Exhibit 99.1
[FIRST COMMUNITY BANCSHARES, INC. LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE: FOR MORE INFORMATION,
OCTOBER 23, 2003 CONTACT: ROBERT L. SCHUMACHER AT
(276) 326-9000
FIRST COMMUNITY BANCSHARES, INC. (FCBC) ANNOUNCES
THIRD QUARTER OPERATING RESULTS
First Community Bancshares, Inc. (Nasdaq: FCBC; www.fcbinc.com) today
reported earnings of $6.2 million for the third quarter of 2003, or $0.55 basic
and diluted earnings per share. This compares with earnings of $6.6 million or
$.60 basic and diluted earnings per share for the third quarter of 2002. Return
on average equity in the third quarter of 2003 was 14.10% compared to 17.64% for
the third quarter of last year and return on average assets for the current
quarter was 1.46% versus 1.78% for the third quarter of 2002.
Net income for the third quarter of 2003 decreased by $357,000 compared
to the third quarter of 2002. The largest contributing factor was a $1.1 million
decrease in net income from mortgage banking operations. The volatility in
mortgage interest rates during the third quarter of 2003 along with consumer
uncertainty caused application volume to decrease by 40% while closings with
reduced margins reached record levels. These factors resulted in reduced margins
and a $1.0 million loss from mortgage banking in the third quarter of 2003
versus a $134,000 profit in the third quarter of 2002. Partially offsetting the
decline in mortgage banking was an after-tax gain of $623,000 on the sale of
certain short-term equity investments in the third quarter of 2003 as these
securities were judged to be fully valued. Operating costs for the quarter rose
$2.3 million primarily due to a $1.4 million increase in salaries and benefits.
This increase relates largely to bank acquisitions and new branches acquired or
opened in late 2002 and throughout 2003. These new operations comprised $727,000
of the $1.4 million increase in salaries and benefits between the third quarters
of 2002 and 2003.
Net income for the nine months ended September 30, 2003 was $19.9
million, versus $18.9 million for the nine months ended September 30, 2002, an
increase of $1.0 million or 5.3%. Basic and diluted earnings per share for the
year-to-date period in 2003 were $1.81 and $1.79, respectively. This compares
with year-to-date basic and diluted earnings per share of $1.73 for the
nine-month period in 2002. Return on Average Assets and Return on Average Equity
were 1.67% and 16.23%, respectively, for the nine months in 2003 and compare
with 1.73% and 17.84% for the comparable nine-month period in 2002.
The $1.0 million increase in net income for the year-to-date period was
driven by a $2.1 million or 4.69% increase in net interest income, a $582,000,
or 17.85% reduction in the provision for loan losses and a 14.13% increase of
$2.2 million in non-interest revenues, largely attributable to the third quarter
investment securities gains. The increase in net interest income was largely
volume driven with the addition of $71.4 million in average earning assets from
the Greenville and CommonWealth acquisitions. In addition to the increase in net
interest income and the securities gains, strong increases were realized in each
category of non-interest revenues. These increases included fiduciary income,
service charge revenues on deposit accounts and other operating revenues.
Service charge revenue increases were associated with increased account volumes
from acquisitions, and from internal growth and increased transaction volume.
Offsetting these increases was a decrease of $673,000 in mortgage banking income
for the year-to-date period due to the previously discussed decline in mortgage
banking income in the third quarter 2003. Along with increased revenues for the
period, the company also realized significant increases in operating costs most
of which related to salaries, benefits and occupancy expenses of newly acquired
operations in Richmond, Virginia and Greenville, West Virginia, and new branches
in Winston-Salem, North Carolina and Bluefield, Virginia.
The provision for loan losses was $782,000 and $2.7 million for the
three and nine month periods ended September 30, 2003 compared to $1.3 million
and $3.3 million for the three and nine months ended September 30, 2002. The
change in the provision is directionally consistent with the assessment of the
adequacy of the allowance for loan losses at each financial statement date. On a
linked quarter basis, the third quarter 2003 provision decreased $526,000
reflecting a reduction in outstanding loans, improved loss history during the
quarter and reductions in risk factor assignments.
First Community's asset quality ratios remain strong and reflect
continuing improvement over previous periods. The ratio of non-performing assets
to total assets was .29% at September 30, 2003, slightly lower than the June 30,
2003 level of .33% and .41% at December 31, 2002. The Company reported
non-accrual loans of $2.3 million at September 30, 2003 compared to $2.6 million
at June 30, 2003 and $3.1 million at December 31, 2002. The reserve coverage
ratio at September 30, 2003 was 653% compared to 596% at June 30, 2003.
First Community Bancshares, Inc., headquartered in Bluefield, Virginia,
has assets of approximately $1.68 billion and is the parent company of First
Community Bank, N. A., also headquartered in Bluefield. First Community Bank
operates through 47 full-service offices and two trust and investment management
offices in the three-state region of Virginia, West Virginia and North Carolina.
First Community Bank is also the parent company of Stone Capital Management,
Inc., an SEC registered investment advisory firm and United First Mortgage,
Inc., which operates 10 retail mortgage offices throughout Virginia. First
Community Bancshares, Inc.'s common stock is traded on the Nasdaq National
Market under the symbol "FCBC."
DISCLAIMER
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 and their feature sets; 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
Legislation 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 Per Share Data)(Unaudited) Nine Months Three Months
Ended Ended
September 30 September 30
-----------------------------------------------------------
2003 2002 2003 2002
-----------------------------------------------------------
INTEREST Interest and fees on loans held for investment $ 52,465 $ 54,646 $ 18,591 $ 18,597
INCOME Interest and fees on loans held for sale 2,084 2,521 800 851
Interest on securities-taxable 9,607 10,235 3,075 3,236
Interest on securities-nontaxable 4,851 5,101 1,552 1,679
Interest on federal funds sold and deposits 490 170 128 88
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 69,497 72,673 24,146 24,451
- -----------------------------------------------------------------------------------------------------------------------------
INTEREST Interest on deposits 15,393 19,603 4,934 6,206
EXPENSE Interest on borrowings 6,305 7,414 2,180 2,234
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 21,698 27,017 7,114 8,440
- -----------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 47,799 45,656 17,032 16,011
Provision for loan losses 2,679 3,261 782 1,302
- -----------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 45,120 42,395 16,250 14,709
- -----------------------------------------------------------------------------------------------------------------------------
NON-INTEREST Fiduciary income 1,530 1,287 549 443
INCOME Service charges on deposit accounts 5,905 5,135 2,098 1,866
Other service charges, commissions and fees 1,622 1,009 553 328
Mortgage banking income 6,921 7,594 507 2,238
Other operating income 881 582 340 100
Gain on sale of securities 1,191 208 1,038 22
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 18,050 15,815 5,085 4,997
- -----------------------------------------------------------------------------------------------------------------------------
NON-INTEREST Salaries and employee benefits 19,962 17,295 7,190 5,746
EXPENSE Occupancy expense of bank premises 2,533 2,160 861 738
Furniture and equipment expense 1,613 1,594 563 529
Amortization of intangible assets 178 180 64 61
Other operating expense 10,833 10,077 3,896 3,177
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 35,119 31,306 12,574 10,251
- -----------------------------------------------------------------------------------------------------------------------------
Income before income taxes 28,051 26,904 8,761 9,455
Income tax expense 8,107 7,963 2,532 2,869
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 19,944 $ 18,941 $ 6,229 $ 6,586
- -----------------------------------------------------------------------------------------------------------------------------
BASIC EARNINGS PER COMMON SHARE (EPS) $ 1.81 $ 1.73 $ 0.55 $ 0.60
- -----------------------------------------------------------------------------------------------------------------------------
DILUTED EARNINGS PER COMMON SHARE (DEPS) $ 1.79 $ 1.73 $ 0.55 $ 0.60
Weighted Average Shares Outstanding:
Basic 11,047,199 10,929,010 11,262,180 10,920,876
Diluted 11,143,175 10,980,872 11,383,941 10,975,950
For the period:
Return on average equity 16.23% 17.84% 14.10% 17.64%
Return on average assets 1.67% 1.73% 1.46% 1.78%
Cash dividends per share $ 0.73 $ 0.69 $ 0.25 $ 0.23
At period end:
Book value per share $ 15.33 $ 13.73 $ 15.33 $ 13.73
Market value $ 35.29 $ 26.66 $ 35.29 $ 26.66
=============================================================================================================================
FIRST COMMUNITY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
================================================================================================================================
(Dollars in Thousands, Except Per Share Data)(Unaudited)
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------- -----------
ASSETS Cash and due from banks $ 32,889 $ 33,364
Interest-bearing deposits with banks 76,309 88,064
Fed Funds Sold - 3,157
Securities available for sale (amortized cost of $388,283
September 30, 2003; $289,616, December 31, 2002) 395,496 300,885
Securities held to maturity (fair value of $41,558
September 30, 2003; $43,342, December 31, 2002) 39,433 41,014
Loans held for sale 16,689 66,364
Loans held for investment, net of unearned income 1,028,189 927,621
Less allowance for loan losses 15,680 14,410
- -------------------------------------------------------------------------------------------------------------------------------
Net loans 1,012,509 913,211
Premises and equipment 29,661 25,078
Other real estate owned 2,403 2,855
Interest receivable 8,433 7,897
Other assets 24,184 15,391
Intangible assets 41,330 27,083
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,679,336 $ 1,524,363
================================================================================================================================
LIABILITIES Deposits:
Demand $ 194,060 $ 165,557
Interest-bearing demand 234,737 200,297
Savings 188,021 180,786
Time 615,680 593,087
- -------------------------------------------------------------------------------------------------------------------------------
Total Deposits 1,232,498 1,139,727
Interest, taxes and other liabilities 12,090 15,940
Securities sold under agreements to repurchase 102,449 91,877
FHLB and other indebtedness 159,815 124,357
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,506,852 1,371,901
- -------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' Preferred stock, par value undesignated; 1,000,000 shares authorized;
EQUITY no shares issued and outstanding in 2003 and 2002 - -
Common stock, $1 par value; 15,000,000 shares authorized in 2003
and 2002, respectively; 11,432,815 issued in 2003 and 10,952,385
issued in 2002; and 11,250,931 and 10,877,330 outstanding in
2003 and 2002, respectively 11,433 9,957
Additional paid-in capital 108,078 58,642
Retained earnings 54,407 79,084
Treasury stock, at cost (5,762) (1,982)
Accumulated other comprehensive income 4,328 6,761
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 172,484 152,462
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,679,336 $ 1,524,363
==============================================================================================================================
FIRST COMMUNITY BANCSHARES, INC.
QUARTERLY PERFORMANCE SUMMARY AS OF AND FOR THE QUARTER ENDED
INCOME STATEMENTS SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA) 2003 2003 2003 2002 2002
-------------------------------------------------------------------
INTEREST Interest and fees on loans held for investment $ 18,591 $ 16,982 $ 16,892 $ 17,769 $ 18,597
INCOME Interest and fees on loans held for sale 800 655 629 1,063 851
Interest on securities-taxable 3,075 3,387 3,145 2,766 3,236
Interest on securities-nontaxable 1,552 1,642 1,657 1,718 1,679
Interest on federal funds sold and deposits 128 147 215 215 88
----------------------------------------------------------------------
TOTAL INTEREST INCOME 24,146 22,813 22,538 23,531 24,451
----------------------------------------------------------------------
INTEREST Interest on deposits 4,934 5,142 5,317 5,763 6,206
EXPENSE Interest on borrowings 2,180 2,084 2,041 2,228 2,234
----------------------------------------------------------------------
TOTAL INTEREST EXPENSE 7,114 7,226 7,358 7,991 8,440
----------------------------------------------------------------------
NET INTEREST INCOME 17,032 15,587 15,180 15,540 16,011
Provision for loan losses 782 1,308 589 947 1,302
----------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 16,250 14,279 14,591 14,593 14,709
----------------------------------------------------------------------
NON-INT Fiduciary income 549 565 416 486 443
INCOME Service charges on deposit accounts 2,098 1,986 1,821 1,921 1,866
Other service charges, commissions and fees 553 556 513 371 328
Mortgage banking income 507 3,450 2,964 1,841 2,238
Other operating income 340 244 297 214 100
Gain (loss) on Securities 1,038 133 20 (599) 22
----------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 5,085 6,934 6,031 4,234 4,997
----------------------------------------------------------------------
NON-INT Salaries and employee benefits 7,190 6,439 6,333 5,972 5,746
EXPENSE Occupancy expense of bank premises 861 823 849 714 738
Furniture and equipment expense 563 520 530 488 529
Amortization of intangible assets 64 51 63 65 61
Other operating expense 3,896 3,581 3,356 3,724 3,177
----------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 12,574 11,414 11,131 10,963 10,251
----------------------------------------------------------------------
Income before income taxes 8,761 9,799 9,491 7,864 9,455
Income tax expense 2,532 2,832 2,743 2,086 2,869
----------------------------------------------------------------------
NET INCOME* 6,229 6,967 6,748 5,778 6,586
======================================================================
PER Basic EPS* $ 0.55 $ 0.63 $ 0.62 $ 0.53 $ 0.60
SHARE Diluted EPS * $ 0.55 $ 0.63 $ 0.62 $ 0.52 $ 0.60
DATA Cash dividends per share $ 0.25 $ 0.24 $ 0.24 $ 0.23 $ 0.23
Weighted Average Shares Outstanding:
Basic 11,262,180 10,969,748 10,857,307 10,881,754 10,920,876
Diluted 11,383,941 11,084,847 10,913,481 10,939,535 10,975,950
Actual shares oustanding at period end 11,250,931 11,256,674 10,830,701 10,877,330 10,910,330
Book Value per share at period end $ 15.33 $ 15.57 $ 14.28 $ 14.02 $ 13.73
Average Bid and Ask per share at period end $ 35.29 $ 35.58 $ 30.15 $ 27.95 $ 26.66
RATIOS Return on average assets* 1.46% 1.78% 1.81% 1.64% 1.78%
Return on average equity* 14.10% 17.29% 17.63% 16.36% 17.64%
Net yield on earning assets 4.55% 4.55% 4.64% 4.70% 4.93%
Efficiency Ratio at end of period 51.16% 48.68% 49.67% 49.01% 48.09%
Equity as a percent of total assets at
end of period 10.27% 10.12% 10.12% 10.00% 10.09%
Average earning assets as a percentage of
average total assets 91.91% 92.67% 92.99% 93.05% 92.82%
Average loans (not including loans held
for sale) as a percentage of
average deposits 83.04% 79.23% 79.50% 81.20% 84.86%
QTD Average Loans (Not including Loans Held
for Sale) $ 1,030,875 $ 931,488 $ 906,856 $ 908,342 $ 929,494
AVERAGES Average Earning Assets $ 1,559,472 $ 1,454,319 $ 1,408,749 $ 1,394,399 $ 1,364,045
Average Total Assets $ 1,696,647 $ 1,569,302 $ 1,514,900 $ 1,498,567 $ 1,469,609
Average Deposits $ 1,241,420 $ 1,175,618 $ 1,140,746 $ 1,118,597 $ 1,095,377
Average Equity $ 175,228 $ 161,622 $ 155,222 $ 150,449 $ 148,124
Taxable Equivalent Net Interest Income $ 17,899 $ 16,504 $ 16,115 $ 16,513 $ 16,963
Average Interest-bearing deposits $ 1,046,364 $ 1,008,130 $ 983,242 $ 959,708 $ 936,578
* - In accordance with FAS 147, goodwill amortization on certain
branch acquisitions ceased on October 1, 2002 and, as required,
First Community restated quarterly amounts in its 2002 annual
report.
FIRST COMMUNITY BANCSHARES, INC.
QUARTERLY PERFORMANCE SUMMARY
BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
2003 2003 2003 2002 2002
------------------------------------------------------------------------
Cash and due from banks $ 32,889 $ 43,551 $ 36,979 $ 33,364 $ 30,331
Interest-bearing deposits with banks 76,309 25,795 63,146 88,064 20,246
Federal funds sold - 7,353 4 3,157 75
Securities available for sale 395,496 419,815 372,926 300,885 334,408
Securities held to maturity 39,433 39,745 40,084 41,014 40,211
Loans held for sale 16,689 45,458 50,753 66,364 68,821
Loans held for investment, net of unearned income 1,028,189 1,027,928 897,194 927,621 926,400
Less allowance for loan losses 15,680 15,707 13,782 14,410 14,080
------------------------------------------------------------------------
Net loans 1,012,509 1,012,221 883,412 913,211 912,320
Premises and equipment 29,661 29,449 25,417 25,078 23,632
Other real estate owned 2,403 2,787 2,545 2,855 2,668
Interest receivable 8,433 8,381 8,210 7,897 8,340
Other assets 24,184 22,966 18,524 15,391 16,843
Intangible assets 41,330 42,791 27,110 27,083 26,012
------------------------------------------------------------------------
TOTAL ASSETS $ 1,679,336 $ 1,700,312 $ 1,529,110 $ 1,524,363 $ 1,483,907
========================================================================
Deposits:
Demand $ 194,060 $ 210,347 $ 162,998 $ 165,557 $ 161,249
Interest-bearing demand 234,737 234,551 207,098 200,297 185,866
Savings 188,021 185,284 183,738 180,786 179,888
Time 615,680 626,539 599,868 593,087 578,223
------------------------------------------------------------------------
Total Deposits 1,232,498 1,256,721 1,153,702 1,139,727 1,105,226
Interest, taxes and other liabilities 12,090 21,686 14,663 15,940 13,928
Federal funds purchased - - - - -
Securities sold under agreements to repurchase 102,449 93,742 95,621 91,877 94,964
FHLB and other indebtedness 159,815 152,855 110,429 124,357 120,053
------------------------------------------------------------------------
TOTAL LIABILITIES 1,506,852 1,525,004 1,374,415 1,371,901 1,334,171
------------------------------------------------------------------------
Preferred Stock - - - - -
Common stock, $1 par value 11,433 11,390 9,965 9,957 9,957
Additional paid-in capital 108,078 108,286 58,970 58,642 58,642
Retained earnings 54,407 51,149 83,267 79,084 75,353
Treasury stock, at cost (5,762) (4,028) (3,543) (1,982) (1,098)
Accumulated other comprehensive income 4,328 8,511 6,036 6,761 6,882
------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 172,484 175,308 154,695 152,462 149,736
------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,679,336 $ 1,700,312 $ 1,529,110 $ 1,524,363 $ 1,483,907
========================================================================
FIRST COMMUNITY BANCSHARES, INC.
SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
AS OF AND FOR THE QUARTER ENDED
SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
2003 2003 2003 2002 2002
-------------------------------------------------------------
ASSET QUALITY ANALYSIS:
Allowance for Loan Losses:
Beginning balance $ 15,707 $ 13,782 $ 14,410 $ 14,080 $ 14,194
Provision 782 1,308 589 947 1,302
Acquisiton balance - 1,583 - 395 -
Charge-offs (990) (1,441) (1,668) (1,212) (1,593)
Recoveries 181 475 451 200 177
-------------------------------------------------------------
Net charge-offs (809) (966) (1,217) (1,012) (1,416)
Ending balance $ 15,680 $ 15,707 $ 13,782 $ 14,410 $ 14,080
=============================================================
NONPERFORMING ASSETS:
Nonaccrual loans $ 2,277 $ 2,547 $ 3,997 $ 3,075 $ 4,987
Foreclosed real estate 2,403 2,787 2,544 2,855 2,668
Repossessions 125 140 188 172 341
Loans 90 days or more past due & still accruing 124 86 21 91 367
-------------------------------------------------------------
Nonperforming assets $ 4,929 $ 5,560 $ 6,750 $ 6,193 $ 8,363
=============================================================
Loans 90 days or more past due & still accruing
as a percentage of loans held for investment 0.01% 0.01% 0.00% 0.01% 0.04%
ASSET QUALITY RATIOS:
Nonaccrual loans and leases as a
percentage of loans held for investment 0.22% 0.25% 0.45% 0.33% 0.54%
Nonperforming assets as a percentage of:
Total assets 0.29% 0.33% 0.44% 0.41% 0.56%
Loans held for investment plus foreclosed
property 0.48% 0.54% 0.75% 0.67% 0.90%
Net charge-offs as a % of average loans held
for investment 0.08% 0.10% 0.13% 0.11% 0.15%
Allowance for loan & lease losses as a
percentage of loans held for investment 1.53% 1.53% 1.54% 1.55% 1.52%
Ratio of allowance for loans losses to:
Nonaccrual loans 6.89 6.17 3.45 4.69 2.82
Restructured loans performing according to
modified terms $ 362 $ 368 $ 341 $ 345 $ 347