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First Community Bancshares, Inc. Announces Fourth Quarter and Full Year 2015 Results and Quarterly Dividend

BLUEFIELD, Va., Jan. 26, 2016 (GLOBE NEWSWIRE) -- First Community Bancshares, Inc. (NASDAQ:FCBC) (www.fcbinc.com) (the “Company”) today announced financial results for the quarter and year ended December 31, 2015. The Company reported net income of $6.15 million for the quarter and $24.54 million for the year ended December 31, 2015. Net income available to common shareholders totaled $6.15 million, or $0.34 per diluted common share, for the quarter and $24.44 million, or $1.31 per diluted common share, for the year ended December 31, 2015. Core earnings totaled $6.17 million for the quarter and $24.52 million for the year ended December 31, 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 February 5, 2016, and is expected to be paid on or about February 19, 2016. The current year marks the 31st consecutive year of cash dividends paid to stockholders.

Fourth Quarter 2015 Highlights –

  • The Company's diluted earnings per share increased 5 basis points, or 17.24%, to $0.34 for the fourth quarter of 2015 compared to the fourth quarter of 2014.
  • The Company’s normalized net interest margin increased 17 basis points to 3.68% for the fourth quarter of 2015 compared to the fourth quarter of 2014.
  • The Company’s non-covered loan portfolio as of December 31, 2015, increased $23.24 million, or 1.45%, compared with September 30, 2015, and increased $56.33 million, or 3.59%, compared with December 31, 2014.
  • The Company repurchased 219,573 common shares during the fourth quarter, bringing total repurchased shares to 1,401,622 during the year ended December 31, 2015, including the effect of the preferred share redemption.
  • The Company significantly exceeds regulatory “well capitalized” targets as of December 31, 2015.

Net Interest Income

Net interest income decreased $3.54 million, or 14.31%, to $21.18 million for the fourth quarter of 2015 compared with the same quarter of 2014. The tax equivalent net interest margin decreased to 3.98% for the fourth quarter of 2015 compared with 4.19% for the same quarter of 2014. Total interest income decreased $4.50 million, or 15.98%, to $23.68 million for the fourth quarter of 2015 compared with the same quarter of 2014. The tax equivalent yield on loans decreased 82 basis points to 5.07% while the average loan balance decreased $50.24 million, or 2.88%, to $1.69 billion for the fourth quarter of 2015 compared with the same quarter of 2014. The decrease in net interest income and the average loan balance was primarily due to loans sold in divestiture activities during the fourth quarter of 2014 and decreases in the covered loan portfolio compared to the fourth quarter of 2014. In addition, we realized a positive resolution of a sizable problem credit which resulted in enhanced accretion income, reduced specific reserves, and recovery of prior years’ charge-offs during the fourth quarter of 2014.

Purchased credit impaired (“PCI”) loan interest accretion totaled $2.49 million for the fourth quarter of 2015, of which $824 thousand was received in cash, compared to accretion income of $2.75 million for the same quarter of 2014, of which $1.20 million was received in cash. Accretion income was enhanced in the fourth quarter of 2014 by discount accretion of $2.59 million related to the positive resolution of a sizable problem credit. The normalized net interest margin, which excludes non-cash loan interest accretion, was 3.68% for the fourth quarter of 2015 compared to 3.51% for same quarter of 2014. The normalized yield on loans was 4.68% for the fourth quarter of 2015 compared to 4.95% for the same quarter of 2014.

Total interest expense decreased $969 thousand, or 27.92%, to $2.50 million for the fourth quarter of 2015 compared with the same quarter of 2014. Deposit costs decreased $601 thousand, or 33.33%, to $1.20 million for the fourth quarter of 2015 compared with the same quarter of 2014, reflecting a 10 basis point decrease in the average rate paid on interest-bearing deposits. Borrowing costs decreased $368 thousand, or 22.06%, to $1.30 million for the fourth 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 12 basis points to 0.60% for the fourth quarter of 2015 compared with the same quarter of 2014. The average balance of interest-bearing liabilities decreased $262.68 million, or 13.76%, to $1.65 billion for the fourth quarter of 2015 compared with the same quarter of 2014, which included a $235.57 million decrease in average interest-bearing deposits and a $27.11 million decrease in average total borrowings.

Noninterest Income

Noninterest income experienced a slight decrease of $15 thousand, or 0.20%, to $7.48 million for the fourth quarter of 2015 compared with the same quarter of 2014, which was largely due to a decrease in the net loss on sale of securities offset by an increase in the net amortization expense related to the FDIC indemnification asset, a decrease in other operating income, and the net gain from the sale of thirteen branches to CresCom Bank during the fourth quarter of 2014. Wealth management revenues increased $110 thousand, or 17.35%, for the fourth quarter of 2015 compared with the same quarter of 2014. The Trust and Wealth Management Divisions reported $742 million in combined assets under management as of December 31, 2015. Service charges on deposits and other service charges and fees decreased $216 thousand, or 3.70%, to $5.62 million for the fourth quarter of 2015 compared with the same quarter of 2014. Insurance commissions increased $121 thousand, or 8.39%, for the fourth quarter of 2015 compared with the same quarter of 2014. The Company realized a $7 thousand net loss on the sale of securities in the fourth quarter of 2015 compared to a net loss of $1.69 million in the same quarter of 2014. The net loss in the fourth quarter of 2014 included the sale of the Company’s only remaining non-Agency mortgage-backed security at a loss of $1.62 million. Net amortization expense related to the FDIC indemnification asset increased $387 thousand, or 47.60%, for the fourth quarter of 2015 compared with the same quarter of 2014 as a result of continuing better than expected performance in the covered loan portfolio. Other operating income decreased $572 thousand, or 42.88%, for the fourth quarter of 2015 compared with the same quarter of 2014 primarily due to a $400 thousand legal settlement recognized during the fourth quarter of 2014.

Noninterest Expense

Noninterest expense decreased $4.97 million, or 20.65%, to $19.08 million for the fourth quarter of 2015 compared with the same quarter of 2014, which was largely due to the absence of FHLB debt prepayment fees and merger, acquisition, and divestiture expenses coupled with a decrease in other operating expense. The Company incurred fees of $1.96 million related to the prepayment of $25 million in FHLB convertible advances and expenses related to branch acquisition and divestitures of $865 thousand in the fourth quarter of 2014. Salaries and employee benefits decreased $573 thousand, or 5.29%, to $10.27 million for the fourth quarter of 2015 compared with the same quarter of 2014. Full-time equivalent employees totaled 673 as of December 31, 2015, a decrease of 5 employees compared with the same period of the prior year. Occupancy, furniture, and equipment expenses decreased $96 thousand, or 3.36%, to $2.76 million for the fourth quarter of 2015 compared with the same quarter of 2014. Other operating expense decreased $1.47 million, or 21.25%, to $5.44 million for the fourth quarter of 2015 compared with the same quarter of 2014, which was largely due to write-downs of certain long-term investments in land and buildings totaling $935 thousand during the fourth quarter of 2014. Other operating expense also included a $72 thousand increase in the net loss on sales and expenses associated with other real estate owned (“OREO”). The non-GAAP efficiency ratio for the fourth quarter of 2015 was 63.55% compared to 57.70% for the same quarter of 2014.

Allowance for Loan Losses and Asset Quality

The allowance for loan losses totaled $20.23 million as of December 31, 2015 and December 31, 2014. As of December 31, 2015, $20.18 million of the allowance was attributed to the non-PCI loan portfolio and $54 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 1.24% as of December 31, 2015, compared with 1.29% as of December 31, 2014. Allowance activity in the fourth quarter of 2015 included a $434 thousand provision for loan losses compared to a $488 thousand recovery of loan losses for the same quarter of 2014. There was no activity related to loan losses recorded through the FDIC indemnification asset in the fourth quarter of 2015, compared to a provision of $29 thousand in the fourth quarter of 2014. The Company realized net charge-offs of $328 thousand in the fourth quarter of 2015, an increase of $537 thousand compared to net recoveries of $209 thousand in the same quarter of 2014. The ratio of annualized net charge-offs to average non-covered loans was 0.08% for the fourth quarter of 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 increased to 1.72% as of December 31, 2015, compared to 1.40% for the same period of the prior year. Non-covered nonaccrual loans totaled $17.85 million as of December 31, 2015, compared to $10.56 million as of December 31, 2014. At quarter-end, the Company’s non-covered nonaccrual loans as a percentage of total non-covered loans were 1.10%, compared to 0.67% at year-end 2014. As of December 31, 2015, the Company’s non-covered nonperforming loans as a percentage of total non-covered loans were 1.15% and non-covered nonperforming assets as a percentage of total non-covered assets were 0.99%.

As of December 31, 2015, total nonperforming assets, including the covered and non-covered loan portfolios, consisted of $18.49 million in nonaccrual loans, $824 thousand in unseasoned, accruing troubled debt restructurings, and $8.91 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 $3.62 million, or 18.19%, and total covered nonperforming assets decreased $4.08 million, or 46.58%, as of December 31, 2015, compared to December 31, 2014.

Balance Sheet and Capital

Consolidated assets totaled $2.46 billion as of December 31, 2015, a decrease of $145.66 million, or 5.59%, compared with $2.61 billion as of December 31, 2014. The change in consolidated assets was primarily driven by a $183.38 million, or 93.14%, 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 December 31, 2015, securities available for sale increased $40.06 million, securities held to maturity increased $14.59 million, and loans held for investment increased $15.33 million compared to December 31, 2014.

Consolidated liabilities totaled $2.12 billion as of December 31, 2015, a decrease of $137.30 million, or 6.08%, compared with $2.26 billion as of December 31, 2014. The change in consolidated liabilities was driven by a $127.50 million decrease in deposits and a $27.24 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 $343.02 million as of December 31, 2015, a decrease of $8.36 million, or 2.38%, 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. Additionally, the Company repurchased 1,238,299 common shares at a weighted average cost of $17.35 per share and paid a cash dividend of $0.54 per common share during 2015. Book value per common share increased 4.93% to $18.95 as of December 31, 2015, compared with $18.06 as of December 31, 2014. Tangible book value per common share increased 4.38% to $13.11 as of December 31, 2015, compared with $12.56 as of December 31, 2014.

The Company significantly exceeds regulatory “well capitalized” targets as of December 31, 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 50 banking locations throughout Virginia, West Virginia, North Carolina, and Tennessee as of December 31, 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 $742 million in combined assets as of December 31, 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 9 insurance locations throughout Virginia, West Virginia, and North Carolina as of December 31, 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 $2.46 billion as of December 31, 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   Year Ended  
  December 31,   December 31,  
(Amounts in thousands, except share and per share data)   2015       2014       2015       2014    
Interest income                
Interest and fees on loans held for investment $   21,633     $   25,841     $   87,632     $   95,492    
Interest on securities -- taxable     1,058         1,145         4,225         5,975    
Interest on securities -- nontaxable     965         1,021         3,978         4,350    
Interest on deposits in banks     21         174         267         291    
Total interest income     23,677         28,181         96,102         106,108    
Interest expense                
Interest on deposits     1,202         1,803         5,878         7,308    
Interest on short-term borrowings     466         513         1,952         2,024    
Interest on long-term borrowings     834         1,155         3,519         5,958    
Total interest expense     2,502         3,471         11,349         15,290    
Net interest income     21,175         24,710         84,753         90,818    
Provision for (recovery of) loan losses     434         (488 )       2,191         145    
Net interest income after provision for loan losses     20,741         25,198         82,562         90,673    
Noninterest income                
Wealth management income     744         634         2,975         3,030    
Service charges on deposit accounts     3,563         3,729         13,717         13,828    
Other service charges and fees     2,058         2,108         8,045         7,581    
Insurance commissions     1,563         1,442         6,899         6,555    
Net impairment losses recognized in earnings     -         -         -         (737 )  
Net (loss) gain on sale of securities     (7 )       (1,691 )       144         (1,385 )  
Net FDIC indemnification asset amortization     (1,200 )       (813 )       (6,379 )       (3,979 )  
Net gain on branch divestiture     -         755         -         755    
Other operating income     762         1,334         4,129         4,355    
Total noninterest income      7,483         7,498         29,530         30,003    
Noninterest expense                
Salaries and employee benefits     10,268         10,841         39,625         40,713    
Occupancy expense of bank premises     1,413         1,513         5,817         6,338    
Furniture and equipment      1,345         1,341         5,199         4,952    
Amortization of intangible assets     281         255         1,118         787    
FDIC premiums and assessments     332         361         1,513         1,672    
FHLB debt prepayment fees     -         1,961         1,702         5,008    
Merger, acquisition, and divestiture expense     -         865         86         1,150    
Other operating expense     5,444         6,913         21,111         22,242    
Total noninterest expense     19,083         24,050         76,171         82,862    
Income before income taxes     9,141         8,646         35,921         37,814    
Income tax expense     2,993         2,931         11,381         12,324    
Net income      6,148         5,715         24,540         25,490    
Dividends on preferred stock     -         227         105         910    
Net income available to common shareholders $   6,148     $   5,488     $   24,435     $   24,580    
                 
Basic earnings per common share  $   0.34     $   0.30     $   1.32     $   1.34    
Diluted earnings per common share      0.34         0.29         1.31         1.31    
Cash dividends per common share     0.14         0.13         0.54         0.50    
                 
Weighted average basic shares outstanding   18,193,824       18,403,959       18,531,039       18,406,363    
Weighted average diluted shares outstanding   18,226,719       19,482,000       18,727,464       19,483,054    
                 
Return on average assets   0.99 %     0.80 %     0.97 %     0.94 %  
Return on average common equity   7.05 %     6.48 %     7.08 %     7.51 %  
                 

/EIN News/ --  

   
FIRST COMMUNITY BANCSHARES, INC.  
CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)  
                     
  Quarter Ended  
  December 31,   September 30,   June 30,   March 31,   December 31,  
(Amounts in thousands, except share and per share data)   2015       2015       2015       2015       2014    
Interest Income                    
Interest and fees on loans held for investment $   21,633     $   22,259     $   21,826     $   21,914     $   25,841    
Interest on securities -- taxable     1,058         1,062         1,070         1,035         1,145    
Interest on securities -- nontaxable     965         994         1,003         1,016         1,021    
Interest on deposits in banks     21         33         80         133         174    
Total interest income     23,677         24,348         23,979         24,098         28,181    
Interest Expense                    
Interest on deposits     1,202         1,384         1,562         1,730         1,803    
Interest on short-term borrowings     466         497         499         490         513    
Interest on long-term borrowings     834         798         848         1,039         1,155    
Total interest expense     2,502         2,679         2,909         3,259         3,471    
Net interest income     21,175         21,669         21,070         20,839         24,710    
Provision for (recovery of) loan losses     434         381         276         1,100         (488 )  
Net interest income after provision for loan losses     20,741         21,288         20,794         19,739         25,198    
Noninterest Income                    
Wealth management income     744         790         775         666         634    
Service charges on deposit accounts     3,563         3,744         3,507         2,903         3,729    
Other service charges and fees     2,058         1,974         2,005         2,008         2,108    
Insurance commissions     1,563         1,650         1,559         2,127         1,442    
Net impairment losses recognized in earnings     -         -         -         -         -    
Net (loss) gain on sale of securities     (7 )       (39 )       213         (23 )       (1,691 )  
Net FDIC indemnification asset amortization     (1,200 )       (1,768 )       (1,846 )       (1,565 )       (813 )  
Net gain on branch divestiture     -         -         -         -         755    
Other operating income     762         723         1,924         720         1,334    
Total noninterest income      7,483         7,074         8,137         6,836         7,498    
Noninterest Expense                    
Salaries and employee benefits     10,268         9,971         9,693         9,693         10,841    
Occupancy expense of bank premises     1,413         1,443         1,427         1,534         1,513    
Furniture and equipment     1,345         1,259         1,358         1,237         1,341    
Amortization of intangible assets     281         281         279         277         255    
FDIC premiums and assessments      332         377         389         415         361    
FHLB debt prepayment fees     -         -         1,702         -         1,961    
Merger, acquisition, and divestiture expense     -         -         -         86         865    
Other operating expense     5,444         5,688         5,441         4,538         6,913    
Total noninterest expense     19,083         19,019         20,289         17,780         24,050    
Income before income taxes     9,141         9,343         8,642         8,795         8,646    
Income tax expense     2,993         3,084         2,467         2,837         2,931    
Net income      6,148         6,259         6,175         5,958         5,715    
Dividends on preferred stock     -         -         -         105         227    
Net income available to common shareholders $   6,148     $   6,259     $   6,175     $   5,853     $   5,488    
                     
Basic earnings per common share $   0.34     $   0.34     $   0.33     $   0.31     $   0.30    
Diluted earnings per common share     0.34         0.34         0.33         0.31         0.29    
Cash dividends per common share     0.14         0.14         0.13         0.13         0.13    
                     
Weighted average basic shares outstanding     18,193,824         18,470,348         18,831,742         18,633,574         18,403,959    
Weighted average diluted shares outstanding     18,226,719         18,500,975         18,860,119         19,344,443         19,482,000    
                     

 

 
FIRST COMMUNITY BANCSHARES, INC.
RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited)
                   
  Three Months Ended
  December 31,   September 30,   June 30,   March 31,   December 31,
    2015       2015       2015       2015       2014  
(Amounts in thousands, except per share data)                  
Net income, GAAP $   6,148     $   6,259     $   6,175     $   5,958     $   5,715  
Non-GAAP adjustments:                  
Net impairment losses recognized in earnings     -         -         -         -         -  
Net loss (gain) on sale of securities     7         39         (213 )       23         1,691  
Net gain on branch divestiture     -         -         -         -         (755 )
FHLB debt prepayment fees     -         -         1,702         -         1,961  
Merger, acquisition, and divestiture expense     -         -         -         86         865  
Other noncore, nonrecurring items     31         (75 )       (930 )       (30 )       1,173  
Total adjustments to core earnings     38         (36 )       559         79         4,935  
Tax effect      14         (13 )       630         29         1,859  
Core earnings, non-GAAP $   6,172     $   6,236     $   6,104     $   6,008     $   8,791  
                   
Core return on average assets   0.99 %     1.00 %     0.96 %     0.94 %     1.28 %
Core return on average common equity   7.08 %     7.16 %     7.00 %     7.09 %     10.39 %
Core return on average tangible common equity   10.21 %     10.34 %     10.07 %     10.31 %     15.50 %
Core diluted earnings per common share $   0.34     $   0.34     $   0.32     $   0.31     $   0.45  
                   
              Year Ended
              December 31,
                2015       2014  
(Amounts in thousands, except per share data)                  
Net income, GAAP             $   24,540     $   25,490  
Non-GAAP adjustments:                  
Net impairment losses recognized in earnings                 -         737  
Net (gain) loss on sale of securities                 (144 )       1,385  
Net gain on branch divestiture                 -         (755 )
FHLB debt prepayment fees                 1,702         5,008  
Merger, acquisition, and divestiture expense                 86         1,150  
Other noncore, nonrecurring items                 (1,004 )       637  
Total adjustments to core earnings                 640         8,162  
Tax effect                  660         3,074  
Core earnings, non-GAAP             $   24,520     $   30,578  
                   
Core return on average assets               0.97 %     1.17 %
Core return on average common equity               7.09 %     9.34 %
Core return on average tangible common equity               10.25 %     13.99 %
Core diluted earnings per common share             $   1.31     $   1.57  
                   

 

   
FIRST COMMUNITY BANCSHARES, INC.  
EFFICIENCY RATIO CALCULATION (Unaudited)  
                     
  Three Months Ended  
  December 31,   September 30,   June 30,   March 31,   December 31,  
    2015       2015       2015       2015       2014    
(Amounts in thousands)                    
Noninterest expense, GAAP $   19,083     $   19,019     $   20,289     $   17,780     $   24,050    
Non-GAAP adjustments:                    
FHLB debt prepayment fees     -         -         (1,702 )       -         (1,961 )  
Merger, acquisition, and divestiture expense     -         -         -         (86 )       (865 )  
OREO expense and net loss     (475 )       (1,220 )       (416 )       (327 )       (403 )  
Other noncore, nonrecurring items     (61 )       15         (213 )       -         (1,573 )  
Adjusted noninterest expense     18,547         17,814         17,958         17,367         19,248    
                     
Net interest income, GAAP     21,175         21,669         21,070         20,839         24,710    
Noninterest income, GAAP     7,483         7,074         8,137         6,836         7,498    
Non-GAAP adjustments:                    
Tax equivalency adjustment     548         565         1,249         588         613    
Net impairment losses recognized in earnings     -         -         -         -         -    
Net loss (gain) on sale of securities     7         39         (213 )       23         1,691    
Net gain on branch divestiture     -         -         -         -         (755 )  
Other noncore, nonrecurring items     (30 )       (60 )       (1,143 )       (30 )       (400 )  
Adjusted net interest and noninterest income     29,183         29,287         29,100         28,256         33,357    
                     
Non-GAAP efficiency ratio   63.55 %     60.83 %     61.71 %     61.46 %     57.70 %  
GAAP efficiency ratio   66.59 %     66.17 %     69.47 %     64.25 %     74.67 %  
                     
              Year Ended  
              December 31,
 
                2015       2014    
(Amounts in thousands)                    
Noninterest expense, GAAP             $   76,171     $   82,862    
Non-GAAP adjustments:                    
FHLB debt prepayment fees                 (1,702 )       (5,008 )  
Merger, acquisition, and divestiture expense                 (86 )       (1,150 )  
OREO expense and net loss                 (2,438 )       (2,094 )  
Other noncore, nonrecurring items                 (259 )       (1,573 )  
Adjusted noninterest expense                 71,686         73,037    
                     
Net interest income, GAAP                 84,753         90,818    
Noninterest income, GAAP                 29,530         30,003    
Non-GAAP adjustments:                    
Tax equivalency adjustment                 2,950         2,557    
Net impairment losses recognized in earnings                 -         737    
Net (gain) loss on sale of securities                 (144 )       1,385    
Net gain on branch divestiture                 -         (755 )  
Other noncore, nonrecurring items                 (1,263 )       (936 )  
Adjusted net interest and noninterest income                 115,826         123,809    
                     
Non-GAAP efficiency ratio               61.89 %     58.99 %  
GAAP efficiency ratio               66.65 %     68.58 %  
                     

 

   
FIRST COMMUNITY BANCSHARES, INC.  
CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)  
                     
    As of the Quarter Ended  
  December 31,   September 30,   June 30,   March 31,   December 31,  
    2015       2015       2015       2015       2014    
(Amounts in thousands)                    
Cash and due from banks $   37,383     $   33,555     $   38,200     $   36,222     $   39,450    
Federal funds sold     13,498         27,118         53,023         169,422         196,873    
Interest-bearing deposits in banks     906         1,351         1,379         1,380         1,337    
Total cash and cash equivalents     51,787         62,024         92,602         207,024         237,660    
Securities available for sale      366,173         382,212         376,191         351,454         326,117    
Securities held to maturity      72,541         72,596         72,652         72,897         57,948    
Loans held for sale     -         523         913         1,174         1,792    
Loans held for investment, net of unearned income:                  
Covered under loss share agreements     83,035         90,203         102,634         112,724         122,240    
Not covered under loss share agreements     1,623,506         1,600,271         1,564,655         1,558,310         1,567,176    
Less allowance for loan losses     (20,233 )       (20,127 )       (20,258 )       (20,252 )       (20,227 )  
Loans, net     1,686,308         1,670,870         1,647,944         1,651,956         1,670,981    
FDIC indemnification asset     20,844         22,049         23,653         26,053         27,900    
Property, plant, and equipment, net     52,756         53,442         54,112         54,955         55,844    
Other real estate owned:                    
Covered under loss share agreements     4,034         4,079         5,382         5,834         6,324    
Not covered under loss share agreements     4,873         5,088         7,434         7,032         6,638    
Interest receivable     6,007         5,910         6,119         6,188         6,315    
Goodwill     100,486         100,810         100,810         100,810         100,722    
Intangible assets     5,243         5,583         5,865         6,144         6,422    
Other assets     91,224         93,453         99,034         95,497         105,065    
Total assets $   2,462,276     $   2,478,116     $   2,491,798     $   2,585,844     $   2,607,936    
                     
Deposits:                    
Noninterest-bearing demand $   451,511     $   442,021     $   424,438     $   433,422     $   417,729    
Interest-bearing demand     347,705         343,303         329,583         341,300         353,874    
Savings     530,585         526,627         528,003         533,589         525,478    
Time     543,458         590,951         638,197         682,878         703,678    
Total deposits     1,873,259         1,902,902         1,920,221         1,991,189         2,000,759    
Interest, taxes, and other liabilities     26,630         25,356         23,852         24,203         26,062    
Securities sold under agreements to repurchase     138,614         124,076         122,158         116,302         121,742    
FHLB borrowings     65,000         65,000         65,000         90,000         90,000    
Other borrowings     15,756         15,955         15,999         15,999         17,999    
Total liabilities     2,119,259         2,133,289         2,147,230         2,237,693         2,256,562    
                     
Preferred stock     -         -         -         -         15,151    
Common stock     21,382         21,382         21,382         21,382         20,500    
Additional paid-in capital     227,692         227,621         227,616         227,782         215,873    
Retained earnings     155,647         152,046         148,378         144,656         141,206    
Treasury stock, at cost     (56,457 )       (52,484 )       (46,610 )       (41,078 )       (35,751 )  
Accumulated other comprehensive loss     (5,247 )       (3,738 )       (6,198 )       (4,591 )       (5,605 )  
Total stockholders' equity     343,017         344,827         344,568         348,151         351,374    
Total liabilities and stockholders' equity $   2,462,276     $   2,478,116     $   2,491,798     $   2,585,844     $   2,607,936    
                     
Shares outstanding at period-end     18,098,141         18,313,425         18,641,966         18,965,274         18,406,219    
Book value per common share at period-end(1) $   18.95     $   18.83     $   18.48     $   18.36     $   18.06    
Tangible book value per common share at period-end(2) $   13.11     $   13.02     $   12.76     $   12.72     $   12.56    
                         
                         
(1) Book value per common share is defined as stockholders' equity divided by as-converted common shares outstanding.  
(2) Tangible book value per common share is defined as stockholders' equity less goodwill and other intangibles divided by as-converted common shares outstanding.  
                     

 

 
FIRST COMMUNITY BANCSHARES, INC.
SELECTED CREDIT QUALITY INFORMATION (Unaudited)
                   
  As of and for the Quarter Ended
  December 31,   September 30,   June 30,   March 31,   December 31,
(Amounts in thousands)   2015       2015       2015       2015       2014  
Allowance for Loan Losses                   
Beginning balance $   20,127     $   20,258     $   20,252     $   20,227     $   21,159  
Removal of loans transferred      -         -         -         -         (682 )
Provision for (recovery of) loan losses charged to operations     434         381         276         1,100         (488 )
(Recovery of) provision for  loan losses recorded through the FDIC indemnification asset     -         (75 )       -         46         29  
Charge-offs     (805 )       (689 )       (673 )       (1,578 )       (1,362 )
Recoveries     477         252         403         457         1,571  
Net (charge-offs) recoveries      (328 )       (437 )       (270 )       (1,121 )       209  
Ending balance $   20,233     $   20,127     $   20,258     $   20,252     $   20,227  
                   
Summary of Asset Quality                  
Non-covered nonperforming                  
Nonaccrual loans  $   17,847     $   17,100     $   15,936     $   15,387     $   10,556  
Accruing loans past due 90 days or more     -         3         -         -         -  
Troubled debt restructurings ("TDRs")(1)    824         74         -         -         2,726  
Total non-covered nonperforming loans    18,671         17,177         15,936         15,387         13,282  
OREO not covered under FDIC loss share agreements     4,873         5,088         7,434         7,032         6,638  
Total non-covered nonperforming assets $  23,544     $   22,265     $   23,370     $   22,419     $   19,920  
Covered nonperforming                  
Nonaccrual loans  $   647     $   815     $   1,062     $   2,780     $   2,438  
Accruing loans past due 90 days or more     -         -         -         60         -  
Total covered nonperforming loans     647         815         1,062         2,840         2,438  
OREO covered under FDIC loss share agreements     4,034         4,079         5,382         5,834         6,324  
Total covered nonperforming assets $   4,681     $   4,894     $   6,444     $   8,674     $   8,762  
                   
Additional Information                  
Performing TDRs(2) $   13,890     $   13,965     $   13,841     $   14,025     $   11,808  
Total TDRs(3)    14,714         14,039         13,841         14,025         14,534  
                   
Asset Quality Ratios                  
Non-covered                   
Nonperforming loans to total loans   1.15 %     1.07 %     1.02 %     0.99 %     0.85 %
Nonperforming assets to total assets   0.99 %     0.93 %     0.98 %     0.91 %     0.80 %
Non-PCI allowance to nonperforming loans   108.08 %     117.06 %     126.41 %     130.88 %     151.85 %
Non-PCI allowance to total loans   1.24 %     1.26 %     1.29 %     1.29 %     1.29 %
Annualized net charge-offs to average loans   0.08 %     0.11 %     0.07 %     0.29 %     NM  
Non-covered and covered                  
Nonperforming loans to total loans   1.13 %     1.06 %     1.02 %     1.09 %     0.93 %
Nonperforming assets to total assets   1.15 %     1.10 %     1.20 %     1.20 %     1.10 %
Nonperforming assets to total loans and OREO   1.65 %     1.60 %     1.77 %     1.85 %     1.68 %
Allowance for loan losses to nonperforming loans   104.74 %     111.87 %     119.18 %     111.11 %     128.67 %
Allowance for loan losses to total loans   1.19 %     1.19 %     1.22 %     1.21 %     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 December 31,
    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) $   1,694,569     $   21,661       5.07 %   $   1,744,810     $   25,889       5.89 %
Securities available-for-sale     377,213         2,349       2.47 %       337,952         2,592       3.04 %
Securities held-to-maturity     72,568         194       1.06 %       44,538         140       1.25 %
Interest-bearing deposits     19,544         21       0.43 %       268,724         174       0.26 %
Total earning assets     2,163,894         24,225       4.44 %       2,396,024         28,795       4.77 %
Other assets      298,312                 328,105          
Total assets $   2,462,206             $   2,724,129          
                       
Liabilities                      
Interest-bearing deposits                      
Demand deposits  $   344,214     $   47       0.05 %   $   376,285     $   52       0.05 %
Savings deposits      530,977         78       0.06 %       564,892         127       0.09 %
Time deposits     561,443         1,077       0.76 %       731,026         1,624       0.88 %
Total interest-bearing deposits     1,436,634         1,202       0.33 %       1,672,203         1,803       0.43 %
Borrowings                      
Federal funds purchased     2,114         2       0.38 %       -         -       -  
Retail repurchase agreements     74,042         14       0.08 %       70,686         23       0.13 %
Wholesale repurchase agreements     50,000         474       3.76 %       50,000         473       3.75 %
FHLB advances and other borrowings     83,748         810       3.84 %       116,333         1,172       4.00 %
Total borrowings     209,904         1,300       2.46 %       237,019         1,668       2.79 %
Total interest-bearing liabilities     1,646,538         2,502       0.60 %       1,909,222         3,471       0.72 %
Noninterest-bearing demand deposits     446,623                 437,781          
Other liabilities     23,293                 26,133          
Total liabilities     2,116,454                 2,373,136          
Stockholders' equity     345,752                 350,993          
Total liabilities and stockholders' equity $   2,462,206             $   2,724,129          
Net interest income, FTE     $   21,723             $   25,324      
Net interest rate spread           3.84 %             4.05 %
Net interest margin           3.98 %             4.19 %
                       
                       
(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)
                       
  Year Ended December 31,
    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) $   1,680,021     $   87,768       5.22 %   $   1,744,520     $   95,707       5.49 %
Securities available-for-sale     363,359         9,575       2.64 %       410,136         12,400       3.02 %
Securities held-to-maturity     70,987         770       1.08 %       20,843         267       1.28 %
Interest-bearing deposits     98,639         267       0.27 %       98,090         291       0.30 %
Total earning assets     2,213,006         98,380       4.44 %       2,273,589         108,665       4.78 %
Other assets      307,928                 334,981          
Total assets $   2,520,934             $   2,608,570          
                       
Liabilities                      
Interest-bearing deposits                      
Demand deposits  $   343,036     $   203       0.06 %   $   366,932     $   206       0.06 %
Savings deposits      532,221         367       0.07 %       535,256         514       0.10 %
Time deposits     631,654         5,308       0.84 %       704,518         6,588       0.94 %
Total interest-bearing deposits     1,506,911         5,878       0.39 %       1,606,706         7,308       0.45 %
Borrowings                      
Federal funds purchased     535         2       0.37 %       892         3       0.34 %
Retail repurchase agreements     71,262         68       0.10 %       72,917         97       0.13 %
Wholesale repurchase agreements     50,000         1,878       3.76 %       50,000         1,878       3.76 %
FHLB advances and other borrowings     89,400         3,523       3.94 %       147,504         6,004       4.07 %
Total borrowings     211,197         5,471       2.59 %       271,313         7,982       2.94 %
Total interest-bearing liabilities     1,718,108         11,349       0.66 %       1,878,019         15,290       0.81 %
Noninterest-bearing demand deposits     433,936                 367,315          
Other liabilities     20,691                 20,617          
Total liabilities     2,172,735                 2,265,951          
Stockholders' equity     348,199                 342,619          
Total liabilities and stockholders' equity $   2,520,934             $   2,608,570          
Net interest income, FTE     $   87,031             $   93,375      
Net interest rate spread           3.78 %             3.97 %
Net interest margin           3.93 %             4.11 %
                       
                       
(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 December 31, 
    2015       2014  
      Average Yield/       Average Yield/
(Amounts in thousands) Interest(1)   Rate(1)   Interest(1)   Rate(1)
Earning assets              
Loans(2) $   21,661       5.07 %   $   25,889       5.89 %
Accretion income     2,493             2,745      
Less: cash accretion income     824             1,198      
Non-cash accretion income     1,669             1,547      
Non-recurring discount accretion     -             2,588      
Loans, excluding non-cash, non-recurring accretion income     19,992       4.68 %       21,754       4.95 %
Other earning assets     2,564       2.17 %       2,906       1.77 %
Total earning assets     22,556       4.13 %       24,660       4.08 %
Total interest-bearing liabilities     2,502       0.60 %       3,471       0.72 %
Net interest income, FTE $   20,054         $   21,189      
Net interest rate spread       3.53 %         3.36 %
Net interest margin       3.68 %         3.51 %
               
               
(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.
               
   Year Ended December 31, 
    2015       2014  
      Average Yield/       Average Yield/
(Amounts in thousands) Interest(1)   Rate(1)   Interest(1)   Rate(1)
Earning assets              
Loans(2) $   87,768       5.22 %   $   95,707       5.49 %
Accretion income     11,258             11,469      
Less: cash accretion income     4,149             4,412      
Non-cash accretion income     7,109             7,057      
Non-recurring discount accretion     -             2,588      
Loans, excluding non-cash, non-recurring accretion income     80,659       4.80 %       86,062       4.93 %
Other earning assets     10,612       1.99 %       12,958       2.45 %
Total earning assets     91,271       4.12 %       99,020       4.36 %
Total interest-bearing liabilities     11,349       0.66 %       15,290       0.81 %
Net interest income, FTE $   79,922         $   83,730      
Net interest rate spread       3.46 %         3.55 %
Net interest margin       3.61 %         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.
               

 

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

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