First Community Bancshares, Inc. Announces Second Quarter Earnings
BLUEFIELD, Va.--(BUSINESS WIRE)--First Community Bancshares, Inc. (NASDAQ:FCBC) (www.fcbinc.com) today reported second quarter earnings of $6.24 million, or $0.56 per diluted share. Return on average assets was 1.23% for the second quarter of 2008 and return on average equity was 12.08%. Year-to-date earnings were $12.55 million, or $1.13 per diluted share, representing 1.22% return on assets and 11.87% return on equity.
The Company has increased its commercial lending resources, and loans outstanding increased compared to March 31, 2008. The Company is currently seeing a strong pipeline of approved and prospective deals, which points towards further increases in the loan portfolio. Net interest margin also began to recover from 2007 levels increasing to 3.92% from 3.78% in the second quarter of 2007.
The Company reported excellent asset quality measures at June 30, 2008. At the close of the second quarter, nonaccrual loans remained low at $4.13 million, or 0.35%, of total loans. Other real estate owned was $500 thousand. Loan loss provision for the second quarter of 2008 was $937 thousand, and was driven by two specific commercial loan impairments identified late in the second quarter.
On July 1, 2008, the Company’s wholly-owned insurance agency subsidiary, GreenPoint Insurance Group, completed the acquisition of REL Insurance, in High Point, North Carolina. REL adds approximately $750 thousand in annual insurance commissions. Richard E. Lee, principal of REL, will assume a key position in operations at GreenPoint as the two are merged. GreenPoint, under the direction of its President, Shawn Cummings, now reports pro forma annual commission revenue of approximately $5.0 million.
Net Interest Income
Tax-equivalent net interest margin for the second quarter increased to 3.92%. Net interest income was down $389 thousand, or 2.29%, from the second quarter of 2007. Interest income was $27.43 million, a decrease of $4.55 million, or 14.22%, from second quarter 2007. The decrease was due primarily to decreases in loan and security yields and a decrease in average loans, a result of stronger underwriting standards. The yield on loans dropped to 6.78% from 7.49% and average loans decreased $72.88 million to $1.18 billion from second quarter 2007.
Second quarter interest expense decreased $4.16 million, or 27.78%, from 2007. Second quarter deposit costs decreased $2.63 million compared to the second quarter of 2007, while the average rate paid on interest-bearing deposits decreased 77 basis points to 2.55%. Throughout 2008, the Company has exercised discipline in pricing, which let to declining CD portfolio totals. Compared to 2007, interest costs on borrowings decreased $1.53 million to $3.69 million, while the average balance decreased $6.06 million. Second quarter cost of interest-bearing liabilities decreased 89 basis points compared to last year. Average interest bearing liabilities decreased $60.32 million, or 3.63%, compared with second quarter 2007. Also during the second quarter, the Company repaid a $50.00 million advance from the FHLB. The advance had a fixed rate of 3.64%, and the Company replaced the funding with lower cost sources.
Noninterest Income
Wealth management revenues increased $93 thousand, or 9.25%, compared with the second quarter of 2007 as trust revenue increased $68 thousand and investment advisory revenue increased $25 thousand. Service charges on deposit accounts increased $801 thousand, or 30.09%. Other service charges and fees increased $227 thousand, or 27.12%. Insurance commissions were $1.15 million for the second quarter of 2008. Insurance commissions are derived from GreenPoint Insurance Group, a September 2007 acquisition. Other operating income decreased 20.73% to $803 thousand.
Noninterest Expenses
Total non-interest expenses for the second quarter of 2008 increased $2.68 million, or 22.23%, from second quarter 2007. Salaries and benefits increased $1.42 million, or 22.95%, from the second quarter of 2007. GreenPoint accounted for approximately $567 thousand of the increase. The Company’s new Small Business Lending Division and new branches accounted for $135 thousand and $240 thousand of the increase, respectively. The Company also deferred $357 thousand less in salaries and benefits costs through FAS 91 as a result of lower levels of loan production, and saw increases in health care costs of $258 thousand (exclusive of GreenPoint). Occupancy and furniture and equipment expenses increased due to the new branches that were opened throughout 2007 and the addition of operating expenses at GreenPoint. Other non-interest expenses increased $787 thousand, or 19.65%, compared to the second quarter of 2007 and included $225 thousand of expenses at GreenPoint, $244 thousand of increased account promotion and marketing expenses, $189 thousand in increased consulting fee expenses, and $278 thousand in increased legal expenses. Increased legal expenses include $171 thousand associated with one-time costs incurred in abandoned deal charges. The second quarter efficiency ratio was 57.55% compared to 50.25% in 2007.
Asset Quality
Credit quality remains quite good. Total loan delinquencies as a percent of total loans were 0.91% compared with 0.65% at March 31, 2008, and 0.98% at December 31, 2007. The ratio of allowance for loan losses as a percent of loans held for investment increased to 1.14% compared with 1.09% at March 31, 2008, and 1.05% at December 31, 2007. Non-performing assets increased to $4.63 million compared with $3.54 million at March 31, 2008, and $3.47 million at December 31, 2007. Non-performing loans as a percentage of loans held for investment were 0.35% compared with 0.27% at March 31, 2008, and 0.24% at December 31, 2007.
The annualized net charge-off rate as a percent to average total loans remained at a low 14 basis points for the second quarter of 2008. Net charge-offs in the second quarter of 2008 were $366 thousand, down from $576 thousand in the second quarter of 2007. The Company made a provision for loan losses of $937 thousand in the second quarter of 2008 compared with no provision in the second quarter of 2007.
Balance Sheet
Since year-end 2007, consolidated assets have decreased $96.15 million to $2.05 billion. Included in that decrease is the prepayment of a $25.00 million FHLB advance, a decrease of $44.40 million in the loan portfolio, and a net decrease of $67.25 million in the investment portfolio. Total stockholders’ equity for the Company was $196.61 million, resulting in a book value per common share outstanding of $17.95 compared to $217.10 million and $19.61 per common share at December 31, 2007. The decrease in total equity principally reflects the increase in accumulated other comprehensive loss as a result of lower valuations on the Company’s securities portfolio and interest rate swap.
The second quarter cash dividend to shareholders was $0.28 per share. 2008 is expected to be the 17th consecutive year of dividend increases to shareholders. During the second quarter of 2008, the Company repurchased 60,800 shares at an average cost of approximately $31.95 per share.
The Company will host an investor and media teleconference and webcast on Thursday, July 24, 2008, at 11:00 a.m. To access the teleconference, the toll-free number to call is (877) 407-8033. Alternatively, individuals may listen to the live or archived webcast of the conference call. To listen to the webcast, visit www.fcbinc.com and follow the link under the Current News Releases section. The Company’s press release and financial summary will be available in this section, as well. Copies of the Company’s second quarter 2008 earnings press release and financial summary will also be made available upon request via fax, email or postal service mail. To request a copy, contact David D. Brown, Chief Financial Officer, at (800) 425-0839.
First Community Bancshares, Inc., headquartered in Bluefield, Virginia, is a $2.05 billion financial holding company and is the parent company of First Community Bank, N. A. First Community Bank, N. A. operates through fifty-eight locations and four wealth management offices in the five states of Virginia, West Virginia, North Carolina, South Carolina, and Tennessee. First Community Bank, N. A. offers wealth management services through its Trust & Financial Services Division and Investment Planning Consultants, Inc., a registered investment advisory firm which offers wealth management and investment advice. The Company’s wealth management group managed assets with a market value of $831 million at June 30, 2008. First Community is also the parent company of GreenPoint Insurance Group, Inc., a full-service insurance agency located in High Point, North Carolina. First Community Bancshares, Inc.’s common stock is traded on the NASDAQ Global Select Market under the symbol, “FCBC”. Additional investor information can be found on the Internet at www.fcbinc.com.
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.
| First Community Bancshares, Inc. | Three Months Ended | Six Months Ended | ||||||||||||||||
| Consolidated Statements of Income | June 30, | June 30, | ||||||||||||||||
| (In Thousands, Except Share and Per Share Data)(Unaudited) | 2008 | 2007 | 2008 | 2007 | ||||||||||||||
| Interest | Interest and fees on loans held for investment | $ | 19,891 | $ | 23,404 | $ | 41,128 | $ | 46,923 | |||||||||
| Income | Interest on securities-taxable | 5,467 | 6,030 | 11,534 | 11,011 | |||||||||||||
| Interest on securities-nontaxable | 2,004 | 2,150 | 4,067 | 4,062 | ||||||||||||||
| Interest on federal funds sold and deposits | 71 | 395 | 251 | 669 | ||||||||||||||
| Total interest income | 27,433 | 31,979 | 56,980 | 62,665 | ||||||||||||||
| Interest | Interest on deposits | 7,118 | 9,748 | 15,859 | 19,048 | |||||||||||||
| Expense | Interest on borrowings | 3,690 | 5,217 | 8,136 | 9,588 | |||||||||||||
| Total interest expense | 10,808 | 14,965 | 23,995 | 28,636 | ||||||||||||||
| Net interest income | 16,625 | 17,014 | 32,985 | 34,029 | ||||||||||||||
| Provision for loan losses | 937 | - | 1,260 | - | ||||||||||||||
| Net interest income after provision for loan losses | 15,688 | 17,014 | 31,725 | 34,029 | ||||||||||||||
| Non-Interest | Wealth management income | 1,098 | 1,005 | 1,997 | 2,023 | |||||||||||||
| Income | Service charges on deposit accounts | 3,463 | 2,662 | 6,562 | 5,071 | |||||||||||||
| Other service charges and fees | 1,064 | 837 | 2,185 | 1,707 | ||||||||||||||
| Insurance commissions | 1,146 | - | 2,490 | - | ||||||||||||||
| Gain on sale of securities | 150 | 30 | 1,970 | 159 | ||||||||||||||
| Other operating income | 803 | 1,013 | 1,661 | 1,802 | ||||||||||||||
| Total non-interest income | 7,724 | 5,547 | 16,865 | 10,762 | ||||||||||||||
| Non-Interest | Salaries and employee benefits | 7,580 | 6,165 | 15,370 | 12,576 | |||||||||||||
| Expense | Occupancy expense of bank premises | 1,256 | 1,020 | 2,420 | 2,077 | |||||||||||||
| Furniture and equipment expense | 973 | 780 | 1,874 | 1,603 | ||||||||||||||
| Amortization of intangible assets | 158 | 105 | 318 | 208 | ||||||||||||||
| Prepayment penalty | - | - | 1,647 | - | ||||||||||||||
| Other operating expense | 4,792 | 4,005 | 9,413 | 7,769 | ||||||||||||||
| Total non-interest expense | 14,759 | 12,075 | 31,042 | 24,233 | ||||||||||||||
| Income before income taxes | 8,653 | 10,486 | 17,548 | 20,558 | ||||||||||||||
| Income tax expense | 2,415 | 3,047 | 4,998 | 5,995 | ||||||||||||||
| Net income | $ | 6,238 | $ | 7,439 | $ | 12,550 | $ | 14,563 | ||||||||||
| Basic earnings per common share (EPS) | $ | 0.57 | $ | 0.66 | $ | 1.14 | $ | 1.29 | ||||||||||
| Diluted earnings per common share (DEPS) | $ | 0.56 | $ | 0.66 | $ | 1.13 | $ | 1.28 | ||||||||||
| Weighted Average Shares Outstanding: | ||||||||||||||||||
| Basic | 10,992,301 | 11,260,868 | 11,011,116 | 11,260,126 | ||||||||||||||
| Diluted | 11,073,440 | 11,320,227 | 11,091,714 | 11,334,486 | ||||||||||||||
| For the period: | ||||||||||||||||||
| Return on average assets | 1.23 | % | 1.40 | % | 1.22 | % | 1.41 | % | ||||||||||
| Return on average equity | 12.08 | % | 13.56 | % | 11.87 | % | 13.45 | % | ||||||||||
| Return on average tangible equity | 18.75 | % | 19.12 | % | 18.12 | % | 19.02 | % | ||||||||||
| Cash dividends per share | $ | 0.28 | $ | 0.27 | $ | 0.56 | $ |
0.54 |
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| At period end: | ||||||||||||||||||
| Book value per share | $ | 17.95 |
|
$ | 19.25 |
|
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| Market value | $ | 28.20 | $ | 31.19 | ||||||||||||||
| First Community Bancshares, Inc. | |||||||||||||||||
| Quarterly Performance Summary | As of and for the Quarter Ended | ||||||||||||||||
| Income Statements | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||
| (In Thousands, Except Share and Per Share Data)(Unaudited) | 2008 | 2008 | 2007 | 2007 | 2007 | ||||||||||||
| Interest | Interest and fees on loans held for investment | $ | 19,891 | $ | 21,237 | $ | 23,100 | $ | 23,478 | $ | 23,404 | ||||||
| Income | Interest on securities-taxable | 5,467 | 6,067 | 6,942 | 6,772 | 6,030 | |||||||||||
| Interest on securities-nontaxable | 2,004 | 2,063 | 2,050 | 2,078 | 2,150 | ||||||||||||
| Interest on federal funds sold and deposits | 71 | 180 | 102 | 404 | 395 | ||||||||||||
| Total interest income | 27,433 | 29,547 | 32,194 | 32,732 | 31,979 | ||||||||||||
| Interest | Interest on deposits | 7,118 | 8,741 | 9,626 | 10,083 | 9,748 | |||||||||||
| Expense | Interest on borrowings | 3,690 | 4,446 | 5,425 | 5,506 | 5,217 | |||||||||||
| Total interest expense | 10,808 | 13,187 | 15,051 | 15,589 | 14,965 | ||||||||||||
| Net interest income | 16,625 | 16,360 | 17,143 | 17,143 | 17,014 | ||||||||||||
| Provision for loan losses | 937 | 323 | 717 | - | - | ||||||||||||
|
Net interest income after provision for loan losses |
15,688 | 16,037 | 16,426 | 17,143 | 17,014 | ||||||||||||
| Non-Int | Wealth management income | 1,098 | 899 | 949 | 908 | 1,005 | |||||||||||
| Income | Service charges on deposit accounts | 3,463 | 3,099 | 3,310 | 3,006 | 2,662 | |||||||||||
| Other service charges, commissions and fees | 1,064 | 1,121 | 991 | 902 | 837 | ||||||||||||
| Insurance commissions | 1,146 | 1,344 | 1,142 | - | - | ||||||||||||
| Gain on sale of securities | 150 | 1,820 | 202 | 50 | 30 | ||||||||||||
| Other operating income | 803 | 858 | 1,455 | 1,154 | 1,013 | ||||||||||||
| Total non-interest income | 7,724 | 9,141 | 8,049 | 6,020 | 5,547 | ||||||||||||
| Non-Int | Salaries and employee benefits | 7,580 | 7,790 | 6,728 | 6,544 | 6,165 | |||||||||||
| Expense | Occupancy expense of bank premises | 1,256 | 1,164 | 1,170 | 933 | 1,020 | |||||||||||
| Furniture and equipment expense | 973 | 901 | 923 | 844 | 780 | ||||||||||||
| Amortization of intangible assets | 158 | 160 | 154 | 105 | 105 | ||||||||||||
| Prepayment penalty | - | 1,647 | - | - | - | ||||||||||||
| Other operating expense | 4,792 | 4,621 | 4,419 | 4,410 | 4,005 | ||||||||||||
| Total non-interest expense | 14,759 | 16,283 | 13,394 | 12,836 | 12,075 | ||||||||||||
| Income before income taxes | 8,653 | 8,895 | 11,081 | ||||||||||||||