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Section 1: 8-K (FORM 8-K)

fcbc20171024_8k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 
 

Date of Report (Date of earliest event reported): October 24, 2017

 
 
 

FIRST COMMUNITY BANCSHARES, INC.

 
 

(Exact name of registrant as specified in its charter)

 
 
 

Nevada

 

000-19297

 

55-0694814

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 
 

P.O. Box 989

Bluefield, Virginia

 

24605-0989

(Address of principal executive offices)

 

(Zip Code)

 
 

Registrant’s telephone number, including area code: (276) 326-9000

___________________________________________________________________________________________________

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

     

Item 2.02     Results of Operations and Financial Condition.

 

On October 24, 2017, First Community Bancshares, Inc. (the “Company”) announced by press release its earnings for the third quarter of 2017. A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 8.01     Other Events.     

 

On October 24, 2017, the Company announced by press release its quarterly cash dividend to common stockholders of eighteen cents ($0.18) per common share, payable on November 17, 2017, to shareholders of record on November 3, 2017. A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 9.01     Financial Statements and Exhibits.

 

(d)

 

The following exhibit is included with this report:

 

 

 

Exhibit No.

 

Exhibit Description

 

 

 

99.1

 

Earnings and dividend press release dated October 24, 2017

     
     
     
     
     

Forward-Looking Statements 

 

This Current Report on Form 8-K contains 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 to reflect circumstances or events that occur after the date the forward-looking statements are made.

   

 

 

   

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

   

First Community Bancshares, Inc.

(Registrant)

     

Date:

October 24, 2017

 
   

/s/ David D. Brown

     
   

David D. Brown

   

Chief Financial Officer

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

ex_97420.htm

Exhibit 99.1

 

    

NEWS RELEASE

FOR IMMEDIATE RELEASE:

 

FOR MORE INFORMATION, CONTACT:

October 24, 2017

 

David D. Brown

   

(276) 326-9000

 

First Community Bancshares, Inc. Announces Third Quarter 2017 Results

and Quarterly Dividend

 

Bluefield, Virginia – First Community Bancshares, Inc. (NASDAQ: FCBC) (www.firstcommunitybank.com) (the “Company”) today reported its unaudited results of operations and other financial information for the quarter and nine months ended September 30, 2017. The Company reported net income available to common shareholders of $7.65 million, or $0.45 per diluted common share for the quarter ended September 30, 2017, which represents a 21.62% increase in per share diluted earnings compared to the same quarter of 2016. Net income available to common shareholders was $20.27 million, or $1.19 per diluted common share for the nine months ended September 30, 2017, which represents an 11.21% increase in per share diluted earnings compared to the same period of 2016.

 

The Company also announced today that the Board of Directors declared a quarterly cash dividend to common shareholders of eighteen cents ($0.18) per common share. The quarterly dividend is payable to common shareholders of record on November 3, 2017, and is expected to be paid on or about November 17, 2017. The current year marks the 32nd consecutive year of cash dividends paid to stockholders.

 

Third Quarter 2017 Highlights

 

Income Statement

 

o

Net income available to common shareholders increased $1.27 million, or 19.88%, to $7.65 million compared to the same quarter of 2016.

 

o

Return on average assets increased 26 basis points to 1.29% and return on average common equity increased 103 basis points to 8.61% compared to the same quarter of 2016.

 

o

The non-GAAP efficiency ratio improved to 54.68% compared to 62.45% in the same quarter of 2016.

 

o

Diluted earnings per share increased $0.08, or 21.62%, to $0.45 compared to the same quarter of 2016.

 

o

Net interest margin increased 30 basis points to 4.25%, and normalized net interest margin increased 23 basis points to 4.00% compared to the same quarter of 2016.

 

Balance Sheet

 

o

Net charge-offs decreased $456 thousand, or 33.68%, to $898 thousand for the nine months ended September 30, 2017, compared to the same period of 2016.

 

o

Book value per common share increased $0.81 to $20.76 compared to December 31, 2016.

 

o

Tangible book value per common share increased $0.85 to $14.74 compared to December 31, 2016.

 

o

The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of September 30, 2017.

 

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 measures 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.

 

1

 

 

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 44 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of September 30, 2017. First Community Bank provides insurance services through First Community Insurance Services, which operates 6 in-branch locations in Virginia and West Virginia and offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed $936 million in combined assets as of September 30, 2017. The Company reported consolidated assets of $2.37 billion as of September 30, 2017. The Company’s common stock is listed on the NASDAQ Global Select Market under the trading symbol, “FCBC”. 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.

  

2

 

     

Financial Performance

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

September 30,

 

(Amounts in thousands, except share and per share data)

 

2017

   

2017

   

2017

   

2016

   

2016

   

2017

   

2016

 

Interest income

                                                       

Interest and fees on loans

  $ 22,694     $ 22,914     $ 21,827     $ 21,956     $ 21,952     $ 67,435     $ 65,762  

Interest on securities

    1,080       1,170       1,206       1,362       1,643       3,456       5,491  

Interest on deposits in banks

    275       221       159       98       26       655       55  

Total interest income

    24,049       24,305       23,192       23,416       23,621       71,546       71,308  

Interest expense

                                                       

Interest on deposits

    1,275       1,233       1,166       1,145       1,133       3,674       3,334  

Interest on borrowings

    724       778       885       1,314       1,367       2,387       4,051  

Total interest expense

    1,999       2,011       2,051       2,459       2,500       6,061       7,385  

Net interest income

    22,050       22,294       21,141       20,957       21,121       65,485       63,923  

Provision for (recovery of) loan losses

    730       934       492       500       (1,154 )     2,156       755  

Net interest income after provision (recovery)

    21,320       21,360       20,649       20,457       22,275       63,329       63,168  

Total noninterest income

    7,135       5,475       5,691       6,238       5,895       18,301       20,828  

Total noninterest expense

    16,909       17,458       17,083       16,653       18,557       51,450       56,093  

Income before income taxes

    11,546       9,377       9,257       10,042       9,613       30,180       27,903  

Income tax expense

    3,894       2,959       3,055       3,638       3,230       9,908       9,181  

Net income available to common shareholders

  $ 7,652     $ 6,418     $ 6,202     $ 6,404     $ 6,383     $ 20,272     $ 18,722  
                                                         

Earnings per common share

                                                       

Basic

  $ 0.45     $ 0.38     $ 0.36     $ 0.38     $ 0.37     $ 1.19     $ 1.07  

Diluted

    0.45       0.38       0.36       0.38       0.37       1.19       1.07  

Cash dividends per common share

    0.18       0.16       0.16       0.16       0.16       0.50       0.44  

Weighted average shares outstanding

                                                       

Basic

    17,005,654       16,998,125       16,998,125       16,891,010       17,031,074       17,005,350       17,433,406  

Diluted

    17,082,729       17,072,174       17,072,174       17,043,869       17,083,526       17,076,958       17,475,211  

Performance ratios

                                                       

Return on average assets

    1.29 %     1.08 %     1.06 %     1.05 %     1.03 %     1.14 %     1.01 %

Return on average common equity

    8.61 %     7.41 %     7.35 %     7.49 %     7.58 %     7.80 %     7.40 %

Return on average tangible common equity(1)

    12.13 %     10.51 %     10.50 %     10.75 %     11.07 %     11.06 %     10.76

%

  


(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

   

Nine Months Ended

 
   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

September 30,

 
   

2017

   

2017

   

2017

   

2016

   

2016

   

2017

   

2016

 

(Amounts in thousands, except per share data)

                                                       

Net income, GAAP

  $ 7,652     $ 6,418     $ 6,202     $ 6,404     $ 6,383     $ 20,272     $ 18,722  

Non-GAAP adjustments:

                                                       

Net gain on divestitures

    -       -       -       (619 )     (3,065 )     -       (3,065 )

Allowance reversal for sold loans

    -       -       -       -       (1,354 )     -       (1,354 )

Merger, acquisition, and divestiture expense

    -       -       -       55       226       -       675  

Net loss (gain) on sale of securities

    -       657       -       (388 )     (25 )     657       53  

Net impairment losses

    -       -       -       -       4,635       -       4,646  

Other non-core items

    34       (174 )     (18 )     (48 )     (264 )     (158 )     (504 )

Total adjustments to core earnings

    34       483       (18 )     (1,000 )     153       499       451  

Tax effect

    12       345       (7 )     (708 )     56       350       166  

Core earnings, non-GAAP(1)

  $ 7,674     $ 6,556     $ 6,191     $ 6,112     $ 6,480     $ 20,421     $ 19,007  
                                                         

Core diluted earnings per common share

  $ 0.45     $ 0.38     $ 0.36     $ 0.36     $ 0.38     $ 1.19     $ 1.09  

Performance ratios

                                                       

Core return on average assets

    1.29 %     1.11 %     1.06 %     1.01 %     1.05 %     1.15 %     1.03 %

Core return on average common equity

    8.63 %     7.57 %     7.33 %     7.15 %     7.70 %     7.86 %     7.51 %

Core return on average tangible common equity(2)

    12.16 %     10.74 %     10.48 %     10.26 %     11.24 %     11.14 %     10.92 %

 


(1)

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

  

3

 

  

Net Interest Income and Margin

 

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

 

   

Three Months Ended September 30,

 
   

2017

   

2016

 
   

Average

           

Average Yield/

   

Average

           

Average Yield/

 

(Amounts in thousands)

 

Balance

   

Interest(1)

   

Rate(1)

   

Balance

   

Interest(1)

   

Rate(1)

 

Assets

                                               

Earning assets

                                               

Loans(2)

  $ 1,843,612     $ 22,765       4.90 %   $ 1,820,899     $ 21,974       4.80 %

Securities available for sale

    157,038       1,373       3.47 %     266,162       1,941       2.90 %

Securities held to maturity

    25,199       106       1.67 %     72,210       189       1.04 %

Interest-bearing deposits

    73,802       275       1.48 %     19,025       26       0.54 %

Total earning assets

    2,099,651       24,519       4.63 %     2,178,296       24,130       4.41 %

Other assets

    258,763                       282,310                  

Total assets

  $ 2,358,414                     $ 2,460,606                  
                                                 

Liabilities and stockholders' equity

                                               

Interest-bearing deposits

                                               

Demand deposits

  $ 384,594     $ 89       0.09 %   $ 337,893     $ 60       0.07 %

Savings deposits

    518,355       43       0.03 %     523,503       62       0.05 %

Time deposits

    509,251       1,143       0.89 %     529,344       1,011       0.76 %

Total interest-bearing deposits

    1,412,200       1,275       0.36 %     1,390,740       1,133       0.32 %

Borrowings

                                               

Federal funds purchased

    -       -       -       3,696       6       0.65 %

Retail repurchase agreements

    58,194       10       0.07 %     64,385       12       0.07 %

Wholesale repurchase agreements

    25,000       203       3.22 %     50,000       473       3.76 %

FHLB advances and other borrowings

    50,000       511       4.05 %     133,838       876       2.60 %

Total borrowings

    133,194       724       2.16 %     251,919       1,367       2.16 %

Total interest-bearing liabilities

    1,545,394       1,999       0.51 %     1,642,659       2,500       0.61 %

Noninterest-bearing demand deposits

    440,227                       462,588                  

Other liabilities

    20,101                       20,462                  

Total liabilities

    2,005,722                       2,125,709                  

Stockholders' equity

    352,692                       334,897                  

Total liabilities and stockholders' equity

  $ 2,358,414                     $ 2,460,606                  

Net interest income, FTE

          $ 22,520                     $ 21,630          

Net interest rate spread

                    4.12 %                     3.80 %

Net interest margin

                    4.25 %                     3.95 %

 


(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.

 

4

 

 

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

 

   

Nine Months Ended September 30,

 
   

2017

   

2016

 
   

Average

           

Average Yield/

   

Average

           

Average Yield/

 

(Amounts in thousands)

 

Balance

   

Interest(1)

   

Rate(1)

   

Balance

   

Interest(1)

   

Rate(1)

 

Assets

                                               

Earning assets

                                               

Loans(2)

  $ 1,841,981     $ 67,645       4.91 %   $ 1,775,744     $ 65,836       4.95 %

Securities available for sale

    162,198       4,312       3.55 %     318,891       6,403       2.68 %

Securities held to maturity

    35,578       382       1.44 %     72,350       575       1.06 %

Interest-bearing deposits

    66,069       655       1.33 %     13,288       55       0.55 %

Total earning assets

    2,105,826       72,994       4.63 %     2,180,273       72,869       4.47 %

Other assets

    264,333                       287,784                  

Total assets

  $ 2,370,159                     $ 2,468,057                  
                                                 

Liabilities and stockholders' equity

                                               

Interest-bearing deposits

                                               

Demand deposits

  $ 384,265     $ 301       0.10 %   $ 339,920     $ 177       0.07 %

Savings deposits

    523,219       114       0.03 %     533,799       191       0.05 %

Time deposits

    513,072       3,259       0.85 %     527,056       2,966       0.75 %

Total interest-bearing deposits

    1,420,556       3,674       0.35 %     1,400,775       3,334       0.32 %

Borrowings

                                               

Federal funds purchased

    2       -       0.00 %     5,393       26       0.64 %

Retail repurchase agreements

    61,951       31       0.07 %     69,347       37       0.07 %

Wholesale repurchase agreements

    25,000       602       3.22 %     50,000       1,410       3.77 %

FHLB advances and other borrowings

    57,357       1,754       4.09 %     124,803       2,578       2.76 %

Total borrowings

    144,310       2,387       2.21 %     249,543       4,051       2.17 %

Total interest-bearing liabilities

    1,564,866       6,061       0.52 %     1,650,318       7,385       0.60 %

Noninterest-bearing demand deposits

    435,825                       457,250                  

Other liabilities

    21,905                       22,581                  

Total liabilities

    2,022,596                       2,130,149                  

Stockholders' equity

    347,563                       337,908                  

Total liabilities and stockholders' equity

  $ 2,370,159                     $ 2,468,057                  

Net interest income, FTE

          $ 66,933                     $ 65,484          

Net interest rate spread

                    4.12 %                     3.87 %

Net interest margin

                    4.25 %                     4.01 %

  


(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.

  

5

 

   

RECONCILIATION OF GAAP NET INTEREST MARGIN TO NON-GAAP NORMALIZED NET INTEREST MARGIN (Unaudited)

 

   

Three Months Ended September 30,

 
   

2017

   

2016

 

(Amounts in thousands)

 

Interest(1)

   

Average Yield/ Rate(1)

   

Interest(1)

   

Average Yield/ Rate(1)

 

Earning assets

                               

Loans(2)

  $ 22,765       4.90 %   $ 21,974       4.80 %

Accretion income

    1,925               1,683          

Less: cash accretion income

    548               699          

Non-cash accretion income

    1,377               984          

Loans, normalized(3)

    21,388       4.60 %     20,990       4.59 %

Other earning assets

    1,754       2.72 %     2,156       2.40 %

Total earning assets

    23,142       4.37 %     23,146       4.23 %

Total interest-bearing liabilities

    1,999       0.51 %     2,500       0.61 %

Net interest income, FTE(3)

  $ 21,143             $ 20,646          

Net interest rate spread, normalized(3)

            3.86 %             3.62 %

Net interest margin, normalized(3)

            4.00 %             3.77 %

  


(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.

 

   

Nine Months Ended September 30,

 
   

2017

   

2016

 

(Amounts in thousands)

 

Interest(1)

   

Average Yield/ Rate(1)

   

Interest(1)

   

Average Yield/ Rate(1)

 

Earning assets

                               

Loans(2)

  $ 67,645       4.91 %   $ 65,836       4.95 %

Accretion income

    6,243               6,183          

Less: cash accretion income

    1,986               2,290          

Non-cash accretion income

    4,257               3,893          

Loans, normalized(3)

    63,388       4.60 %     61,943       4.66 %

Other earning assets

    5,349       2.71 %     7,033       2.32 %

Total earning assets

    68,737       4.36 %     68,976       4.23 %

Total interest-bearing liabilities

    6,061       0.52 %     7,385       0.60 %

Net interest income, FTE(3)

  $ 62,676             $ 61,591          

Net interest rate spread, normalized(3)

            3.84 %             3.63 %

Net interest margin, normalized(3)

            3.98 %             3.77 %

   


(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.

 

6

 

 

Noninterest Income and Expense

 

CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

September 30,

 

(Amounts in thousands)

 

2017

   

2017

   

2017

   

2016

   

2016

   

2017

   

2016

 

Noninterest income

                                                       

Wealth management

  $ 758     $ 791     $ 790     $ 681     $ 653     $ 2,339     $ 2,147  

Service charges on deposits

    3,605       3,360       3,113       3,442       3,494       10,078       10,146  

Other service charges and fees

    2,141       2,168       2,078       2,014       2,024       6,387       6,088  

Insurance commissions

    306       325       373       59       1,592       1,004       5,383  

Net impairment losses recognized in earnings

    -       -       -       -       (4,635 )     -       (4,646 )

Net gain (loss) on sale of securities

    -       (657 )     -       388       25       (657 )     (53 )

Net FDIC indemnification asset amortization

    (268 )     (1,586 )     (1,332 )     (1,618 )     (1,369 )     (3,186 )     (3,856 )

Net gain on divestitures

    -       -       -       619       3,065       -       3,065  

Other operating income

    593       1,074       669       653       1,046       2,336       2,554  

Total noninterest income

    7,135       5,475       5,691       6,238       5,895       18,301       20,828  

Noninterest expense

                                                       

Salaries and employee benefits

    9,137       9,157       8,884       9,411       9,828       27,178       30,501  

Occupancy expense

    1,082       1,341       1,248       1,158       1,249       3,671       4,139  

Furniture and equipment expense

    1,133       1,087       1,091       1,070       1,066       3,311       3,271  

Amortization of intangibles

    266       263       261       265       316       790       871  

FDIC premiums and assessments

    227       227       244       274       363       698       1,109  

Merger, acquisition, and divestiture expense

    -       -       -       55       226       -       675  

Other operating expense

    5,064       5,383       5,355       4,420       5,509       15,802       15,527  

Total noninterest expense

    16,909       17,458       17,083       16,653       18,557       51,450       56,093  

 

Efficiency Ratio

 

EFFICIENCY RATIO CALCULATION (Unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 
   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

September 30,

 
   

2017

   

2017

   

2017

   

2016

   

2016

   

2017

   

2016

 

(Amounts in thousands)

                                                       

Noninterest expense, GAAP

  $ 16,909     $ 17,458     $ 17,083     $ 16,653     $ 18,557     $ 51,450     $ 56,093  

Non-GAAP adjustments

                                                       

Merger, acquisition, and divestiture expense

    -       -       -       (55 )     (226 )     -       (675 )

OREO expense and net loss

    (647 )     (213 )     (328 )     (184 )     (278 )     (1,188 )     (1,236 )

Other non-core items

    (64 )     (327 )     -       8       (168 )     (391 )     (372 )

Adjusted noninterest expense

    16,198       16,918       16,755       16,422       17,885       49,871       53,810  
                                                         

Net interest income, GAAP

    22,050       22,294       21,141       20,957       21,121       65,485       63,923  

Noninterest income, GAAP

    7,135       5,475       5,691       6,238       5,895       18,301       20,828  

Non-GAAP adjustments

                                                       

Tax equivalency adjustment

    470       481       497       520       509       1,448       1,561  

Net impairment losses

    -       -       -       -       4,635       -       4,646  

Net loss (gain) on sale of securities

    -       657       -       (388 )     (25 )     657       53  

Net gain on divestitures

    -       -       -       (619 )     (3,065 )     -       (3,065 )

Other non-core items

    (30 )     (501 )     (18 )     (40 )     (432 )     (549 )     (876 )

Adjusted net interest and noninterest income

    29,625       28,406       27,311       26,668       28,638       85,342       87,070  
                                                         

Non-GAAP efficiency ratio(1)

    54.68 %     59.56 %     61.35 %     61.58 %     62.45 %     58.44 %     61.80 %

GAAP efficiency ratio

    57.94 %     62.87 %     63.67 %     61.24 %     68.69 %     61.41 %     66.19 %

 


(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

 

     

7

 

 

Balance Sheet and Capital

 

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

 

   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

 

(Amounts in thousands, except per share data)

 

2017

   

2017

   

2017

   

2016

   

2016

 

Assets

                                       

Total cash and cash equivalents

  $ 105,119     $ 106,799     $ 152,851     $ 76,307     $ 65,929  

Securities available for sale

    174,424       157,854       158,685       165,579       220,856  

Securities held to maturity

    25,182       25,216       47,092       47,133       72,182  

Loans held for investment, net of unearned income

                                       

Non-covered

    1,805,429       1,796,263       1,784,371       1,795,954       1,774,547  

Covered

    32,292       45,845       51,412       56,994       61,837  

Less allowance for loan losses

    (19,206 )     (18,886 )     (18,458 )     (17,948 )     (19,633 )

Loans held for investment, net

    1,818,515       1,823,222       1,817,325       1,835,000       1,816,751  

FDIC indemnification asset

    7,465       8,159       9,931       12,173       14,332  

Premises and equipment, net

    48,949       49,598       50,057       50,085       50,564  

Other real estate owned, non-covered

    3,543       3,914       4,477       5,109       4,052  

Other real estate owned, covered

    54       124       241       276       2,437  

Interest receivable

    5,156       5,072       5,059       5,553       5,498  

Goodwill

    95,779       95,779       95,779       95,779       101,776  

Other intangible assets

    6,417       6,683       6,947       7,207       7,964  

Other assets

    84,177       84,183       82,069       86,197       87,932  

Total assets

  $ 2,374,780     $ 2,366,603     $ 2,430,513     $ 2,386,398     $ 2,450,273  
                                         

Liabilities

                                       

Deposits

                                       

Noninterest-bearing

  $ 452,940     $ 443,800     $ 467,677     $ 427,705     $ 473,509  

Interest-bearing

    1,410,880       1,413,574       1,438,917       1,413,633       1,388,390  

Total deposits

    1,863,820       1,857,374       1,906,594       1,841,338       1,861,899  

Securities sold under agreements to repurchase

    83,783       86,011       90,653       98,005       118,532  

FHLB borrowings

    50,000       50,000       65,000       65,000       90,000  

Other borrowings

    -       -       244       15,708       15,707  

Interest, taxes, and other liabilities

    24,540       24,443       24,618       27,290       26,599  

Total liabilities

    2,022,143       2,017,828       2,087,109       2,047,341       2,112,737  
                                         

Stockholders' equity

                                       

Common stock

    21,382       21,382       21,382       21,382       21,382  

Additional paid-in capital

    228,510       228,326       228,176       228,142       227,884  

Retained earnings

    182,145       177,556       173,860       170,377       166,689  

Treasury stock, at cost

    (79,333 )     (78,488 )     (78,533 )     (78,833 )     (78,789 )

Accumulated other comprehensive (loss) income

    (67 )     (1 )     (1,481 )     (2,011 )     370  

Total stockholders' equity

    352,637       348,775       343,404       339,057       337,536  

Total liabilities and stockholders' equity

  $ 2,374,780     $ 2,366,603     $ 2,430,513     $ 2,386,398     $ 2,450,273  
                                         

Shares outstanding at period-end

    16,986,502       17,017,071       17,013,185       16,994,208       16,988,972  

Book value per common share(1)

  $ 20.76     $ 20.50     $ 20.18     $ 19.95     $ 19.87  

Tangible book value per common share(2)

    14.74       14.47       14.15       13.89       13.41  

  


(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

 

 

8

 

      

Asset Quality

 

SELECTED CREDIT QUALITY INFORMATION (Unaudited)

 

   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

September 30,

 

(Amounts in thousands)

 

2017

   

2017

   

2017

   

2016

   

2016

 

Allowance for Loan Losses

                                       

Beginning balance

  $ 18,886     $ 18,458     $ 17,948     $ 19,633     $ 21,099  

Provision for (recovery of) loan losses charged to operations

    730       934       492       500       (1,154 )

Charge-offs

    (717 )     (902 )     (357 )     (2,485 )     (772 )

Recoveries

    307       396       375       300       460  

Net (charge-offs) recoveries

    (410 )     (506 )     18       (2,185 )     (312 )

Ending balance

  $ 19,206     $ 18,886     $ 18,458     $ 17,948     $ 19,633  
                                         

Nonperforming Assets

                                       

Non-covered nonperforming assets

                                       

Nonaccrual loans

  $ 18,942     $ 20,146     $ 18,537     $ 15,854     $ 17,487  

Accruing loans past due 90 days or more

    -       -       20       -       62  

Troubled debt restructurings ("TDRs")(1)

    141       100       -       114       115  

Total non-covered nonperforming loans

    19,083       20,246       18,557       15,968       17,664  

OREO

    3,543       3,914       4,477       5,109       4,052  

Total non-covered nonperforming assets

  $ 22,626     $ 24,160     $ 23,034     $ 21,077     $ 21,716  
                                         

Covered nonperforming assets

                                       

Nonaccrual loans

  $ 420     $ 446     $ 918     $ 608     $ 688  

Total covered nonperforming loans

    420       446       918       608       688  

OREO

    54       124       241       276       2,437  

Total covered nonperforming assets

  $ 474     $ 570     $ 1,159     $ 884     $ 3,125  
                                         

Additional Information

                                       

Performing TDRs(2)

  $ 8,101     $ 8,485     $ 8,593     $ 12,838     $ 13,336  

Total TDRs(3)

    8,242       8,585       8,593       12,952       13,451  
                                         

Non-covered ratios

                                       

Nonperforming loans to total loans

    1.06 %     1.13 %     1.04 %     0.89 %     1.00 %

Nonperforming assets to total assets

    0.97 %     1.04 %     0.97 %     0.90 %     0.91 %

Non-PCI allowance to nonperforming loans

    100.64 %     93.24 %     99.40 %     112.32 %     111.08 %

Non-PCI allowance to total loans

    1.06 %     1.05 %     1.03 %     1.00 %     1.11 %

Annualized net charge-offs to average loans

    0.09 %     0.11 %     0.00 %     0.49 %     0.07 %
                                         

Total ratios

                                       

Nonperforming loans to total loans

    1.06 %     1.12 %     1.06 %     0.89 %     1.00 %

Nonperforming assets to total assets

    0.97 %     1.04 %     1.00 %     0.92 %     1.01 %

Allowance for loan losses to nonperforming loans

    98.48 %     91.27 %     94.78 %     108.28 %     106.98 %

Allowance for loan losses to total loans

    1.05 %     1.03 %     1.01 %     0.97 %     1.07 %

Annualized net charge-offs to average loans

    0.09 %     0.11 %     0.00 %     0.47 %     0.07 %

 


(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 

 

9

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