First Community Bancshares, Inc. Announces Third Quarter 2016 Results and Quarterly Dividend

BLUEFIELD, Va., Oct. 25, 2016 (GLOBE NEWSWIRE) — First Community Bancshares, Inc. (NASDAQ:FCBC) (www.fcbinc.com) (the “Company”) today reported its unaudited results of operations and other financial information for the quarter and nine months ended September 30, 2016. The Company reported net income available to common shareholders of $6.38 million, or $0.37 per diluted common share for the quarter ended September 30, 2016, which represents an 8.82% increase in per share earnings compared to the same quarter of 2015. Net income available to common shareholders was $18.72 million, or $1.07 per diluted common share for the nine months ended September 30, 2016, which represents a 10.31% increase in per share earnings compared to the same period of 2015.

The Company also announced today that the Board of Directors declared a quarterly cash dividend to common shareholders of sixteen cents ($0.16) per common share. The quarterly dividend is payable to common shareholders of record on November 4, 2016, and is expected to be paid on or about November 18, 2016. The current year marks the 31st consecutive year of cash dividends paid to stockholders.

On July 15, 2016, the Company completed the previously announced branch exchange with First Bank, North Carolina, pursuant to which First Community Bank (the “Bank”) sold six branches in the Winston-Salem and Mooresville areas of North Carolina and acquired seven branches in Southwestern Virginia. At closing, First Bank assumed total assets of $158.25 million, including total loans of $154.03 million, and total liabilities of $111.20 million, including total deposits of $110.99 million. The Company received a deposit premium from First Bank of $4.07 million and recorded a net gain of $3.07 million in connection with the divestiture transaction. At closing, the acquired branches added total assets of $156.88 million, including total loans of $151.04 million, and total liabilities of $134.41 million, including total deposits of $134.26 million. The Company paid a deposit premium to First Bank of $3.84 million and recorded goodwill of $2.45 million in connection with the branch acquisitions.

On October 1, 2016, the Company sold two North Carolina offices operating under the Greenpoint Insurance Group, Inc. trade name and two Virginia offices operating under the trade name Carr & Hyde Insurance to Ascension Insurance Agency, Inc. The transaction does not impact the Company’s in-branch insurance offices operating as First Community Insurance Services, Inc. in West Virginia and Virginia.

Third Quarter 2016 Highlights

  • Income Statement
    • Net income available to common shareholders increased $124 thousand, or 1.98%, to $6.38 million compared to the same quarter of 2015.
    • Diluted earnings per share increased $0.03, or 8.82%, to $0.37 compared to the same quarter of 2015.
    • Core, non-GAAP diluted earnings per common share increased $0.04 to $0.38 compared to the same quarter of 2015.
    • The net interest margin decreased 10 basis points to 3.95%, while the normalized net interest margin increased 9 basis points to 3.77% compared to the same quarter of 2015.
  • Balance Sheet
    • The non-covered loan portfolio increased $151.04 million, or 9.30%, compared to December 31, 2015.
    • Book value per common share increased $0.92 to $19.87 compared to December 31, 2015.
    • The Company repurchased 171,225 common shares during the quarter resulting in 1,152,776 shares repurchased year-to-date. The Company has repurchased 3.93 million shares since September 30, 2013.
    • The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of September 30, 2016. 
  • Asset Quality
    • Annualized net charge-offs were only 0.07% of average loans compared to 0.10% for the same period of the prior year.
    • Total nonperforming assets decreased $2.63 million compared to December 31, 2015, and decreased $2.32 million compared to September 30, 2015.
    • Total non-covered nonperforming assets decreased $1.08 million compared to December 31, 2015, and decreased $549 thousand compared to September 30, 2015.
    • 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 improved 21 basis points to 1.51% as of September 30, 2016, from 1.72% as of December 31, 2015.
    • The Company recognized a net loan loss recovery of $1.15 million as a result of the reversal of $1.35 million in loan loss provisions related to loans sold to First Bank.

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. The Company’s non-GAAP financial measures presented in this release include core earnings, the efficiency ratio, tangible book value per common share, average tangible common equity, and normalized net interest margin. Management believes that core earnings provide the Company and investors a valuable tool to evaluate the Company’s financial results. Management believes that the efficiency ratio provides 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. The reconciliations of these measures to GAAP measures are provided within this news release.

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 48 branch banking locations throughout Virginia, West Virginia, North Carolina, and Tennessee as of September 30, 2016. First Community Bank offers wealth management and investment services through its wholly-owned subsidiary First Community Wealth Management and the Bank’s Trust Division, which collectively managed $767 million in combined assets as of September 30, 2016. The Company’s common stock is listed on the NASDAQ Global Select Market under the trading symbol, “FCBC”. The Company reported consolidated assets of $2.45 billion as of September 30, 2016. 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.

Financial Performance

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)  
                                 
      Three Months Ended   Nine Months Ended  
      September 30,   June 30,   March 31,   December 31,   September 30,   September 30,  
(Amounts in thousands, except share and per share data)   2016       2016       2016       2015       2015       2016       2015    
Interest income                            
  Interest and fees on loans $ 21,952     $ 22,237     $ 21,573     $ 21,633     $ 22,259     $ 65,762     $ 65,999    
  Interest on securities   1,643       1,891       1,957       2,023       2,056       5,491       6,180    
  Interest on deposits in banks   26       9       20       21       33       55       246    
Total interest income   23,621       24,137       23,550         23,677       24,348       71,308       72,425    
Interest expense                            
  Interest on deposits   1,133       1,087       1,114       1,202       1,384       3,334       4,676    
  Interest on borrowings   1,367       1,359       1,325       1,300       1,295       4,051       4,171    
Total interest expense   2,500       2,446       2,439         2,502       2,679       7,385       8,847    
Net interest income   21,121       21,691       21,111         21,175       21,669       63,923       63,578    
(Recovery of) provision for loan losses   (1,154 )     722       1,187       434       381       755       1,757    
Net interest income after                             
  (recovery) provision   22,275       20,969       19,924         20,741       21,288       63,168       61,821    
Total noninterest income   5,895       7,030       7,903       7,483       7,074       20,828       22,047    
Total noninterest expense   18,557       18,722       18,814       19,083       19,019       56,093       57,088    
Income before income taxes   9,613       9,277       9,013         9,141       9,343       27,903       26,780    
Income tax expense   3,230       3,022       2,929       2,993       3,084       9,181       8,388    
Net income    6,383       6,255       6,084         6,148       6,259   $   18,722       18,392    
Dividends on preferred stock                                       105    
Net income available to common shareholders $ 6,383   $ $ 6,255   $ $ 6,084   $   $ 6,148   $ $ 6,259   $ $ 18,722     $ 18,287    
                                 
Earnings per common share                            
  Basic $ 0.37     $ 0.36     $ 0.34     $ 0.34     $ 0.34     $ 1.07     $ 0.98    
  Diluted   0.37       0.36       0.34       0.34       0.34       1.07       0.97    
Cash dividends per common share   0.16       0.14       0.14       0.14       0.14       0.44       0.40    
Weighted average shares outstanding                            
  Basic   17,031,074       17,414,320       17,859,197       18,193,824       18,470,348       17,433,406       18,644,679    
  Diluted   17,083,526       17,462,845       17,892,531       18,226,719       18,500,975       17,475,211       18,895,909    
Performance ratios                            
  Return on average assets   1.03 %     1.02 %     0.99 %     0.99 %     1.00 %     1.01 %     0.96 %  
  Return on average common equity   7.58 %     7.47 %     7.15 %     7.05 %     7.18 %     7.40 %     7.07 %  
  Return on average tangible common equity(1)   11.07 %     10.88 %     10.34 %     10.17 %     10.38 %     10.76 %     10.23 %  
                                 
(1 A non-GAAP financial measure defined as average stockholders’ equity less average goodwill, other intangibles, and preferred stock liquidation preference  

RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited)
                               
      Three Months Ended   Nine Months Ended
      September 30,   June 30,   March 31,   December 31,   September 30,   September 30,
        2016       2016       2016       2015       2015       2016       2015  
(Amounts in thousands, except per share data)                            
Net income, GAAP    $   6,383     $   6,255     $   6,084     $   6,148     $   6,259     $   18,722     $   18,392  
Non-GAAP adjustments:                            
  Net gain on divestiture       (3,065 )       –         –         –         –         (3,065 )       –  
  Allowance reversal for sold loans   (1,354       –         –         –         –        (1,354       –  
  Merger, acquisition, and divestiture expense     226         410         39         –         –         675         86  
  Net (gain) loss on sale of securities     (25 )       79         (1 )       7         39         53         (151 )
  FHLB debt prepayment fees     –         –         –         –         –         –         1,702  
  Net impairment losses       4,635         11         –         –         –         4,646         –  
  Other non-core items     (264 )       –         (240 )       31         (75 )       (504 )       (1,035 )
Total adjustments to core earnings     153         500         (202 )       38         (36 )     451         602  
Tax effect      56         184         (74 )       14         (13 )     166         646  
Core earnings, non-GAAP(1)   $  6,480     $   6,571     $   5,956     $   6,172     $   6,236     $ 19,007     $   18,348  
                               
Core diluted earnings per common share   $   0.38     $   0.38     $   0.33     $   0.34     $   0.34     $   1.09     $   0.97  
Performance ratios                             
  Core return on average assets   1.05 %     1.07 %     0.97 %     0.99 %     1.00 %     1.03 %     0.97 %
  Core return on average common equity   7.70 %     7.85 %     7.00 %     7.08 %     7.16 %     7.51 %     7.09 %
  Core return on average tangible common equity(2)   11.24 %     11.43 %     10.12 %     10.21 %     10.34 %     10.92 %     10.26 %
                               
 (1 )  A non-GAAP financial measure that excludes gains, losses, and impairment losses on securities; goodwill and intangible impairment; taxes; and other non-recurring income and expense items from net income
 (2 )  A non-GAAP financial measure defined as average stockholders’ equity less average goodwill, other intangibles, and preferred stock liquidation preference
                               

Net Interest Income and Margin

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
                             
      Three Months Ended September 30,  
        2016       2015    
      Average        Average Yield/   Average        Average Yield/  
(Amounts in thousands) Balance   Interest(1)   Rate(1)   Balance   Interest(1)   Rate(1)  
Assets                        
Earning assets                        
  Loans(2) $   1,820,899     $   21,974       4.80 %   $   1,675,787     $   22,291       5.28 %  
  Securities available for sale     266,162         1,941       2.90 %       382,099         2,394       2.49 %  
  Securities held to maturity     72,210         189       1.04 %       72,624         195       1.07 %  
  Interest-bearing deposits     19,025         26       0.54 %       48,750         33       0.27 %  
Total earning assets     2,178,296         24,130       4.41 %       2,179,260         24,913       4.53 %  
Other assets      282,310                 305,331            
Total assets $   2,460,606             $   2,484,591            
                             
Liabilities and stockholders’ equity                        
Interest-bearing deposits                        
  Demand deposits  $   337,893     $   60       0.07 %   $   335,831     $   52       0.06 %  
  Savings deposits      523,503         62       0.05 %       532,445         83       0.06 %  
  Time deposits     529,344         1,011       0.76 %       613,598         1,249       0.81 %  
Total interest-bearing deposits     1,390,740         1,133       0.32 %       1,481,874         1,384       0.37 %  
Borrowings                        
  Federal funds purchased     3,696         6       0.65 %       7         –          
  Retail repurchase agreements     64,385         12       0.07 %       72,740         16       0.09 %  
  Wholesale repurchase agreements     50,000         473       3.76 %       50,000         473       3.75 %  
  FHLB advances and other borrowings     133,838         876       2.60 %       80,985         806       3.95 %  
Total borrowings     251,919         1,367       2.16 %       203,732         1,295       2.52 %  
Total interest-bearing liabilities     1,642,659         2,500       0.61 %       1,685,606         2,679       0.63 %  
Noninterest-bearing demand deposits     462,588                 433,164            
Other liabilities     20,462                 20,028            
Total liabilities     2,125,709                 2,138,798            
Stockholders’ equity     334,897                 345,793            
Total liabilities and stockholders’ equity $   2,460,606             $   2,484,591            
Net interest income, FTE     $   21,630             $   22,234        
Net interest rate spread           3.80 %             3.90 %  
Net interest margin           3.95 %             4.05 %  
                             
 (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.  
                             

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
                             
      Nine Months Ended September 30,  
        2016       2015    
      Average        Average Yield/   Average        Average Yield/  
(Amounts in thousands) Balance   Interest(1)   Rate(1)   Balance   Interest(1)   Rate(1)  
Assets                        
Earning assets                        
  Loans(2) $   1,775,744     $   65,836       4.95 %   $   1,675,118     $   66,107       5.28 %  
  Securities available for sale     318,891         6,403       2.68 %       358,690         7,225       2.69 %  
  Securities held to maturity     72,350         575       1.06 %       70,454         577       1.09 %  
  Interest-bearing deposits     13,288         55       0.55 %       125,295         246       0.26 %  
Total earning assets     2,180,273         72,869       4.47 %       2,229,557         74,155       4.45 %  
Other assets      287,784                 311,825            
Total assets $   2,468,057             $   2,541,382            
                             
Liabilities and stockholders’ equity                        
Interest-bearing deposits                        
  Demand deposits  $   339,920     $   177       0.07 %   $   342,639     $   156       0.06 %  
  Savings deposits      533,799         191       0.05 %       532,641         289       0.07 %  
  Time deposits     527,056         2,966       0.75 %       655,314         4,231       0.86 %  
Total interest-bearing deposits     1,400,775         3,334       0.32 %       1,530,594         4,676       0.41 %  
Borrowings                        
  Federal funds purchased     5,393         26       0.64 %       2         –       0.00 %  
  Retail repurchase agreements     69,347         37       0.07 %       70,325         53       0.10 %  
  Wholesale repurchase agreements     50,000         1,410       3.77 %       50,000         1,405       3.76 %  
  FHLB advances and other borrowings     124,803         2,578       2.76 %       91,305         2,713       3.97 %  
Total borrowings     249,543         4,051       2.17 %       211,632         4,171       2.64 %  
Total interest-bearing liabilities     1,650,318         7,385       0.60 %       1,742,226         8,847       0.68 %  
Noninterest-bearing demand deposits     457,250                 429,661            
Other liabilities     22,581                 20,472            
Total liabilities     2,130,149                 2,192,359            
Stockholders’ equity     337,908                 349,023            
Total liabilities and stockholders’ equity $   2,468,057             $   2,541,382            
Net interest income, FTE     $   65,484             $   65,308        
Net interest rate spread           3.88 %             3.77 %  
Net interest margin           4.01 %             3.92 %  
                             
 (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.  

 

RECONCILIATION OF GAAP NET INTEREST MARGIN TO NON-GAAP NORMALIZED NET INTEREST MARGIN (Unaudited)  
                     
      Three Months Ended September 30,  
        2016      2015   
(Amounts in thousands) Interest(1)   Average Yield/
Rate
(1) 
  Interest(1)   Average Yield/
Rate
(1) 
 
Earning assets                
Loans(2) $   21,974       4.80 %   $   22,291     5.28 %  
  Accretion income     1,683             2,930        
  Less: cash accretion income     699             903        
  Non-cash accretion income     984             2,027        
Loans, normalized(3)     20,990       4.59 %       20,264     4.80 %  
Other earning assets     2,156       2.40 %       2,622     2.07 %  
Total earning assets     23,146       4.23 %       22,886     4.17 %  
Total interest-bearing liabilities     2,500       0.61 %       2,679     0.63 %  
Net interest income, FTE(3) $   20,646         $   20,207        
Net interest rate spread, normalized(3)       3.62 %       3.54 %  
Net interest margin, normalized(3)       3.77 %       3.68 %  
                     
  (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.
  (3 ) Normalized totals are non-GAAP financial measures that exclude non-cash loan interest accretion related to PCI loans.  
                     
      Nine Months Ended September 30,  
        2016      2015  
(Amounts in thousands) Interest(1)   Average Yield/
Rate
(1) 
  Interest(1)   Average Yield/
Rate
(1) 
 
Earning assets                
Loans(2) $   65,836       4.95 %   $   66,107     5.28 %  
  Accretion income     6,183             8,765        
  Less: cash accretion income     2,290             3,326        
  Non-cash accretion income     3,893             5,439        
Loans, normalized(3)     61,943       4.66 %       60,668     4.84 %  
Other earning assets     7,033       2.32 %       8,048     1.94 %  
Total earning assets     68,976       4.23 %       68,716     4.12 %  
Total interest-bearing liabilities     7,385       0.60 %       8,847     0.68 %  
Net interest income, FTE(3) $   61,591         $   59,869        
Net interest rate spread, normalized(3)       3.63 %       3.44 %  
Net interest margin, normalized(3)       3.77 %       3.59 %  
                     
  (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.
  (3 ) Normalized totals are non-GAAP financial measures that exclude non-cash loan interest accretion related to PCI loans.  
                     

Noninterest Income and Expense

CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)  
                               
    Three Months Ended   Nine Months Ended  
    September 30,   June 30,   March 31,   December 31,   September 30,   September 30,   
(Amounts in thousands)   2016       2016       2016       2015       2015       2016       2015    
Noninterest income                            
  Wealth management     653         810         684         744         790         2,147         2,231    
  Service charges on deposits     3,494         3,361         3,291         3,563         3,744         10,146         10,154    
  Other service charges and fees     2,024         2,054         2,010         2,058         1,974         6,088         5,987    
  Insurance commissions     1,592         1,600         2,191         1,563         1,650         5,383         5,336    
  Net impairment losses recognized in earnings     (4,635 )       (11 )       –         –         –         (4,646 )       –    
  Net (loss) gain on sale of securities     25         (79 )       1         (7 )       (39 )       (53 )       151    
  Net FDIC indemnification asset amortization     (1,369 )       (1,328 )       (1,159 )       (1,200 )       (1,768 )       (3,856 )       (5,179 )  
  Net gain on divestiture     3,065         –         –         –         –         3,065         –    
  Other operating income     1,046         623         885         762         723         2,554         3,367    
Total noninterest income      5,895         7,030         7,903         7,483         7,074         20,828         22,047    
Noninterest expense                            
  Salaries and employee benefits     9,828         10,198         10,475         10,268         9,971         30,501         29,357    
  Occupancy expense     1,249         1,359         1,531         1,413         1,443         4,139         4,404    
  Furniture and equipment expense     1,066         1,109         1,096         1,345         1,259         3,271         3,854    
  Amortization of intangibles     316         277         278         281         281         871         837    
  FDIC premiums and assessments     363         372         374         332         377         1,109         1,181    
  FHLB debt prepayment fees     –         –         –         –         –         –         1,702    
  Merger, acquisition, and divestiture expense     226         410         39         –         –         675         86    
  Other operating expense     5,509         4,997         5,021         5,444         5,688         15,527         15,667    
Total noninterest expense     18,557         18,722         18,814         19,083         19,019         56,093         57,088    
                               

Efficiency Ratio

EFFICIENCY RATIO CALCULATION (Unaudited)  
                                 
      Three Months Ended   Nine Months Ended  
      September 30,   June 30,   March 31,   December 31,   September 30,   September 30,  
        2016       2016       2016       2015       2015       2016       2015    
(Amounts in thousands)                            
Noninterest expense, GAAP $   18,557     $   18,722     $   18,814     $   19,083     $   19,019     $   56,093     $   57,088    
Non-GAAP adjustments                            
  Merger, acquisition, and divestiture expense     (226 )       (410 )       (39 )       –         –         (675 )       (86 )  
  FHLB debt prepayment fees     –         –         –         –         –         –         (1,702 )  
  OREO expense and net loss     (278 )       (247 )       (711 )       (475 )       (1,220 )       (1,236 )       (1,963 )  
  Goodwill impairment     –         –         –         –         –         –         –    
  Other non-core, non-recurring items     (168 )       (30 )       (174 )       (61 )       15         (372 )       (198 )  
Adjusted noninterest expense     17,885         18,035         17,890         18,547         17,814         53,810         53,139    
                                 
Net interest income, GAAP     21,121         21,691         21,111         21,175         21,669         63,923         63,578    
Noninterest income, GAAP     5,895         7,030         7,903         7,483         7,074         20,828         22,047    
Non-GAAP adjustments                            
  Tax equivalency adjustment     509         521         531         548         565         1,561         2,402    
  Net impairment losses     4,635         11         –         –         –         4,646         –    
  Net (gain) loss on sale of securities     (25 )       79         (1 )       7         39         53         (151 )  
  Net gain on divestiture     (3,065 )       –         –         –         –         (3,065 )       –    
  Other non-core items     (432 )       (30 )       (414 )       (30 )       (60 )       (876 )       (1,233 )  
Adjusted net interest and noninterest income     28,638         29,302         29,130         29,183         29,287         87,070         86,643    
                                 
Non-GAAP efficiency ratio(1)   62.45 %     61.55 %     61.41 %     63.55 %     60.83 %     61.80 %     61.33 %  
GAAP efficiency ratio   68.69 %     65.19 %     64.84 %     66.59 %     66.17 %     66.19 %     66.67 %  
                                 
(1 ) A non-GAAP financial measure computed by dividing adjusted noninterest expense by the sum of tax equivalent net interest income and adjusted noninterest income.  
                                 

Balance Sheet and Capital

 

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
                       
      September 30,   June 30,   March 31,   December 31,   September 30,
(Amounts in thousands, except per share data)   2016       2016       2016       2015       2015  
Assets                  
Total cash and cash equivalents     65,929         44,301         39,587         51,787         62,024  
Securities available for sale      220,856         322,699         338,469         366,173         382,212  
Securities held to maturity      72,182         72,239         72,485         72,541         72,596  
Loans held for sale     –         –         –         –         523  
Loans held for investment, net of unearned income                  
  Non-covered     1,774,547         1,733,398         1,685,891         1,623,506         1,600,271  
  Covered     61,837         68,585         76,538         83,035         90,203  
  Less allowance for loan losses     (19,633 )       (21,099 )       (20,467 )       (20,233 )       (20,127 )
Loans held for investment, net     1,816,751         1,780,884         1,741,962         1,686,308         1,670,347  
FDIC indemnification asset     14,332         16,431         18,787         20,844         22,049  
Premises and equipment, net     50,564         50,199         50,799         52,756         53,442  
Other real estate owned, non-covered     4,052         4,187         5,313         4,873         5,088  
Other real estate owned, covered     2,437         2,017         2,279         4,034         4,079  
Interest receivable     5,498         6,115         5,968         6,007         5,910  
Goodwill     101,776         100,486         100,486         100,486         100,810  
Other intangible assets     7,964         4,688         4,965         5,243         5,583  
Other assets     87,932         91,082         89,187         91,224         93,453  
Total assets $   2,450,273     $   2,495,328     $   2,470,287     $   2,462,276     $   2,478,116  
                       
Liabilities                  
Deposits                  
  Noninterest-bearing $   473,509     $   451,003     $   453,336     $   451,511     $   442,021  
  Interest-bearing     1,388,390         1,373,412         1,421,329         1,421,748         1,460,881  
Total deposits     1,861,899         1,824,415         1,874,665         1,873,259         1,902,902  
Interest, taxes, and other liabilities     26,599         25,553         24,576         26,630         25,356  
Federal funds purchased     –         42,000         18,000         –         –  
Securities sold under agreements to repurchase     118,532         113,392         134,661         138,614         124,076  
FHLB borrowings     90,000         140,000         65,000         65,000         65,000  
Other borrowings     15,707         15,756         15,756         15,756         15,955  
Total liabilities     2,112,737         2,161,116         2,132,658         2,119,259         2,133,289  
                       
Stockholders’ equity                  
Common stock     21,382         21,382         21,382         21,382         21,382  
Additional paid-in capital     227,884         227,791         227,725         227,692         227,621  
Retained earnings     166,689         163,030         159,223         155,647         152,046  
Treasury stock, at cost     (78,789 )       (74,974 )       (64,968 )       (56,457 )       (52,484 )
Accumulated other comprehensive income (loss)     370         (3,017 )       (5,733 )       (5,247 )       (3,738 )
Total stockholders’ equity     337,536         334,212         337,629         343,017         344,827  
Total liabilities and stockholders’ equity $   2,450,273     $   2,495,328     $   2,470,287     $   2,462,276     $   2,478,116  
                       
Shares outstanding at period-end     16,988,972         17,155,322         17,631,011         18,098,141         18,313,425  
Book value per common share(1) $   19.87     $   19.48     $   19.15     $   18.95     $   18.83  
Tangible book value per common share(2)     13.41         13.35         13.17         13.11         13.02  
                       
(1  ) Stockholders’ equity divided by as-converted common shares outstanding
(2  ) A non-GAAP financial measure defined as stockholders’ equity less goodwill and other intangibles, divided by as-converted common shares outstanding
                       

Asset Quality

SELECTED CREDIT QUALITY INFORMATION (Unaudited)
                       
      September 30,   June 30,   March 31,   December 31,   September 30,
(Amounts in thousands)   2016       2016       2016       2015       2015  
Allowance for Loan Losses                   
Beginning balance $   21,099     $   20,467     $   20,233     $   20,127     $   20,258  
(Recovery of) provision for loan losses charged                  
  to operations     (1,154 )       722         1,187         434         381  
(Recovery of) provision for loan losses recorded                  
  through the FDIC indemnification asset     –         (10 )       9         –         (75 )
Charge-offs     (772 )       (691 )       (1,228 )       (805 )       (689 )
Recoveries     460         611         266         477         252  
Net charge-offs     (312 )       (80 )       (962 )       (328 )       (437 )
Ending balance $   19,633     $   21,099     $   20,467     $   20,233     $   20,127  
                       
Nonperforming Assets                  
Non-covered nonperforming assets                  
Nonaccrual loans  $   17,487     $   16,626     $   16,196     $   17,847     $   17,100  
Accruing loans past due 90 days or more     62         64         243         –         3  
Troubled debt restructurings (“TDRs”)(1)     115         115         158         73         74  
Total non-covered nonperforming loans     17,664         16,805         16,597         17,920         17,177  
OREO     4,052         4,187         5,313         4,873         5,088  
Total non-covered nonperforming assets $   21,716     $   20,992     $   21,910     $   22,793     $   22,265  
                       
Covered nonperforming assets                  
Nonaccrual loans  $   688     $   680     $   1,955     $   647     $   815  
Total covered nonperforming loans     688         680         1,955         647         815  
OREO     2,437         2,017         2,279         4,034         4,079  
Total covered nonperforming assets $   3,125     $   2,697     $   4,234     $   4,681     $   4,894  
                       
Additional Information                  
Performing TDRs(2) $   13,336     $   13,562     $   13,474     $   13,889     $   13,965  
Total TDRs(3)     13,451         13,677         13,632         13,962         14,039  
                       
Non-covered ratios                  
Nonperforming loans to total loans   1.00 %     0.97 %     0.98 %     1.10 %     1.07 %
Nonperforming assets to total assets   0.91 %     0.87 %     0.92 %     0.96 %     0.93 %
Non-PCI allowance to nonperforming loans   111.08 %     125.48 %     123.17 %     112.61 %     117.06 %
Non-PCI allowance to total loans   1.11 %     1.22 %     1.21 %     1.24 %     1.26 %
Annualized net charge-offs to average loans   0.07 %     0.02 %     0.23 %     0.08 %     0.11 %
                       
Total ratios                  
Nonperforming loans to total loans   1.00 %     0.97 %     1.05 %     1.09 %     1.06 %
Nonperforming assets to total assets   1.01 %     0.95 %     1.06 %     1.12 %     1.10 %
Allowance for loan losses to nonperforming loans   106.98 %     120.67 %     110.32 %     108.97 %     111.87 %
Allowance for loan losses to total loans   1.07 %     1.17 %     1.16 %     1.19 %     1.19 %
Annualized net charge-offs to average loans   0.07 %     0.02 %     0.22 %     0.08 %     0.10 %
                       
(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 total TDRs 
                       

  

CONTACT: FOR MORE INFORMATION, CONTACT:
David D. Brown
(276) 326-9000

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