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First Community Bancshares, Inc. Announces First Quarter 2016 Results and Quarterly Dividend

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BLUEFIELD, Va., April 26, 2016 (GLOBE NEWSWIRE) -- First Community Bancshares, Inc. (NASDAQ: FCBC) (www.fcbinc.com) (the "Company") today reported its unaudited results of operations and other financial information for the quarter ended March 31, 2016.

The Company also announced today that the Board of Directors declared a quarterly cash dividend to common shareholders of fourteen cents ($0.14) per common share. The quarterly dividend is payable to common shareholders of record on May 6, 2016, and is expected to be paid on or about May 20, 2016. The current year marks the 31st consecutive year of cash dividends paid to stockholders.

First Quarter 2016 Highlights

  • Income Statement
    • Net income available to common shareholders increased $231 thousand, or 3.95%, compared to the same quarter of the prior year.
    • Diluted earnings per share was $0.34, an increase of $0.03, or 9.68%, compared to the same quarter of the prior year.
    • Core diluted earnings per common share increased $0.02 to $0.33 compared to the same quarter of the prior year.
    • Normalized net interest margin increased 24 basis points to 3.74% compared to the same quarter of the prior year.
    • The non-GAAP efficiency ratio improved 5 basis points to 61.41% compared with the same quarter of 2015.
       
  • Balance Sheet
    • The non-covered loan portfolio increased $62.39 million, or 3.84%, compared with December 31, 2015.
    • Book value per common share increased $0.20 to $19.15 compared with December 31, 2015.
    • The Company repurchased 487,739 common shares during the quarter.
    • The Company and its subsidiary bank both significantly exceed regulatory "well capitalized" targets as of March 31, 2016.
       
  • Asset Quality
    • Net charge-offs decreased $159 thousand, or 14.18%, compared to the same quarter of 2015.
    • Non-covered delinquent loans as a percentage of total non-covered loans decreased 31 basis points to 1.35% compared to the same period of the prior year.
    • Total non-covered nonperforming assets decreased $883 thousand compared to December 31, 2015, and decreased $509 thousand compared to March 31, 2015.
    • Net loan loss provision of $1.19 million was recognized to cover net charge-offs and the significant loan growth experienced during the quarter.

Financial Performance

CONDENSED STATEMENTS OF INCOME (Unaudited) 
             
   Three Months Ended 
   March 31, December 31, September 30, June 30, March 31, 
(Amounts in thousands, except share and per share data) 2016   2015   2015   2015   2015  
Interest income          
 Interest and fees on loans$21,573  $21,633  $22,259  $21,826  $21,914  
 Interest on securities 1,957   2,023   2,056   2,073   2,051  
 Interest on deposits in banks 20   21   33   80   133  
Total interest income 23,550   23,677   24,348   23,979   24,098  
Interest expense          
 Interest on deposits 1,114   1,202   1,384   1,562   1,730  
 Interest on borrowings 1,325   1,300   1,295   1,347   1,529  
Total interest expense 2,439   2,502   2,679   2,909   3,259  
Net interest income 21,111   21,175   21,669   21,070   20,839  
Provision for (recovery of) loan losses 1,187   434   381   276   1,100  
Net interest income after provision for loan losses 19,924   20,741   21,288   20,794   19,739  
Total noninterest income 7,903   7,483   7,074   8,137   6,836  
Total noninterest expense 18,814   19,083   19,019   20,289   17,780  
Income before income taxes 9,013   9,141   9,343   8,642   8,795  
Income tax expense 2,929   2,993   3,084   2,467   2,837  
Net income  6,084   6,148   6,259   6,175   5,958  
Dividends on preferred stock -   -   -   -   105  
Net income available to common shareholders$6,084  $6,148  $6,259  $6,175  $5,853  
             
Earnings per common share          
 Basic$0.34  $0.34  $0.34  $0.33  $0.31  
 Diluted 0.34   0.34   0.34   0.33   0.31  
Cash dividends per common share 0.14   0.14   0.14   0.13   0.13  
Weighted average shares outstanding          
 Basic 17,859,197   18,193,824   18,470,348   18,831,907   18,633,574  
 Diluted 17,892,531   18,226,719   18,500,975   18,860,284   19,344,443  
Performance ratios          
 Return on average assets 0.99%  0.99%  1.00%  0.97%  0.91% 
 Return on average common equity 7.15%  7.05%  7.18%  7.08%  6.91% 
 Return on average tangible common equity(1) 10.34%  10.17%  10.38%  10.19%  10.04% 
             
 (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
   March 31, December 31, September 30, June 30, March 31,
    2016   2015   2015   2015   2015 
(Amounts in thousands, except per share data)         
Net income, GAAP$6,084  $6,148  $6,259  $6,175  $5,958 
Non-GAAP adjustments:         
 Merger, acquisition, and divestiture expense 39   -   -   -   86 
 Net loss (gain) on sale of securities (1)  7   39   (213)  23 
 FHLB debt prepayment fees -   -   -   1,702   - 
 Other non-core, non-recurring items (240)  31   (75)  (930)  (30)
Total adjustments to core earnings (202)  38   (36)  559   79 
Tax effect (74)  14   (13)  630   29 
Core earnings, non-GAAP(1)$5,956  $6,172  $6,236  $6,104  $6,008 
            
Core diluted earnings per common share$0.33  $0.34  $0.34  $0.32  $0.31 
Performance ratios         
 Core return on average assets 0.97%  0.99%  1.00%  0.96%  0.94%
 Core return on average common equity 7.00%  7.08%  7.16%  7.00%  7.09%
 Core return on average tangible common equity(2) 10.12%  10.21%  10.34%  10.07%  10.31%
            
 (1) A non-GAAP financial measure that excludes gains, losses, and impairment losses on securities; goodwill and intangible impairment; amortization of intangibles; 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.
  

The Company's net income available to common shareholders increased $231 thousand, or 3.95%, to $6.08 million, or $0.34 per diluted common share for the first quarter of 2016 compared with $5.85 million, or $0.31 per diluted common share, in the same quarter of the prior year. The increase in net income was largely due to a $272 thousand increase in net interest income and a $1.07 million increase in noninterest income. These increases were offset by an $87 thousand increase in the provision for loan losses, a $1.03 million increase in noninterest expense, and a $92 thousand increase in income tax expense. The increase in net interest income was primarily due to decreases in deposit and borrowing costs.

Net Interest Income and Margin

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
               
   Three Months Ended March 31, 
    2016   2015  
   Average    Average Yield/ Average    Average Yield/ 
(Amounts in thousands)Balance Interest(1) Rate(1) Balance Interest(1) Rate(1) 
Assets            
Earning assets            
 Loans(2)$  1,730,401  $  21,599   5.02% $  1,678,118  $  21,954   5.31% 
 Securities available for sale   354,582     2,268   2.57%    331,044     2,413   2.96% 
 Securities held to maturity   72,512     194   1.08%    65,923     186   1.14% 
 Interest-bearing deposits   15,591     20   0.52%    208,867     133   0.26% 
Total earning assets   2,173,086     24,081   4.45%    2,283,952     24,686   4.38% 
Other assets    297,156         318,856      
Total assets$  2,470,242      $  2,602,808      
               
Liabilities and stockholders' equity            
Interest-bearing deposits            
 Demand deposits $  342,524  $  57   0.07% $  351,742  $  52   0.06% 
 Savings deposits    535,769     66   0.05%    526,697     105   0.08% 
 Time deposits   533,635     991   0.75%    698,030     1,573   0.91% 
Total interest-bearing deposits   1,411,928     1,114   0.32%    1,576,469     1,730   0.45% 
Borrowings            
 Federal funds purchased   3,424     5   0.59%    -     -   -  
 Retail repurchase agreements   77,993     13   0.07%    67,853     20   0.12% 
 Wholesale repurchase agreements   50,000     468   3.76%    50,000     463   3.76% 
 FHLB advances and other borrowings   108,013     839   3.12%    106,621     1,046   3.98% 
Total borrowings   239,430     1,325   2.23%    224,474     1,529   2.76% 
Total interest-bearing liabilities   1,651,358     2,439   0.59%    1,800,943     3,259   0.73% 
Noninterest-bearing demand deposits   448,849         427,313      
Other liabilities   27,784         21,329      
Total liabilities   2,127,991         2,249,585      
Stockholders' equity   342,251         353,223      
Total liabilities and stockholders' equity$  2,470,242      $  2,602,808      
Net interest income, FTE  $  21,642      $  21,427    
Net interest rate spread     3.86%      3.65% 
Net interest margin     4.01%      3.80% 
               
(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. 
  


RECONCILIATION OF GAAP NET INTEREST MARGIN TO NORMALIZED NET INTEREST MARGIN (Unaudited)   
              
   Three Months Ended March 31,    
    2016   2015     
(Amounts in thousands)Interest(1) Average Yield/
Rate
(1) 
 Interest(1) Average Yield/
Rate
(1) 
    
Earning assets           
Loans(2)$  21,599   5.02% $  21,954   5.31%    
 Accretion income   2,252       2,839       
 Less: cash accretion income   805       1,096       
 Non-cash accretion income   1,447       1,743       
Loans, normalized(3)   20,152   4.68%    20,211   4.88%    
Other earning assets   2,482   2.26%    2,732   1.83%    
Total earning assets   22,634   4.19%    22,943   4.07%    
Total interest-bearing liabilities   2,439   0.59%    3,259   0.73%    
Net interest income, FTE(3)$  20,195    $  19,684       
Net interest rate spread, normalized(3)   3.60%    3.34%    
Net interest margin, normalized(3)   3.74%    3.50%    
              
 (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)A non-GAAP financial measure that excludes non-cash loan interest accretion related to PCI loans.
              

The tax equivalent net interest margin increased 21 basis points, or 5.53%, to 4.01% for the first quarter of 2016 compared with 3.80% for the same quarter of the prior year. The tax equivalent yield on loans decreased 29 basis points to 5.02% while the average loan balance increased $52.28 million, or 3.12%, to $1.73 billion. The increase in the average loan balance was primarily due to continued growth in the non-covered loan portfolio.

Non-cash purchased credit impaired ("PCI") loan interest accretion decreased $296 thousand, or 16.98%, to $1.45 million for the first quarter of 2016 compared to $1.74 million for the same quarter of the prior year. The normalized net interest margin, which excludes non-cash loan interest accretion, increased 24 basis points and the normalized yield on loans decreased 20 basis points due to continued runoff and better than expected performance in the covered loan portfolio.

Deposit costs reflect a 13 basis point decrease in the average rate paid on interest-bearing deposits. The average rate paid on interest-bearing liabilities decreased 14 basis points to 0.59% for the first quarter of 2016 compared with the same quarter of 2015. The average balance of interest-bearing liabilities decreased $149.59 million, or 8.31%, to $1.65 billion for the first quarter of 2016 compared with the same quarter of 2015, which included a $164.54 million decrease in average interest-bearing deposits and a $14.96 million increase in average total borrowings.

Noninterest Income and Expense

CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited) 
            
  Three Months Ended 
  March 31, December 31, September 30, June 30, March 31, 
(Amounts in thousands, except share and per share data) 2016   2015   2015   2015   2015  
Noninterest income          
 Wealth management 684   744   790   775   666  
 Service charges on deposits 3,291   3,563   3,744   3,507   2,903  
 Other service charges and fees 2,010   2,058   1,974   2,005   2,008  
 Insurance commissions 2,191   1,563   1,650   1,559   2,127  
 Net gain (loss) on sale of securities 1   (7)  (39)  213   (23) 
 Net FDIC indemnification asset amortization (1,159)  (1,200)  (1,768)  (1,846)  (1,565) 
 Other operating income 885   762   723   1,924   720  
Total noninterest income 7,903   7,483   7,074   8,137   6,836  
Noninterest expense          
 Salaries and employee benefits 10,475   10,268   9,971   9,693   9,693  
 Occupancy expense 1,531   1,413   1,443   1,427   1,534  
 Furniture and equipment expense 1,096   1,345   1,259   1,358   1,237  
 Amortization of intangibles 278   281   281   279   277  
 FDIC premiums and assessments 374   332   377   389   415  
 FHLB debt prepayment fees -   -   -   1,702   -  
 Merger, acquisition, and divestiture expense 39   -   -   -   86  
 Other operating expense 5,021   5,444   5,688   5,441   4,538  
Total noninterest expense 18,814   19,083   19,019   20,289   17,780  
            

Noninterest income increased $1.07 million, or 15.61%, for the first quarter of 2016 compared with the same quarter of 2015. The increase was largely due to a $406 thousand decrease in net negative amortization related to the FDIC indemnification asset as a result of continuing better than expected performance in the covered loan portfolio and a $388 thousand increase in service charges on deposits. Other operating income included a $364 thousand gain on the sale of fixed assets from previously closed branches offset by a $106 thousand decrease in secondary market lending income.

Noninterest expense increased $1.03 million, or 5.82%, for the first quarter of 2016 compared with the same quarter of 2015. The increase was largely due to a $782 thousand increase in salaries and employee benefits and $483 thousand increase in other operating expense. The increase in other operating expense included a $384 thousand increase in the net loss on sales and expenses associated with other real estate owned ("OREO") and write-downs of certain long-term investments in land and buildings totaling $174 thousand.

Efficiency Ratio

EFFICIENCY RATIO CALCULATION (Unaudited) 
             
   Three Months Ended 
   March 31, December 31, September 30, June 30, March 31, 
    2016   2015   2015   2015   2015  
(Amounts in thousands)          
Noninterest expense, GAAP$18,814  $19,083  $19,019  $20,289  $17,780  
Non-GAAP adjustments          
 Merger, acquisition, and divestiture expense (39)  -   -   -   (86) 
 FHLB debt prepayment fees -   -   -   (1,702)  -  
 OREO expense and net loss (711)  (475)  (1,220)  (416)  (327) 
 Other non-core, non-recurring items (174)  (61)  15   (213)  -  
Adjusted noninterest expense 17,890   18,547   17,814   17,958   17,367  
             
Net interest income, GAAP 21,111   21,175   21,669   21,070   20,839  
Noninterest income, GAAP 7,903   7,483   7,074   8,137   6,836  
Non-GAAP adjustments          
 Tax equivalency adjustment 531   548   565   1,249   588  
 Net loss (gain) on sale of securities (1)  7   39   (213)  23  
 Other non-core, non-recurring items (414)  (30)  (60)  (1,143)  (30) 
Adjusted net interest and noninterest income 29,130   29,183   29,287   29,100   28,256  
             
Non-GAAP efficiency ratio(1) 61.41%  63.55%  60.83%  61.71%  61.46% 
GAAP efficiency ratio 64.84%  66.59%  66.17%  69.47%  64.25% 
             
 (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. 
             

Balance Sheet and Capital

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
            
   March 31, December 31, September 30, June 30, March 31,
(Amounts in thousands, except per share data) 2016   2015   2015   2015   2015 
Assets         
Total cash and cash equivalents   39,587     51,787     62,024     92,602     207,024 
Securities available for sale    338,469     366,173     382,212     376,191     351,454 
Securities held to maturity    72,485     72,541     72,596     72,652     72,897 
Loans held for sale   -     -     523     913     1,174 
Loans held for investment, net of unearned income         
 Non-covered   1,685,891     1,623,506     1,600,271     1,564,655     1,558,310 
 Covered   76,538     83,035     90,203     102,634     112,724 
 Less allowance for loan losses   (20,467)    (20,233)    (20,127)    (20,258)    (20,252)
Loans held for investment, net   1,741,962     1,686,308     1,670,347     1,647,031     1,650,782 
FDIC indemnification asset   18,787     20,844     22,049     23,653     26,053 
Premises and equipment, net   50,799     52,756     53,442     54,112     54,955 
Other real estate owned, non-covered   5,313     4,873     5,088     7,434     7,032 
Other real estate owned, covered   2,279     4,034     4,079     5,382     5,834 
Interest receivable   5,968     6,007     5,910     6,119     6,188 
Goodwill   100,486     100,486     100,810     100,810     100,810 
Other intangible assets   4,965     5,243     5,583     5,865     6,144 
Other assets   89,187     91,224     93,453     99,034     95,497 
Total assets$  2,470,287  $  2,462,276  $  2,477,593  $  2,490,885  $  2,584,670 
            
Liabilities         
Deposits         
 Noninterest-bearing$  453,336  $  451,511  $  442,021  $  424,438  $  433,422 
 Interest-bearing   1,421,329     1,421,748     1,460,881     1,495,783     1,557,767 
Total deposits   1,874,665     1,873,259     1,902,902     1,920,221     1,991,189 
Interest, taxes, and other liabilities   24,576     26,630     25,356     23,852     24,203 
Federal funds purchased   18,000     -     -     -     - 
Securities sold under agreements to repurchase   134,661     138,614     124,076     122,158     116,302 
FHLB borrowings   65,000     65,000     65,000     65,000     90,000 
Other borrowings   15,756     15,756     15,955     15,999     15,999 
Total liabilities   2,132,658     2,119,259     2,133,289     2,147,230     2,237,693 
            
Stockholders' equity         
Common stock   21,382     21,382     21,382     21,382     21,382 
Additional paid-in capital   227,725     227,692     227,621     227,616     227,782 
Retained earnings   159,223     155,647     152,046     148,378     144,656 
Treasury stock, at cost   (64,968)    (56,457)    (52,484)    (46,610)    (41,078)
Accumulated other comprehensive loss   (5,733)    (5,247)    (3,738)    (6,198)    (4,591)
Total stockholders' equity   337,629     343,017     344,827     344,568     348,151 
Total liabilities and stockholders' equity$  2,470,287  $  2,462,276  $  2,478,116  $  2,491,798  $  2,585,844 
            
Shares outstanding at period-end   17,631,011     18,098,141     18,313,425     18,641,966     18,965,274 
Book value per common share(1)$  19.15  $  18.95  $  18.83  $  18.48  $  18.36 
Tangible book value per common share(2)   13.17     13.11     13.02     12.76     12.72 
            
 (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.
            

Consolidated assets increased $8.01 million, or 0.33%, as of March 31, 2016, compared with December 31, 2015. The change in consolidated assets was primarily driven by a $55.65 million increase in net loans offset by a $27.70 million decrease in securities available for sale and a $12.20 million decrease in cash and cash equivalents. Consolidated liabilities increased $13.40 million, or 0.63%, as of March 31, 2016, compared with December 31, 2015. The change in consolidated liabilities was driven by an $18.00 million increase in federal funds purchased.

Stockholders' equity decreased $5.39 million, or 1.57%, as of March 31, 2016, compared with December 31, 2015. The Company repurchased 487,739 common shares at a weighted average cost of $18.14 per share and paid a cash dividend of $0.14 per common share during the first quarter of 2016. Book value per common share increased 1.06% to $19.15 as of March 31, 2016, compared with December 31, 2015. Tangible book value per common share increased 0.46% to $13.17 as of March 31, 2016, compared with December 31, 2015. The Company significantly exceeds regulatory "well capitalized" targets as of March 31, 2016.

Asset Quality

SELECTED CREDIT QUALITY INFORMATION (Unaudited)
            
   March 31, December 31, September 30, June 30, March 31,
(Amounts in thousands) 2016   2015   2015   2015   2015 
Allowance for Loan Losses          
Beginning balance$  20,233  $  20,127  $  20,258  $  20,252  $  20,227 
Provision for loan losses charged         
 to operations   1,187     434     381     276     1,100 
Provision for (recovery of) loan losses recorded         
 through the FDIC indemnification asset   9     -     (75)    -     46 
Charge-offs   (1,141)    (805)    (689)    (673)    (1,578)
Recoveries   179     477     252     403     457 
Net (charge-offs) recoveries    (962)    (328)    (437)    (270)    (1,121)
Ending balance$  20,467  $  20,233  $  20,127  $  20,258  $  20,252 
            
Nonperforming Assets         
Non-covered nonperforming assets         
Nonaccrual loans $  16,196  $  17,847  $  17,100  $  15,936  $  15,387 
Accruing loans past due 90 days or more   243     -     3     -     - 
Troubled debt restructurings ("TDRs")(1)   158     73     74     -     - 
Total non-covered nonperforming loans   16,597     17,920     17,177     15,936     15,387 
OREO   5,313     4,873     5,088     7,434     7,032 
Total non-covered nonperforming assets$  21,910  $  22,793  $  22,265  $  23,370  $  22,419 
            
Covered nonperforming assets         
Nonaccrual loans $  1,955  $  647  $  815  $  1,062  $  2,780 
Accruing loans past due 90 days or more   -     -     -     -     60 
Total covered nonperforming loans   1,955     647     815     1,062     2,840 
OREO   2,279     4,034     4,079     5,382     5,834 
Total covered nonperforming assets$  4,234  $  4,681  $  4,894  $  6,444  $  8,674 
            
Additional Information         
Performing TDRs(2)$  13,474  $  13,889  $  13,965  $  13,841  $  14,025 
Total TDRs(3)   13,632     13,962     14,039     13,841     14,025 
            
Non-covered ratios         
Nonperforming loans to total loans 0.98%  1.10%  1.07%  1.02%  0.99%
Nonperforming assets to total assets 0.92%  0.96%  0.93%  0.98%  0.91%
Non-PCI allowance to nonperforming loans 123.17%  112.61%  117.06%  126.41%  130.88%
Non-PCI allowance to total loans 1.21%  1.24%  1.26%  1.29%  1.29%
Annualized net charge-offs to average loans 0.23%  0.08%  0.11%  0.07%  0.29%
            
Total ratios         
Nonperforming loans to total loans 1.05%  1.09%  1.06%  1.02%  1.09%
Nonperforming assets to total assets 1.06%  1.12%  1.10%  1.20%  1.20%
Allowance for loan losses to nonperforming loans 110.32%  108.97%  111.87%  119.18%  111.11%
Allowance for loan losses to total loans 1.16%  1.19%  1.19%  1.22%  1.21%
            
 (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 
            

The allowance for loan losses totaled $20.47 million as of March 31, 2016 and $20.23 million as of December 31, 2015. As of March 31, 2016, $20.44 million of the allowance was attributed to the non-PCI loan portfolio and $24 thousand was attributed to the PCI loan portfolio. Non-covered loans and OREO are those assets not covered by FDIC loss share agreements. Allowance activity in the first quarter of 2016 included a $1.19 million provision for loan losses charged to operations compared to $1.10 million for the same quarter of 2015. The provision for loan losses recorded through the FDIC indemnification asset totaled $9 thousand during the first quarter of 2016 compared to $46 thousand for the same quarter of 2015. The Company realized net charge-offs of $962 thousand in the first quarter of 2016, a decrease of $159 thousand, or 14.18%, compared to $1.12 million in the same quarter of 2015. The ratio of annualized net charge-offs to average non-covered loans was 0.23% for the first quarter of 2016 compared to 0.29% for the same quarter of the prior year.

Non-covered delinquent loans, which are comprised of loans 30 days or more past due and nonaccrual loans, as a percentage of total non-covered loans decreased to 1.35% as of March 31, 2016, compared to 1.66% for the same period of the prior year. Non-covered nonaccrual loans totaled $16.20 million as of March 31, 2016, compared to $17.85 million as of December 31, 2015. At quarter-end, the Company's non-covered nonaccrual loans as a percentage of total non-covered loans were 0.96%, compared to 1.10% at year-end 2015.

As of March 31, 2016, total nonperforming assets, including the covered and non-covered loan portfolios, consisted of $18.15 million in nonaccrual loans, $243 thousand in accruing loans 90 days or more past due, $158 thousand in unseasoned, accruing troubled debt restructurings, and $7.59 million in OREO. In comparison, total nonperforming assets consisted of $18.49 million in nonaccrual loans, $73 thousand in unseasoned, accruing troubled debt restructurings, and $8.91 million in OREO as of December 31, 2015. In addition, total non-covered nonperforming assets decreased $883 thousand, or 3.87%, as of March 31, 2016, compared to December 31, 2015.

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 measure 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.

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 49 banking branch locations throughout Virginia, West Virginia, North Carolina, and Tennessee as of March 31, 2016. First Community Bank offers wealth management and investment services through its wholly-owned subsidiary First Community Wealth Management and the Bank's Trust Division, which collectively managed $755 million in combined assets as of March 31, 2016. The Company provides insurance services through its wholly-owned subsidiary Greenpoint Insurance Group, Inc., a full-service insurance agency headquartered in High Point, North Carolina, that operated 9 insurance locations throughout Virginia, West Virginia, and North Carolina as of March 31, 2016. The Company's common stock is listed on the NASDAQ Global Select Market under the trading symbol, "FCBC". The Company reported consolidated assets of $2.47 billion as of March 31, 2016. 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.

FOR MORE INFORMATION, CONTACT: David D. Brown (276) 326-9000

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