |
September 30, |
||||||||||||||||||
| (Amounts in thousands, except share and per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||||||
| Interest income | |||||||||||||||||||
| Interest and fees on loans held for investment | $ | 22,259 | $ | 23,407 | $ | 65,999 | $ | 69,651 | |||||||||||
| Interest on securities — taxable | 1,062 | 1,196 | 3,167 | 4,830 | |||||||||||||||
| Interest on securities — nontaxable | 994 | 1,108 | 3,013 | 3,329 | |||||||||||||||
| Interest on deposits in banks | 33 | 40 | 246 | 117 | |||||||||||||||
| Total interest income | 24,348 | 25,751 | 72,425 | 77,927 | |||||||||||||||
| Interest expense | |||||||||||||||||||
| Interest on deposits | 1,384 | 1,782 | 4,676 | 5,505 | |||||||||||||||
| Interest on short-term borrowings | 497 | 526 | 1,486 | 1,511 | |||||||||||||||
| Interest on long-term borrowings | 798 | 1,428 | 2,685 | 4,803 | |||||||||||||||
| Total interest expense | 2,679 | 3,736 | 8,847 | 11,819 | |||||||||||||||
| Net interest income | 21,669 | 22,015 | 63,578 | 66,108 | |||||||||||||||
| Provision for (recovery of) loan losses | 381 | (2,439 | ) | 1,757 | 633 | ||||||||||||||
| Net interest income after provision for loan losses | 21,288 | 24,454 | 61,821 | 65,475 | |||||||||||||||
| Noninterest income | |||||||||||||||||||
| Wealth management income | 790 | 670 | 2,231 | 2,396 | |||||||||||||||
| Service charges on deposit accounts | 3,744 | 3,606 | 10,154 | 10,099 | |||||||||||||||
| Other service charges and fees | 1,974 | 1,852 | 5,987 | 5,473 | |||||||||||||||
| Insurance commissions | 1,650 | 1,695 | 5,336 | 5,113 | |||||||||||||||
| Net impairment losses recognized in earnings | – | (219 | ) | – | (737 | ) | |||||||||||||
| Net (loss) gain on sale of securities | (39 | ) | 320 | 151 | 306 | ||||||||||||||
| Net FDIC indemnification asset amortization | (1,768 | ) | (1,096 | ) | (5,179 | ) | (3,166 | ) | |||||||||||
| Other operating income | 723 | 839 | 3,367 | 3,021 | |||||||||||||||
| Total noninterest income | 7,074 | 7,667 | 22,047 | 22,505 | |||||||||||||||
| Noninterest expense | |||||||||||||||||||
| Salaries and employee benefits | 9,971 | 9,924 | 29,357 | 29,872 | |||||||||||||||
| Occupancy expense of bank premises | 1,443 | 1,469 | 4,404 | 4,825 | |||||||||||||||
| Furniture and equipment | 1,259 | 1,212 | 3,854 | 3,611 | |||||||||||||||
| Amortization of intangible assets | 281 | 179 | 837 | 532 | |||||||||||||||
| FDIC premiums and assessments | 377 | 419 | 1,181 | 1,311 | |||||||||||||||
| FHLB debt prepayment fees | – | 3,047 | 1,702 | 3,047 | |||||||||||||||
| Merger, acquisition, and divestiture expense | – | 285 | 86 | 285 | |||||||||||||||
| Other operating expense | 5,688 | 4,934 | 15,667 | 15,329 | |||||||||||||||
| Total noninterest expense | 19,019 | 21,469 | 57,088 | 58,812 | |||||||||||||||
| Income before income taxes | 9,343 | 10,652 | 26,780 | 29,168 | |||||||||||||||
| Income tax expense | 3,084 | 3,609 | 8,388 | 9,393 | |||||||||||||||
| Net income | 6,259 | 7,043 | 18,392 | 19,775 | |||||||||||||||
| Dividends on preferred stock | – | 228 | 105 | 683 | |||||||||||||||
| Net income available to common shareholders | $ | 6,259 | $ | 6,815 | $ | 18,287 | $ | 19,092 | |||||||||||
| Basic earnings per common share | $ | 0.34 | $ | 0.37 | $ | 0.98 | $ | 1.04 | |||||||||||
| Diluted earnings per common share | 0.34 | 0.36 | 0.97 | 1.02 | |||||||||||||||
| Cash dividends per common share | 0.14 | 0.13 | 0.40 | 0.37 | |||||||||||||||
| Weighted average basic shares outstanding | 18,470,348 | 18,402,764 | 18,644,679 | 18,407,173 | |||||||||||||||
| Weighted average diluted shares outstanding | 18,500,975 | 19,466,126 | 18,895,909 | 19,472,136 | |||||||||||||||
| Return on average assets | 1.00 | % | 1.06 | % | 0.96 | % | 0.99 | % | |||||||||||
| Return on average common equity | 7.18 | % | 8.15 | % | 7.07 | % | 7.86 | % | |||||||||||
| FIRST COMMUNITY BANCSHARES, INC. | |||||||||||||||||||||
| CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited) | |||||||||||||||||||||
| Quarter Ended | |||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
| (Amounts in thousands, except share and per share data) | 2015 | 2015 | 2015 | 2014 | 2014 | ||||||||||||||||
| Interest Income | |||||||||||||||||||||
| Interest and fees on loans held for investment | $ | 22,259 | $ | 21,826 | $ | 21,914 | $ | 25,841 | $ | 23,407 | |||||||||||
| Interest on securities — taxable | 1,062 | 1,070 | 1,035 | 1,145 | 1,196 | ||||||||||||||||
| Interest on securities — nontaxable | 994 | 1,003 | 1,016 | 1,021 | 1,108 | ||||||||||||||||
| Interest on deposits in banks | 33 | 80 | 133 | 174 | 40 | ||||||||||||||||
| Total interest income | 24,348 | 23,979 | 24,098 | 28,181 | 25,751 | ||||||||||||||||
| Interest Expense | |||||||||||||||||||||
| Interest on deposits | 1,384 | 1,562 | 1,730 | 1,803 | 1,782 | ||||||||||||||||
| Interest on short-term borrowings | 497 | 499 | 490 | 513 | 526 | ||||||||||||||||
| Interest on long-term borrowings | 798 | 848 | 1,039 | 1,155 | 1,428 | ||||||||||||||||
| Total interest expense | 2,679 | 2,909 | 3,259 | 3,471 | 3,736 | ||||||||||||||||
| Net interest income | 21,669 | 21,070 | 20,839 | 24,710 | 22,015 | ||||||||||||||||
| Provision for (recovery of) loan losses | 381 | 276 | 1,100 | (488 | ) | (2,439 | ) | ||||||||||||||
| Net interest income after provision for loan losses | 21,288 | 20,794 | 19,739 | 25,198 | 24,454 | ||||||||||||||||
| Noninterest Income | |||||||||||||||||||||
| Wealth management income | 790 | 775 | 666 | 634 | 670 | ||||||||||||||||
| Service charges on deposit accounts | 3,744 | 3,507 | 2,903 | 3,729 | 3,606 | ||||||||||||||||
| Other service charges and fees | 1,974 | 2,005 | 2,008 | 2,108 | 1,852 | ||||||||||||||||
| Insurance commissions | 1,650 | 1,559 | 2,127 | 1,442 | 1,695 | ||||||||||||||||
| Net impairment losses recognized in earnings | – | – | – | – | (219 | ) | |||||||||||||||
| Net (loss) gain on sale of securities | (39 | ) | 213 | (23 | ) | (1,691 | ) | 320 | |||||||||||||
| Net FDIC indemnification asset amortization | (1,768 | ) | (1,846 | ) | (1,565 | ) | (813 | ) | (1,096 | ) | |||||||||||
| Net gain on branch divestiture | – | – | – | 755 | – | ||||||||||||||||
| Other operating income | 723 | 1,924 | 720 | 1,334 | 839 | ||||||||||||||||
| Total noninterest income | 7,074 | 8,137 | 6,836 | 7,498 | 7,667 | ||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||
| Salaries and employee benefits | 9,971 | 9,693 | 9,693 | 10,841 | 9,924 | ||||||||||||||||
| Occupancy expense of bank premises | 1,443 | 1,427 | 1,534 | 1,513 | 1,469 | ||||||||||||||||
| Furniture and equipment | 1,259 | 1,358 | 1,237 | 1,341 | 1,212 | ||||||||||||||||
| Amortization of intangible assets | 281 | 279 | 277 | 255 | 179 | ||||||||||||||||
| FDIC premiums and assessments | 377 | 389 | 415 | 361 | 419 | ||||||||||||||||
| FHLB debt prepayment fees | – | 1,702 | – | 1,961 | 3,047 | ||||||||||||||||
| Merger, acquisition, and divestiture expense | – | – | 86 | 865 | 285 | ||||||||||||||||
| Other operating expense | 5,688 | 5,441 | 4,538 | 6,913 | 4,934 | ||||||||||||||||
| Total noninterest expense | 19,019 | 20,289 | 17,780 | 24,050 | 21,469 | ||||||||||||||||
| Income before income taxes | 9,343 | 8,642 | 8,795 | 8,646 | 10,652 | ||||||||||||||||
| Income tax expense | 3,084 | 2,467 | 2,837 | 2,931 | 3,609 | ||||||||||||||||
| Net income | 6,259 | 6,175 | 5,958 | 5,715 | 7,043 | ||||||||||||||||
| Dividends on preferred stock | – | – | 105 | 227 | 228 | ||||||||||||||||
| Net income available to common shareholders | $ | 6,259 | $ | 6,175 | $ | 5,853 | $ | 5,488 | $ | 6,815 | |||||||||||
| Basic earnings per common share | $ | 0.34 | $ | 0.33 | $ | 0.31 | $ | 0.30 | $ | 0.37 | |||||||||||
| Diluted earnings per common share | 0.34 | 0.33 | 0.31 | 0.29 | 0.36 | ||||||||||||||||
| Cash dividends per common share | 0.14 | 0.13 | 0.13 | 0.13 | 0.13 | ||||||||||||||||
| Weighted average basic shares outstanding | 18,470,348 | 18,831,742 | 18,633,574 | 18,403,959 | 18,402,764 | ||||||||||||||||
| Weighted average diluted shares outstanding | 18,500,975 | 18,860,119 | 19,344,443 | 19,482,000 | 19,466,126 | ||||||||||||||||
| FIRST COMMUNITY BANCSHARES, INC. | ||||||||||||||||||||
| RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| 2015 | 2015 | 2015 | 2014 | 2014 | ||||||||||||||||
| (Amounts in thousands, except per share data) | ||||||||||||||||||||
| Net income, GAAP | $ | 6,259 | $ | 6,175 | $ | 5,958 | $ | 5,715 | $ | 7,043 | ||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Net impairment losses recognized in earnings | – | – | – | – | 219 | |||||||||||||||
| Net loss (gain) on sale of securities | 39 | (213 | ) | 23 | 1,691 | (320 | ) | |||||||||||||
| Net gain on branch divestiture | – | – | – | (755 | ) | – | ||||||||||||||
| FHLB debt prepayment fees | – | 1,702 | – | 1,961 | 3,047 | |||||||||||||||
| Merger, acquisition, and divestiture expense | – | – | 86 | 865 | 285 | |||||||||||||||
| Other noncore, nonrecurring items | (75 | ) | (930 | ) | (30 | ) | 1,173 | – | ||||||||||||
| Total adjustments to core earnings | (36 | ) | 559 | 79 | 4,935 | 3,231 | ||||||||||||||
| Tax effect | (13 | ) | 630 | 29 | 1,859 | 1,217 | ||||||||||||||
| Core earnings, non-GAAP | $ | 6,236 | $ | 6,104 | $ | 6,008 | $ | 8,791 | $ | 9,057 | ||||||||||
| Core return on average assets | 1.00 | % | 0.96 | % | 0.94 | % | 1.28 | % | 1.41 | % | ||||||||||
| Core return on average common equity | 7.16 | % | 7.00 | % | 7.09 | % | 10.39 | % | 10.83 | % | ||||||||||
| Core return on average tangible common equity | 10.34 | % | 10.07 | % | 10.31 | % | 15.50 | % | 16.06 | % | ||||||||||
| Core diluted earnings per common share | $ | 0.34 | $ | 0.32 | $ | 0.31 | $ | 0.45 | $ | 0.47 | ||||||||||
| Nine Months Ended | ||||||||||||||||||||
| September 30, | ||||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||||
| (Amounts in thousands, except per share data) | ||||||||||||||||||||
| Net income, GAAP | $ | 18,392 | $ | 19,775 | ||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||
| Net impairment losses recognized in earnings | – | 737 | ||||||||||||||||||
| Net gain on sale of securities | (151 | ) | (306 | ) | ||||||||||||||||
| FHLB debt prepayment fees | 1,702 | 3,047 | ||||||||||||||||||
| Merger, acquisition, and divestiture expense | 86 | 285 | ||||||||||||||||||
| Other noncore, nonrecurring items | (1,035 | ) | (536 | ) | ||||||||||||||||
| Total adjustments to core earnings | 602 | 3,227 | ||||||||||||||||||
| Tax effect | 646 | 1,215 | ||||||||||||||||||
| Core earnings, non-GAAP | $ | 18,348 | $ | 21,787 | ||||||||||||||||
| Core return on average assets | 0.97 | % | 1.13 | % | ||||||||||||||||
| Core return on average common equity | 7.09 | % | 8.97 | % | ||||||||||||||||
| Core return on average tangible common equity | 10.26 | % | 13.45 | % | ||||||||||||||||
| Core diluted earnings per common share | $ | 0.97 | $ | 1.12 | ||||||||||||||||
| FIRST COMMUNITY BANCSHARES, INC. | |||||||||||||||||||||
| EFFICIENCY RATIO CALCULATION (Unaudited) | |||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
| 2015 | 2015 | 2015 | 2014 | 2014 | |||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||
| Noninterest expense, GAAP | $ | 18,600 | $ | 20,289 | $ | 17,780 | $ | 24,050 | $ | 21,469 | |||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||
| FHLB debt prepayment fees | – | (1,702 | ) | – | (1,961 | ) | (3,047 | ) | |||||||||||||
| Merger, acquisition, and divestiture expense | – | – | (86 | ) | (865 | ) | (285 | ) | |||||||||||||
| OREO expense and net loss | (1,220 | ) | (416 | ) | (327 | ) | (403 | ) | (580 | ) | |||||||||||
| Other noncore, nonrecurring items | 15 | (213 | ) | – | (1,573 | ) | – | ||||||||||||||
| Adjusted noninterest expense | 17,395 | 17,958 | 17,367 | 19,248 | 17,557 | ||||||||||||||||
| Net interest income, GAAP | 21,669 | 21,070 | 20,839 | 24,710 | 22,015 | ||||||||||||||||
| Noninterest income, GAAP | 6,655 | 8,137 | 6,836 | 7,498 | 7,667 | ||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||
| Tax equivalency adjustment | 565 | 1,249 | 588 | 613 | 582 | ||||||||||||||||
| Net impairment losses recognized in earnings | – | – | – | – | 219 | ||||||||||||||||
| Net loss (gain) on sale of securities | 39 | (213 | ) | 23 | 1,691 | (320 | ) | ||||||||||||||
| Net gain on branch divestiture | – | – | – | (755 | ) | – | |||||||||||||||
| Other noncore, nonrecurring items | (60 | ) | (1,143 | ) | (30 | ) | (400 | ) | – | ||||||||||||
| Adjusted net interest and noninterest income | 28,868 | 29,100 | 28,256 | 33,357 | 30,163 | ||||||||||||||||
| Non-GAAP efficiency ratio | 60.26 | % | 61.71 | % | 61.46 | % | 57.70 | % | 58.21 | % | |||||||||||
| GAAP efficiency ratio | 65.67 | % | 69.47 | % | 64.25 | % | 74.67 | % | 72.33 | % | |||||||||||
| Nine Months Ended | |||||||||||||||||||||
| September 30, | |||||||||||||||||||||
| 2015 | 2014 | ||||||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||
| Noninterest expense, GAAP | $ | 56,669 | $ | 58,812 | |||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||
| FHLB debt prepayment fees | (1,702 | ) | (3,047 | ) | |||||||||||||||||
| Merger, acquisition, and divestiture expense | (86 | ) | (1,691 | ) | |||||||||||||||||
| OREO expense and net loss | (1,963 | ) | (285 | ) | |||||||||||||||||
| Other noncore, nonrecurring items | (198 | ) | – | ||||||||||||||||||
| Adjusted noninterest expense | 52,720 | 53,789 | |||||||||||||||||||
| Net interest income, GAAP | 63,578 | 66,108 | |||||||||||||||||||
| Noninterest income, GAAP | 21,628 | 22,505 | |||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||
| Tax equivalency adjustment | 2,402 | 1,943 | |||||||||||||||||||
| Net impairment losses recognized in earnings | – | 737 | |||||||||||||||||||
| Net gain on sale of securities | (151 | ) | (306 | ) | |||||||||||||||||
| Other noncore, nonrecurring items | (1,233 | ) | (536 | ) | |||||||||||||||||
| Adjusted net interest and noninterest income | 86,224 | 90,451 | |||||||||||||||||||
| Non-GAAP efficiency ratio | 61.14 | % | 59.47 | % | |||||||||||||||||
| GAAP efficiency ratio | 66.51 | % | 66.37 | % | |||||||||||||||||
| FIRST COMMUNITY BANCSHARES, INC. | |||||||||||||||||||||
| CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) | |||||||||||||||||||||
| As of the Quarter Ended | |||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
| 2015 | 2015 | 2015 | 2014 | 2014 | |||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||
| Cash and due from banks | $ | 33,555 | $ | 38,200 | $ | 36,222 | $ | 39,450 | $ | 44,703 | |||||||||||
| Federal funds sold | 27,118 | 53,023 | 169,422 | 196,873 | 55,503 | ||||||||||||||||
| Interest-bearing deposits in banks | 1,351 | 1,379 | 1,380 | 1,337 | 5,716 | ||||||||||||||||
| Total cash and cash equivalents | 62,024 | 92,602 | 207,024 | 237,660 | 105,922 | ||||||||||||||||
| Securities available for sale | 382,212 | 376,191 | 351,454 | 326,117 | 351,693 | ||||||||||||||||
| Securities held to maturity | 72,596 | 72,652 | 72,897 | 57,948 | 31,029 | ||||||||||||||||
| Loans held for sale | 523 | 913 | 1,174 | 1,792 | 1,150 | ||||||||||||||||
| Loans held for investment, net of unearned income: | |||||||||||||||||||||
| Covered under loss share agreements | 90,203 | 102,634 | 112,724 | 122,240 | 126,611 | ||||||||||||||||
| Not covered under loss share agreements | 1,600,271 | 1,564,655 | 1,558,310 | 1,567,176 | 1,636,181 | ||||||||||||||||
| Less allowance for loan losses | (20,127 | ) | (20,258 | ) | (20,252 | ) | (20,227 | ) | (21,159 | ) | |||||||||||
| Loans, net | 1,670,870 | 1,647,944 | 1,651,956 | 1,670,981 | 1,742,783 | ||||||||||||||||
| FDIC indemnification asset | 22,049 | 23,653 | 26,053 | 27,900 | 29,745 | ||||||||||||||||
| Property, plant, and equipment, net | 53,442 | 54,112 | 54,955 | 55,844 | 59,283 | ||||||||||||||||
| Other real estate owned: | |||||||||||||||||||||
| Covered under loss share agreements | 4,079 | 5,382 | 5,834 | 6,324 | 7,620 | ||||||||||||||||
| Not covered under loss share agreements | 5,088 | 7,434 | 7,032 | 6,638 | 5,612 | ||||||||||||||||
| Interest receivable | 5,910 | 6,119 | 6,188 | 6,315 | 6,346 | ||||||||||||||||
| Goodwill | 100,810 | 100,810 | 100,810 | 100,722 | 105,657 | ||||||||||||||||
| Intangible assets | 5,583 | 5,865 | 6,144 | 6,422 | 2,334 | ||||||||||||||||
| Other assets | 93,453 | 99,034 | 95,497 | 105,065 | 102,103 | ||||||||||||||||
| Total assets | $ | 2,478,116 | $ | 2,491,798 | $ | 2,585,844 | $ | 2,607,936 | $ | 2,550,127 | |||||||||||
| Deposits: | |||||||||||||||||||||
| Noninterest-bearing demand | $ | 442,021 | $ | 424,438 | $ | 433,422 | $ | 417,729 | $ | 397,523 | |||||||||||
| Interest-bearing demand | 343,303 | 329,583 | 341,300 | 353,874 | 347,589 | ||||||||||||||||
| Savings | 526,627 | 528,003 | 533,589 | 525,478 | 519,902 | ||||||||||||||||
| Time | 590,951 | 638,197 | 682,878 | 703,678 | 667,261 | ||||||||||||||||
| Total deposits | 1,902,902 | 1,920,221 | 1,991,189 | 2,000,759 | 1,932,275 | ||||||||||||||||
| Interest, taxes, and other liabilities | 25,356 | 23,852 | 24,203 | 26,062 | 25,131 | ||||||||||||||||
| Securities sold under agreements to repurchase | 124,076 | 122,158 | 116,302 | 121,742 | 114,439 | ||||||||||||||||
| FHLB borrowings | 65,000 | 65,000 | 90,000 | 90,000 | 115,000 | ||||||||||||||||
| Other borrowings | 15,955 | 15,999 | 15,999 | 17,999 | 16,047 | ||||||||||||||||
| Total liabilities | 2,133,289 | 2,147,230 | 2,237,693 | 2,256,562 | 2,202,892 | ||||||||||||||||
| Preferred stock | – | – | – | 15,151 | 15,151 | ||||||||||||||||
| Common stock | 21,382 | 21,382 | 21,382 | 20,500 | 20,500 | ||||||||||||||||
| Additional paid-in capital | 227,621 | 227,616 | 227,782 | 215,873 | 215,729 | ||||||||||||||||
| Retained earnings | 152,046 | 148,378 | 144,656 | 141,206 | 138,111 | ||||||||||||||||
| Treasury stock, at cost | (52,484 | ) | (46,610 | ) | (41,078 | ) | (35,751 | ) | (35,808 | ) | |||||||||||
| Accumulated other comprehensive loss | (3,738 | ) | (6,198 | ) | (4,591 | ) | (5,605 | ) | (6,448 | ) | |||||||||||
| Total stockholders’ equity | 344,827 | 344,568 | 348,151 | 351,374 | 347,235 | ||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,478,116 | $ | 2,491,798 | $ | 2,585,844 | $ | 2,607,936 | $ | 2,550,127 | |||||||||||
| Shares outstanding at period-end | 18,313,425 | 18,641,966 | 18,965,274 | 18,406,219 | 18,402,919 | ||||||||||||||||
| Book value per common share at period-end(1) | $ | 18.83 | $ | 18.48 | $ | 18.36 | $ | 18.06 | $ | 17.85 | |||||||||||
| Tangible book value per common share | |||||||||||||||||||||
| at period-end(2) | $ | 13.02 | $ | 12.76 | $ | 12.72 | $ | 12.56 | $ | 12.30 | |||||||||||
| (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 | ||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
| (Amounts in thousands) | 2015 | 2015 | 2015 | 2014 | 2014 | |||||||||||||||
| Allowance for Loan Losses | ||||||||||||||||||||
| Beginning balance | $ | 20,258 | $ | 20,252 | $ | 20,227 | $ | 21,159 | $ | 23,911 | ||||||||||
| Removal of loans transferred | – | – | – | (682 | ) | – | ||||||||||||||
| Provision for (recovery of) loan losses charged | ||||||||||||||||||||
| to operations | 381 | 276 | 1,100 | (488 | ) | (2,439 | ) | |||||||||||||
| (Recovery of) provision for loan losses recorded | ||||||||||||||||||||
| through the FDIC indemnification asset | (75 | ) | – | 46 | 29 | (110 | ) | |||||||||||||
| Charge-offs | (689 | ) | (673 | ) | (1,578 | ) | (1,362 | ) | (1,118 | ) | ||||||||||
| Recoveries | 252 | 403 | 457 | 1,571 | 915 | |||||||||||||||
| Net (charge-offs) recoveries | (437 | ) | (270 | ) | (1,121 | ) | 209 | (203 | ) | |||||||||||
| Ending balance | $ | 20,127 | $ | 20,258 | $ | 20,252 | $ | 20,227 | $ | 21,159 | ||||||||||
| Summary of Asset Quality | ||||||||||||||||||||
| Non-covered nonperforming | ||||||||||||||||||||
| Nonaccrual loans | $ | 17,100 | $ | 15,936 | $ | 15,387 | $ | 10,556 | $ | 11,480 | ||||||||||
| Accruing loans past due 90 days or more | 3 | – | – | – | – | |||||||||||||||
| Troubled debt restructurings (“TDRs”)(1) | 74 | – | – | 2,726 | 3,450 | |||||||||||||||
| Total non-covered nonperforming loans | 17,177 | 15,936 | 15,387 | 13,282 | 14,930 | |||||||||||||||
| OREO not covered under FDIC loss share agreements | 5,088 | 7,434 | 7,032 | 6,638 | 5,612 | |||||||||||||||
| Total non-covered nonperforming assets | $ | 22,265 | $ | 23,370 | $ | 22,419 | $ | 19,920 | $ | 20,542 | ||||||||||
| Covered nonperforming | ||||||||||||||||||||
| Nonaccrual loans | $ | 815 | $ | 1,062 | $ | 2,780 | $ | 2,438 | $ | 1,131 | ||||||||||
| Accruing loans past due 90 days or more | – | – | 60 | – | – | |||||||||||||||
| Total covered nonperforming loans | 815 | 1,062 | 2,840 | 2,438 | 1,131 | |||||||||||||||
| OREO covered under FDIC loss share agreements | 4,079 | 5,382 | 5,834 | 6,324 | 7,620 | |||||||||||||||
| Total covered nonperforming assets | $ | 4,894 | $ | 6,444 | $ | 8,674 | $ | 8,762 | $ | 8,751 | ||||||||||
| Additional Information | ||||||||||||||||||||
| Performing TDRs(2) | $ | 13,965 | $ | 13,841 | $ | 14,025 | $ | 11,808 | $ | 11,701 | ||||||||||
| Total TDRs(3) | 14,039 | 13,841 | 14,025 | 14,534 | 15,151 | |||||||||||||||
| Asset Quality Ratios | ||||||||||||||||||||
| Non-covered | ||||||||||||||||||||
| Nonperforming loans to total loans | 1.07 | % | 1.02 | % | 0.99 | % | 0.85 | % | 0.91 | % | ||||||||||
| Nonperforming assets to total assets | 0.93 | % | 0.98 | % | 0.91 | % | 0.80 | % | 0.85 | % | ||||||||||
| Non-PCI allowance to nonperforming loans | 117.06 | % | 126.41 | % | 130.88 | % | 151.85 | % | 140.35 | % | ||||||||||
| Non-PCI allowance to total loans | 1.26 | % | 1.29 | % | 1.29 | % | 1.29 | % | 1.28 | % | ||||||||||
| Annualized net charge-offs to average loans | 0.11 | % | 0.07 | % | 0.29 | % | NM | 0.05 | % | |||||||||||
| Non-covered and covered | ||||||||||||||||||||
| Nonperforming loans to total loans | 1.06 | % | 1.02 | % | 1.09 | % | 0.93 | % | 0.91 | % | ||||||||||
| Nonperforming assets to total assets | 1.10 | % | 1.20 | % | 1.20 | % | 1.10 | % | 1.15 | % | ||||||||||
| Nonperforming assets to total loans and OREO | 1.60 | % | 1.77 | % | 1.85 | % | 1.68 | % | 1.65 | % | ||||||||||
| Allowance for loan losses to nonperforming loans | 111.87 | % | 119.18 | % | 111.11 | % | 128.67 | % | 131.74 | % | ||||||||||
| Allowance for loan losses to total loans | 1.19 | % | 1.22 | % | 1.21 | % | 1.20 | % | 1.20 | % | ||||||||||
| (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. | ||||||||||||||||||||||||
| AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||||||||
| Average | Average Yield/ | Average | Average Yield/ | |||||||||||||||||||||
| (Amounts in thousands) | Balance | Interest(1) | Rate(1) | Balance | Interest(1) | Rate(1) | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||
| Loans(2) | $ | 1,675,787 | $ | 22,291 | 5.28 | % | $ | 1,766,769 | $ | 23,460 | 5.27 | % | ||||||||||||
| Securities available-for-sale | 382,099 | 2,394 | 2.49 | % | 376,778 | 2,811 | 2.96 | % | ||||||||||||||||
| Securities held-to-maturity | 72,624 | 195 | 1.07 | % | 24,189 | 73 | 1.20 | % | ||||||||||||||||
| Interest-bearing deposits | 48,750 | 33 | 0.27 | % | 45,826 | 40 | 0.35 | % | ||||||||||||||||
| Total earning assets | 2,179,260 | 24,913 | 4.53 | % | 2,213,562 | 26,384 | 4.73 | % | ||||||||||||||||
| Other assets | 305,331 | 331,771 | ||||||||||||||||||||||
| Total assets | $ | 2,484,591 | $ | 2,545,333 | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||
| Demand deposits | $ | 335,831 | $ | 52 | 0.06 | % | $ | 349,013 | $ | 49 | 0.06 | % | ||||||||||||
| Savings deposits | 532,445 | 83 | 0.06 | % | 521,334 | 121 | 0.09 | % | ||||||||||||||||
| Time deposits | 613,598 | 1,249 | 0.81 | % | 675,454 | 1,612 | 0.95 | % | ||||||||||||||||
| Total interest-bearing deposits | 1,481,874 | 1,384 | 0.37 | % | 1,545,801 | 1,782 | 0.46 | % | ||||||||||||||||
| Borrowings | ||||||||||||||||||||||||
| Federal funds purchased | 7 | – | 0.00 | % | 69 | – | 0.00 | % | ||||||||||||||||
| Retail repurchase agreements | 72,740 | 16 | 0.09 | % | 69,565 | 23 | 0.13 | % | ||||||||||||||||
| Wholesale repurchase agreements | 50,000 | 473 | 3.75 | % | 50,000 | 474 | 3.76 | % | ||||||||||||||||
| FHLB advances and other borrowings | 80,985 | 806 | 3.95 | % | 142,115 | 1,457 | 4.07 | % | ||||||||||||||||
| Total borrowings | 203,732 | 1,295 | 2.52 | % | 261,749 | 1,954 | 2.96 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,685,606 | 2,679 | 0.63 | % | 1,807,550 | 3,736 | 0.82 | % | ||||||||||||||||
| Noninterest-bearing demand deposits | 433,164 | 371,877 | ||||||||||||||||||||||
| Other liabilities | 20,028 | 18,888 | ||||||||||||||||||||||
| Total liabilities | 2,138,798 | 2,198,315 | ||||||||||||||||||||||
| Stockholders’ equity | 345,793 | 347,018 | ||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,484,591 | $ | 2,545,333 | ||||||||||||||||||||
| Net interest income, FTE | $ | 22,234 | $ | 22,648 | ||||||||||||||||||||
| Net interest rate spread | 3.90 | % | 3.91 | % | ||||||||||||||||||||
| Net interest margin | 4.05 | % | 4.06 | % | ||||||||||||||||||||
| (1) Fully taxable equivalent (“FTE”) basis based on the federal statutory rate of 35% | ||||||||||||||||||||||||
| (2) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual. | ||||||||||||||||||||||||
| FIRST COMMUNITY BANCSHARES, INC. | ||||||||||||||||||||||||
| AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) | ||||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||||||||
| Average | Average Yield/ | Average | Average Yield/ | |||||||||||||||||||||
| (Amounts in thousands) | Balance | Interest(1) | Rate(1) | Balance | Interest(1) | Rate(1) | ||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||
| Loans(2) | $ | 1,675,118 | $ | 66,107 | 5.28 | % | $ | 1,744,422 | $ | 69,818 | 5.35 | % | ||||||||||||
| Securities available-for-sale | 358,690 | 7,225 | 2.69 | % | 434,462 | 9,808 | 3.02 | % | ||||||||||||||||
| Securities held-to-maturity | 70,454 | 577 | 1.09 | % | 12,858 | 127 | 1.32 | % | ||||||||||||||||
| Interest-bearing deposits | 125,295 | 246 | 0.26 | % | 40,587 | 117 | 0.39 | % | ||||||||||||||||
| Total earning assets | 2,229,557 | 74,155 | 4.45 | % | 2,232,329 | 79,870 | 4.78 | % | ||||||||||||||||
| Other assets | 311,825 | 337,298 | ||||||||||||||||||||||
| Total assets | $ | 2,541,382 | $ | 2,569,627 | ||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||
| Demand deposits | $ | 342,639 | $ | 156 | 0.06 | % | $ | 363,780 | $ | 154 | 0.06 | % | ||||||||||||
| Savings deposits | 532,641 | 289 | 0.07 | % | 525,269 | 387 | 0.10 | % | ||||||||||||||||
| Time deposits | 655,314 | 4,231 | 0.86 | % | 695,585 | 4,964 | 0.95 | % | ||||||||||||||||
| Total interest-bearing deposits | 1,530,594 | 4,676 | 0.41 | % | 1,584,634 | 5,505 | 0.46 | % | ||||||||||||||||
| Borrowings | ||||||||||||||||||||||||
| Federal funds purchased | 2 | – | 0.00 | % | 1,192 | 3 | 0.34 | % | ||||||||||||||||
| Retail repurchase agreements | 70,325 | 53 | 0.10 | % | 73,669 | 74 | 0.13 | % | ||||||||||||||||
| Wholesale repurchase agreements | 50,000 | 1,405 | 3.76 | % | 50,000 | 1,405 | 3.76 | % | ||||||||||||||||
| FHLB advances and other borrowings | 91,305 | 2,713 | 3.97 | % | 158,009 | 4,832 | 4.09 | % | ||||||||||||||||
| Total borrowings | 211,632 | 4,171 | 2.64 | % | 282,870 | 6,314 | 2.98 | % | ||||||||||||||||
| Total interest-bearing liabilities | 1,742,226 | 8,847 | 0.68 | % | 1,867,504 | 11,819 | 0.85 | % | ||||||||||||||||
| Noninterest-bearing demand deposits | 429,661 | 343,568 | ||||||||||||||||||||||
| Other liabilities | 20,472 | 18,758 | ||||||||||||||||||||||
| Total liabilities | 2,192,359 | 2,229,830 | ||||||||||||||||||||||
| Stockholders’ equity | 349,023 | 339,797 | ||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,541,382 | $ | 2,569,627 | ||||||||||||||||||||
| Net interest income, FTE | $ | 65,308 | $ | 68,051 | ||||||||||||||||||||
| Net interest rate spread | 3.77 | % | 3.93 | % | ||||||||||||||||||||
| Net interest margin | 3.92 | % | 4.08 | % | ||||||||||||||||||||
| (1) FTE basis based on the federal statutory rate of 35% | ||||||||||||||||||||||||
| (2) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual. | ||||||||||||||||||||||||
| FIRST COMMUNITY BANCSHARES, INC. | ||||||||||||||||
| RECONCILIATION OF GAAP NET INTEREST MARGIN TO NORMALIZED NET INTEREST MARGIN (Unaudited) | ||||||||||||||||
| Three Months Ended September 30, | ||||||||||||||||
| 2015 | 2014 | |||||||||||||||
| Average Yield/ | Average Yield/ | |||||||||||||||
| (Amounts in thousands) | Interest(1) | Rate(1) | Interest(1) | Rate(1) | ||||||||||||
| Earning assets | ||||||||||||||||
| Loans(2) | $ | 22,291 | 5.28 | % | $ | 23,460 | 5.27 | % | ||||||||
| Accretion income | 2,930 | 2,813 | ||||||||||||||
| Less: cash accretion income | 903 | 1,367 | ||||||||||||||
| Non-cash accretion income | 2,027 | 1,446 | ||||||||||||||
| Loans, excluding non-cash accretion income | 20,264 | 4.80 | % | 22,014 | 4.94 | % | ||||||||||
| Other earning assets | 2,622 | 2.07 | % | 2,924 | 2.60 | % | ||||||||||
| Total earning assets | 22,886 | 4.17 | % | 24,938 | 4.47 | % | ||||||||||
| Total interest-bearing liabilities | 2,679 | 0.63 | % | 3,736 | 0.82 | % | ||||||||||
| Net interest income, FTE | $ | 20,207 | $ | 21,202 | ||||||||||||
| Net interest rate spread | 3.54 | % | 3.65 | % | ||||||||||||
| Net interest margin | 3.68 | % | 3.80 | % | ||||||||||||
| (1) FTE basis based on the federal statutory rate of 35% | ||||||||||||||||
| (2) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual. | ||||||||||||||||
| Nine Months Ended June 30, | ||||||||||||||||
| 2015 | 2014 | |||||||||||||||
| Average Yield/ | Average Yield/ | |||||||||||||||
| (Amounts in thousands) | Interest(1) | Rate(1) | Interest(1) | Rate(1) | ||||||||||||
| Earning assets | ||||||||||||||||
| Loans(2) | $ | 66,107 | 5.28 | % | $ | 69,818 | 5.35 | % | ||||||||
| Accretion income | 8,765 | 8,724 | ||||||||||||||
| Less: cash accretion income | 3,326 | 3,214 | ||||||||||||||
| Non-cash accretion income | 5,439 | 5,510 | ||||||||||||||
| Loans, excluding non-cash accretion income | 60,668 | 4.84 | % | 64,308 | 4.93 | % | ||||||||||
| Other earning assets | 8,048 | 1.94 | % | 10,052 | 2.75 | % | ||||||||||
| Total earning assets | 68,716 | 4.12 | % | 74,360 | 4.45 | % | ||||||||||
| Total interest-bearing liabilities | 8,847 | 0.68 | % | 11,819 | 0.85 | % | ||||||||||
| Net interest income, FTE | $ | 59,869 | $ | 62,541 | ||||||||||||
| Net interest rate spread | 3.44 | % | 3.60 | % | ||||||||||||
| Net interest margin | 3.59 | % | 3.75 | % | ||||||||||||
| (1) FTE basis based on the federal statutory rate of 35% | ||||||||||||||||
| (2) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual. | ||||||||||||||||
CONTACT: FOR MORE INFORMATION, CONTACT: David D. Brown (276) 326-9000