First Community Bancshares, Inc. Announces Third Quarter 2009 Results
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BLUEFIELD, Va.--(BUSINESS WIRE)-- First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) today reported a net loss for the quarter ended September 30, 2009, of $11.30 million, or $0.65 per common share, and a net loss available to common shareholders for the third quarter of 2009 of $12.31 million, or $0.71 per common share. Net loss and net loss available to common shareholders amounted to $3.67 million, or $0.26 per share, and $5.83 million, or $0.42 per share, respectively, for the nine months ended September 30, 2009. The losses recognized during the three and nine months ended September 30, 2009, were due to after-tax securities impairment charges of $19.33 million and $21.83 million, respectively, and are discussed in more detail below. Core earnings for the third quarter of 2009 amounted to $4.32 million, or $0.25 per diluted share, and $14.53 million, or $1.04 per diluted share for the nine months ended September 30, 2009 (see the attached reconciliation of GAAP to core earnings).
Third Quarter 2009 Highlights -
-- Repaid the U. S. Treasury's $41.50 million preferred stock investment
-- Completed the TriStone Community Bank acquisition and integration
-- Continued stable and strong asset quality metrics with a ratio of
non-performing assets to total assets at September 30, 2009 of 71 basis
points
-- Net interest margin increased to 3.68%, up six basis points from the
quarter ended June 30, 2009
-- Declared cash dividend of $0.10 per share of common stock
-- First Community Bank, N. A. remains "well-capitalized" as defined by
regulatory measures with a total risk-based capital ratio of 11.4% and a
Tier 1 leverage ratio of 8.7% at September 30, 2009
Commenting on third quarter results, Chief Executive Officer John M. Mendez said, "We have achieved a great deal in the third quarter and throughout 2009. The TriStone Community Bank acquisition, our continued loan quality, our capital raise and repayment of the TARP investment have resulted in a stronger balance sheet with greater earnings capacity, which has positioned us for success in 2010. The impairment charges are certainly a distraction and provide additional confirmation of how difficult the economy has been for the financial services industry. Although we have not completely eliminated our exposure to our investment securities, we believe that we have significantly reduced an element of risk in our balance sheet and will evaluate our position in these securities very closely in the fourth quarter."
On July 31, 2009, the Company completed its acquisition of TriStone Community Bank in Winston-Salem, North Carolina. TriStone Community Bank's Chief Executive Officer, Simpson O. "Skip" Brown, remains with First Community Bank and has assumed the role of Regional President for the Winston-Salem and East Tennessee areas.
Net Interest Income
Tax-equivalent net interest margin for the third quarter of 2009 was 3.68%. Net interest income was $17.54 million, an increase of $1.21 million, or 7.43%, from the third quarter of 2008. Interest income was $27.13 million, an increase of $580 thousand, or 2.18%, from the third quarter of 2008. The yield on loans dropped to 6.14% from 6.53% while average loans increased $187.75 million to $1.36 billion from the third quarter 2008, which was reflective of the acquisitions of Coddle Creek Financial and TriStone Community Bank in November 2008 and July 2009, respectively. Yields on loans have dropped as a direct result of the precipitous declines in market rates of interest as the prime lending rate decreased 175 basis points to 3.25% in the third quarter of 2009 from 5.00% in the third quarter of 2008.
The Company also maintained an average federal funds sold position of $65.52 million through the third quarter. This increased liquidity position continued to have a negative impact on net interest margin.
Third quarter interest expense was $9.59 million, a decrease of $633 thousand, or 6.60%, from the third quarter of 2008. Third quarter deposit costs increased $314 thousand compared to the third quarter of 2008, while the average rate paid on interest-bearing deposits decreased 44 basis points to 1.93%. Compared to the third quarter of 2008, interest costs on borrowings decreased $947 thousand to $2.60 million, while the average balance decreased $69.48 million due to the redemption of various wholesale borrowings and the Company's relatively liquid balance sheet. The cost of interest-bearing liabilities decreased 45 basis points during the third quarter of 2009 compared to the third quarter of 2008. Average interest bearing liabilities increased $205.44 million, or 13.01%, compared with the third quarter of 2008, and included a decrease of $20.56 million in Federal Home Loan Bank ("FHLB") borrowings.
Non-interest Income
During the third quarter of 2009, wealth management revenues increased 1.46% to $971 thousand, and at September 30, 2009 the Wealth Management Division reported $841 million in assets under management. Service charges on deposit accounts were $3.66 million for the third quarter of 2009, a decrease of $149 thousand, or 4.07%, from the third quarter of 2008. Insurance commissions were $1.57 million for the third quarter of 2009, an increase of $327 thousand, or 26.37%, from the same period in 2008. These revenues reflect GreenPoint Insurance Group's acquisition of Carr & Hyde Insurance in December 2008. Also, during the third quarter the Company recognized a preliminary gain on the acquisition of TriStone Community Bank of approximately $4.49 million.
Investment Securities Impairment Charges
The Company maintains a portfolio of investment securities that include pooled trust preferred securities. These securities generally represent obligations of banks and, to a lesser extent, insurance companies and real estate investment trusts. For the year ended December 31, 2008 and the six months ended June 30, 2009, the Company previously reported non-cash other-than-temporary impairment ("OTTI") charges of $15.46 million and $3.37 million, respectively, on its pooled trust preferred securities. During the third quarter of 2009, an increasing number of the banks and other companies that have issued obligations that collateralize the pooled trust preferred securities that the Company holds have defaulted or deferred the payment of interest, which adversely impacted the cash flows from such pooled trust preferred securities.
In order to enhance its methodology and assumptions for predicting individual issuer defaults within each of the securities, the Company recently migrated to a proprietary prediction analysis that considers many data points regarding the individual banks underlying the securities. Application of this predictive analysis to our pooled trust preferred securities portfolio resulted in an increase of projected default rates by issuers of the securities.
During the third quarter of 2009, the Company recognized pre-tax credit-related net impairment losses on its pooled trust preferred securities of $30.53 million, or $1.10 per common share on an after-tax basis. Both the credit-related net impairment losses and other comprehensive income ("OCI") noncredit-related losses primarily reflect the continuing deterioration of some of the banks that underlie these securities. The majority of the impairment recognized in the third quarter is related to the pooled trust preferred securities where the underlying collateral is predominantly from banking institutions. The pooled trust preferred securities were all originally rated "A" and had a carrying value at 21% of par at September 30, 2009. The Company also recognized additional impairment of $284 thousand on two equity securities in the third quarter.
Non-interest Expenses
Excluding OTTI, non-interest expenses for the third quarter of 2009 increased $3.38 million, or 23.48%, from the third quarter of 2008. The large increase is due to increased federal Deposit Insurance Corporation ("FDIC") deposit insurance premiums and merger-related expenses. Salaries and employee benefits increased $489 thousand, or 6.63%, from the third quarter of 2008. Coddle Creek Financial branches accounted for an increase in salaries and employee benefits of $294 thousand, TriStone Community Bank branches accounted for an increase of $148 thousand, and GreenPoint Insurance Group's acquisitions accounted for an increase of $309 thousand. The remainder of the Company showed an overall decrease in salaries and benefits of $262 thousand.
Occupancy and furniture and equipment expenses decreased $27 thousand, or 1.23%, during the third quarter of 2009 as compared to the same period in the prior year. Other operating expenses increased $268 thousand, or 5.86%, compared to the third quarter of 2008. The third quarter of 2009 efficiency ratio was 59.04% compared to 56.62% in the third quarter of 2008.
The acquisition of TriStone Community Bank was completed in July 2009 and its integration is largely complete. The Company is on track to realize its projected pre-tax cost savings of approximately $1.00 million, or 25%. During the third quarter of 2009 the Company incurred expenses related to the merger of approximately $1.51 million.
Credit Quality
The Company's loan quality measures at September 30, 2009 continue to compare favorably to the Company's peers and the industry. Total loan delinquencies of 30 days or more, including non-accrual loans, as a percent of total loans were 1.62% at September 30, 2009 compared with 1.35% at June 30, 2009. The ratio of allowance for loan losses as a percent of loans held for investment was 1.25% at September 30, 2009 compared with 1.31% at June 30, 2009. Accounting for the acquisition of TriStone Community Bank caused this ratio to decline by approximately 13 basis points, as no allowance was recorded at acquisition. Non-performing assets increased slightly to $16.23 million at September 30, 2009, or 0.71% of total assets, from $15.26 million at June 30, 2009. Non-performing loans as a percentage of loans held for investment decreased to 0.88% at September 30, 2009, compared with 0.92% at June 30, 2009.
Balance Sheet
Since December 31, 2008, consolidated assets have increased $165.03 million to $2.30 billion at September 30, 2009, due to the acquisition of TriStone Community Bank, an increasing deposit base, and $61.67 million in new capital from the June 2009 equity offering. Total stockholders' equity for the Company was $265.54 million, resulting in a book value per common share outstanding of $15.02 at September 30, 2009, compared to $220.34 million and $15.46 per common share at December 31, 2008. In September 2009, the Company's board of directors announced a $0.10 per share dividend on its common stock. 2009 is the Company's 24th consecutive year of paying dividends to common shareholders.
The Company will host an investor and media teleconference and webcast on Thursday, October 29, 2009 at 11:00 a.m. To access the teleconference, the toll-free number is (877) 407-8033. Alternatively, individuals may listen to the live or archived webcast of the conference call. To listen to the webcast, visit www.fcbinc.com and follow the link under the Current News Releases section. The Company's press release and financial summary will be available in this section, as well. Copies of the Company's third quarter 2009 earnings press release and financial summary will also be made available upon request via fax, email or postal service mail. To request a copy, contact David D. Brown, Chief Financial Officer, at (800) 425-0839.
First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.30 billion financial holding company and is the parent company of First Community Bank, N. A. First Community Bank, N. A. operates through sixty-one locations in the five states of Virginia, West Virginia, North Carolina, South Carolina, and Tennessee. First Community Bank, N. A. offers wealth management services through its Trust & Financial Services Division and Investment Planning Consultants, Inc., a registered investment advisory firm which offers wealth management and investment advice. The Company's wealth management division managed assets with a market value of $841 million at September 30, 2009. First Community is also the parent company of GreenPoint Insurance Group, Inc., a full-service insurance agency located in High Point, North Carolina. First Community Bancshares, Inc.'s common stock is traded on the NASDAQ Global Select Market under the symbol, "FCBC". Additional investor information can be found on the Internet at www.fcbinc.com.
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company's Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.
First Community Bancshares, Inc.
Condensed Consolidated Statements of Income/(Loss)
(Unaudited) Three Months Ended Nine Months Ended
(In Thousands, Except Share and Per September 30, September 30,
Share Data)
2009 2008 2009 2008
Interest and fees on
Interest loans held for $ 21,064 $ 19,266 $ 60,619 $ 60,394
investment
Income Interest on 4,562 5,567 14,903 17,101
securities-taxable
Interest on 1,449 1,708 4,527 5,775
securities-nontaxable
Interest on federal
funds sold and 55 9 133 260
deposits
Total interest income 27,130 26,550 80,182 83,530
Interest Interest on deposits 6,998 6,684 21,641 22,543
Expense Interest on 2,596 3,543 8,251 11,679
borrowings
Total interest 9,594 10,227 29,892 34,222
expense
Net interest income 17,536 16,323 50,290 49,308
Provision for loan 3,418 3,461 8,057 4,721
losses
Net interest income
after provision for 14,118 12,862 42,233 44,587
loan losses
Non-Interest Wealth management 971 957 3,088 2,954
income
Income Service charges on 3,659 3,808 10,307 10,370
deposit accounts
Other service charges 1,156 1,040 3,467 3,225
and fees
Insurance commissions 1,567 1,240 5,523 3,730
Net impairment losses
recognized in (30,811 ) (51 ) (34,796 ) (51 )
earnings
Security gains 866 163 2,930 2,133
Acquisition gain 4,493 - 4,493 -
Other operating 815 675 1,750 2,336
income
Total non-interest (17,284 ) 7,832 (3,238 ) 24,697
income
Non-Interest Salaries and employee 7,860 7,371 23,131 22,741
benefits
Expense Occupancy expense of 1,266 1,297 4,202 3,717
bank premises
Furniture and 928 924 2,758 2,798
equipment expense
Amortization of 262 166 751 484
intangible assets
FHLB debt prepayment - - 88 1,647
fees
FDIC premiums and 1,109 62 2,584 141
assessments
Merger-related 1,505 - 1,580 -
expenses
Other operating 4,838 4,570 14,011 13,904
expense
Total non-interest 17,768 14,390 49,105 45,432
expense
(Loss) income before (20,934 ) 6,304 (10,110 ) 23,852
income taxes
Income tax (benefit) (9,633 ) 1,753 (6,444 ) 6,751
expense
Net (loss) income (11,301 ) 4,551 (3,666 ) 17,101
Dividends on 1,011 - 2,160 -
preferred stock
Net (loss) income
available to common $ (12,312 ) $ 4,551 $ (5,826 ) $ 17,101
shareholders
Per Basic earnings per $ (0.71 ) $ 0.42 $ (0.42 ) $ 1.56
common share (EPS)
Share Diluted earnings per $ (0.71 ) $ 0.41 $ (0.42 ) $ 1.54
common share (DEPS)
Weighted average
shares outstanding:
Basic 17,427,434 10,956,867 13,918,599 10,992,901
Diluted 17,427,434 11,034,059 13,918,599 11,071,925
For the period:
Return on average -2.15 % 0.90 % -0.35 % 1.12 %
assets
Return on average -18.78 % 9.39 % -3.28 % 11.09 %
common equity
Cash dividends per $ 0.10 $ 0.28 $ 0.30 $ 0.84
common share
First Community Bancshares, Inc.
Condensed Quarterly Income/(Loss) Statements
As of and for the Quarter Ended
(Unaudited) September 30, June 30, March 31, December 31, September 30,
(In Thousands, Except Share and 2009 2009 2009 2008 2008
Per Share Data)
Interest and fees on
Interest loans held for $ 21,064 $ 19,571 $ 19,984 $ 19,830 $ 19,266
investment
Income Interest on 4,562 5,177 5,164 5,613 5,567
securities-taxable
Interest on 1,449 1,402 1,676 1,746 1,708
securities-nontaxable
Interest on federal
funds sold and 55 39 39 46 9
deposits
Total interest income 27,130 26,189 26,863 27,235 26,550
Interest Interest on deposits 6,998 7,076 7,567 7,249 6,684
Expense Interest on 2,596 2,792 2,863 3,459 3,543
borrowings
Total interest 9,594 9,868 10,430 10,708 10,227
expense
Net interest income 17,536 16,321 16,433 16,527 16,323
Provision for loan 3,418 2,552 2,087 2,701 3,461
losses
Net interest income
after provision for 14,118 13,769 14,346 13,826 12,862
loan losses
Non-Int Wealth management 971 1,133 984 1,146 957
income
Income Service charges on 3,659 3,491 3,157 3,697 3,808
deposit accounts
Other service charges 1,156 1,133 1,178 1,023 1,040
and fees
Insurance commissions 1,567 1,639 2,317 1,258 1,240
Net impairment losses
recognized in (30,811 ) (3,776 ) (209 ) (29,923 ) (51 )
earnings
Securities gains 866 1,653 411 (234 ) 163
(losses)
Acquisition gain 4,493 - - - -
Other operating 815 349 586 659 675
income
Total non-interest (17,284 ) 5,622 8,424 (22,374 ) 7,832
income
Non-Int Salaries and employee 7,860 7,405 7,866 7,135 7,371
benefits
Expense Occupancy expense of 1,266 1,333 1,603 1,385 1,297
bank premises
Furniture and 928 892 938 942 924
equipment expense
Amortization of 262 244 245 205 166
intangible assets
FHLB debt prepayment - 88 - - -
fees
FDIC premiums and 1,109 1,287 188 61 62
assessments
Merger-related 1,505 74 1 - -
expenses
Other operating 4,838 4,820 4,353 5,305 4,570
expense
Total non-interest 17,768 16,143 15,194 15,033 14,390
expense
(Loss) income before (20,934 ) 3,248 7,576 (23,581 ) 6,304
income taxes
Income tax (benefit) (9,633 ) 843 2,346 (9,561 ) 1,753
expense
Net (loss) income (11,301 ) 2,405 5,230 (14,020 ) 4,551
Preferred dividends 1,011 578 571 255 -
Net (loss) income
available to common $ (12,312 ) $ 1,827 $ 4,659 $ (14,275 ) $ 4,551
shareholders
Per Basic EPS $ (0.71 ) $ 0.14 $ 0.40 $ (1.27 ) $ 0.42
Share Diluted EPS $ (0.71 ) $ 0.14 $ 0.40 $ (1.27 ) $ 0.41
Cash dividends per $ 0.10 $ 0.20 $ - $ 0.28 $ 0.28
common share
Weighted average
shares outstanding:
Basic 17,427,434 12,696,202 11,567,769 11,252,183 10,956,867
Diluted 17,427,434 12,741,080 11,616,568 11,252,183 11,034,059
First Community Bancshares, Inc.
Reconciliation of GAAP Net Income/(Loss) to Core Earnings
(Unaudited) Three Months Ended Nine Months Ended
(In Thousands, Except Per Share September 30, September 30,
Data)
2009 2008 2009 2008
Net (loss) income, GAAP $ (11,301 ) $ 4,551 $ (3,666 ) $ 17,101
Non-GAAP adjustments:
Security (gains)/losses (866 ) (163 ) (2,930 ) (2,133 )
Acquisition gain (4,493 ) - (4,493 ) -
Merger expenses 1,505 1,580
FHLB debt prepayment fees - - 88 1,647
Other-than-temporary security 30,811 51 34,796 51
impairments
FDIC special assessments - - 988 -
Other non-core, non-recurring 525 243 1,558 686
items
Total adjustments to core 27,482 131 31,587 251
earnings
Tax effect 11,862 51 13,391 98
Core earnings, non-GAAP $ 4,319 $ 4,631 $ 14,530 $ 17,254
Core return on average assets 0.75 % 0.92 % 0.88 % 1.13 %
Core return on average equity 6.59 % 9.56 % 8.17 % 11.19 %
Core diluted earnings per share $ 0.25 $ 0.42 $ 1.04 $ 1.56
Efficiency Ratio Calculation
(Unaudited) Three Months Ended Nine Months Ended
(Dollars In Thousands) September 30, September 30,
2009 2008 2009 2008
Noninterest expenses, GAAP $ 17,768 $ 14,390 $ 49,105 $ 45,432
Non-GAAP adjustments:
Merger expenses (1,505 ) - (1,580 ) -
FHLB debt prepayment fees - - (88 ) (1,647 )
Other non-core, non-recurring (525 ) (243 ) (2,546 ) (686 )
items
Adjusted noninterest expenses 15,738 14,147 44,891 43,099
Net interest income, GAAP 17,536 16,323 50,290 49,308
Noninterest income, GAAP (17,284 ) 7,832 (3,238 ) 24,697
Non-GAAP adjustments:
Tax-equivalency adjustment 793 941 2,482 3,171
Security (gains)/losses (866 ) (163 ) (2,930 ) (2,133 )
Other-than-temporary security 30,811 51 34,796 51
impairments
Acquisition gain (4,493 ) - (4,493 ) -
Adjusted net interest and 26,497 24,984 76,907 75,094
noninterest income
Efficiency Ratio 59.40 % 56.62 % 58.37 % 57.39 %
First Community Bancshares, Inc.
Quarterly Balance Sheets
For the Quarter Ended
September 30, June 30, March 31, December 31, September 30,
2009 2009 2009 2008 2008
(Unaudited) (Dollars In Thousands)
Cash and due $ 51,905 $ 116,095 $ 100,881 $ 39,310 $ 53,238
from banks
Interest-bearing
deposits with 3,352 28,354 79 7,129 664
banks
Securities
available for 575,800 521,879 549,664 520,723 513,001
sale
Securities held 7,452 7,725 8,471 8,670 9,043
to maturity
Loans held for 4,376 802 1,445 1,024 140
sale
Loans held for
investment, net 1,396,617 1,269,443 1,276,790 1,298,159 1,168,286
of unearned
income
Less allowance 17,444 16,678 16,555 15,978 14,510
for loan losses
Net loans 1,383,549 1,253,568 1,261,680 1,283,205 1,153,916
Premises and 57,695 55,193 54,893 55,024 50,504
equipment
Other real 3,955 3,615 3,114 1,326 896
estate owned
Interest 9,046 8,934 8,848 10,084 9,156
receivable
Intangible 90,134 89,534 89,338 89,612 72,222
assets
Other assets 115,453 118,313 122,173 118,231 104,817
Total Assets $ 2,298,341 $ 2,203,210 $ 2,199,141 $ 2,133,314 $ 1,967,457
Deposits:
Demand $ 198,107 $ 202,543 $ 207,947 $ 199,712 $ 214,582
Interest-bearing 216,184 195,905 194,934 185,117 186,403
demand
Savings 351,450 311,435 319,007 309,577 312,451
Time 896,716 837,475 861,556 809,352 636,108
Total Deposits 1,662,457 1,547,358 1,583,444 1,503,758 1,349,544
Interest, taxes
and other 24,374 27,630 28,293 27,423 20,494
liabilities
Federal funds - - - - 29,500
purchased
Securities sold
under agreements 147,042 153,804 153,824 165,914 180,388
to repurchase
FHLB and other 198,932 190,863 215,870 215,877 216,720
indebtedness
Total 2,032,805 1,919,655 1,981,431 1,912,972 1,796,646
Liabilities
Preferred stock, - 40,525 40,471 40,419 -
net of discount
Common stock 18,083 17,341 12,051 12,051 11,499
Additional 192,799 183,955 127,992 128,526 108,862
paid-in capital
Retained 102,920 116,997 118,021 107,231 124,731
earnings
Treasury stock, (12,768 ) (13,712 ) (14,453 ) (15,368 ) (16,882 )
at cost
Accumulated
other (35,498 ) (61,551 ) (66,372 ) (52,517 ) (57,399 )
comprehensive
loss
Total
Stockholders' 265,536 283,555 217,710 220,342 170,811
Equity
Total
Liabilities and $ 2,298,341 $ 2,203,210 $ 2,199,141 $ 2,133,314 $ 1,967,457
Stockholders'
Equity
Actual shares
outstanding at 17,680,328 16,909,592 11,596,249 11,567,449 10,967,597
period end
Book value per
common share at $ 15.02 $ 14.31 $ 15.20 $ 15.46 $ 15.57
period end
Tangible book
value per common $ 9.92 $ 9.02 $ 7.49 $ 7.71 $ 8.99
share at period
end (1)
(1) Tangible book value per common share is defined as stockholders' equity
less goodwill and other intangibles divided by common shares outstanding.
First Community Bancshares, Inc.
Selected Financial Information
As of and for the Quarter Ended
September June 30, March 31, December 31, September 30,
30,
(Unaudited) 2009 2009 2009 2008 2008
Summary of
Loan Loss (Dollars in Thousands)
Experience
Allowance for
loan losses:
Beginning $ 16,678 $ 16,555 $ 15,978 $ 14,510 $ 13,433
balance
Balance - - - 1,169 -
acquired
Provision for 3,418 2,552 2,087 2,701 3,461
loan losses
Charge-offs (2,990 ) (2,681 ) (1,730 ) (2,606 ) (2,601 )
Recoveries 338 252 220 204 217
Net (2,652 ) (2,429 ) (1,510 ) (2,402 ) (2,384 )
charge-offs
Ending balance $ 17,444 $ 16,678 $ 16,555 $ 15,978 $ 14,510
Summary of
Asset Quality
Nonaccrual $ 12,278 $ 11,645 $ 10,628 $ 12,763 $ 6,997
loans
Loans 90 days
or more past - - - - -
due and still
accruing
Total
non-performing 12,278 11,645 10,628 12,763 6,997
loans
Other real 3,955 3,615 3,114 1,326 896
estate owned
Total
non-performing $ 16,233 $ 15,260 $ 13,742 $ 14,089 $ 7,893
assets
Asset Quality
Ratios
Non-performing
loans as a
percentage of 0.88 % 0.92 % 0.83 % 0.98 % 0.60 %
loans held for
investment
Non-performing
assets as a 0.71 % 0.69 % 0.62 % 0.66 % 0.40 %
percentage of
total assets
Annualized net
charge-offs as
a percentage 0.77 % 0.77 % 0.47 % 0.77 % 0.81 %
of average
loans held for
investment
Allowance for
loan losses as
a percentage 1.25 % 1.31 % 1.30 % 1.23 % 1.24 %
of loans held
for investment
Ratio of
allowance for
loan losses to 1.42 1.43 1.56 1.25 2.07
non-performing
loans
First Community Bancshares, Inc.
Nonaccrual Loan Detail
(Unaudited) As of September 30, 2009
Nonaccrual
Loans to
Loans Nonaccrual Loans
(Dollars in Thousands) Outstanding Loans Outstanding
Commercial
Commercial & industrial $ 90,015 $ 454 0.50 %
Agriculture 1,033 185 17.95 %
Total commercial 91,048 639 0.70 %
Commercial real estate
Construction, land development & vacant 137,750 2,078 1.51 %
land
Non-owner occupied 176,029 1,934 1.10 %
Owner occupied 164,193 2,296 1.40 %
Farmland 39,159 68 0.17 %
Total commercial real estate 517,131 6,376 1.23 %
Consumer 62,995 157 0.25 %
Residential real estate
Residential 543,689 4,736 0.87 %
Multi-family 73,289 - 0.00 %
Home equity lines 108,466 369 0.34 %
Total residential 725,444 5,105 0.70 %
Total loans $ 1,396,618 $ 12,278 0.88 %
Pooled Trust Preferred Securities Detail
September 30, 2009
(Unaudited) Unrealized
(Loss) Current
Class/ Par Book Fair Recognized Quarter Cumulative
Deal Name Tranche Value Value Value In OCI OTTI OTTI
(In
Thousands)
PreTSL X B1 $ 10,028 $ 5,697 $ 2,967 $ (2,730 ) $ 3,110 $ 4,331
PreTSL XII B1 20,114 12,685 8,016 (4,669 ) 6,980 7,429
PreTSL XIV B1 9,000 8,890 4,650 (4,240 ) 110 110
PreTSL XVI C 4,039 1,639 838 (801 ) 2,403 2,402
PreTSL XXII C1 12,624 10,050 2,575 (7,475 ) 2,628 2,628
PreTSL C1 7,923 7,964 2,811 (5,153 ) - -
XXIII
PreTSL XXVI C1 7,010 6,102 1,194 (4,908 ) 908 908
SOLOSO 2007 A3L 18,400 - - - 1,244 18,400
1A
Trapeza Ser D 20,233 7,089 51 (7,038 ) 13,144 13,144
13A
$ 109,371 $ 60,116 $ 23,102 $ (37,014 ) $ 30,527 $ 49,352
First Community Bancshares, Inc.
Selected Financial Information
As of and for the Quarter Ended
September 30, June 30, March 31, December 31, September 30,
(Unaudited) 2009 2009 2009 2008 2008
(Dollars in Thousands)
Ratios
Return on -2.15 % 0.34 % 0.87 % -2.77 % 0.90 %
average assets
Return on
average common -18.78 % 3.82 % 10.61 % -33.28 % 9.39 %
equity
Net interest 3.68 % 3.62 % 3.73 % 3.93 % 3.90 %
margin
Efficiency ratio 59.40 % 58.62 % 58.25 % 57.97 % 56.62 %
for the quarter
Efficiency ratio 58.37 % 58.43 % 58.25 % 57.54 % 57.39 %
year-to-date
Equity as a
percent of total 11.55 % 12.87 % 9.90 % 10.33 % 8.68 %
assets at end of
period
Average earning
assets as a
percentage of 87.14 % 86.78 % 86.68 % 86.38 % 87.89 %
average total
assets
Average loans as
a percentage of 83.25 % 81.19 % 82.83 % 86.01 % 88.25 %
average deposits
Average Balances
Investments $ 536,485 $ 564,934 $ 521,776 $ 508,289 $ 582,605
Loans 1,362,603 1,269,584 1,292,179 1,235,023 1,174,855
Earning assets 1,978,626 1,892,403 1,887,583 1,768,113 1,758,895
Total assets 2,270,592 2,180,779 2,177,762 2,046,879 2,001,191
Deposits 1,636,744 1,563,640 1,560,109 1,435,956 1,331,293
Interest-bearing 1,437,763 1,361,970 1,360,798 1,230,547 1,120,138
deposits
Borrowings 347,292 359,628 372,282 400,393 459,475
Interest-bearing 1,785,055 1,721,597 1,733,080 1,630,940 1,579,613
liabilities
Equity 260,126 233,093 219,653 189,122 192,743
Tax equivalent
net interest 18,329 17,093 17,349 17,483 17,264
income
First Community Bancshares, Inc.
Consolidated Average Balance Sheets, Yields, and Rates
Three Months Ended September 30,
2009 2008
Yield/ Yield/
Average Interest Rate Average Interest Rate
(Unaudited) Balance (1) (1) Balance (1) (1)
(Dollars in Thousands)
Earning assets
Loans held for $ 1,362,603 $ 21,078 6.14 % $ 1,174,855 $ 19,286 6.53 %
investment (2)
Securities 536,485 6,636 4.91 % 573,046 8,035 5.58 %
available for sale
Held to maturity 7,575 154 8.07 % 9,559 161 6.70 %
securities
Interest-bearing 71,963 55 0.30 % 1,435 9 2.50 %
deposits with banks
Total earning 1,978,626 $ 27,923 5.60 % 1,758,895 $ 27,491 6.22 %
assets
Other assets 291,966 242,296
Total $ 2,270,592 $ 2,001,191
Interest-bearing
liabilities
Interest-bearing $ 209,569 $ 110 0.21 % $ 178,632 $ 73 0.16 %
demand deposits
Savings deposits 339,601 639 0.75 % 309,364 1,172 1.51 %
Time deposits 888,593 6,249 2.79 % 632,142 5,439 3.42 %
Fed funds purchased - - - 42,702 251 2.34 %
Retail repurchase 101,065 333 1.31 % 149,984 730 1.94 %
agreements
Wholesale
repurchase 50,000 474 3.76 % 50,000 389 3.10 %
agreements
FHLB borrowings &
other long-term 196,227 1,789 3.62 % 216,789 2,173 3.99 %
debt
Total
interest-bearing 1,785,055 9,594 2.13 % 1,579,613 10,227 2.58 %
liabilities
Noninterest-bearing 198,981 211,155
demand deposits
Other liabilities 26,430 17,680
Stockholders' 260,126 192,743
equity
Total $ 2,270,592 $ 2,001,191
Net interest income $ 18,329 $ 17,264
Net interest rate 3.47 % 3.64 %
spread (3)
Net interest margin 3.68 % 3.90 %
(4)
(1) Fully taxable equivalent at the rate of 35%.
(2) Non-accrual loans are included in average balances outstanding but with no
related interest income during the period of non-accrual.
(3) Represents the difference between the yield on earning assets and cost of
funds.
(4) Represents tax equivalent net interest income divided by average earning
assets.
First Community Bancshares, Inc.
Consolidated Average Balance Sheets, Yields, and Rates
Nine Months Ended September 30,
2009 2008
Yield/ Yield/
Average Interest Rate Average Interest Rate
(Unaudited) Balance (1) (1) Balance (1) (1)
(Dollars in Thousands)
Earning assets
Loans held for $ 1,308,380 $ 60,662 6.20 % $ 1,187,006 $ 60,456 6.80 %
investment (2)
Securities 535,710 21,377 5.34 % 602,802 25,310 5.61 %
available for sale
Held to maturity 7,954 490 8.24 % 10,849 675 8.31 %
securities
Interest-bearing 67,819 133 0.26 % 12,363 260 2.81 %
deposits with banks
Total earning 1,919,863 $ 82,662 5.76 % 1,813,020 $ 86,701 6.39 %
assets
Other assets 290,180 232,933
Total $ 2,210,043 $ 2,045,953
Interest-bearing
liabilities
Interest-bearing $ 199,235 $ 270 0.18 % $ 171,661 $ 213 0.17 %
demand deposits
Savings deposits 323,387 1,835 0.76 % 314,903 3,847 1.63 %
Time deposits 864,503 19,535 3.02 % 648,282 18,483 3.81 %
Fed funds purchased - - - 18,241 330 2.42 %
Retail repurchase 103,000 1,056 1.37 % 151,107 2,540 2.25 %
agreements
Wholesale
repurchase 50,000 1,449 3.87 % 50,000 1,077 2.88 %
agreements
FHLB borrowings &
other long-term 206,643 5,745 3.72 % 252,520 7,732 4.09 %
debt
Total
interest-bearing 1,746,768 29,890 2.29 % 1,606,714 34,222 2.85 %
liabilities
Noninterest-bearing 199,986 213,934
demand deposits
Other liabilities 25,517 19,326
Stockholders' 237,772 205,979
equity
Total $ 2,210,043 $ 2,045,953
Net interest income $ 52,772 $ 52,479
Net interest rate 3.47 % 3.54 %
spread (3)
Net interest margin 3.68 % 3.87 %
(4)
(1) Fully taxable equivalent at the rate of 35%.
(2) Non-accrual loans are included in average balances outstanding but with no
related interest income during the period of non-accrual.
(3) Represents the difference between the yield on earning assets and cost of
funds.
(4) Represents tax equivalent net interest income divided by average earning
assets.
Source: First Community Bancshares, Inc.
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