First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) today reported record earnings of $7.3 million for the second quarter of 2006, or $0.65 diluted earnings per share. This represents an 18% increase over second quarter 2005 earnings of $6.2 million, or $0.55 diluted earnings per share. Return on average assets for the second quarter of 2006 was 1.47%, compared to 1.31% for the second quarter of 2005. Return on average equity for the second quarter of 2006 was 14.74%, compared to 13.19% for the same period in 2005.
Year-to-date earnings were $14.1 million, or $1.25 diluted earnings per share, a 16% increase over the same period of 2005. Return on average assets for the period was 1.45% and return on average equity was 14.42% for the period.
During the second quarter, the Bank sold its Drakes Branch, Virginia branch location. The transaction resulted in a net deposit premium of approximately $702 thousand. The branch sale was the second of three divestitures determined by an evaluation of the branch network. The branch held approximately $16.4 million in deposits and customer repurchase agreements and approximately $1.9 million in loans.
Operations for the most recent quarter were improved through a 5.4% reduction in total operating costs compared to the corresponding quarter in 2005. The cost reductions are the result of the Company's initiatives for achieving greater efficiency which have led to an 11% reduction in full-time equivalent employees since year-end 2005. Total salaries and benefits decreased $670 thousand between second quarter 2005 and 2006, and decreased $1.1 million compared to first quarter 2006.
Provision for loan losses was down $262 thousand and $545 thousand for the three- and six-month periods in 2006 compared with the preceding year. These reductions reflect continued improvement in overall asset quality and improving metrics utilized within the allowance methodology. Other financial highlights are as follows:
Financial Highlights
Second Quarter 2006
-- Interest income was $30.0 million, an improvement of $3.2 million, or 12%, over second quarter 2005. The increase was due primarily to increases in benchmark interest rates.
-- Net interest income was down from the second quarter of 2005 due to increases in interest expense. Second quarter interest expense was $3.6 million, or 43%, greater than 2005. On a linked-quarter basis, interest expense increased almost $1 million. Despite the growing interest costs, tax-equivalent net interest margin was 4.28%, down slightly from 4.32% for the first quarter of 2006, and from 4.51% for the second quarter of 2005.
-- Non-interest income was $5.5 million. Excluding the gain from the branch sale, non-interest income was $4.8 million compared to $4.6 million a year ago, a 5.4% increase. Service charges on deposit accounts increased $32 thousand, and other service charges and fees increased $40 thousand. The sale of the Drakes Branch, Virginia, banking office resulted in gains of approximately $702 thousand.
-- Non-interest expense for the second quarter was $12.6 million, a decrease of $745 thousand from last quarter and $713 thousand from second quarter of 2005. The decreases can be attributed to the extensive cost-savings measures implemented by the Company during the past three quarters. Salaries and benefits decreased $1.1 million from last quarter and $670 thousand from second quarter of 2005. Excluding the effects of the branch sale gains and non-recurring charge-offs, the efficiency ratio was 50.5% compared to 54.6% in 2005.
-- Credit quality remains sound with total delinquencies as a percent of total loans at 0.45% at June 30, 2006, compared to 0.60% at June 30, 2005 and 0.79% at December 31, 2005. The ratio of allowance for loan losses as a percent of loans held for investment was 1.12% compared to 1.23% at June 30, 2005. The provision for loan losses was $811 thousand compared to $1.1 million. Net charge-offs were $898 thousand compared to $1.2 million for second quarter 2005.
-- During the second quarter, the board of directors declared a dividend to stockholders of twenty-six cents ($0.26). The dividend represents an increase of 2.0% over the $0.255 per share paid in the second quarter of 2005. 2006 is projected to be the 15th consecutive year of dividend increases to stockholders. Dividends have increased at an average annual rate of over 10% since 1991. The second quarter dividend yield was 3.2% based on the quarter-end market value.
Year-to-Date 2006
-- Interest income grew $7.0 million, or 13%, compared to the same period of 2005. Tax-equivalent net interest margin was 4.30% compared to 4.49%.
-- Non-interest income was $10.7 million, an increase over prior year of $2.4 million, or 29%. The bulk of the increase was due to gains realized from the branch sale and a first quarter recovery from a previous fraud loss. Service charges on deposit accounts increased 6.3%, and other service charges, commissions and fees increased 9.1%.
-- Compared to prior year, non-interest expense increased only slightly to $25.9 million. The Company's expense control measures are the major reason behind the flat non-interest expense compared to the prior year period. Excluding the effects of the non-recurring income and expense items, the efficiency ratio year-to-date was 53.4% compared to 54.8% in 2005.
-- The provision for loan losses was $1.2 million compared to $1.8 for the first six months of 2005. Net charge-offs were $1.2 million compared to $1.7 million. Non-performing loans decreased to $2.9 million, a $457 thousand improvement from year-end 2005 and $1.2 million from June 30, 2005. Non-performing loans as a percentage of loans held for investment were 0.22% compared to 0.25% at December 31, 2005, and 0.32% at June 30, 2005.
-- Since year-end 2005, consolidated assets have increased $27.1 million, a 2.8% annualized growth rate, to $1.98 billion compared to $1.95 billion.
-- Total stockholders' equity for the Company was $197.9 million, resulting in a book value per common share outstanding of $17.71 compared to $194.5 million and $17.29 per common share at December 31, 2005.
The Company will host an investor and media teleconference and webcast on Wednesday, July 26, 2006 at 11:00 a.m. To access the teleconference, the toll-free number to call is (877) 407-8031. Alternatively, individuals may listen to the live or archived webcast of the conference call. To listen to the webcast, visit www.fcbinc.com and follow the link under the Current News Releases section. The Company's press release and financial summary will be available in this section, as well. Copies of the Company's second quarter 2006 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 Dave Brown at (800) 425-0839.
First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $1.98 billion bank holding company and is the parent company of First Community Bank, N. A. First Community Bank, N. A. operates through fifty-nine banking locations and six wealth management offices in the four states of Virginia, West Virginia, North Carolina and Tennessee. First Community Bank, N. A. is also the parent of Stone Capital Management, Inc., a SEC registered investment advisory firm, which offers wealth management and investment advice. The Company also offers wealth management services through its Trust & Financial Services Division, which as of June 30, 2006, managed assets with a market value of $478 million. First Community Bancshares, Inc.'s common stock is traded on the NASDAQ Global Select Market under the symbol "FCBC". Additional investor information can be found on the Internet at www.fcbinc.com.
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company's Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.
First Community Bancshares, Inc.
Consolidated Statements of Income
(Dollars in Thousands, Except Share and Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------------
2006 2005 2006 2005
--------------------------------------------
Interest Income
Interest and fees on loans
held for investment $24,506 $22,192 $48,431 $42,920
Interest on securities-
taxable 3,224 2,555 6,101 4,851
Interest on securities-
nontaxable 1,816 1,865 3,642 3,814
Interest on federal funds
sold and deposits 479 178 774 393
----------------------------------------------------------------------
Total interest income 30,025 26,790 58,948 51,978
----------------------------------------------------------------------
Interest Expense
Interest on deposits 8,326 5,547 15,973 10,509
Interest on borrowings 3,526 2,721 6,737 5,194
----------------------------------------------------------------------
Total interest expense 11,852 8,268 22,710 15,703
----------------------------------------------------------------------
Net interest income 18,173 18,522 36,238 36,275
Provision for loan losses 811 1,073 1,219 1,764
----------------------------------------------------------------------
Net interest income after
provision for loan losses 17,362 17,449 35,019 34,511
----------------------------------------------------------------------
Non-Interest Income
Wealth management income 732 793 1,415 1,482
Service charges on deposit
accounts 2,655 2,623 5,072 4,771
Other service charges,
commissions and fees 711 671 1,451 1,330
(Loss) gain on sale of
securities (94) 121 66 143
Other operating income 1,516 362 2,664 566
----------------------------------------------------------------------
Total non-interest income 5,520 4,570 10,668 8,292
----------------------------------------------------------------------
Non-Interest Expense
Salaries and employee
benefits 6,782 7,452 14,683 14,770
Occupancy expense of bank
premises 1,011 968 2,051 1,911
Furniture and equipment
expense 858 813 1,708 1,597
Amortization of intangible
assets 144 111 234 221
Other operating expense 3,793 3,957 7,245 7,298
--------------------------------------------
Total non-interest expense 12,588 13,301 25,921 25,797
----------------------------------------------------------------------
Income from continuing
operations before income
taxes 10,294 8,718 19,766 17,006
Income tax expense
continuing operations 3,002 2,494 5,630 4,731
----------------------------------------------------------------------
Income from continuing
operations 7,292 6,224 14,136 12,275
----------------------------------------------------------------------
Loss from discontinued
operations before tax - (39) - (170)
Income tax benefit from
discontinued operations - (15) - (66)
----------------------------------------------------------------------
Loss from discontinued
operations - (24) - (104)
----------------------------------------------------------------------
Net income $7,292 $6,200 $14,136 $12,171
----------------------------------------------------------------------
Basic earnings per common
share (EPS) $0.65 $0.55 $1.26 $1.08
Diluted earnings per
common share (DEPS) $0.65 $0.55 $1.25 $1.07
Weighted Average Shares
Outstanding:
Basic 11,201,052 11,273,724 11,216,940 11,266,648
Diluted 11,258,581 11,344,480 11,277,032 11,341,847
For the period:
Return on average assets 1.47% 1.31% 1.45% 1.31%
Return on average equity 14.74% 13.19% 14.42% 13.09%
Return on average tangible
equity 21.61% 19.87% 21.14% 19.77%
Cash dividends per share $0.26 $0.255 $0.52 $0.51
At period end:
Book value per share $17.71 $16.83 $17.71 $16.83
Market value $32.99 $32.50 $32.99 $32.50
First Community Bancshares Inc.
Quarterly Performance Summary
Income Statements
(Dollars in Thousands Except Share and Per Share Data)(Unaudited)
As of and for the Quarter Ended
-------------------------------------
June 30, March 31, Dec. 31,
2006 2006 2005
------------ ----------- -----------
Interest Income
Interest and fees on loans
held for investment $24,506 $23,925 $23,720
Interest on securities-
taxable 3,224 2,877 3,322
Interest on securities-
nontaxable 1,816 1,826 1,854
Interest on federal funds
sold and deposits 479 295 341
------------ ----------- -----------
Total interest
income 30,025 28,923 29,237
------------ ----------- -----------
Interest Expense
Interest on deposits 8,326 7,647 7,225
Interest on borrowings 3,526 3,211 3,380
------------ ----------- -----------
Total interest
expense 11,852 10,858 10,605
------------ ----------- -----------
Net interest income 18,173 18,065 18,632
Provision for loan losses 811 408 882
------------ ----------- -----------
Net interest income after
provision for loan
losses 17,362 17,657 17,750
------------ ----------- -----------
Non-Int Income
Wealth management income 732 683 716
Service charges on deposit
accounts 2,655 2,417 2,664
Other service charges,
commissions and fees 711 740 723
(Loss) gain on sale of
securities (94) 160 74
Other operating income 1,516 1,148 4,804
------------ ----------- -----------
Total non-interest
income 5,520 5,148 8,981
------------ ----------- -----------
Non-Int Expense
Salaries and employee
benefits 6,782 7,901 7,450
Occupancy expense of bank
premises 1,011 1,040 992
Furniture and equipment
expense 858 850 1,154
Amortization of intangible
assets 144 90 102
Prepayment penalties on
FHLB advances - - 3,794
Other operating expense 3,793 3,452 3,184
------------ ----------- -----------
Total non-
interest
expense 12,588 13,333 16,676
------------ ----------- -----------
Income before income
taxes-continuing
operations 10,294 9,472 10,055
Income tax expense-
continuing operations 3,002 2,628 2,819
------------ ----------- -----------
Income from
continuing
operations 7,292 6,844 7,236
------------ ----------- -----------
Loss before tax-
discontinued operations - - (27)
Income tax benefit
-discontinued operations - - (11)
------------ ----------- -----------
Loss from
discontinued
operations - - (16)
------------ ----------- -----------
Net income $7,292 $6,844 $7,220
============ =========== ===========
Per Share Data
Basic EPS $0.65 $0.61 $0.64
Diluted EPS $0.65 $0.61 $0.64
Basic EPS from continuing
operations $0.65 $0.61 $0.64
Diluted EPS from
continuing operations $0.65 $0.61 $0.64
Cash dividends per share $0.26 $0.26 $0.255
Weighted Average Shares
Outstanding:
Basic 11,201,052 11,233,005 11,268,496
Diluted 11,258,581 11,311,743 11,340,526
Actual shares outstanding
at period end 11,176,455 11,214,584 11,251,803
Book Value per share at
period end $17.71 $17.49 $17.29
Market Value per share at
period end $32.99 $31.98 $31.16
First Community Bancshares Inc.
Quarterly Performance Summary
Income Statements
(Dollars in Thousands Except Share and Per Share Data)(Unaudited)
As of and for the
Quarter Ended
-----------------------
Sept. 30, June 30,
2005 2005
----------- -----------
Interest Income
Interest and fees on loans held for
investment $23,263 $22,192
Interest on securities-taxable 2,904 2,555
Interest on securities-nontaxable 1,783 1,865
Interest on federal funds sold and
deposits 343 178
----------- -----------
Total interest income 28,293 26,790
----------- -----------
Interest Expense
Interest on deposits 6,296 5,547
Interest on borrowings 3,276 2,721
----------- -----------
Total interest expense 9,572 8,268
----------- -----------
Net interest income 18,721 18,522
Provision for loan losses 1,060 1,073
----------- -----------
Net interest income after
provision for loan losses 17,661 17,449
----------- -----------
Non-Int Income
Wealth management income 757 793
Service charges on deposit accounts 2,660 2,623
Other service charges, commissions
and fees 733 671
(Loss) gain on sale of securities 536 121
Other operating income 346 362
----------- -----------
Total non-interest income 5,032 4,570
----------- -----------
Non-Int Expense
Salaries and employee benefits 7,260 7,452
Occupancy expense of bank premises 1,000 968
Furniture and equipment expense 855 813
Amortization of intangible assets 112 111
Prepayment penalties on FHLB
advances - -
Other operating expense 3,891 3,957
----------- -----------
Total non-interest expense 13,118 13,301
----------- -----------
Income before income taxes-
continuing operations 9,575 8,718
Income tax expense-continuing
operations 2,641 2,494
----------- -----------
Income from continuing operations 6,934 6,224
----------- -----------
Loss before tax-discontinued
operations (36) (39)
Income tax benefit -discontinued
operations (14) (15)
----------- -----------
Loss from discontinued
operations (22) (24)
----------- -----------
Net income $6,912 $6,200
=========== ===========
Per Share Data
Basic EPS $0.61 $0.55
Diluted EPS $0.61 $0.55
Basic EPS from continuing
operations $0.61 $0.55
Diluted EPS from continuing
operations $0.61 $0.55
Cash dividends per share $0.255 $0.255
Weighted Average Shares Outstanding:
Basic 11,275,156 11,273,724
Diluted 11,342,912 11,344,480
Actual shares outstanding at
period end 11,273,248 11,274,391
Book Value per share at period end $17.15 $16.83
Market Value per share at period end $29.34 $32.50
First Community Bancshares, Inc.
Quarterly Balance Sheets
(Unaudited)
June 30, March 31, Dec. 31,
2006 2006 2005
---------- ----------- ----------
(Dollars in thousands)
Cash and due from banks $43,620 $46,953 $46,872
Interest-bearing deposits
with banks 29,714 59,005 10,667
Securities available for
sale 405,761 396,691 404,381
Securities held to
maturity 20,641 22,789 24,173
Loans held for sale 1,293 848 1,274
Loans held for
investment, net of
unearned income 1,318,943 1,329,666 1,331,039
Less allowance for
loan losses 14,710 14,797 14,736
----------- ----------- ----------
Net loans 1,304,233 1,314,869 1,316,303
Premises and equipment 35,888 35,636 34,993
Other real estate owned 910 867 1,400
Interest receivable 10,179 10,664 10,232
Intangible assets 60,883 61,028 61,119
Other assets 66,510 39,512 41,069
----------- ----------- ----------
Total Assets 1,979,632 1,988,862 1,952,483
----------- ----------- ----------
Deposits:
Demand $253,664 $246,521 $230,542
Interest-bearing
demand 139,861 149,039 144,314
Savings 344,436 362,677 355,184
Time 675,165 683,853 675,904
----------- ----------- ----------
Total Deposits 1,413,126 1,442,090 1,405,944
Interest, taxes and other
liabilities 14,938 15,471 16,153
Federal funds purchased - - 82,500
Securities sold under
agreements to repurchase 149,507 131,009 124,154
FHLB and other
indebtedness 204,158 204,192 129,231
----------- ----------- ----------
Total Liabilities 1,781,729 1,792,762 1,757,982
----------- ----------- ----------
Common stock, $1 par
value 11,499 11,499 11,496
Additional paid-in
capital 108,602 108,629 108,573
Retained earnings 91,136 86,755 82,828
Treasury stock, at cost (10,097) (8,934) (7,625)
Accumulated other
comprehensive income
(loss) (3,237) (1,849) (771)
----------- ----------- ----------
Total Stockholders'
Equity 197,903 196,100 194,501
----------- ----------- ----------
Total Liabilities and
Stockholders' Equity 1,979,632 1,988,862 1,952,483
----------------- ----------- ----------
First Community Bancshares, Inc.
Quarterly Balance Sheets
(Unaudited)
Sept. 30, June 30,
2005 2005
------------ ---------
(Dollars in thousands)
Cash and due from banks $48,122 $43,415
Interest-bearing deposits with banks 47,822 64,488
Securities available for sale 410,057 366,981
Securities held to maturity 24,723 29,854
Loans held for sale 1,377 1,075
Loans held for investment, net of
unearned income 1,321,221 1,296,728
Less allowance for loan losses 14,486 15,984
----------- ----------
Net loans 1,306,735 1,280,744
Premises and equipment 35,640 35,796
Other real estate owned 1,690 975
Interest receivable 10,175 9,476
Intangible assets 61,287 61,399
Other assets 39,886 41,055
----------- ----------
Total Assets 1,987,514 1,935,258
----------- ----------
Deposits:
Demand $237,455 $235,217
Interest-bearing demand 152,331 150,112
Savings 375,027 350,189
Time 681,225 662,381
----------- ----------
Total Deposits 1,446,038 1,397,899
Interest, taxes and other liabilities 15,169 15,122
Federal funds purchased - -
Securities sold under agreements to
repurchase 125,739 125,285
FHLB and other indebtedness 207,180 207,231
----------- ----------
Total Liabilities 1,794,126 1,745,537
----------- ----------
Common stock, $1 par value 11,496 11,496
Additional paid-in capital 108,606 108,639
Retained earnings 78,484 74,444
Treasury stock, at cost (6,897) (6,864)
Accumulated other comprehensive income
(loss) 1,699 2,006
----------- ----------
Total Stockholders' Equity 193,388 189,721
----------- ----------
Total Liabilities and
Stockholders' Equity 1,987,514 1,935,258
----------- ----------
First Community Bancshares, Inc.
Selected Financial Information
(Unaudited)
As of and for the Quarter Ended
-------------------------------------
June 30, March 31, Dec. 31,
2006 2006 2005
-------------------------------------
(Dollars in thousands)
Ratios
Return on average assets 1.47% 1.42% 1.44%
Return on average equity 14.74% 14.09% 14.69%
Return on average tangible equity 21.61% 20.42% 21.58%
Net interest margin 4.28% 4.32% 4.27%
Efficiency Ratio for the quarter (a) 50.49% 56.38% 52.65%
Efficiency Ratio year-to-date (a) 53.39% 56.38% 53.83%
Equity as a percent of total
assets at end of period 10.00% 9.86% 9.96%
Average earning assets as a
percentage of average total assets 90.55% 91.39% 92.12%
Average loans as a percentage of
average deposits 92.87% 94.23% 92.34%
Average Balances
Investments $427,085 $426,953 $464,713
Loans 1,328,768 1,335,080 1,326,858
Earning Assets 1,797,214 1,790,870 1,826,221
Total Assets 1,984,741 1,959,600 1,982,411
Deposits 1,430,785 1,416,895 1,436,927
Interest-bearing deposits 1,190,489 1,185,265 1,202,972
Borrowings 340,694 330,621 334,917
Interest-bearing Liabilities 1,531,183 1,515,886 1,537,889
Equity 198,440 196,998 195,051
Tax-equivalent Net Interest
Income 19,161 19,059 19,641
(a) Excludes securities gains/losses, intangible amortization,
foreclosed property expenses, non-recurring income and expense items,
and includes tax equivalency adjustment.
First Community Bancshares, Inc.
Selected Financial Information
(Unaudited)
As of and for the
Quarter Ended
------------------------
Sept. 30, June 30,
2005 2005
------------ -----------
(Dollars in thousands)
Ratios
Return on average assets 1.40% 1.31%
Return on average equity 14.23% 13.19%
Return on average tangible equity 21.08% 19.87%
Net interest margin 4.33% 4.51%
Efficiency Ratio for the quarter (a) 53.23% 54.57%
Efficiency Ratio year-to-date (a) 54.23% 54.75%
Equity as a percent of total
assets at end of period 9.73% 9.80%
Average earning assets as a
percentage of average total assets 92.09% 91.95%
Average loans as a percentage of
average deposits 92.94% 92.48%
Average Balances
Investments $444,720 $416,279
Loans 1,320,434 1,299,358
Earning Assets 1,804,504 1,739,147
Total Assets 1,959,583 1,891,333
Deposits 1,420,799 1,405,086
Interest-bearing deposits 1,187,958 1,176,779
Borrowings 331,142 284,562
Interest-bearing Liabilities 1,519,100 1,461,341
Equity 192,648 188,532
Tax-equivalent Net Interest
Income 19,691 19,535
(a) Excludes securities gains/losses, intangible amortization,
foreclosed property expenses, non- recurring income and expense items,
and includes tax equivalency adjustment.
First Community Bancshares, Inc.
Selected Financial Information
(Unaudited)
As of and for the Quarter Ended
---------------------------------------------------
June 30, March 31, Dec. 31, Sept. 30, June 30,
2006 2006 2005 2005 2005
-------------- -------- -------- --------- --------
(Dollars in thousands)
Asset Quality Analysis:
A