BLUEFIELD, Va., July 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 and six months ended June 30, 2016. The Company reported net income available to common shareholders of $6.26 million, or $0.36 per diluted common share for the quarter ended June 30, 2016, which represents a 9.09% increase in per share earnings compared to the same quarter of 2015. Net income available to common shareholders was $12.34 million, or $0.70 per diluted common share for the six months ended June 30, 2016, which represents a 9.38% increase in per share earnings compared to the same period of 2015.
The Company also announced today that the Board of Directors declared a quarterly cash dividend to common shareholders of sixteen cents ($0.16) per common share, an increase of 14.29% over the most recent cash dividend. The quarterly dividend is payable to common shareholders of record on August 5, 2016, and is expected to be paid on or about August 19, 2016. The current year marks the 31st consecutive year of cash dividends paid to stockholders.
On July 15, 2016, the Company completed the previously announced branch exchange with First Bank, North Carolina, pursuant to which First Community Bank (the “Bank”) sold six branches in the Winston-Salem and Mooresville areas of North Carolina and acquired seven branches in Southwestern Virginia.
Second Quarter 2016 Highlights
- Income Statement
- Net income available to common shareholders increased $80 thousand to $6.26 million, or 1.30%, compared to the same quarter of 2015.
- Diluted earnings per share increased $0.03, or 9.09%, to $0.36 compared to the same quarter of 2015.
- Core diluted earnings per common share increased $0.06 to $0.38 compared to the same quarter of 2015.
- Net interest margin increased 18 basis points to 4.08% while normalized net interest margin increased 14 basis points to 3.81% compared to the same quarter of 2015.
- Second quarter 2016 efficiency ratio was 65.19%, a significant decrease from the same quarter of 2015. The non-GAAP efficiency ratio improved 16 basis points to 61.55% compared to the same quarter of 2015.
- Balance Sheet
- The non-covered loan portfolio increased $109.89 million, or 6.77%, compared to December 31, 2015.
- Book value per common share increased $0.53 to $19.48 compared to December 31, 2015.
- The Company repurchased 493,812 common shares during the quarter resulting in 981,551 shares repurchased year-to-date. Since June 30, 2013, the Company has repurchased 4.12 million shares.
- The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of June 30, 2016.
- Asset Quality
- Annualized net charge-offs were only 0.02% of average loans compared to 0.06% for the same period of the prior year.
- Delinquent loans as a percentage of total loans decreased 15 basis points to 1.26% compared to the same period of 2015.
- Non-covered delinquent loans as a percentage of total non-covered loans decreased 13 basis points to 1.26% compared to the same period of 2015.
- Total nonperforming assets decreased $3.79 million compared to December 31, 2015, and decreased $6.13 million compared to the same period of 2015.
- Total non-covered nonperforming assets decreased $1.80 million compared to December 31, 2015, and decreased $2.38 million compared to June 30, 2015.
- A net loan loss provision of $722 thousand was recognized to cover net charge-offs and the continued loan growth experienced during the quarter.
Financial Performance
| CONDENSED STATEMENTS OF INCOME (Unaudited) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||
| (Amounts in thousands, except share and per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 22,237 | $ | 21,573 | $ | 21,633 | $ | 22,259 | $ | 21,826 | $ | 43,810 | $ | 43,740 | ||||||||||||||||||
| Interest on securities | 1,891 | 1,957 | 2,023 | 2,056 | 2,073 | 3,848 | 4,124 | |||||||||||||||||||||||||
| Interest on deposits in banks | 9 | 20 | 21 | 33 | 80 | 29 | 213 | |||||||||||||||||||||||||
| Total interest income | 24,137 | 23,550 | 23,677 | 24,348 | 23,979 | 47,687 | 48,077 | |||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||||||||
| Interest on deposits | 1,087 | 1,114 | 1,202 | 1,384 | 1,562 | 2,201 | 3,292 | |||||||||||||||||||||||||
| Interest on borrowings | 1,359 | 1,325 | 1,300 | 1,295 | 1,347 | 2,684 | 2,876 | |||||||||||||||||||||||||
| Total interest expense | 2,446 | 2,439 | 2,502 | 2,679 | 2,909 | 4,885 | 6,168 | |||||||||||||||||||||||||
| Net interest income | 21,691 | 21,111 | 21,175 | 21,669 | 21,070 | 42,802 | 41,909 | |||||||||||||||||||||||||
| Provision for loan losses | 722 | 1,187 | 434 | 381 | 276 | 1,909 | 1,376 | |||||||||||||||||||||||||
| Net interest income after provision | 20,969 | 19,924 | 20,741 | 21,288 | 20,794 | 40,893 | 40,533 | |||||||||||||||||||||||||
| Noninterest income | ||||||||||||||||||||||||||||||||
| Wealth management | 810 | 684 | 744 | 790 | 775 | 1,494 | 1,441 | |||||||||||||||||||||||||
| Service charges on deposits | 3,361 | 3,291 | 3,563 | 3,744 | 3,507 | 6,652 | 6,410 | |||||||||||||||||||||||||
| Other service charges and fees | 2,054 | 2,010 | 2,058 | 1,974 | 2,005 | 4,064 | 4,013 | |||||||||||||||||||||||||
| Insurance commissions | 1,600 | 2,191 | 1,563 | 1,650 | 1,559 | 3,791 | 3,686 | |||||||||||||||||||||||||
| Net impairment losses recognized in earnings | (11 | ) | - | - | - | - | (11 | ) | - | |||||||||||||||||||||||
| Net (loss) gain on sale of securities | (79 | ) | 1 | (7 | ) | (39 | ) | 213 | (78 | ) | 190 | |||||||||||||||||||||
| Net FDIC indemnification asset amortization | (1,328 | ) | (1,159 | ) | (1,200 | ) | (1,768 | ) | (1,846 | ) | (2,487 | ) | (3,411 | ) | ||||||||||||||||||
| Other operating income | 623 | 885 | 762 | 723 | 1,924 | 1,508 | 2,644 | |||||||||||||||||||||||||
| Total noninterest income | 7,030 | 7,903 | 7,483 | 7,074 | 8,137 | 14,933 | 14,973 | |||||||||||||||||||||||||
| Noninterest expense | ||||||||||||||||||||||||||||||||
| Total noninterest expense | 18,722 | 18,814 | 19,083 | 19,019 | 20,289 | 37,536 | 38,069 | |||||||||||||||||||||||||
| Income before income taxes | 9,277 | 9,013 | 9,141 | 9,343 | 8,642 | 18,290 | 17,437 | |||||||||||||||||||||||||
| Income tax expense | 3,022 | 2,929 | 2,993 | 3,084 | 2,467 | 5,951 | 5,304 | |||||||||||||||||||||||||
| Net income | 6,255 | 6,084 | 6,148 | 6,259 | 6,175 | 12,339 | 12,133 | |||||||||||||||||||||||||
| Dividends on preferred stock | - | - | - | - | - | - | 105 | |||||||||||||||||||||||||
| Net income available to common shareholders | $ | 6,255 | $ | 6,084 | $ | 6,148 | $ | 6,259 | $ | 6,175 | $ | 12,339 | $ | 12,028 | ||||||||||||||||||
| Earnings per common share | ||||||||||||||||||||||||||||||||
| Basic | $ | 0.36 | $ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.33 | $ | 0.70 | $ | 0.64 | ||||||||||||||||||
| Diluted | 0.36 | 0.34 | 0.34 | 0.34 | 0.33 | 0.70 | 0.64 | |||||||||||||||||||||||||
| Cash dividends per common share | 0.14 | 0.14 | 0.14 | 0.14 | 0.13 | 0.28 | 0.26 | |||||||||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||||||||
| Basic | 17,414,320 | 17,859,197 | 18,193,824 | 18,470,348 | 18,831,907 | 17,636,783 | 18,733,288 | |||||||||||||||||||||||||
| Diluted | 17,462,845 | 17,892,531 | 18,226,719 | 18,500,975 | 18,860,284 | 17,675,128 | 19,095,408 | |||||||||||||||||||||||||
| Performance ratios | ||||||||||||||||||||||||||||||||
| Return on average assets | 1.02 | % | 0.99 | % | 0.99 | % | 1.00 | % | 0.97 | % | 1.00 | % | 0.94 | % | ||||||||||||||||||
| Return on average common equity | 7.47 | % | 7.15 | % | 7.05 | % | 7.18 | % | 7.08 | % | 7.31 | % | 7.01 | % | ||||||||||||||||||
| Return on average tangible common equity(1) | 10.88 | % | 10.34 | % | 10.17 | % | 10.38 | % | 10.19 | % | 10.60 | % | 10.16 | % | ||||||||||||||||||
| (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 | Six Months Ended | ||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||||
| (Amounts in thousands, except per share data) | |||||||||||||||||||||||||||||||||
| Net income, GAAP | $ | 6,255 | $ | 6,084 | $ | 6,148 | $ | 6,259 | $ | 6,175 | $ | 12,339 | $ | 12,133 | |||||||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||
| Merger, acquisition, and divestiture expense | 410 | 39 | - | - | - | 449 | 86 | ||||||||||||||||||||||||||
| Net loss (gain) on sale of securities | 79 | (1 | ) | 7 | 39 | (213 | ) | 78 | (190 | ) | |||||||||||||||||||||||
| FHLB debt prepayment fees | - | - | - | - | 1,702 | - | 1,702 | ||||||||||||||||||||||||||
| Net impairment losses recognized in earnings | 11 | - | - | - | - | 11 | - | ||||||||||||||||||||||||||
| Other non-core, non-recurring items | - | (240 | ) | 31 | (75 | ) | (930 | ) | (240 | ) | (960 | ) | |||||||||||||||||||||
| Total adjustments to core earnings | 500 | (202 | ) | 38 | (36 | ) | 559 | 298 | 638 | ||||||||||||||||||||||||
| Tax effect | 184 | (74 | ) | 14 | (13 | ) | 631 | 110 | 660 | ||||||||||||||||||||||||
| Core earnings, non-GAAP(1) | $ | 6,571 | $ | 5,956 | $ | 6,172 | $ | 6,236 | $ | 6,103 | $ | 12,527 | $ | 12,111 | |||||||||||||||||||
| Core diluted earnings per common share | $ | 0.38 | $ | 0.33 | $ | 0.34 | $ | 0.34 | $ | 0.32 | $ | 0.71 | $ | 0.63 | |||||||||||||||||||
| Performance ratios | |||||||||||||||||||||||||||||||||
| Core return on average assets | 1.07 | % | 0.97 | % | 0.99 | % | 1.00 | % | 0.96 | % | 1.02 | % | 0.95 | % | |||||||||||||||||||
| Core return on average common equity | 7.85 | % | 7.00 | % | 7.08 | % | 7.16 | % | 7.00 | % | 7.42 | % | 7.06 | % | |||||||||||||||||||
| Core return on average tangible common equity(2) | 11.43 | % | 10.12 | % | 10.21 | % | 10.34 | % | 10.07 | % | 10.77 | % | 10.23 | % | |||||||||||||||||||
| (1 | ) | A non-GAAP financial measure that excludes gains, losses, and impairment losses on securities; goodwill and intangible impairment; taxes; and other non-recurring income and expense items from net income. | |||||||||||||||||||||||||||||||
| (2 | ) | A non-GAAP financial measure defined as average stockholders’ equity less average goodwill, other intangibles, and preferred stock liquidation preference. | |||||||||||||||||||||||||||||||
Net income available to common shareholders increased $80 thousand, or 1.30%, to $6.26 million for the second quarter of 2016 from $6.18 million for the same quarter of 2015. Diluted earnings per common share increased $0.03 to $0.36 for the second quarter of 2016 from $0.33 for the same quarter of 2015. The increase in net interest income was a result of $621 thousand increase in net interest income and a $1.57 million decrease in noninterest expense offset by a $1.11 million decrease in noninterest income, a $446 thousand increase in the provision for loan losses, and a $555 thousand increase in income tax expense. The increase in net interest income was primarily due to decreases in deposit and borrowing costs. Noninterest income during the second quarter of 2015 included a net death benefit of approximately $1.14 million from the maturity of a life insurance policy.
Net Interest Income and Margin
| AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) | ||||||||||||||||||||||||||||||
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||||
| Average | Average Yield/ | Average | Average Yield/ | |||||||||||||||||||||||||||
| (Amounts in thousands) | Balance | Interest(1) | Rate(1) | Balance | Interest(1) | Rate(1) | ||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||||||
| Loans(2) | $ | 1,775,435 | $ | 22,263 | 5.04 | % | $ | 1,671,476 | $ | 21,862 | 5.25 | % | ||||||||||||||||||
| Securities available for sale | 336,510 | 2,195 | 2.62 | % | 362,366 | 2,418 | 2.68 | % | ||||||||||||||||||||||
| Securities held to maturity | 72,331 | 191 | 1.06 | % | 72,742 | 196 | 1.08 | % | ||||||||||||||||||||||
| Interest-bearing deposits | 5,184 | 9 | 0.70 | % | 120,025 | 80 | 0.27 | % | ||||||||||||||||||||||
| Total earning assets | 2,189,460 | 24,658 | 4.53 | % | 2,226,609 | 24,556 | 4.42 | % | ||||||||||||||||||||||
| Other assets | 283,945 | 311,437 | ||||||||||||||||||||||||||||
| Total assets | $ | 2,473,405 | $ | 2,538,046 | ||||||||||||||||||||||||||
| Liabilities and stockholders' equity | ||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||
| Demand deposits | $ | 339,365 | $ | 60 | 0.07 | % | $ | 340,517 | $ | 51 | 0.06 | % | ||||||||||||||||||
| Savings deposits | 542,238 | 63 | 0.05 | % | 538,717 | 101 | 0.08 | % | ||||||||||||||||||||||
| Time deposits | 518,163 | 964 | 0.75 | % | 655,243 | 1,410 | 0.86 | % | ||||||||||||||||||||||
| Total interest-bearing deposits | 1,399,766 | 1,087 | 0.31 | % | 1,534,477 | 1,562 | 0.41 | % | ||||||||||||||||||||||
| Borrowings | ||||||||||||||||||||||||||||||
| Federal funds purchased | 9,078 | 14 | 0.62 | % | - | - | - | |||||||||||||||||||||||
| Retail repurchase agreements | 65,718 | 12 | 0.07 | % | 70,328 | 17 | 0.10 | % | ||||||||||||||||||||||
| Wholesale repurchase agreements | 50,000 | 469 | 3.77 | % | 50,000 | 468 | 3.75 | % | ||||||||||||||||||||||
| FHLB advances and other borrowings | 132,459 | 864 | 2.62 | % | 86,592 | 862 | 3.99 | % | ||||||||||||||||||||||
| Total borrowings | 257,255 | 1,359 | 2.12 | % | 206,920 | 1,347 | 2.61 | % | ||||||||||||||||||||||
| Total interest-bearing liabilities | 1,657,021 | 2,446 | 0.59 | % | 1,741,397 | 2,909 | 0.67 | % | ||||||||||||||||||||||
| Noninterest-bearing demand deposits | 460,255 | 428,442 | ||||||||||||||||||||||||||||
| Other liabilities | 19,520 | 20,072 | ||||||||||||||||||||||||||||
| Total liabilities | 2,136,796 | 2,189,911 | ||||||||||||||||||||||||||||
| Stockholders' equity | 336,609 | 348,135 | ||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,473,405 | $ | 2,538,046 | ||||||||||||||||||||||||||
| Net interest income, FTE | $ | 22,212 | $ | 21,647 | ||||||||||||||||||||||||||
| Net interest rate spread | 3.94 | % | 3.75 | % | ||||||||||||||||||||||||||
| Net interest margin | 4.08 | % | 3.90 | % | ||||||||||||||||||||||||||
| (1 | ) | Fully taxable equivalent ("FTE") basis based on the federal statutory rate of 35% | ||||||||||||||||||||||||||||
| (2 | ) | Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual. | ||||||||||||||||||||||||||||
| AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) | ||||||||||||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||||||||||
| Average | Average Yield/ | Average | Average Yield/ | |||||||||||||||||||||||||||
| (Amounts in thousands) | Balance | Interest(1) | Rate(1) | Balance | Interest(1) | Rate(1) | ||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||||||
| Loans(2) | $ | 1,752,918 | $ | 43,862 | 5.03 | % | $ | 1,674,778 | $ | 43,816 | 5.28 | % | ||||||||||||||||||
| Securities available for sale | 345,546 | 4,463 | 2.60 | % | 346,792 | 4,831 | 2.81 | % | ||||||||||||||||||||||
| Securities held to maturity | 72,421 | 385 | 1.07 | % | 69,351 | 382 | 1.11 | % | ||||||||||||||||||||||
| Interest-bearing deposits | 10,388 | 29 | 0.56 | % | 164,201 | 213 | 0.26 | % | ||||||||||||||||||||||
| Total earning assets | 2,181,273 | 48,739 | 4.49 | % | 2,255,122 | 49,242 | 4.40 | % | ||||||||||||||||||||||
| Other assets | 290,551 | 315,126 | ||||||||||||||||||||||||||||
| Total assets | $ | 2,471,824 | $ | 2,570,248 | ||||||||||||||||||||||||||
| Liabilities and stockholders' equity | ||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||
| Demand deposits | $ | 340,945 | $ | 117 | 0.07 | % | $ | 346,099 | $ | 104 | 0.06 | % | ||||||||||||||||||
| Savings deposits | 539,004 | 129 | 0.05 | % | 532,740 | 206 | 0.08 | % | ||||||||||||||||||||||
| Time deposits | 525,899 | 1,955 | 0.75 | % | 676,519 | 2,982 | 0.89 | % | ||||||||||||||||||||||
| Total interest-bearing deposits | 1,405,848 | 2,201 | 0.31 | % | 1,555,358 | 3,292 | 0.43 | % | ||||||||||||||||||||||
| Borrowings | ||||||||||||||||||||||||||||||
| Federal funds purchased | 6,251 | 20 | 0.64 | % | - | - | - | |||||||||||||||||||||||
| Retail repurchase agreements | 71,855 | 25 | 0.07 | % | 69,097 | 38 | 0.11 | % | ||||||||||||||||||||||
| Wholesale repurchase agreements | 50,000 | 937 | 3.77 | % | 50,000 | 931 | 3.75 | % | ||||||||||||||||||||||
| FHLB advances and other borrowings | 120,236 | 1,702 | 2.85 | % | 96,551 | 1,907 | 3.98 | % | ||||||||||||||||||||||
| Total borrowings | 248,342 | 2,684 | 2.17 | % | 215,648 | 2,876 | 2.69 | % | ||||||||||||||||||||||
| Total interest-bearing liabilities | 1,654,190 | 4,885 | 0.59 | % | 1,771,006 | 6,168 | 0.70 | % | ||||||||||||||||||||||
| Noninterest-bearing demand deposits | 454,552 | 427,881 | ||||||||||||||||||||||||||||
| Other liabilities | 23,652 | 20,696 | ||||||||||||||||||||||||||||
| Total liabilities | 2,132,394 | 2,219,583 | ||||||||||||||||||||||||||||
| Stockholders' equity | 339,430 | 350,665 | ||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,471,824 | $ | 2,570,248 | ||||||||||||||||||||||||||
| Net interest income, FTE | $ | 43,854 | $ | 43,074 | ||||||||||||||||||||||||||
| Net interest rate spread | 3.90 | % | 3.70 | % | ||||||||||||||||||||||||||
| Net interest margin | 4.04 | % | 3.85 | % | ||||||||||||||||||||||||||
| (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 June 30, | ||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||
| (Amounts in thousands) | Interest(1) | Average Yield/ Rate(1) | Interest(1) | Average Yield/ Rate(1) | ||||||||||||||||||
| Earning assets | ||||||||||||||||||||||
| Loans(2) | $ | 22,263 | 5.04 | % | $ | 21,862 | 5.25 | % | ||||||||||||||
| Accretion income | 2,248 | 2,416 | ||||||||||||||||||||
| Less: cash accretion income | 786 | 1,134 | ||||||||||||||||||||
| Non-cash accretion income | 1,462 | 1,282 | ||||||||||||||||||||
| Loans, normalized(3) | 20,801 | 4.71 | % | 20,580 | 4.94 | % | ||||||||||||||||
| Other earning assets | 2,395 | 2.33 | % | 2,694 | 1.95 | % | ||||||||||||||||
| Total earning assets | 23,196 | 4.26 | % | 23,274 | 4.19 | % | ||||||||||||||||
| Total interest-bearing liabilities | 2,446 | 0.59 | % | 2,909 | 0.67 | % | ||||||||||||||||
| Net interest income, FTE(3) | $ | 20,750 | $ | 20,365 | ||||||||||||||||||
| Net interest rate spread, normalized(3) | 3.67 | % | 3.52 | % | ||||||||||||||||||
| Net interest margin, normalized(3) | 3.81 | % | 3.67 | % | ||||||||||||||||||
| (1 | ) | FTE basis based on the federal statutory rate of 35%. | ||||||||||||||||||||
| (2 | ) | Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual. | ||||||||||||||||||||
| (3 | ) | Normalized totals are non-GAAP financial measures that exclude non-cash loan interest accretion related to PCI loans. | ||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||
| (Amounts in thousands) | Interest(1) | Average Yield/ Rate(1) | Interest(1) | Average Yield/ Rate(1) | ||||||||||||||||||
| Earning assets | ||||||||||||||||||||||
| Loans(2) | $ | 43,862 | 5.03 | % | $ | 43,816 | 5.28 | % | ||||||||||||||
| Accretion income | 4,500 | 5,255 | ||||||||||||||||||||
| Less: cash accretion income | 1,591 | 2,230 | ||||||||||||||||||||
| Non-cash accretion income | 2,909 | 3,025 | ||||||||||||||||||||
| Loans, normalized(3) | 40,953 | 4.70 | % | 40,791 | 4.91 | % | ||||||||||||||||
| Other earning assets | 4,877 | 2.29 | % | 5,425 | 1.89 | % | ||||||||||||||||
| Total earning assets | 45,830 | 4.23 | % | 46,216 | 4.13 | % | ||||||||||||||||
| Total interest-bearing liabilities | 4,885 | 0.59 | % | 6,168 | 0.70 | % | ||||||||||||||||
| Net interest income, FTE(3) | $ | 40,945 | $ | 40,048 | ||||||||||||||||||
| Net interest rate spread, normalized(3) | 3.63 | % | 3.43 | % | ||||||||||||||||||
| Net interest margin, normalized(3) | 3.77 | % | 3.58 | % | ||||||||||||||||||
| (1 | ) | FTE basis based on the federal statutory rate of 35% | ||||||||||||||||||||
| (2 | ) | Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual. | ||||||||||||||||||||
| (3 | ) | Normalized totals are non-GAAP financial measures that exclude non-cash loan interest accretion related to PCI loans. | ||||||||||||||||||||
The tax equivalent net interest margin increased 18 basis points, or 4.62%, to 4.08% and the normalized net interest margin, which excludes non-cash loan interest accretion, increased 14 basis points, or 3.81%, to 3.81% for the second quarter of 2016 compared to the same quarter of 2015. The tax equivalent yield on loans decreased 21 basis points to 5.04% while the average balance increased $103.96 million, or 6.22%, to $1.78 billion. The increase in average loans was primarily due to continued growth in the non-covered loan portfolio. Non-cash purchased credit impaired (“PCI”) loan interest accretion increased $180 thousand, or 14.04%, to $1.46 million for the second quarter of 2016 from $1.28 million for the same quarter of 2015 due to several large loan payoffs. The normalized yield on loans decreased 23 basis points to 4.71%. The average rate paid on interest-bearing liabilities decreased 8 basis points to 0.59% and the average balance decreased $84.38 million, or 4.85%, to $1.66 billion. The decrease in average interest-bearing liabilities included a $134.71 million decrease in average interest-bearing deposits, primarily time deposit accounts, offset by a $50.34 million increase in average borrowings.
Noninterest Income and Expense
| CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited) | |||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | |||||||||||||||||||||||
| (Amounts in thousands) | 2016 | 2016 | 2015 | 2015 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||
| Wealth management | 810 | 684 | 744 | 790 | 775 | 1,494 | 1,441 | ||||||||||||||||||||||
| Service charges on deposits | 3,361 | 3,291 | 3,563 | 3,744 | 3,507 | 6,652 | 6,410 | ||||||||||||||||||||||
| Other service charges and fees | 2,054 | 2,010 | 2,058 | 1,974 | 2,005 | 4,064 | 4,013 | ||||||||||||||||||||||
| Insurance commissions | 1,600 | 2,191 | 1,563 | 1,650 | 1,559 | 3,791 | 3,686 | ||||||||||||||||||||||
| Net impairment losses recognized in earnings | (11 | ) | - | - | - | - | (11 | ) | - | ||||||||||||||||||||
| Net (loss) gain on sale of securities | (79 | ) | 1 | (7 | ) | (39 | ) | 213 | (78 | ) | 190 | ||||||||||||||||||
| Net FDIC indemnification asset amortization | (1,328 | ) | (1,159 | ) | (1,200 | ) | (1,768 | ) | (1,846 | ) | (2,487 | ) | (3,411 | ) | |||||||||||||||
| Other operating income | 623 | 885 | 762 | 723 | 1,924 | 1,508 | 2,644 | ||||||||||||||||||||||
| Total noninterest income | 7,030 | 7,903 | 7,483 | 7,074 | 8,137 | 14,933 | 14,973 | ||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||
| Salaries and employee benefits | 10,198 | 10,475 | 10,268 | 9,971 | 9,693 | 20,673 | 19,386 | ||||||||||||||||||||||
| Occupancy expense | 1,359 | 1,531 | 1,413 | 1,443 | 1,427 | 2,890 | 2,961 | ||||||||||||||||||||||
| Furniture and equipment expense | 1,109 | 1,096 | 1,345 | 1,259 | 1,358 | 2,205 | 2,595 | ||||||||||||||||||||||
| Amortization of intangibles | 277 | 278 | 281 | 281 | 279 | 555 | 556 | ||||||||||||||||||||||
| FDIC premiums and assessments | 372 | 374 | 332 | 377 | 389 | 746 | 804 | ||||||||||||||||||||||
| FHLB debt prepayment fees | - | - | - | - | 1,702 | - | 1,702 | ||||||||||||||||||||||
| Merger, acquisition, and divestiture expense | 410 | 39 | - | - | - | 449 | 86 | ||||||||||||||||||||||
| Other operating expense | 4,997 | 5,021 | 5,444 | 5,688 | 5,441 | 10,018 | 9,979 | ||||||||||||||||||||||
| Total noninterest expense | 18,722 | 18,814 | 19,083 | 19,019 | 20,289 | 37,536 | 38,069 | ||||||||||||||||||||||
Noninterest income decreased $1.11 million, or 13.60%, for the second quarter of 2016 compared to the same quarter of 2015. The decrease was largely due to a $1.30 million, or 67.62%, decrease in other operating income offset by a $518 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. The Company recognized OTTI charges of $11 thousand associated with certain equity securities. Other operating income included a net death benefit of approximately $1.14 million from the maturity of a life insurance policy during the second quarter of 2015.
Noninterest expense decreased $1.57 million, or 7.72%, for the second quarter of 2016 compared to the same quarter of 2015. The decrease was largely due to FHLB debt prepayment fees of $1.70 million incurred during the second quarter of 2015 coupled with a $444 thousand decrease in other operating expense offset by a $505 thousand increase in salaries and employee benefits and expenses related to the branch swap with First Bank of $410 thousand. The decrease in other operating expense included a $415 thousand decrease in the net loss on sales and expenses associated with other real estate owned (“OREO”).
Efficiency Ratio
| EFFICIENCY RATIO CALCULATION (Unaudited) | ||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | June 30, | ||||||||||||||||||||||||||||
| 2016 | 2016 | 2015 | 2015 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||||||||||||
| Noninterest expense, GAAP | $ | 18,722 | $ | 18,814 | $ | 19,083 | $ | 19,019 | $ | 20,289 | $ | 37,536 | $ | 38,069 | ||||||||||||||||||||
| Non-GAAP adjustments | ||||||||||||||||||||||||||||||||||
| Merger, acquisition, and divestiture expense | (410 | ) | (39 | ) | - | - | - | (449 | ) | (86 | ) | |||||||||||||||||||||||
| FHLB debt prepayment fees | - | - | - | - | (1,702 | ) | - | (1,702 | ) | |||||||||||||||||||||||||
| OREO expense and net loss | (247 | ) | (711 | ) | (475 | ) | (1,220 | ) | (416 | ) | (958 | ) | (743 | ) | ||||||||||||||||||||
| Other non-core, non-recurring items | (30 | ) | (174 | ) | (61 | ) | 15 | (213 | ) | (204 | ) | (213 | ) | |||||||||||||||||||||
| Adjusted noninterest expense | 18,035 | 17,890 | 18,547 | 17,814 | 17,958 | 35,925 | 35,325 | |||||||||||||||||||||||||||
| Net interest income, GAAP | 21,691 | 21,111 | 21,175 | 21,669 | 21,070 | 42,802 | 41,909 | |||||||||||||||||||||||||||
| Noninterest income, GAAP | 7,030 | 7,903 | 7,483 | 7,074 | 8,137 | 14,933 | 14,973 | |||||||||||||||||||||||||||
| Non-GAAP adjustments | ||||||||||||||||||||||||||||||||||
| Tax equivalency adjustment | 521 | 531 | 548 | 565 | 1,249 | 1,052 | 1,837 | |||||||||||||||||||||||||||
| Net impairment losses recognized in earnings | 11 | - | - | - | - | 11 | - | |||||||||||||||||||||||||||
| Net loss (gain) on sale of securities | 79 | (1 | ) | 7 | 39 | (213 | ) | 78 | (190 | ) | ||||||||||||||||||||||||
| Other non-core, non-recurring items | (30 | ) | (414 | ) | (30 | ) | (60 | ) | (1,143 | ) | (444 | ) | (1,173 | ) | ||||||||||||||||||||
| Adjusted net interest and noninterest income | 29,302 | 29,130 | 29,183 | 29,287 | 29,100 | 58,432 | 57,356 | |||||||||||||||||||||||||||
| Non-GAAP efficiency ratio(1) | 61.55 | % | 61.41 | % | 63.55 | % | 60.83 | % | 61.71 | % | 61.48 | % | 61.59 | % | ||||||||||||||||||||
| GAAP efficiency ratio | 65.19 | % | 64.84 | % | 66.59 | % | 66.17 | % | 69.47 | % | 65.01 | % | 66.93 | % | ||||||||||||||||||||
| (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) | |||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||
| (Amounts in thousands, except per share data) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||||
| Total cash and cash equivalents | 44,301 | 39,587 | 51,787 | 62,024 | 92,602 | ||||||||||||||||||||
| Securities available for sale | 322,699 | 338,469 | 366,173 | 382,212 | 376,191 | ||||||||||||||||||||
| Securities held to maturity | 72,239 | 72,485 | 72,541 | 72,596 | 72,652 | ||||||||||||||||||||
| Loans held for sale | - | - | - | 523 | 913 | ||||||||||||||||||||
| Loans held for investment, net of unearned income | |||||||||||||||||||||||||
| Non-covered | 1,733,398 | 1,685,891 | 1,623,506 | 1,600,271 | 1,564,655 | ||||||||||||||||||||
| Covered | 68,585 | 76,538 | 83,035 | 90,203 | 102,634 | ||||||||||||||||||||
| Less allowance for loan losses | (21,099 | ) | (20,467 | ) | (20,233 | ) | (20,127 | ) | (20,258 | ) | |||||||||||||||
| Loans held for investment, net | 1,780,884 | 1,741,962 | 1,686,308 | 1,670,347 | 1,647,031 | ||||||||||||||||||||
| FDIC indemnification asset | 16,431 | 18,787 | 20,844 | 22,049 | 23,653 | ||||||||||||||||||||
| Premises and equipment, net | 50,199 | 50,799 | 52,756 | 53,442 | 54,112 | ||||||||||||||||||||
| Other real estate owned, non-covered | 4,187 | 5,313 | 4,873 | 5,088 | 7,434 | ||||||||||||||||||||
| Other real estate owned, covered | 2,017 | 2,279 | 4,034 | 4,079 | 5,382 | ||||||||||||||||||||
| Interest receivable | 6,115 | 5,968 | 6,007 | 5,910 | 6,119 | ||||||||||||||||||||
| Goodwill | 100,486 | 100,486 | 100,486 | 100,810 | 100,810 | ||||||||||||||||||||
| Other intangible assets | 4,688 | 4,965 | 5,243 | 5,583 | 5,865 | ||||||||||||||||||||
| Other assets | 91,082 | 89,187 | 91,224 | 93,453 | 99,034 | ||||||||||||||||||||
| Total assets | $ | 2,495,328 | $ | 2,470,287 | $ | 2,462,276 | $ | 2,478,116 | $ | 2,491,798 | |||||||||||||||
| Liabilities | |||||||||||||||||||||||||
| Deposits | |||||||||||||||||||||||||
| Noninterest-bearing | $ | 451,003 | $ | 453,336 | $ | 451,511 | $ | 442,021 | $ | 424,438 | |||||||||||||||
| Interest-bearing | 1,373,412 | 1,421,329 | 1,421,748 | 1,460,881 | 1,495,783 | ||||||||||||||||||||
| Total deposits | 1,824,415 | 1,874,665 | 1,873,259 | 1,902,902 | 1,920,221 | ||||||||||||||||||||
| Interest, taxes, and other liabilities | 25,553 | 24,576 | 26,630 | 25,356 | 23,852 | ||||||||||||||||||||
| Federal funds purchased | 42,000 | 18,000 | - | - | - | ||||||||||||||||||||
| Securities sold under agreements to repurchase | 113,392 | 134,661 | 138,614 | 124,076 | 122,158 | ||||||||||||||||||||
| FHLB borrowings | 140,000 | 65,000 | 65,000 | 65,000 | 65,000 | ||||||||||||||||||||
| Other borrowings | 15,756 | 15,756 | 15,756 | 15,955 | 15,999 | ||||||||||||||||||||
| Total liabilities | 2,161,116 | 2,132,658 | 2,119,259 | 2,133,289 | 2,147,230 | ||||||||||||||||||||
| Stockholders' equity | |||||||||||||||||||||||||
| Common stock | 21,382 | 21,382 | 21,382 | 21,382 | 21,382 | ||||||||||||||||||||
| Additional paid-in capital | 227,791 | 227,725 | 227,692 | 227,621 | 227,616 | ||||||||||||||||||||
| Retained earnings | 163,030 | 159,223 | 155,647 | 152,046 | 148,378 | ||||||||||||||||||||
| Treasury stock, at cost | (74,974 | ) | (64,968 | ) | (56,457 | ) | (52,484 | ) | (46,610 | ) | |||||||||||||||
| Accumulated other comprehensive loss | (3,017 | ) | (5,733 | ) | (5,247 | ) | (3,738 | ) | (6,198 | ) | |||||||||||||||
| Total stockholders' equity | 334,212 | 337,629 | 343,017 | 344,827 | 344,568 | ||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,495,328 | $ | 2,470,287 | $ | 2,462,276 | $ | 2,478,116 | $ | 2,491,798 | |||||||||||||||
| Shares outstanding at period-end | 17,155,322 | 17,631,011 | 18,098,141 | 18,313,425 | 18,641,966 | ||||||||||||||||||||
| Book value per common share(1) | $ | 19.48 | $ | 19.15 | $ | 18.95 | $ | 18.83 | $ | 18.48 | |||||||||||||||
| Tangible book value per common share(2) | 13.35 | 13.17 | 13.11 | 13.02 | 12.76 | ||||||||||||||||||||
| (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 $33.05 million, or 1.34%, as of June 30, 2016, compared to December 31, 2015. The change in consolidated assets was primarily driven by a $94.58 million increase in net loans offset by a $43.47 million decrease in securities available for sale and a $7.49 million decrease in cash and cash equivalents. Consolidated liabilities increased $41.86 million, or 1.98%, as of June 30, 2016, compared to December 31, 2015. The change in consolidated liabilities was driven by a $75.00 million increase in FHLB borrowings and $42.00 million increase in federal funds purchased offset by a $48.84 million decrease in total deposits, primarily due to time deposits, and $25.22 million decrease in securities sold under agreements to repurchase.
Stockholders’ equity decreased $8.81 million, or 2.57%, as of June 30, 2016, compared to December 31, 2015. The Company repurchased 981,551 common shares at a weighted average cost of $19.52 per share and paid a cash dividend of $0.28 per common share during the first six months of 2016. Book value per common share increased $0.53 to $19.48 and tangible book value per common share increased $0.24 to $13.35 as of June 30, 2016, compared to December 31, 2015. The Company significantly exceeds regulatory “well capitalized” targets as of June 30, 2016.
Asset Quality
| SELECTED CREDIT QUALITY INFORMATION (Unaudited) | |||||||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||||||||
| (Amounts in thousands) | 2016 | 2016 | 2015 | 2015 | 2015 | ||||||||||||||||||||
| Allowance for Loan Losses | |||||||||||||||||||||||||
| Beginning balance | $ | 20,467 | $ | 20,233 | $ | 20,127 | $ | 20,258 | $ | 20,252 | |||||||||||||||
| Provision for loan losses charged | |||||||||||||||||||||||||
| to operations | 722 | 1,187 | 434 | 381 | 276 | ||||||||||||||||||||
| (Recovery of) provision for loan losses recorded | |||||||||||||||||||||||||
| through the FDIC indemnification asset | (10 | ) | 9 | - | (75 | ) | - | ||||||||||||||||||
| Charge-offs | (691 | ) | (1,228 | ) | (805 | ) | (689 | ) | (673 | ) | |||||||||||||||
| Recoveries | 611 | 266 | 477 | 252 | 403 | ||||||||||||||||||||
| Net charge-offs | (80 | ) | (962 | ) | (328 | ) | (437 | ) | (270 | ) | |||||||||||||||
| Ending balance | $ | 21,099 | $ | 20,467 | $ | 20,233 | $ | 20,127 | $ | 20,258 | |||||||||||||||
| Nonperforming Assets | |||||||||||||||||||||||||
| Non-covered nonperforming assets | |||||||||||||||||||||||||
| Nonaccrual loans | $ | 16,626 | $ | 16,196 | $ | 17,847 | $ | 17,100 | $ | 15,936 | |||||||||||||||
| Accruing loans past due 90 days or more | 64 | 243 | - | 3 | - | ||||||||||||||||||||
| Troubled debt restructurings ("TDRs")(1) | 115 | 158 | 73 | 74 | - | ||||||||||||||||||||
| Total non-covered nonperforming loans | 16,805 | 16,597 | 17,920 | 17,177 | 15,936 | ||||||||||||||||||||
| OREO | 4,187 | 5,313 | 4,873 | 5,088 | 7,434 | ||||||||||||||||||||
| Total non-covered nonperforming assets | $ | 20,992 | $ | 21,910 | $ | 22,793 | $ | 22,265 | $ | 23,370 | |||||||||||||||
| Covered nonperforming assets | |||||||||||||||||||||||||
| Nonaccrual loans | $ | 680 | $ | 1,955 | $ | 647 | $ | 815 | $ | 1,062 | |||||||||||||||
| Accruing loans past due 90 days or more | - | - | - | - | - | ||||||||||||||||||||
| Total covered nonperforming loans | 680 | 1,955 | 647 | 815 | 1,062 | ||||||||||||||||||||
| OREO | 2,017 | 2,279 | 4,034 | 4,079 | 5,382 | ||||||||||||||||||||
| Total covered nonperforming assets | $ | 2,697 | $ | 4,234 | $ | 4,681 | $ | 4,894 | $ | 6,444 | |||||||||||||||
| Additional Information | |||||||||||||||||||||||||
| Performing TDRs(2) | $ | 13,562 | $ | 13,474 | $ | 13,889 | $ | 13,965 | $ | 13,841 | |||||||||||||||
| Total TDRs(3) | 13,677 | 13,632 | 13,962 | 14,039 | 13,841 | ||||||||||||||||||||
| Non-covered ratios | |||||||||||||||||||||||||
| Nonperforming loans to total loans | 0.97 | % | 0.98 | % | 1.10 | % | 1.07 | % | 1.02 | % | |||||||||||||||
| Nonperforming assets to total assets | 0.87 | % | 0.92 | % | 0.96 | % | 0.93 | % | 0.98 | % | |||||||||||||||
| Non-PCI allowance to nonperforming loans | 125.48 | % | 123.17 | % | 112.61 | % | 117.06 | % | 126.41 | % | |||||||||||||||
| Non-PCI allowance to total loans | 1.22 | % | 1.21 | % | 1.24 | % | 1.26 | % | 1.29 | % | |||||||||||||||
| Annualized net charge-offs to average loans | 0.02 | % | 0.23 | % | 0.08 | % | 0.11 | % | 0.07 | % | |||||||||||||||
| Total ratios | |||||||||||||||||||||||||
| Nonperforming loans to total loans | 0.97 | % | 1.05 | % | 1.09 | % | 1.06 | % | 1.02 | % | |||||||||||||||
| Nonperforming assets to total assets | 0.95 | % | 1.06 | % | 1.12 | % | 1.10 | % | 1.20 | % | |||||||||||||||
| Allowance for loan losses to nonperforming loans | 120.67 | % | 110.32 | % | 108.97 | % | 111.87 | % | 119.18 | % | |||||||||||||||
| Allowance for loan losses to total loans | 1.17 | % | 1.16 | % | 1.19 | % | 1.19 | % | 1.22 | % | |||||||||||||||
| Annualized net charge-off to average loans | 0.02 | % | 0.22 | % | 0.08 | % | 0.10 | % | 0.06 | % | |||||||||||||||
| (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 increased $866 thousand, or 4.28%, to $21.10 million as of June 30, 2016, compared to December 31, 2015. As of June 30, 2016, $21.09 million of the allowance was attributed to the non-PCI loan portfolio and $12 thousand was attributed to the PCI loan portfolio.
The provision for loan losses charged to operations increased $446 thousand to $722 thousand, for the second quarter of 2016 compared to the same quarter of 2015. The recovery of loan losses recorded through the FDIC indemnification asset totaled $10 thousand during the second quarter of 2016 compared to no activity for the same quarter of 2015. Net charge-offs decreased $190 thousand, or 70.37%, for the second quarter of 2016, compared to the same quarter of 2015. Annualized net charge-offs to average non-covered loans improved 5 basis points to 0.02% for the second quarter of 2016 compared to the same quarter of 2015. Non-covered loans and OREO are those assets not covered by FDIC loss share agreements.
Non-covered nonaccrual loans decreased $1.22 million, or 6.84%, as of June 30, 2016, compared to December 31, 2015. Non-covered nonaccrual loans as a percentage of total non-covered loans improved 14 basis points to 0.96% as of June 30, 2016, compared to December 31, 2015. Non-covered delinquent loans, which are comprised of loans 30 days or more past due and nonaccrual loans, as a percentage of total non-covered loans improved 46 basis points to 1.26% as of June 30, 2016, from 1.72% as of December 31, 2015.
Non-covered nonperforming assets decreased $1.80 million, or 7.90%, as of June 30, 2016, compared to December 31, 2015, and non-covered assets as a percent of total non-covered assets improved 9 basis points to 0.87%. As of June 30, 2016, total nonperforming assets consisted of $17.31 million in nonaccrual loans, $64 thousand in accruing loans 90 days or more past due, $115 thousand in unseasoned, accruing troubled debt restructurings, and $6.20 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.
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 48 branch banking locations throughout Virginia, West Virginia, North Carolina, and Tennessee as of June 30, 2016. First Community Bank offers wealth management and investment services through its wholly-owned subsidiary First Community Wealth Management and the Bank’s Trust Division, which collectively managed $770 million in combined assets as of June 30, 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 June 30, 2016. The Company’s common stock is listed on the NASDAQ Global Select Market under the trading symbol, “FCBC”. The Company reported consolidated assets of $2.50 billion as of June 30, 2016. Additional investor information is available on the Company’s website at www.fcbinc.com.
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.