EX-99.1 2 v230006_ex99-1.htm Unassociated Document
Exhibit 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE:
July 27, 2011
  
FOR MORE INFORMATION,
CONTACT:     David D. Brown
   
           (276) 326-9000

First Community Bancshares, Inc. Announces Second Quarter 2011 Results
and Quarterly Cash Dividend to Common Stockholders

Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) (the “Company”) today reported net income for the quarter ended June 30, 2011, of $5.73 million, which is an increase of $597 thousand, or 11.64%, over the prior year.  Net income to common shareholders for the quarter ended June 30, 2011, was $5.60 million, or $0.31 per diluted common share.  Net income for the six months ended June 30, 2011, totaled $11.48 million and net income available to common shareholders totaled $11.35 million, or $0.63 per diluted common share.  Net income for the first half of 2011 reflects an increase of $1.07 million, or 10.28%, over the prior year.

Additionally, the Company announced today that the board of directors declared a quarterly cash dividend to common stockholders of ten cents ($0.10) per common share.  The quarterly dividend is payable to common stockholders of record August 12, 2011, and is expected to be paid on or about August 26, 2011.  2011 is the 26th consecutive year of cash dividend payments to stockholders.

Second Quarter 2011 Highlights –

 
·
Return on average assets for the second quarter of 2011 improved to 1.02%, as compared to 0.91% for the second quarter of 2010.
 
·
Tangible book value per common share increased to $11.02, up $0.99, or 9.87%, from December 31, 2010.
 
·
The ratio of non-performing assets to total assets was 129 basis points, an improvement of 3 basis points from year-end 2010.
 
·
The Company’s efficiency ratio of 59.03% for the second quarter of 2011 was a significant improvement over the first quarter of 2011.
 
·
The Company significantly exceeds regulatory “well-capitalized” targets with a total risk-based capital ratio of 17.59%, Tier 1 risk-based capital ratio of 16.33%, and a Tier 1 leverage ratio of 11.00% at June 30, 2011.
 
·
During the second quarter of 2011, the Company announced the completion of an $18.92 million capital raise through the private placement of mandatorily convertible preferred stock.  The Company plans to use the capital in furtherance of its strategic growth plans.

Net Interest Income

Tax-equivalent net interest margin for the second quarter of 2011 was 3.83% compared to 3.92% from the comparable quarter of 2010.  Net interest income was $17.75 million for the second quarter of 2011, a decrease of $788 thousand, or 4.25%, from the second quarter of 2010.  Total interest income was $23.34 million for the second quarter of 2011, a decrease of $2.82 million, or 10.78% from the second quarter of 2010.  The decrease in interest income reflects continued low loan demand and the Company’s conservative deployment of excess cash to manage its long-term risk profile.  The yield on loans decreased to 5.88% for the second quarter of 2011 from 6.04% in the same period of the prior year, while average loans decreased $23.54 million between the comparable periods to $1.37 billion as loan demand remains quite low.  The Company continued to maintain a high level of liquidity with average overnight liquidity of $174.78 million during the second quarter of 2011.

Second quarter 2011 interest expense was $5.58 million, a decrease of $2.03 million, or 26.69%, from the second quarter of 2010.  Second quarter 2011 deposit costs decreased $1.83 million compared to the second quarter of 2010, which was primarily due to a decrease in the average rate paid on interest-bearing deposits of 48 basis points to 0.95%.  Compared to the second quarter of 2010, interest costs on borrowings decreased $199 thousand to $2.31 million for the second quarter of 2011, while the average balance decreased $42.14 million from the comparable period due to the redemption of various wholesale borrowings.  The cost of interest-bearing liabilities decreased 39 basis points during the second quarter of 2011 compared to the second quarter of 2010.  Average interest-bearing liabilities decreased $88.89 million, or 5.01% for the second quarter of 2011 compared with the second quarter of 2010, which included a decrease of $29.68 million in Federal Home Loan Bank (“FHLB”) borrowings and other long-term debt.
 
 
 
 
Provision

The provision for loan losses for the second quarter and first half of 2011 amounted to $3.08 million and $4.69 million, respectively.  These compare very favorably to the provision for loan losses for the second quarter and first half of 2010 of $3.60 million and $7.26 million, respectively.  The second quarter of 2011 marks the fourth consecutive quarter of provision decreases compared to the prior year’s comparable quarter.

Noninterest Income

During the second quarter of 2011, wealth management revenues decreased $82 thousand, or 8.10%, to $930 thousand from the second quarter of 2010.  The Wealth Management Division reported $892 million in assets under management at June 30, 2011.  Service charges on deposit accounts were $3.35 million for the second quarter of 2011, an increase of $6 thousand, or 0.18%, from the second quarter of 2010.  Insurance commissions were $1.56 million for the second quarter of 2011, an increase of $172 thousand, or 12.38%, from the previous year.

Noninterest Expenses

Noninterest expenses for the second quarter of 2011 increased $1.14 million, or 6.87%, compared to the second quarter of 2010.  Salaries and employee benefits increased $198 thousand, or 2.33%, in the second quarter of 2011 compared to the same period in the prior year.  Federal Deposit Insurance Corporation (“FDIC”) deposit insurance premiums decreased $296 thousand, or 41.69% in the second quarter of 2011, compared to the second quarter of 2010, primarily due to the FDIC’s change in assessment methodology for deposit insurance to one based on tangible assets.  Other operating expenses were $5.90 million for the second quarter of 2011, an increase of $1.24 million, or 26.63%, from the second quarter of 2010.  Expenses and losses associated with other real estate amounted to $1.76 million for the second quarter of 2011, compared with $485 thousand last year.

Conversion to State Charter

Effective with the close of business June 28, 2011, the Company’s wholly-owned banking subsidiary became a Virginia state-chartered banking institution operating under the name First Community Bank.  The change to a state charter does not affect operations or products, and customers continue to receive the same excellent service they have come to know with the First Community family of companies.  The bank subsidiary will continue to operate as a Federal Reserve Bank member in the Federal Reserve Fifth District.  The move does not affect FDIC insurance coverage.  The move aligns the Company’s primary bank regulation with the Virginia Bureau of Financial Institutions and the Federal Reserve Bank of Richmond, both of which are based in the Company’s home state of Virginia.  Additionally, the Company expects to save approximately $150 thousand in annual regulatory assessments.

Credit Quality

The Company’s loan quality measures at June 30, 2011, continue to compare favorably to the industry.  Total loan delinquencies of 30 days or more, including non-accrual loans, as a percent of total loans were 2.12% at June 30, 2011.  This compares favorably to the most recent Federal Reserve report of the Company’s peer group of bank holding companies with total assets between $1 and $3 billion, which indicates peer total loan delinquencies of 4.39%.  The ratio of allowance for loan losses as a percent of loans held for investment was 1.93% at June 30, 2011, compared to 1.93% at March 31, 2011, and 1.91% at December 31, 2010.

Total non-performing assets, which include unseasoned loan restructurings and other real estate owned, were 1.29% of total assets at June 30, 2011, and non-performing loans as a percentage of loans held for investment were 1.67%.  These levels are much better by comparison with those in the Federal Reserve peer group, which were last reported as total non-performing assets to total assets of 3.18% and non-performing loans to total loans of 3.43%.  Included in non-performing assets are $878 thousand of unseasoned loan restructurings at June 30, 2011.
 
 
 
 
Balance Sheet

Consolidated assets were $2.21 billion at June 30, 2011.  Total stockholders’ equity was $302.20 million at June 30, 2011, resulting in a book value per common share outstanding of $15.72, compared to total stockholders’ equity of $269.88 million and a book value per common share of $15.11 at December 31, 2010.  During the second quarter of 2011, the Company paid a $0.10 per share dividend on common shares.

The Company will host an investor and media teleconference and webcast on Thursday, July 28, 2011, 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 Investor Relations section.  The Company’s press release and financial summary will be available in this section, as well.  Copies of the Company’s second quarter 2011 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 (276) 326-9000.

Non-GAAP Presentations

The Company prepares its financial statements under accounting principles generally accepted in the United States, or “GAAP.”  However, this press release also refers to certain non-GAAP financial measures that we believe, when considered together with GAAP financial measures, provide investors with important information regarding our operational performance.  An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.

Core earnings are a non-GAAP financial measure that reflects net income excluding non-recurring income and expense items, taxes, loan loss provisions, losses on other real estate owned, as well as gains, losses, impairment losses on securities, and goodwill impairments from net income.  These excluded items are difficult to predict and we believe that core earnings provide the Company and investors with a valuable tool to evaluate the Company’s financial results.

The adjusted efficiency ratio is a non-GAAP financial measure that is computed by dividing core non-interest expense by the sum of net interest income on a tax equivalent basis and core non-interest income.  We believe that this measure provides investors with important information about our operating efficiency.  Comparison of our adjusted efficiency ratio with those of other companies may not be possible because other companies may calculate the adjusted efficiency ratio differently.

Tangible book value is a non-GAAP financial measure that is defined as stockholders’ equity less goodwill and other intangible assets.

About First Community Bancshares, Inc.

First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.21 billion financial holding company and is the parent company of First Community Bank.  First Community Bank operates through fifty-six locations in the four states of Virginia, West Virginia, North Carolina, and Tennessee.  First Community Bank 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 $892 million at June 30, 2011.  The Company is also the parent company of GreenPoint Insurance Group, Inc., a full-service insurance agency headquartered in High Point, North Carolina, that operates ten offices.  The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol, “FCBC”.  Additional investor information can be found on the 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

   
Three Months Ended
    
Six Months Ended
  
(Unaudited)
  
June 30,
    
June 30,
  
(In Thousands, Except Share and Per Share Data)
  
2011
    
2010
    
2011
    
2010
  
Interest Income
                        
Interest and fees on loans held for investment
   $ 20,094     $ 20,997     $ 40,549     $ 42,351  
Interest on securities — taxable
     1,850       3,730       4,383       7,516  
Interest on securities — nontaxable
     1,291       1,394       2,824       2,820  
Interest on deposits in banks
     100       34       169       80  
Total interest income
     23,335       26,155       47,925       52,767  
Interest Expense
                                
Interest on deposits
     3,273       5,106       7,153       10,608  
Interest on borrowings
     2,308       2,507       4,743       4,998  
Total interest expense
     5,581       7,613       11,896       15,606  
Net interest income
     17,754       18,542       36,029       37,161  
Provision for loan losses
     3,079       3,596       4,691       7,261  
Net interest income after provision for loan losses
     14,675       14,946       31,338       29,900  
Noninterest Income
                                
Wealth management income
     930       1,012       1,824       1,897  
Service charges on deposit accounts
     3,353       3,347       6,384       6,339  
Other service charges and fees
     1,461       1,250       2,867       2,531  
Insurance commissions
     1,561       1,389       3,504       3,590  
Net impairment losses recognized in earnings
     -       (185 )     (527 )     (185 )
Net gains on sale of securities
     3,224       1,201       5,060       1,451  
Other operating income
     834       890       1,750       1,859  
Total noninterest income
     11,363       8,904       20,862       17,482  
Noninterest Expense
                                
Salaries and employee benefits
     8,685       8,487       17,814       16,456  
Occupancy expense of bank premises
     1,568       1,570       3,215       3,279  
Furniture and equipment expense
     909       918       1,824       1,822  
Amortization of intangible assets
     261       253       520       509  
FDIC premiums and assessments
     414       710       1,292       1,411  
Prepayment penalties on FHLB advances
     -       -       471       -  
Other operating expense
     5,901       4,660       10,665       9,193  
Total noninterest expense
     17,738       16,598       35,801       32,670  
Income before income taxes
     8,300       7,252       16,399       14,712  
Income tax expense
     2,572       2,121       4,920       4,303  
Net income
     5,728       5,131       11,479       10,409  
Dividends on preferred stock
     131       -       131       -  
Net income available to common shareholders
   $ 5,597     $ 5,131     $ 11,348     $ 10,409  
Per Share
                                
Basic earnings per common share
   $ 0.31     $ 0.29     $ 0.63     $ 0.59  
Diluted earnings per common share
   $ 0.31     $ 0.29     $ 0.63     $ 0.59  
Weighted average shares outstanding:
                                
Basic
     17,895,904       17,787,325       17,882,006       17,776,500  
Diluted
     18,534,489       17,805,393       18,200,184       17,792,535  
For the period:
                                
Return on average assets
     1.02 %     0.91 %     1.03 %     0.93 %
Return on average common equity
     7.91 %     7.73 %     8.18 %     8.02 %
Cash dividends per common share
   $ 0.10     $ 0.10     $ 0.20     $ 0.20  
 
 
- 4 -
 

First Community Bancshares, Inc.
Condensed Quarterly Statements of Income
 
   
As of and for the Quarter Ended
  
(Unaudited)  
  
June 30,
    
March 31,
    
December 31,
    
September 30,
    
June 30,
  
(In Thousands, Except Share and Per Share Data)
  
2011
    
2011
    
2010
    
2010
    
2010
  
Interest Income
                              
Interest and fees on loans held for investment
   $ 20,094     $ 20,455     $ 20,950     $ 21,440     $ 20,997  
Interest on securities — taxable
     1,850       2,533       2,293       2,895       3,730  
Interest on securities — nontaxable
     1,291       1,533       1,672       1,451       1,394  
Interest on deposits in banks
     100       69       60       54       34  
Total interest income
     23,335       24,590       24,975       25,840       26,155  
Interest Expense
                                        
Interest on deposits
     3,273       3,880       4,407       4,872       5,106  
Interest on borrowings
     2,308       2,435       2,469       2,371       2,507  
Total interest expense
     5,581       6,315       6,876       7,243       7,613  
Net interest income
     17,754       18,275       18,099       18,597       18,542  
Provision for loan losses
     3,079       1,612       3,686       3,810       3,596  
Net interest income after provision  for loan losses
     14,675       16,663       14,413       14,787       14,946  
Noninterest Income
                                        
Wealth management income
     930       894       1,022       909       1,012  
Service charges on deposit accounts
     3,353       3,031       3,332       3,457       3,347  
Other service charges and fees
     1,461       1,406       1,299       1,244       1,250  
Insurance commissions
     1,561       1,943       1,474       1,663       1,389  
Net impairment losses recognized in earnings
     -       (527 )     -       -       (185 )
Net gains on sale of securities
     3,224       1,836       4,248       2,574       1,201  
Other operating income
     834       916       713       1,091       890  
Total noninterest income
     11,363       9,499       12,088       10,938       8,904  
Noninterest Expense
                                        
Salaries and employee benefits
     8,685       9,129       9,319       8,753       8,487  
Occupancy expense of bank premises
     1,568       1,647       1,586       1,573       1,570  
Furniture and equipment expense
     909       915       965       926       918  
Amortization of intangible assets
     261       259       263       260       253  
FDIC premiums and assessments
     414       878       727       718       710  
Prepayment penalties on FHLB advances
     -       471       -       -       -  
Goodwill impairment
     -       -       1,039       -       -  
Other operating expense
     5,901       4,764       5,945       5,199       4,660  
Total noninterest expense
     17,738       18,063       19,844       17,429       16,598  
Income before income taxes
     8,300       8,099       6,657       8,296       7,252  
Income tax expense
     2,572       2,348       1,772       1,743       2,121  
Net income
     5,728       5,751       4,885       6,553       5,131  
Dividends on preferred stock
     131       -       -       -       -  
Net income available to  common shareholders
   $ 5,597     $ 5,751     $ 4,885     $ 6,553     $ 5,131  
Per Share
                                        
Basic earnings per common share
   $ 0.31     $ 0.32     $ 0.27     $ 0.37     $ 0.29  
Diluted earnings per common share
   $ 0.31     $ 0.32     $ 0.27     $ 0.37     $ 0.29  
Cash dividends per common share
   $ 0.10     $ 0.10     $ 0.10     $ 0.10     $ 0.10  
Weighted average shares outstanding:
                                        
Basic
     17,895,904       17,867,953       17,845,857       17,808,348       17,787,325  
Diluted
     18,534,489       17,887,118       17,891,807       17,832,882       17,805,393  
 
 
- 5 -
 

First Community Bancshares, Inc.
Reconciliation of GAAP Net Income to Core Earnings

   
Three Months Ended
    
Six Months Ended
  
(Unaudited)
  
June 30,
    
June 30,
  
(In Thousands, Except Per Share Data)
  
2011
    
2010
    
2011
    
2010
  
                         
Net income to common shareholders, GAAP
   $ 5,597     $ 5,131     $ 11,348     $ 10,409  
Non-GAAP adjustments:
                                
Security gains
     (3,224 )     (1,201 )     (5,060 )     (1,451 )
FHLB debt prepayment fees
     -       -       471       -  
Other-than-temporary security impairments
     -       185       527       185  
Intangibles amortization
     261       253       520       509  
Other non-core items
     -       -       -       4  
Total adjustments to core earnings
     (2,963 )     (763 )     (3,542 )     (753 )
Tax effect
     (1,111 )     (286 )     (1,328 )     (282 )
Core earnings, non-GAAP
   $ 3,745     $ 4,654     $ 9,134     $ 9,938  
                                 
Core return on average assets
     0.68 %     0.83 %     0.83 %     0.89 %
Core return on average common equity
     5.29 %     7.01 %     6.59 %     7.65 %
Core diluted earnings per common share
   $ 0.20     $ 0.26     $ 0.50     $ 0.56  

Efficiency Ratio Calculation

   
Three Months Ended
    
Six Months Ended
  
(Unaudited)
  
June 30,
    
June 30,
  
(In Thousands)
  
2011
    
2010
    
2011
    
2010
  
                         
Noninterest expense, GAAP
   $ 17,738     $ 16,598     $ 35,801     $ 32,670  
Non-GAAP adjustments:
                                
FHLB debt prepayment fees
     -       -       (471 )     -  
OREO expenses
     (1,759 )     (485 )     (2,072 )     (1,160 )
Intangibles amortization
     (261 )     (253 )     (520 )     (509 )
Other non-core items
     -       -       -       -  
Adjusted noninterest expense
     15,718       15,860       32,738       31,001  
                                 
Net interest income, GAAP
     17,754       18,542       36,029       37,161  
Noninterest income, GAAP
     11,363       8,904       20,862       17,482  
Non-GAAP adjustments:
                                
Tax-equivalency adjustment
     736       791       1,602       1,603  
Security gains
     (3,224 )     (1,201 )     (5,060 )     (1,451 )
Other-than-temporary security impairments
     -       185       527       185  
Other non-core items
     -       -       -       4  
Adjusted net interest and noninterest income
     26,629       27,221       53,960       54,984  
                                 
Efficiency Ratio
     59.03 %     58.26 %     60.67 %     56.38 %
 
 
- 6 -
 

First Community Bancshares, Inc.
Quarterly Balance Sheets

    
For the Quarter Ended
  
(Unaudited)
  
June 30,
    
March 31,
    
December 31,
    
September 30,
    
June 30,
  
(Dollars In Thousands)
  
2011
    
2011
    
2010
    
2010
    
2010
  
                               
Cash and due from banks
   $ 31,451     $ 52,684     $ 28,816     $ 37,120     $ 35,174  
Federal funds sold
     162,629       121,974       81,526       93,281       15,748  
Interest-bearing balances with banks
     36,539       809       1,847       1,363       25,609  
Total cash and cash equivalents
     230,619       175,467       112,189       131,764       76,531  
Securities available-for-sale
     349,976       430,965       480,064       480,587       502,866  
Securities held-to-maturity
     4,106       4,524       4,637       5,931       6,468  
Loans held for sale
     920       2,614       4,694       3,386       2,141  
Loans held for investment, net of unearned income
     1,373,944       1,375,685       1,386,206       1,398,251       1,399,885  
Less allowance for loan losses
     26,482       26,482       26,482       26,420       25,011  
Net loans
     1,348,382       1,351,817       1,364,418       1,375,217       1,377,015  
Premises and equipment, net
     55,808       56,189       56,244       56,042       56,407  
Other real estate owned
     5,585       5,644       4,910       5,501       7,108  
Interest receivable
     6,202       7,288       7,675       7,899       7,859  
Goodwill
     85,132       84,930       84,914       85,176       84,853  
Other intangible assets
     5,205       5,466       5,725       5,989       5,904  
Other assets
     115,385       118,690       123,462       143,319       121,835  
Total assets
   $ 2,206,400     $ 2,240,980     $ 2,244,238     $ 2,297,425     $ 2,246,846  
Deposits:
                                        
Noninterest-bearing demand
   $ 219,488     $ 222,072     $ 205,151     $ 216,167     $ 205,731  
Interest-bearing demand
     271,622       287,006       262,420       270,927       244,889  
Savings
     405,409       420,481       426,547       425,661       404,820  
Time
     683,157       707,458       726,837       744,468       757,979  
Total deposits
     1,579,676       1,637,017       1,620,955       1,657,223       1,613,419  
Interest, taxes and other liabilities
     20,563       20,459       21,318       21,377       21,865  
Securities sold under agreements to repurchase
     137,778       139,472       140,894       153,413       147,772  
FHLB borrowings
     150,000       150,000       175,000       175,000       180,134  
Other indebtedness
     16,179       16,186       16,193       16,209       15,731  
Total liabilities
     1,904,196       1,963,134       1,974,360       2,023,222       1,978,921  
                                         
Preferred stock, net of discount
     18,921       -       -       -       -  
Common stock
     18,083       18,083       18,083       18,083       18,083  
Additional paid-in capital
     188,278       188,742       189,239       189,811       190,259  
Retained earnings
     89,257       85,450       81,486       78,385       73,613  
Treasury stock, at cost
     (5,137 )     (5,851 )     (6,740 )     (7,729 )     (8,583 )
Accumulated other comprehensive loss
     (7,198 )     (8,578 )     (12,190 )     (4,347 )     (5,447 )
Total stockholders' equity
     302,204       277,846       269,878       274,203       267,925  
Total liabilities and stockholders' equity
   $ 2,206,400     $ 2,240,980     $ 2,244,238     $ 2,297,425     $ 2,246,846  
                                         
Actual shares outstanding at period end
     17,917,824       17,894,899       17,866,335       17,834,601       17,807,155  
Book value per common share at period end (1)
   $ 15.72     $ 15.53     $ 15.11     $ 15.37     $ 15.05  
Tangible book value per common share at period end (1)
   $ 11.02     $ 10.48     $ 10.03     $ 10.26     $ 9.95  
 
(1)
Book value and tangible book value per common share is defined as stockholders' equity less goodwill and other intangibles divided by if-converted common shares outstanding.
 
 
- 7 -
 

First Community Bancshares, Inc.
Selected Credit Quality Information

   
As of and for the Quarter Ended
  
(Unaudited)
  
June 30,
    
March 31,
    
December 31,
    
September 30,
    
June 30,
  
(Dollars in Thousands)
  
2011
    
2011
    
2010
    
2010
    
2010
  
Summary of Loan Loss Experience
                              
Allowance for loan losses:
                              
Beginning balance
   $ 26,482     $ 26,482     $ 26,420     $ 25,011     $ 24,508  
Provision for loan losses
     3,079       1,612       3,686       3,810       3,596  
Charge-offs
     (3,456 )     (2,027 )     (3,846 )     (2,651 )     (3,373 )
Recoveries
     377       415       222       250       280  
Net charge-offs
     (3,079 )     (1,612 )     (3,624 )     (2,401 )     (3,093 )
Ending balance
   $ 26,482     $ 26,482     $ 26,482     $ 26,420     $ 25,011  
                                         
Summary of Asset Quality
                                        
Non-accrual loans
   $ 22,037     $ 17,703     $ 19,414     $ 16,645     $ 17,668  
Restructured loans
     878       1,509       5,325       7,904       1,206  
Loans 90 days or more past due and still accruing
     -       -       -       -       -  
Total non-performing loans
     22,915       19,212       24,739       24,549       18,874  
                                         
Other real estate owned
     5,585       5,644       4,910       5,501       7,108  
Total non-performing assets
   $ 28,500     $ 24,856     $ 29,649     $ 30,050     $ 25,982  
                                         
Restructured loans performing in accordance with terms
   $ 7,044     $ 7,519     $ 3,911     $ 849     $ 1,557  
                                         
Asset Quality Ratios
                                        
Non-performing loans as a percentage of  loans held for investment
     1.67 %     1.40 %     1.78 %     1.76 %     1.35 %
Non-performing assets as a percentage of total assets
     1.29 %     1.11 %     1.32 %     1.31 %     1.16 %
Annualized net charge-offs as a percentage of average loans held for investment
     0.90 %     0.47 %     1.03 %     1.02 %     0.69 %
Allowance for loan losses as a percentage of loans held for investment
     1.93 %     1.93 %     1.91 %     1.89 %     1.89 %
Ratio of allowance for loan losses to non-performing loans
     1.16       1.38       1.07       1.08       1.33  
 
 
- 8 -
 
 
First Community Bancshares, Inc.
Non-accrual Loan Detail

   
As of June 30, 2011
  
               
Non-accrual
  
(Unaudited)
  
Loans
    
Non-accrual
    
Loans to Loans
  
(Dollars in Thousands)
  
Outstanding
    
Loans
    
Outstanding
  
Commercial
                  
Construction — commercial
   $ 34,966     $ 1,026       2.93 %
Land development
     4,694       185       3.94 %
Other land loans
     23,354       1,083       4.64 %
Commercial and industrial
     92,891       4,520       4.87 %
Multi-family residential
     78,163       2,210       2.83 %
Non-farm, non-residential
     333,475       5,304       1.59 %
Agricultural
     1,677       -       0.00 %
Farmland
     37,227       334       0.90 %
Total commercial
     606,447       14,662       2.42 %
                         
Consumer real estate
                        
Home equity lines
     111,995       900       0.80 %
Single family residential mortgage
     560,527       6,163       1.10 %
Owner-occupied construction
     18,062       259       1.43 %
Total consumer real estate
     690,584       7,322       1.06 %
                         
Consumer and other
                        
Consumer loans
     64,692       53       0.08 %
Other loans
     12,221       -       0.00 %
Total consumer and other
     76,913       53       0.07 %
                         
Total loans
   $ 1,373,944     $ 22,037       1.60 %
 
 
- 9 -
 

First Community Bancshares, Inc.
Selected Financial Information

   
As of and for the Quarter Ended
  
(Unaudited)
  
June 30,
    
March 31,
    
December 31,
    
September 30,
    
June 30,
  
(Dollars in Thousands)
  
2011
    
2011
    
2010
    
2010
    
2010
  
Ratios
                              
Return on average assets
     1.02 %     1.05 %     0.85 %     1.14 %     0.91 %
Return on average common equity
     7.91 %     8.47 %     7.00 %     9.49 %     7.73 %
Net interest margin
     3.83 %     3.96 %     3.78 %     3.87 %     3.92 %
Efficiency ratio for the quarter
     59.03 %     62.27 %     64.82 %     58.92 %     58.26 %
Efficiency ratio year-to-date
     60.67 %     62.27 %     59.09 %     57.23 %     56.38 %
Equity as a percent of total assets at end of period
     13.70 %     12.40 %     12.03 %     11.94 %     11.92 %
Average earning assets as a percentage of average total assets
     88.11 %     88.07 %     87.69 %     87.67 %     87.53 %
Average loans as a percentage of average deposits
     85.57 %     84.78 %     85.54 %     85.59 %     85.19 %
                                         
Average Balances
                                        
Investments
   $ 386,706     $ 470,833     $ 498,090     $ 503,686     $ 505,808  
Loans
     1,373,988       1,382,526       1,402,178       1,404,746       1,397,528  
Earning assets
     1,935,470       1,961,538       1,996,106       1,990,953       1,976,118  
Total assets
     2,196,691       2,227,255       2,276,257       2,270,984       2,257,591  
Deposits
     1,605,694       1,630,701       1,639,154       1,641,339       1,640,432  
Interest bearing deposits
     1,386,292       1,418,807       1,427,746       1,433,770       1,433,039  
Borrowings
     297,857       316,864       344,704       342,497       340,001  
Interest bearing liabilities
     1,684,149       1,735,671       1,772,450       1,776,267       1,773,040  
Equity
     291,474       275,350       276,723       274,001       266,218  
Tax-equivalent net interest income
     18,490       19,141       19,040       19,416       19,333  
 
 
- 10 -
 

First Community Bancshares, Inc.
Consolidated Average Balance Sheets, Yields, and Rates

   
Three Months Ended June 30,
  
   
2011
    
2010
  
(Unaudited)
  
Average
    
Interest
    
Average
    
Average
    
Interest
    
Average
  
(Dollars in Thousands)
  
Balance
       (1)    
Rate (1)
    
Balance
       (1)    
Rate (1)
  
Earning assets
                                        
Loans held for investment (2)
   $ 1,373,988     $ 20,134       5.88 %   $ 1,397,528     $ 21,039       6.04 %
Securities available-for-sale
     382,385       3,747       3.93 %     498,880       5,728       4.61 %
Securities held-to-maturity
     4,321       90       8.35 %     6,928       145       8.39 %
Interest-bearing deposits with banks
     174,776       100       0.23 %     72,782       34       0.19 %
Total earning assets
     1,935,470       24,071       4.99 %     1,976,118       26,946       5.47 %
Other assets
     261,221                       281,473                  
Total
   $ 2,196,691                     $ 2,257,591                  
Interest-bearing liabilities
                                                
Interest-bearing demand deposits
   $ 279,912     $ 113       0.16 %   $ 248,512     $ 250       0.40 %
Savings deposits
     414,439       241       0.23 %     421,669       781       0.74 %
Time deposits
     691,941       2,919       1.69 %     762,858       4,075       2.14 %
Retail repurchase agreements
     81,736       141       0.69 %     94,197       252       1.07 %
Wholesale repurchase agreements
     50,000       468       3.75 %     50,000       468       3.75 %
FHLB borrowings & other long-term debt
     166,121       1,699       4.10 %     195,804       1,787       3.66 %
Total interest-bearing liabilities
     1,684,149       5,581       1.33 %     1,773,040       7,613       1.72 %
Noninterest-bearing demand deposits
     219,402                       207,393                  
Other liabilities
     1,666                       10,940                  
Stockholders' equity
     291,474                       266,218                  
Total
   $ 2,196,691                     $ 2,257,591                  
Net interest income, tax-equivalent
           $ 18,490                     $ 19,333          
Net interest rate spread (3)
                     3.66 %                     3.75 %
Net interest margin (4)
                     3.83 %                     3.92 %
 
(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.
 
 
- 11 -
 

First Community Bancshares, Inc.
Consolidated Average Balance Sheets, Yields, and Rates

   
Six Months Ended June 30,
  
   
2011
    
2010
  
(Unaudited)
  
Average
    
Interest
    
Average
    
Average
    
Interest
    
Average
  
(Dollars in Thousands)
  
Balance
       (1)    
Rate (1)
    
Balance
       (1)    
Rate (1)
  
Earning assets
                                        
Loans held for investment (2)
   $ 1,378,233     $ 40,629       5.94 %   $ 1,396,603     $ 42,436       6.13 %
Securities available-for-sale
     424,104       8,544       4.06 %     490,062       11,561       4.76 %
Securities held-to-maturity
     4,432       185       8.42 %     7,033       293       8.40 %
Interest-bearing deposits with banks
     141,662       169       0.24 %     74,675       80       0.22 %
Total earning assets
     1,948,431       49,527       5.13 %     1,968,373       54,370       5.57 %
Other assets
     263,457                       282,363                  
Total
   $ 2,211,888                     $ 2,250,736                  
Interest-bearing liabilities
                                                
Interest-bearing demand deposits
   $ 275,781     $ 324       0.24 %   $ 242,531     $ 450       0.37 %
Savings deposits
     421,046       598       0.29 %     417,377       1,612       0.78 %
Time deposits
     705,632       6,231       1.78 %     777,268       8,546       2.22 %
Retail repurchase agreements
     85,191       314       0.74 %     93,093       528       1.14 %
Wholesale repurchase agreements
     50,000       935       3.77 %     50,000       931       3.75 %
FHLB borrowings & other long-term debt
     172,117       3,494       4.09 %     197,266       3,539       3.62 %
Total interest-bearing liabilities
     1,709,767       11,896       1.40 %     1,777,535       15,606       1.77 %
Noninterest-bearing demand deposits
     215,669                       203,252                  
Other liabilities
     2,995                       8,097                  
Stockholders' equity
     283,457                       261,852                  
Total
   $ 2,211,888                     $ 2,250,736                  
Net interest income, tax-equivalent
           $ 37,631                     $ 38,764          
Net interest rate spread (3)
                     3.73 %                     3.80 %
Net interest margin (4)
                     3.89 %                     3.97 %
 
(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.
 
 
- 12 -