BLUEFIELD, Va., April 26, 2016 (GLOBE NEWSWIRE) -- First Community Bancshares, Inc. (NASDAQ:FCBC) (www.fcbinc.com) (the “Company”) today reported its unaudited results of operations and other financial information for the quarter ended March 31, 2016.
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 May 6, 2016, and is expected to be paid on or about May 20, 2016. The current year marks the 31st consecutive year of cash dividends paid to stockholders.
First Quarter 2016 Highlights
- Income Statement
- Net income available to common shareholders increased $231 thousand, or 3.95%, compared to the same quarter of the prior year.
- Diluted earnings per share was $0.34, an increase of $0.03, or 9.68%, compared to the same quarter of the prior year.
- Core diluted earnings per common share increased $0.02 to $0.33 compared to the same quarter of the prior year.
- Normalized net interest margin increased 24 basis points to 3.74% compared to the same quarter of the prior year.
- The non-GAAP efficiency ratio improved 5 basis points to 61.41% compared with the same quarter of 2015.
- Balance Sheet
- The non-covered loan portfolio increased $62.39 million, or 3.84%, compared with December 31, 2015.
- Book value per common share increased $0.20 to $19.15 compared with December 31, 2015.
- The Company repurchased 487,739 common shares during the quarter.
- The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of March 31, 2016.
- Asset Quality
- Net charge-offs decreased $159 thousand, or 14.18%, compared to the same quarter of 2015.
- Non-covered delinquent loans as a percentage of total non-covered loans decreased 31 basis points to 1.35% compared to the same period of the prior year.
- Total non-covered nonperforming assets decreased $883 thousand compared to December 31, 2015, and decreased $509 thousand compared to March 31, 2015.
- Net loan loss provision of $1.19 million was recognized to cover net charge-offs and the significant loan growth experienced during the quarter.
Financial Performance
| CONDENSED STATEMENTS OF INCOME (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||
| (Amounts in thousands, except share and per share data) | 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||
| Interest income | ||||||||||||||||||||||||
| Interest and fees on loans | $ | 21,573 | $ | 21,633 | $ | 22,259 | $ | 21,826 | $ | 21,914 | ||||||||||||||
| Interest on securities | 1,957 | 2,023 | 2,056 | 2,073 | 2,051 | |||||||||||||||||||
| Interest on deposits in banks | 20 | 21 | 33 | 80 | 133 | |||||||||||||||||||
| Total interest income | 23,550 | 23,677 | 24,348 | 23,979 | 24,098 | |||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||
| Interest on deposits | 1,114 | 1,202 | 1,384 | 1,562 | 1,730 | |||||||||||||||||||
| Interest on borrowings | 1,325 | 1,300 | 1,295 | 1,347 | 1,529 | |||||||||||||||||||
| Total interest expense | 2,439 | 2,502 | 2,679 | 2,909 | 3,259 | |||||||||||||||||||
| Net interest income | 21,111 | 21,175 | 21,669 | 21,070 | 20,839 | |||||||||||||||||||
| Provision for (recovery of) loan losses | 1,187 | 434 | 381 | 276 | 1,100 | |||||||||||||||||||
| Net interest income after provision for loan losses | 19,924 | 20,741 | 21,288 | 20,794 | 19,739 | |||||||||||||||||||
| Total noninterest income | 7,903 | 7,483 | 7,074 | 8,137 | 6,836 | |||||||||||||||||||
| Total noninterest expense | 18,814 | 19,083 | 19,019 | 20,289 | 17,780 | |||||||||||||||||||
| Income before income taxes | 9,013 | 9,141 | 9,343 | 8,642 | 8,795 | |||||||||||||||||||
| Income tax expense | 2,929 | 2,993 | 3,084 | 2,467 | 2,837 | |||||||||||||||||||
| Net income | 6,084 | 6,148 | 6,259 | 6,175 | 5,958 | |||||||||||||||||||
| Dividends on preferred stock | - | - | - | - | 105 | |||||||||||||||||||
| Net income available to common shareholders | $ | 6,084 | $ | 6,148 | $ | 6,259 | $ | 6,175 | $ | 5,853 | ||||||||||||||
| Earnings per common share | ||||||||||||||||||||||||
| Basic | $ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.33 | $ | 0.31 | ||||||||||||||
| Diluted | 0.34 | 0.34 | 0.34 | 0.33 | 0.31 | |||||||||||||||||||
| Cash dividends per common share | 0.14 | 0.14 | 0.14 | 0.13 | 0.13 | |||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||
| Basic | 17,859,197 | 18,193,824 | 18,470,348 | 18,831,907 | 18,633,574 | |||||||||||||||||||
| Diluted | 17,892,531 | 18,226,719 | 18,500,975 | 18,860,284 | 19,344,443 | |||||||||||||||||||
| Performance ratios | ||||||||||||||||||||||||
| Return on average assets | 0.99 | % | 0.99 | % | 1.00 | % | 0.97 | % | 0.91 | % | ||||||||||||||
| Return on average common equity | 7.15 | % | 7.05 | % | 7.18 | % | 7.08 | % | 6.91 | % | ||||||||||||||
| Return on average tangible common equity(1) | 10.34 | % | 10.17 | % | 10.38 | % | 10.19 | % | 10.04 | % | ||||||||||||||
| (1) A non-GAAP financial measure defined as average stockholders’ equity less average goodwill, other intangibles, and preferred stock liquidation preference. | ||||||||||||||||||||||||
| RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited) | |||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||||
| (Amounts in thousands, except per share data) | |||||||||||||||||||||||
| Net income, GAAP | $ | 6,084 | $ | 6,148 | $ | 6,259 | $ | 6,175 | $ | 5,958 | |||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
| Merger, acquisition, and divestiture expense | 39 | - | - | - | 86 | ||||||||||||||||||
| Net loss (gain) on sale of securities | (1 | ) | 7 | 39 | (213 | ) | 23 | ||||||||||||||||
| FHLB debt prepayment fees | - | - | - | 1,702 | - | ||||||||||||||||||
| Other non-core, non-recurring items | (240 | ) | 31 | (75 | ) | (930 | ) | (30 | ) | ||||||||||||||
| Total adjustments to core earnings | (202 | ) | 38 | (36 | ) | 559 | 79 | ||||||||||||||||
| Tax effect | (74 | ) | 14 | (13 | ) | 630 | 29 | ||||||||||||||||
| Core earnings, non-GAAP(1) | $ | 5,956 | $ | 6,172 | $ | 6,236 | $ | 6,104 | $ | 6,008 | |||||||||||||
| Core diluted earnings per common share | $ | 0.33 | $ | 0.34 | $ | 0.34 | $ | 0.32 | $ | 0.31 | |||||||||||||
| Performance ratios | |||||||||||||||||||||||
| Core return on average assets | 0.97 | % | 0.99 | % | 1.00 | % | 0.96 | % | 0.94 | % | |||||||||||||
| Core return on average common equity | 7.00 | % | 7.08 | % | 7.16 | % | 7.00 | % | 7.09 | % | |||||||||||||
| Core return on average tangible common equity(2) | 10.12 | % | 10.21 | % | 10.34 | % | 10.07 | % | 10.31 | % | |||||||||||||
| (1) A non-GAAP financial measure that excludes gains, losses, and impairment losses on securities; goodwill and intangible impairment; amortization of intangibles; taxes; and other non-recurring income and expense items from net income. | |||||||||||||||||||||||
| (2) A non-GAAP financial measure defined as average stockholders’ equity less average goodwill, other intangibles, and preferred stock liquidation preference. | |||||||||||||||||||||||
The Company’s net income available to common shareholders increased $231 thousand, or 3.95%, to $6.08 million, or $0.34 per diluted common share for the first quarter of 2016 compared with $5.85 million, or $0.31 per diluted common share, in the same quarter of the prior year. The increase in net income was largely due to a $272 thousand increase in net interest income and a $1.07 million increase in noninterest income. These increases were offset by an $87 thousand increase in the provision for loan losses, a $1.03 million increase in noninterest expense, and a $92 thousand increase in income tax expense. The increase in net interest income was primarily due to decreases in deposit and borrowing costs.
Net Interest Income and Margin
| AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) | ||||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||
| Average | Average Yield/ | Average | Average Yield/ | |||||||||||||||||||||||||
| (Amounts in thousands) | Balance | Interest(1) | Rate(1) | Balance | Interest(1) | Rate(1) | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||||
| Loans(2) | $ | 1,730,401 | $ | 21,599 | 5.02 | % | $ | 1,678,118 | $ | 21,954 | 5.31 | % | ||||||||||||||||
| Securities available for sale | 354,582 | 2,268 | 2.57 | % | 331,044 | 2,413 | 2.96 | % | ||||||||||||||||||||
| Securities held to maturity | 72,512 | 194 | 1.08 | % | 65,923 | 186 | 1.14 | % | ||||||||||||||||||||
| Interest-bearing deposits | 15,591 | 20 | 0.52 | % | 208,867 | 133 | 0.26 | % | ||||||||||||||||||||
| Total earning assets | 2,173,086 | 24,081 | 4.45 | % | 2,283,952 | 24,686 | 4.38 | % | ||||||||||||||||||||
| Other assets | 297,156 | 318,856 | ||||||||||||||||||||||||||
| Total assets | $ | 2,470,242 | $ | 2,602,808 | ||||||||||||||||||||||||
| Liabilities and stockholders' equity | ||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||
| Demand deposits | $ | 342,524 | $ | 57 | 0.07 | % | $ | 351,742 | $ | 52 | 0.06 | % | ||||||||||||||||
| Savings deposits | 535,769 | 66 | 0.05 | % | 526,697 | 105 | 0.08 | % | ||||||||||||||||||||
| Time deposits | 533,635 | 991 | 0.75 | % | 698,030 | 1,573 | 0.91 | % | ||||||||||||||||||||
| Total interest-bearing deposits | 1,411,928 | 1,114 | 0.32 | % | 1,576,469 | 1,730 | 0.45 | % | ||||||||||||||||||||
| Borrowings | ||||||||||||||||||||||||||||
| Federal funds purchased | 3,424 | 5 | 0.59 | % | - | - | - | |||||||||||||||||||||
| Retail repurchase agreements | 77,993 | 13 | 0.07 | % | 67,853 | 20 | 0.12 | % | ||||||||||||||||||||
| Wholesale repurchase agreements | 50,000 | 468 | 3.76 | % | 50,000 | 463 | 3.76 | % | ||||||||||||||||||||
| FHLB advances and other borrowings | 108,013 | 839 | 3.12 | % | 106,621 | 1,046 | 3.98 | % | ||||||||||||||||||||
| Total borrowings | 239,430 | 1,325 | 2.23 | % | 224,474 | 1,529 | 2.76 | % | ||||||||||||||||||||
| Total interest-bearing liabilities | 1,651,358 | 2,439 | 0.59 | % | 1,800,943 | 3,259 | 0.73 | % | ||||||||||||||||||||
| Noninterest-bearing demand deposits | 448,849 | 427,313 | ||||||||||||||||||||||||||
| Other liabilities | 27,784 | 21,329 | ||||||||||||||||||||||||||
| Total liabilities | 2,127,991 | 2,249,585 | ||||||||||||||||||||||||||
| Stockholders' equity | 342,251 | 353,223 | ||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,470,242 | $ | 2,602,808 | ||||||||||||||||||||||||
| Net interest income, FTE | $ | 21,642 | $ | 21,427 | ||||||||||||||||||||||||
| Net interest rate spread | 3.86 | % | 3.65 | % | ||||||||||||||||||||||||
| Net interest margin | 4.01 | % | 3.80 | % | ||||||||||||||||||||||||
| (1) Fully taxable equivalent ("FTE") basis based on the federal statutory rate of 35% | ||||||||||||||||||||||||||||
| (2) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual. | ||||||||||||||||||||||||||||
| RECONCILIATION OF GAAP NET INTEREST MARGIN TO NORMALIZED NET INTEREST MARGIN (Unaudited) | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2016 | 2015 | ||||||||||||||||||||||
| (Amounts in thousands) | Interest(1) | Average Yield/ Rate(1) | Interest(1) | Average Yield/ Rate(1) | |||||||||||||||||||
| Earning assets | |||||||||||||||||||||||
| Loans(2) | $ | 21,599 | 5.02 | % | $ | 21,954 | 5.31 | % | |||||||||||||||
| Accretion income | 2,252 | 2,839 | |||||||||||||||||||||
| Less: cash accretion income | 805 | 1,096 | |||||||||||||||||||||
| Non-cash accretion income | 1,447 | 1,743 | |||||||||||||||||||||
| Loans, normalized(3) | 20,152 | 4.68 | % | 20,211 | 4.88 | % | |||||||||||||||||
| Other earning assets | 2,482 | 2.26 | % | 2,732 | 1.83 | % | |||||||||||||||||
| Total earning assets | 22,634 | 4.19 | % | 22,943 | 4.07 | % | |||||||||||||||||
| Total interest-bearing liabilities | 2,439 | 0.59 | % | 3,259 | 0.73 | % | |||||||||||||||||
| Net interest income, FTE(3) | $ | 20,195 | $ | 19,684 | |||||||||||||||||||
| Net interest rate spread, normalized(3) | 3.60 | % | 3.34 | % | |||||||||||||||||||
| Net interest margin, normalized(3) | 3.74 | % | 3.50 | % | |||||||||||||||||||
| (1 | ) | FTE basis based on the federal statutory rate of 35% | |||||||||||||||||||||
| (2 | ) | Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual. | |||||||||||||||||||||
| (3 | ) | A non-GAAP financial measure that excludes non-cash loan interest accretion related to PCI loans. | |||||||||||||||||||||
The tax equivalent net interest margin increased 21 basis points, or 5.53%, to 4.01% for the first quarter of 2016 compared with 3.80% for the same quarter of the prior year. The tax equivalent yield on loans decreased 29 basis points to 5.02% while the average loan balance increased $52.28 million, or 3.12%, to $1.73 billion. The increase in the average loan balance was primarily due to continued growth in the non-covered loan portfolio.
Non-cash purchased credit impaired (“PCI”) loan interest accretion decreased $296 thousand, or 16.98%, to $1.45 million for the first quarter of 2016 compared to $1.74 million for the same quarter of the prior year. The normalized net interest margin, which excludes non-cash loan interest accretion, increased 24 basis points and the normalized yield on loans decreased 20 basis points due to continued runoff and better than expected performance in the covered loan portfolio.
Deposit costs reflect a 13 basis point decrease in the average rate paid on interest-bearing deposits. The average rate paid on interest-bearing liabilities decreased 14 basis points to 0.59% for the first quarter of 2016 compared with the same quarter of 2015. The average balance of interest-bearing liabilities decreased $149.59 million, or 8.31%, to $1.65 billion for the first quarter of 2016 compared with the same quarter of 2015, which included a $164.54 million decrease in average interest-bearing deposits and a $14.96 million increase in average total borrowings.
Noninterest Income and Expense
| CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited) | |||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||
| (Amounts in thousands, except share and per share data) | 2016 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||
| Noninterest income | |||||||||||||||||||||
| Wealth management | 684 | 744 | 790 | 775 | 666 | ||||||||||||||||
| Service charges on deposits | 3,291 | 3,563 | 3,744 | 3,507 | 2,903 | ||||||||||||||||
| Other service charges and fees | 2,010 | 2,058 | 1,974 | 2,005 | 2,008 | ||||||||||||||||
| Insurance commissions | 2,191 | 1,563 | 1,650 | 1,559 | 2,127 | ||||||||||||||||
| Net gain (loss) on sale of securities | 1 | (7 | ) | (39 | ) | 213 | (23 | ) | |||||||||||||
| Net FDIC indemnification asset amortization | (1,159 | ) | (1,200 | ) | (1,768 | ) | (1,846 | ) | (1,565 | ) | |||||||||||
| Other operating income | 885 | 762 | 723 | 1,924 | 720 | ||||||||||||||||
| Total noninterest income | 7,903 | 7,483 | 7,074 | 8,137 | 6,836 | ||||||||||||||||
| Noninterest expense | |||||||||||||||||||||
| Salaries and employee benefits | 10,475 | 10,268 | 9,971 | 9,693 | 9,693 | ||||||||||||||||
| Occupancy expense | 1,531 | 1,413 | 1,443 | 1,427 | 1,534 | ||||||||||||||||
| Furniture and equipment expense | 1,096 | 1,345 | 1,259 | 1,358 | 1,237 | ||||||||||||||||
| Amortization of intangibles | 278 | 281 | 281 | 279 | 277 | ||||||||||||||||
| FDIC premiums and assessments | 374 | 332 | 377 | 389 | 415 | ||||||||||||||||
| FHLB debt prepayment fees | - | - | - | 1,702 | - | ||||||||||||||||
| Merger, acquisition, and divestiture expense | 39 | - | - | - | 86 | ||||||||||||||||
| Other operating expense | 5,021 | 5,444 | 5,688 | 5,441 | 4,538 | ||||||||||||||||
| Total noninterest expense | 18,814 | 19,083 | 19,019 | 20,289 | 17,780 | ||||||||||||||||
Noninterest income increased $1.07 million, or 15.61%, for the first quarter of 2016 compared with the same quarter of 2015. The increase was largely due to a $406 thousand decrease in net negative amortization related to the FDIC indemnification asset as a result of continuing better than expected performance in the covered loan portfolio and a $388 thousand increase in service charges on deposits. Other operating income included a $364 thousand gain on the sale of fixed assets from previously closed branches offset by a $106 thousand decrease in secondary market lending income.
Noninterest expense increased $1.03 million, or 5.82%, for the first quarter of 2016 compared with the same quarter of 2015. The increase was largely due to a $782 thousand increase in salaries and employee benefits and $483 thousand increase in other operating expense. The increase in other operating expense included a $384 thousand increase in the net loss on sales and expenses associated with other real estate owned (“OREO”) and write-downs of certain long-term investments in land and buildings totaling $174 thousand.
Efficiency Ratio
| EFFICIENCY RATIO CALCULATION (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||
| Noninterest expense, GAAP | $ | 18,814 | $ | 19,083 | $ | 19,019 | $ | 20,289 | $ | 17,780 | ||||||||||||||
| Non-GAAP adjustments | ||||||||||||||||||||||||
| Merger, acquisition, and divestiture expense | (39 | ) | - | - | - | (86 | ) | |||||||||||||||||
| FHLB debt prepayment fees | - | - | - | (1,702 | ) | - | ||||||||||||||||||
| OREO expense and net loss | (711 | ) | (475 | ) | (1,220 | ) | (416 | ) | (327 | ) | ||||||||||||||
| Other non-core, non-recurring items | (174 | ) | (61 | ) | 15 | (213 | ) | - | ||||||||||||||||
| Adjusted noninterest expense | 17,890 | 18,547 | 17,814 | 17,958 | 17,367 | |||||||||||||||||||
| Net interest income, GAAP | 21,111 | 21,175 | 21,669 | 21,070 | 20,839 | |||||||||||||||||||
| Noninterest income, GAAP | 7,903 | 7,483 | 7,074 | 8,137 | 6,836 | |||||||||||||||||||
| Non-GAAP adjustments | ||||||||||||||||||||||||
| Tax equivalency adjustment | 531 | 548 | 565 | 1,249 | 588 | |||||||||||||||||||
| Net loss (gain) on sale of securities | (1 | ) | 7 | 39 | (213 | ) | 23 | |||||||||||||||||
| Other non-core, non-recurring items | (414 | ) | (30 | ) | (60 | ) | (1,143 | ) | (30 | ) | ||||||||||||||
| Adjusted net interest and noninterest income | 29,130 | 29,183 | 29,287 | 29,100 | 28,256 | |||||||||||||||||||
| Non-GAAP efficiency ratio(1) | 61.41 | % | 63.55 | % | 60.83 | % | 61.71 | % | 61.46 | % | ||||||||||||||
| GAAP efficiency ratio | 64.84 | % | 66.59 | % | 66.17 | % | 69.47 | % | 64.25 | % | ||||||||||||||
| (1) A non-GAAP financial measure computed by dividing adjusted noninterest expense by the sum of tax equivalent net interest income and adjusted noninterest income. | ||||||||||||||||||||||||
Balance Sheet and Capital
| CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) | |||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||
| (Amounts in thousands, except per share data) | 2016 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Total cash and cash equivalents | 39,587 | 51,787 | 62,024 | 92,602 | 207,024 | ||||||||||||||||||
| Securities available for sale | 338,469 | 366,173 | 382,212 | 376,191 | 351,454 | ||||||||||||||||||
| Securities held to maturity | 72,485 | 72,541 | 72,596 | 72,652 | 72,897 | ||||||||||||||||||
| Loans held for sale | - | - | 523 | 913 | 1,174 | ||||||||||||||||||
| Loans held for investment, net of unearned income | |||||||||||||||||||||||
| Non-covered | 1,685,891 | 1,623,506 | 1,600,271 | 1,564,655 | 1,558,310 | ||||||||||||||||||
| Covered | 76,538 | 83,035 | 90,203 | 102,634 | 112,724 | ||||||||||||||||||
| Less allowance for loan losses | (20,467 | ) | (20,233 | ) | (20,127 | ) | (20,258 | ) | (20,252 | ) | |||||||||||||
| Loans held for investment, net | 1,741,962 | 1,686,308 | 1,670,347 | 1,647,031 | 1,650,782 | ||||||||||||||||||
| FDIC indemnification asset | 18,787 | 20,844 | 22,049 | 23,653 | 26,053 | ||||||||||||||||||
| Premises and equipment, net | 50,799 | 52,756 | 53,442 | 54,112 | 54,955 | ||||||||||||||||||
| Other real estate owned, non-covered | 5,313 | 4,873 | 5,088 | 7,434 | 7,032 | ||||||||||||||||||
| Other real estate owned, covered | 2,279 | 4,034 | 4,079 | 5,382 | 5,834 | ||||||||||||||||||
| Interest receivable | 5,968 | 6,007 | 5,910 | 6,119 | 6,188 | ||||||||||||||||||
| Goodwill | 100,486 | 100,486 | 100,810 | 100,810 | 100,810 | ||||||||||||||||||
| Other intangible assets | 4,965 | 5,243 | 5,583 | 5,865 | 6,144 | ||||||||||||||||||
| Other assets | 89,187 | 91,224 | 93,453 | 99,034 | 95,497 | ||||||||||||||||||
| Total assets | $ | 2,470,287 | $ | 2,462,276 | $ | 2,477,593 | $ | 2,490,885 | $ | 2,584,670 | |||||||||||||
| Liabilities | |||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||
| Noninterest-bearing | $ | 453,336 | $ | 451,511 | $ | 442,021 | $ | 424,438 | $ | 433,422 | |||||||||||||
| Interest-bearing | 1,421,329 | 1,421,748 | 1,460,881 | 1,495,783 | 1,557,767 | ||||||||||||||||||
| Total deposits | 1,874,665 | 1,873,259 | 1,902,902 | 1,920,221 | 1,991,189 | ||||||||||||||||||
| Interest, taxes, and other liabilities | 24,576 | 26,630 | 25,356 | 23,852 | 24,203 | ||||||||||||||||||
| Federal funds purchased | 18,000 | - | - | - | - | ||||||||||||||||||
| Securities sold under agreements to repurchase | 134,661 | 138,614 | 124,076 | 122,158 | 116,302 | ||||||||||||||||||
| FHLB borrowings | 65,000 | 65,000 | 65,000 | 65,000 | 90,000 | ||||||||||||||||||
| Other borrowings | 15,756 | 15,756 | 15,955 | 15,999 | 15,999 | ||||||||||||||||||
| Total liabilities | 2,132,658 | 2,119,259 | 2,133,289 | 2,147,230 | 2,237,693 | ||||||||||||||||||
| Stockholders' equity | |||||||||||||||||||||||
| Common stock | 21,382 | 21,382 | 21,382 | 21,382 | 21,382 | ||||||||||||||||||
| Additional paid-in capital | 227,725 | 227,692 | 227,621 | 227,616 | 227,782 | ||||||||||||||||||
| Retained earnings | 159,223 | 155,647 | 152,046 | 148,378 | 144,656 | ||||||||||||||||||
| Treasury stock, at cost | (64,968 | ) | (56,457 | ) | (52,484 | ) | (46,610 | ) | (41,078 | ) | |||||||||||||
| Accumulated other comprehensive loss | (5,733 | ) | (5,247 | ) | (3,738 | ) | (6,198 | ) | (4,591 | ) | |||||||||||||
| Total stockholders' equity | 337,629 | 343,017 | 344,827 | 344,568 | 348,151 | ||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,470,287 | $ | 2,462,276 | $ | 2,478,116 | $ | 2,491,798 | $ | 2,585,844 | |||||||||||||
| Shares outstanding at period-end | 17,631,011 | 18,098,141 | 18,313,425 | 18,641,966 | 18,965,274 | ||||||||||||||||||
| Book value per common share(1) | $ | 19.15 | $ | 18.95 | $ | 18.83 | $ | 18.48 | $ | 18.36 | |||||||||||||
| Tangible book value per common share(2) | 13.17 | 13.11 | 13.02 | 12.76 | 12.72 | ||||||||||||||||||
| (1) Stockholders' equity divided by as-converted common shares outstanding | |||||||||||||||||||||||
| (2) A non-GAAP financial measure defined as stockholders’ equity less goodwill and other intangibles, divided by as-converted common shares outstanding. | |||||||||||||||||||||||
Consolidated assets increased $8.01 million, or 0.33%, as of March 31, 2016, compared with December 31, 2015. The change in consolidated assets was primarily driven by a $55.65 million increase in net loans offset by a $27.70 million decrease in securities available for sale and a $12.20 million decrease in cash and cash equivalents. Consolidated liabilities increased $13.40 million, or 0.63%, as of March 31, 2016, compared with December 31, 2015. The change in consolidated liabilities was driven by an $18.00 million increase in federal funds purchased.
Stockholders’ equity decreased $5.39 million, or 1.57%, as of March 31, 2016, compared with December 31, 2015. The Company repurchased 487,739 common shares at a weighted average cost of $18.14 per share and paid a cash dividend of $0.14 per common share during the first quarter of 2016. Book value per common share increased 1.06% to $19.15 as of March 31, 2016, compared with December 31, 2015. Tangible book value per common share increased 0.46% to $13.17 as of March 31, 2016, compared with December 31, 2015. The Company significantly exceeds regulatory “well capitalized” targets as of March 31, 2016.
Asset Quality
| SELECTED CREDIT QUALITY INFORMATION (Unaudited) | |||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||
| (Amounts in thousands) | 2016 | 2015 | 2015 | 2015 | 2015 | ||||||||||||||||||
| Allowance for Loan Losses | |||||||||||||||||||||||
| Beginning balance | $ | 20,233 | $ | 20,127 | $ | 20,258 | $ | 20,252 | $ | 20,227 | |||||||||||||
| Provision for loan losses charged | |||||||||||||||||||||||
| to operations | 1,187 | 434 | 381 | 276 | 1,100 | ||||||||||||||||||
| Provision for (recovery of) loan losses recorded | |||||||||||||||||||||||
| through the FDIC indemnification asset | 9 | - | (75 | ) | - | 46 | |||||||||||||||||
| Charge-offs | (1,141 | ) | (805 | ) | (689 | ) | (673 | ) | (1,578 | ) | |||||||||||||
| Recoveries | 179 | 477 | 252 | 403 | 457 | ||||||||||||||||||
| Net (charge-offs) recoveries | (962 | ) | (328 | ) | (437 | ) | (270 | ) | (1,121 | ) | |||||||||||||
| Ending balance | $ | 20,467 | $ | 20,233 | $ | 20,127 | $ | 20,258 | $ | 20,252 | |||||||||||||
| Nonperforming Assets | |||||||||||||||||||||||
| Non-covered nonperforming assets | |||||||||||||||||||||||
| Nonaccrual loans | $ | 16,196 | $ | 17,847 | $ | 17,100 | $ | 15,936 | $ | 15,387 | |||||||||||||
| Accruing loans past due 90 days or more | 243 | - | 3 | - | - | ||||||||||||||||||
| Troubled debt restructurings ("TDRs")(1) | 158 | 73 | 74 | - | - | ||||||||||||||||||
| Total non-covered nonperforming loans | 16,597 | 17,920 | 17,177 | 15,936 | 15,387 | ||||||||||||||||||
| OREO | 5,313 | 4,873 | 5,088 | 7,434 | 7,032 | ||||||||||||||||||
| Total non-covered nonperforming assets | $ | 21,910 | $ | 22,793 | $ | 22,265 | $ | 23,370 | $ | 22,419 | |||||||||||||
| Covered nonperforming assets | |||||||||||||||||||||||
| Nonaccrual loans | $ | 1,955 | $ | 647 | $ | 815 | $ | 1,062 | $ | 2,780 | |||||||||||||
| Accruing loans past due 90 days or more | - | - | - | - | 60 | ||||||||||||||||||
| Total covered nonperforming loans | 1,955 | 647 | 815 | 1,062 | 2,840 | ||||||||||||||||||
| OREO | 2,279 | 4,034 | 4,079 | 5,382 | 5,834 | ||||||||||||||||||
| Total covered nonperforming assets | $ | 4,234 | $ | 4,681 | $ | 4,894 | $ | 6,444 | $ | 8,674 | |||||||||||||
| Additional Information | |||||||||||||||||||||||
| Performing TDRs(2) | $ | 13,474 | $ | 13,889 | $ | 13,965 | $ | 13,841 | $ | 14,025 | |||||||||||||
| Total TDRs(3) | 13,632 | 13,962 | 14,039 | 13,841 | 14,025 | ||||||||||||||||||
| Non-covered ratios | |||||||||||||||||||||||
| Nonperforming loans to total loans | 0.98 | % | 1.10 | % | 1.07 | % | 1.02 | % | 0.99 | % | |||||||||||||
| Nonperforming assets to total assets | 0.92 | % | 0.96 | % | 0.93 | % | 0.98 | % | 0.91 | % | |||||||||||||
| Non-PCI allowance to nonperforming loans | 123.17 | % | 112.61 | % | 117.06 | % | 126.41 | % | 130.88 | % | |||||||||||||
| Non-PCI allowance to total loans | 1.21 | % | 1.24 | % | 1.26 | % | 1.29 | % | 1.29 | % | |||||||||||||
| Annualized net charge-offs to average loans | 0.23 | % | 0.08 | % | 0.11 | % | 0.07 | % | 0.29 | % | |||||||||||||
| Total ratios | |||||||||||||||||||||||
| Nonperforming loans to total loans | 1.05 | % | 1.09 | % | 1.06 | % | 1.02 | % | 1.09 | % | |||||||||||||
| Nonperforming assets to total assets | 1.06 | % | 1.12 | % | 1.10 | % | 1.20 | % | 1.20 | % | |||||||||||||
| Allowance for loan losses to nonperforming loans | 110.32 | % | 108.97 | % | 111.87 | % | 119.18 | % | 111.11 | % | |||||||||||||
| Allowance for loan losses to total loans | 1.16 | % | 1.19 | % | 1.19 | % | 1.22 | % | 1.21 | % | |||||||||||||
| (1) Accruing TDRs restructured within the past six months or nonperforming | |||||||||||||||||||||||
| (2) Accruing TDRs with six months or more of satisfactory payment performance | |||||||||||||||||||||||
| (3) Accruing total TDRs | |||||||||||||||||||||||
The allowance for loan losses totaled $20.47 million as of March 31, 2016 and $20.23 million as of December 31, 2015. As of March 31, 2016, $20.44 million of the allowance was attributed to the non-PCI loan portfolio and $24 thousand was attributed to the PCI loan portfolio. Non-covered loans and OREO are those assets not covered by FDIC loss share agreements. Allowance activity in the first quarter of 2016 included a $1.19 million provision for loan losses charged to operations compared to $1.10 million for the same quarter of 2015. The provision for loan losses recorded through the FDIC indemnification asset totaled $9 thousand during the first quarter of 2016 compared to $46 thousand for the same quarter of 2015. The Company realized net charge-offs of $962 thousand in the first quarter of 2016, a decrease of $159 thousand, or 14.18%, compared to $1.12 million in the same quarter of 2015. The ratio of annualized net charge-offs to average non-covered loans was 0.23% for the first quarter of 2016 compared to 0.29% for the same quarter of the prior year.
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 decreased to 1.35% as of March 31, 2016, compared to 1.66% for the same period of the prior year. Non-covered nonaccrual loans totaled $16.20 million as of March 31, 2016, compared to $17.85 million as of December 31, 2015. At quarter-end, the Company’s non-covered nonaccrual loans as a percentage of total non-covered loans were 0.96%, compared to 1.10% at year-end 2015.
As of March 31, 2016, total nonperforming assets, including the covered and non-covered loan portfolios, consisted of $18.15 million in nonaccrual loans, $243 thousand in accruing loans 90 days or more past due, $158 thousand in unseasoned, accruing troubled debt restructurings, and $7.59 million in OREO. In comparison, total nonperforming assets consisted of $18.49 million in nonaccrual loans, $73 thousand in unseasoned, accruing troubled debt restructurings, and $8.91 million in OREO as of December 31, 2015. In addition, total non-covered nonperforming assets decreased $883 thousand, or 3.87%, as of March 31, 2016, compared to 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. The Company’s non-GAAP financial measure presented in this release include core earnings, the efficiency ratio, tangible book value per common share, average tangible common equity, and normalized net interest margin. Management believes that core earnings provide the Company and investors a valuable tool to evaluate the Company’s financial results. Management believes that the efficiency ratio provides important information about the Company’s operating expense control and efficiency of operations. Management also believes this ratio focuses attention on the core operating performance of the Company over time and is highly useful in comparing period-to-period operating performance of core business operations. The efficiency ratio used by the Company may not be comparable to efficiency ratios reported by other financial institutions. The reconciliations of these measures to GAAP measures are provided within this news release.
About First Community Bancshares, Inc.
First Community Bancshares, Inc., a financial holding company headquartered in Bluefield, Virginia, provides banking products and services through its wholly-owned subsidiary First Community Bank. First Community Bank operated 49 banking branch locations throughout Virginia, West Virginia, North Carolina, and Tennessee as of March 31, 2016. First Community Bank offers wealth management and investment services through its wholly-owned subsidiary First Community Wealth Management and the Bank’s Trust Division, which collectively managed $755 million in combined assets as of March 31, 2016. 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 March 31, 2016. The Company’s common stock is listed on the NASDAQ Global Select Market under the trading symbol, “FCBC”. The Company reported consolidated assets of $2.47 billion as of March 31, 2016. Additional investor information is available on the Company’s website at www.fcbinc.com.
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.