Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE: FOR MORE INFORMATION,
OCTOBER 16, 2002 CONTACT: ROBERT L. SCHUMACHER
AT (276) 326-9000
FIRST COMMUNITY BANCSHARES, INC. (FCBC) ANNOUNCES
RECORD THIRD QUARTER OPERATING RESULTS
First Community Bancshares, Inc. (Nasdaq: FCBC; www.fcbinc.com) today
reported earnings of $6.4 million for the Third Quarter of 2002, or $0.65
earnings per basic and diluted share. This represents a $1.4 million improvement
compared to results for the Third Quarter of 2001 of $5.0 million. Third Quarter
2002 net income improved by 29% quarter to quarter over the comparable amount
reported in 2001. The Company also saw improvement of 30% in basic and diluted
earnings per share for the Third Quarter of 2002 compared to the same quarter in
2001. Return on average equity increased to 17.26% in the Third Quarter of 2002
compared to 15.21% for the same quarter last year. In addition, return on
average assets increased to 1.74% in the Third Quarter of 2002 compared to 1.53%
for the comparable period in 2001.
Net interest income for the Third Quarter improved by $3.2 million,
largely due to the Company's management of its net interest margin through
downward repricing of the deposit base during the current rate environment,
which has helped to offset the declining yield on interest earning assets. This
caused net interest margin to increase to 4.78% for the nine months ended
September 30, 2002 compared to 4.56% for the nine months ended September 30,
2001. This improvement was offset, in part, by an increase in non-interest
expenses of $782,000, the majority of which consisted of a $507,000 increase in
salaries and employee benefits largely associated with the four Virginia
branches acquired late in the fourth quarter of 2001.
Net Income for the nine months ended September 30, 2002 was $18.5
million, versus $14.1 million for the nine months ended September 30, 2001, an
improvement of $4.4 million or 32%. This improvement in Net Income is due to an
$8.7 million or 23% increase in net interest income associated with a $197
million increase in average earning assets since September 30, 2001.
Also contributing to results for the first nine months of 2002 were
increases in service charges on deposit accounts, which improved by $810,000 or
19% compared to the first three
quarters of 2001, and an increase of $527,000 in mortgage banking income
compared to the same nine months last year. The improved financial performance
of the Company translates into an increase of $0.45 in basic and diluted
earnings per share for the first nine months of 2002 compared to the same nine
month period last year. Return on average equity for the first nine months of
this year was 17.44% compared to 14.78% for the first three quarters last year.
Return on average assets also improved to 1.69% compared to 1.49% for the first
nine months in 2001.
Despite the continuing slower economy, FCBC's asset quality ratios
remain sound. The ratio of non-performing assets to total assets stood at 0.56%
at the end of the Third Quarter of 2002, compared to 0.77% at the end of the
Third Quarter last year. Loans past due 90 days stood at 0.04%, while
non-accruing loans totaled 0.54% as a percentage of total loans at September 30,
2002. The coverage ratio (loan loss reserve divided by total non-performing
loans) at the end of the Third Quarter of 2002 was 262.98% compared to 190.13%
at the end of the Third Quarter of 2001.
Total assets for the Company at September 30, 2002 stood at $1.48
billion. Growth was realized in retail customer deposits, which increased by $27
million since the previous year end. Total equity for the Company increased to
just under $150 million, bringing book value per common share outstanding to
$15.10, up from $13.39 at year end 2001. The market value of the Company's
common stock was $29.46 at September 30, 2002 compared to $26.79 at December 31,
2001.
First Community is a $1.48 billion bank holding company with
headquarters in Bluefield, Virginia. The Company, through its wholly-owned
subsidiary First Community Bank, N. A., operates 38 branches throughout
Virginia, West Virginia and North Carolina. First Community Bank, N. A. also
owns United First Mortgage, Inc. based in Richmond, Virginia, which operates 11
offices from Virginia Beach to Harrisonburg, Virginia. The Company is also
pleased to announce the opening of its Bluefield, Virginia location in early
November.
First Community Bancshares, Inc. common stock is traded on the Nasdaq
SmallCap market under the symbol "FCBC." The Company is also included in the
both the Russell 2000 and Russell 3000 Indices. The next earnings release for
the Company is expected to be on or about January 24, 2003.
*****
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: 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.
FIRST COMMUNITY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
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(Dollars in Thousands, Except Per Share Data)(Unaudited) Nine Months
Ended
September 30
---------------------------------
2002 2001
---------------------------------
INTEREST Interest and fees on loans held for investment $ 54,646 $ 54,619
INCOME Interest and fees on loans held for sale 2,521 2,110
Interest on securities-taxable 10,235 7,467
Interest on securities-nontaxable 5,101 4,484
Interest on federal funds sold and deposits 170 746
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 72,673 69,426
=====================================================================================================================
INTEREST Interest on deposits 19,603 24,586
EXPENSE Interest on borrowings 7,414 7,862
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TOTAL INTEREST EXPENSE 27,017 32,448
=====================================================================================================================
NET INTEREST INCOME 45,656 36,978
Provision for loan losses 3,261 3,014
- ---------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 42,395 33,964
- ---------------------------------------------------------------------------------------------------------------------
NON-INTEREST Fiduciary income 1,287 1,380
INCOME Service charges on deposit accounts 5,135 4,325
Other service charges, commissions and fees 1,009 1,008
Mortgage banking income 7,594 7,067
Other operating income 582 730
Gain on sale of securities 208 197
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 15,815 14,707
=====================================================================================================================
NON-INTEREST Salaries and employee benefits 17,295 14,904
EXPENSE Occupancy expense of bank premises 2,160 2,005
Furniture and equipment expense 1,594 1,362
Amortization of intangible assets 875 1,687
Other operating expense 10,077 8,326
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 32,001 28,284
=====================================================================================================================
Income before income taxes 26,209 20,387
Income tax expense 7,692 6,322
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NET INCOME (1) 18,517 14,065
=====================================================================================================================
=====================================================================================================================
BASIC AND DILUTED EARNINGS PER COMMON SHARE (EPS) (1) $ 1.86 $ 1.41
Weighted Average Shares Outstanding:
Basic 9,935,464 9,945,772
Diluted 9,982,611 9,977,277
For the year:
Return on average equity 17.44% 14.78%
Return on average assets 1.69% 1.49%
Cash dividends per share $ 0.75 $ 0.63
At period end:
Book value per share $ 15.10 $ 13.33
Average bid and ask $ 29.33 $ 28.82
=====================================================================================================================
(1) Effective January 1, 2002, FCBC ceased amortization of certain
goodwill in accordance with FASB Statement 142. An adjustment of
$1,076 would be necessary to conform the prior period amount to
current year presentation resulting in an adjusted net income and
earnings per share for the corresponding period in 2001 of $15,141
and $1.52, respectivley.
FIRST COMMUNITY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
- ------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands, Except Per Share Data)(Unaudited)
SEPTEMBER 30, DECEMBER 31,
2002 2001
----------------- -----------------
ASSETS Cash and due from banks $ 30,331 $ 47,566
Interest-bearing balances with banks 20,246 249
Securities available for sale (amortized cost of $322,938
September 30, 2002; $352,759, December 31, 2001) 334,408 354,007
Investment securities held to maturity (market value of $42,938
September 30, 2002; $43,393, December 31, 2001) 40,211 41,884
Fed Funds Sold 75 -
Loans held for sale 68,821 65,532
Loans held for investment, net of unearned income 926,400 904,496
Less reserve for loan losses 14,080 13,952
- ------------------------------------------------------------------------------------------------------------------------------
Net loans 912,320 890,544
Premises and equipment 23,632 21,713
Other real estate owned 2,668 3,029
Interest receivable 8,340 8,765
Other assets 16,843 18,468
Intangible assets 26,012 26,478
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 1,483,907 $ 1,478,235
==============================================================================================================================
LIABILITIES Deposits:
Demand $ 161,249 $ 161,346
Interest-bearing demand 185,866 183,685
Savings 179,888 142,839
Time 578,223 590,390
- ------------------------------------------------------------------------------------------------------------------------------
Total Deposits 1,105,226 1,078,260
Interest, taxes and other liabilities 13,928 15,852
Fed Funds Purchased - 26,500
Securities sold under agreements to repurchase 94,964 79,262
FHLB and other indebtedness 120,053 145,320
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,334,171 1,345,194
- ------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' Common stock, $1 par value; 15,000,000 shares authorized in 2002
EQUITY and 2001, respectively; 9,956,714 issued in 2002 and 9,955,425
issued in 2001; and 9,918,482 and 9,936,442 outstanding in
2002 and 2001, respectively 9,957 9,955
Additional paid-in capital 58,642 60,189
Retained earnings 75,353 62,566
Treasury stock, at cost (1,098) (424)
Accumulated other comprehensive income 6,882 755
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 149,736 133,041
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,483,907 $ 1,478,235
==============================================================================================================================
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) 2002 2002 2002 2001 2001
------------------------------------------------------------------
INTEREST Interest and fees on loans held for investment $ 18,597 $ 18,013 $ 18,036 $ 17,963 $ 18,228
INCOME Interest and fees on loans held for sale 851 826 844 846 763
Interest on securities-taxable 3,236 3,621 3,378 2,792 2,596
Interest on securities-nontaxable 1,679 1,680 1,742 1,706 1,634
Interest on federal funds sold and deposits 88 39 43 96 169
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TOTAL INTEREST INCOME 24,451 24,179 24,043 23,403 23,390
------------------------------------------------------------------
INTEREST Interest on deposits 6,206 6,404 6,993 7,298 7,879
EXPENSE Interest on borrowings 2,234 2,603 2,577 2,663 2,701
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TOTAL INTEREST EXPENSE 8,440 9,007 9,570 9,961 10,580
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NET INTEREST INCOME 16,011 15,172 14,473 13,442 12,810
Provision for loan losses 1,302 1,022 937 2,120 1,282
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 14,709 14,150 13,536 11,322 11,528
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NON-INT Fiduciary income 443 501 343 435 470
INCOME Service charges on deposit accounts 1,866 1,806 1,463 1,641 1,517
Other service charges, commissions and fees 328 355 326 427 332
Mortgage banking income 2,238 2,107 3,249 2,515 2,778
Other operating income 100 186 296 566 236
Gain (loss) on Sale of Securities 22 9 177 (16) 153
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TOTAL NON-INTEREST INCOME 4,997 4,964 5,854 5,568 5,486
------------------------------------------------------------------
NON-INT Salaries and employee benefits 5,746 5,746 5,803 4,926 5,239
EXPENSE Occupancy expense of bank premises 738 679 743 610 668
Furniture and equipment expense 529 562 503 452 403
Goodwill amortization 295 293 287 598 568
Other operating expense 3,177 3,399 3,501 3,155 2,825
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TOTAL NON-INTEREST EXPENSE 10,485 10,679 10,837 9,741 9,703
------------------------------------------------------------------
Income before income taxes 9,221 8,435 8,553 7,149 7,311
Income tax expense 2,778 2,539 2,375 2,080 2,311
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NET INCOME 6,443 5,896 6,178 5,069 5,000
FAS 142 GOODWILL ADJUSTMENT 0 0 0 371 361
ADJUSTED NET INCOME $ 6,443 $ 5,896 $ 6,178 $ 5,440 $ 5,361
Taxable Equivalent Net Interest Income $ 16,963 $ 16,123 $ 15,458 $ 14,410 $ 13,747
PER Basic and diluted earnings per common share (EPS) $ 0.65 $ 0.59 $ 0.62 $ 0.51 $ 0.50
SHARE EPS adjusted for FAS 142 (1) $ 0.65 $ 0.59 $ 0.62 $ 0.55 $ 0.54
DATA Cash dividends per share $ 0.25 $ 0.25 $ 0.25 $ 0.26 $ 0.21
Weighted Average Shares Outstanding:
Basic 9,928,069 9,945,158 9,933,222 9,939,974 9,943,522
Diluted 9,978,136 9,993,812 9,977,531 9,991,895 10,003,547
Actual shares oustanding at period end 9,918,482 9,925,982 9,950,982 9,936,442 9,942,602
Book Value per share at period end $ 15.10 $ 14.50 $ 13.67 $ 13.39 $ 13.33
Average Bid and Ask per share at period end $ 29.33 $ 33.00 $ 30.26 $ 26.95 $ 28.82
RATIOS Return on average assets 1.74% 1.62% 1.72% 1.47% 1.53%
Return on average equity 17.26% 16.84% 18.26% 14.89% 15.21%
Net yield on earning assets 4.93% 4.77% 4.64% 4.52% 4.60%
Efficiency Ratio at end of period 48.09% 48.99% 47.14% 47.81% 48.71%
Equity as a percent of total assets at end of period 10.09% 9.89% 9.27% 9.00% 10.07%
Average earning assets as a percentage of
average total assets 92.82% 92.64% 92.77% 92.69% 92.46%
Average loans (not including loans held for sale)
as a percentage of average deposits 99.24% 98.99% 84.78% 88.27% 90.39%
QTD Average Loans (Not including Loans Held for Sale) $ 929,494 $ 917,319 $ 914,749 $ 876,744 $ 850,759
AVERAGES Average Earning Assets $ 1,364,045 $ 1,355,841 $ 1,351,598 $ 1,265,381 $ 1,197,447
Average Total Assets $ 1,469,609 $ 1,463,573 $ 1,456,863 $ 1,365,173 $ 1,295,051
Average Interest-bearing deposits $ 936,578 $ 926,649 $ 1,079,022 $ 993,252 $ 941,190
Average Equity $ 148,124 $ 140,408 $ 137,184 $ 135,114 $ 130,437
(1) Effective January 1, 2002, FCBC ceased certain amortization of
goodwill in accordance with FASB Statement No. 142. This adjustment
conforms prior period amounts with current year presentation.
FIRST COMMUNITY BANCSHARES, INC.
QUARTERLY PERFORMANCE SUMMARY
BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
SEPTEMBER30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
2002 2002 2002 2001 2001
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Cash and due from banks $ 30,331 $ 31,448 $ 28,547 $ 47,566 $ 35,275
Interest-bearing balances with banks 20,246 255 830 249 15,018
Securities available for sale 334,408 338,572 368,526 354,007 261,409
Investment securities held to maturity 40,211 41,327 41,446 41,884 42,001
Federal funds sold 75
Loans held for sale 68,821 52,095 47,596 65,532 40,759
Loans held for investment, net of unearned income 926,400 928,541 911,746 904,496 862,689
Less allowance for loan losses 14,080 14,194 14,271 13,952 12,889
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Net loans 912,320 914,347 897,475 890,544 849,800
Premises and equipment 23,632 22,314 21,927 21,713 19,452
Other real estate owned 2,668 2,452 2,538 3,029 2,595
Interest receivable 8,340 8,330 9,139 8,765 8,746
Other assets 16,843 18,348 23,459 18,468 18,199
Intangible assets 26,012 25,846 26,125 26,478 22,521
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TOTAL ASSETS $ 1,483,907 $ 1,455,334 $ 1,467,608 $ 1,478,235 $ 1,315,775
=======================================================================
Deposits:
Demand $ 161,249 $ 156,820 $ 152,980 $ 161,346 $ 140,754
Interest-bearing demand 185,866 180,585 191,284 183,685 145,927
Savings 179,888 175,431 160,544 142,839 131,306
Time 578,223 568,679 577,398 590,390 535,700
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Total Deposits 1,105,226 1,081,515 1,082,206 1,078,260 953,687
Interest, taxes and other liabilities 13,928 13,704 16,135 15,852 15,760
Federal funds purchased -- 8,950 4,560 26,500 --
Securities sold under agreements to repurchase 94,964 83,015 79,238 79,262 66,126
FHLB and other indebtedness 120,053 124,266 149,467 145,320 147,730
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TOTAL LIABILITIES 1,334,171 1,311,450 1,331,606 1,345,194 1,183,303
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Common stock, $1 par value 9,957 9,957 9,957 9,052 9,052
Additional paid-in capital 58,642 58,600 58,600 35,302 35,302
Retained earnings 75,353 71,394 67,981 88,356 85,910
Treasury stock, at cost (1,098) (870) (167) (424) (276)
Accumulated other comprehensive income (loss) 6,882 4,803 (369) 755 2,484
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TOTAL STOCKHOLDERS' EQUITY 149,736 143,884 136,002 133,041 132,472
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,483,907 $ 1,455,334 $ 1,467,608 $ 1,478,235 $ 1,315,775
=======================================================================
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,
2002 2002 2002 2001 2001
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ASSET QUALITY ANALYSIS:
Allowance for Loan Losses:
Beginning balance $ 14,194 $ 14,271 $ 13,952 $ 12,889 $ 12,688
Provision 1,302 1,022 937 2,120 1,282
Acquisiton balance -- -- -- 484 --
Charge-offs (1,593) (1,243) (820) (1,781) (1,193)
Recoveries 177 144 202 240 112
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Net charge-offs (1,416) (1,099) (618) (1,541) (1,081)
Ending balance $ 14,080 $ 14,194 $ 14,271 $ 13,952 $ 12,889
=======================================================================
NONPERFORMING ASSETS:
Nonaccrual loans $ 4,987 $ 4,131 $ 4,644 $ 3,633 $ 5,361
Foreclosed real estate 2,668 2,452 2,538 3,029 2,595
Repossessions 341 436 495 599 620
Loans 90 days or more past due & still accruing 367 254 192 1,351 1,418
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Nonperforming assets $ 8,363 $ 7,273 $ 7,869 $ 8,612 $ 9,994
=======================================================================
Loans 90 days or more past due & still accruing
as a percentage of loans held for investment 0.04% 0.03% 0.02% 0.15% 0.16%
ASSET QUALITY RATIOS:
Nonaccrual loans and leases as a
percentage of loans held for investment 0.54% 0.44% 0.51% 0.40% 0.62%
Nonperforming assets as a percentage of:
Total assets 0.56% 0.50% 0.54% 0.58% 0.77%
Loans held for investment plus foreclosed property 0.90% 0.78% 0.86% 0.95% 1.15%
Net charge-offs as a % of average loans held for investment 0.15% 0.12% 0.07% 0.18% 0.13%
Allowance for loan & lease losses as a percentage of loans
held for investment 1.52% 1.53% 1.57% 1.54% 1.49%
Ratio of allowance for loans losses to:
Nonaccrual loans 2.82 3.44 3.07 3.84 2.40
Restructured loans performing according to modified terms $ 347 $ 440 $ 354 $ 449 $ 443
MORTGAGE SUBSIDIARY SUPPLEMENTAL INFORMATION:
End of period:
Fee Income $ 2,464 $ 1,669
Gain on sale of loans, net of hedge activity $ 5,131 $ 3,687
Option adjusted mortgage loan commitments outstanding $ 155,442 $ 74,367
Year to date loan production $ 537,668 $ 329,367
Number of employees 110 106