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First Community Bancshares, Inc. Announces Second Quarter 2017 Results and Increased Quarterly Dividend

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BLUEFIELD, Va., July 25, 2017 (GLOBE NEWSWIRE) -- 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 six months ended June 30, 2017. The Company reported net income available to common shareholders of $6.42 million, or $0.38 per diluted common share for the quarter ended June 30, 2017, which represents a 5.56% increase in per share diluted earnings compared to the same quarter of 2016. Net income available to common shareholders was $12.62 million, or $0.74 per diluted common share for the six months ended June 30, 2017, which represents a 5.71% 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, which represents an increase of 12.50% over the most recent cash dividend. The quarterly dividend is payable to common shareholders of record on August 4, 2017, and is expected to be paid on or about August 18, 2017. The current year marks the 32nd consecutive year of cash dividends paid to stockholders.

Second Quarter 2017 Highlights

  • Income Statement
    • Net income available to common shareholders increased $163 thousand, or 2.61%, to $6.42 million compared to the same quarter of 2016.
    • Diluted earnings per share increased $0.02, or 5.56%, to $0.38 compared to the same quarter of 2016.
    • Net interest margin increased 24 basis points to 4.32%, and normalized net interest margin increased 18 basis points to 3.99% compared to the same quarter of 2016.
       
  • Balance Sheet
    • Book value per common share increased $0.55 to $20.50 compared to December 31, 2016.
    • Tangible book value per common share increased $0.58 to $14.47 compared to December 31, 2016.
    • The Company and its subsidiary bank both significantly exceed regulatory "well capitalized" targets as of June 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.

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 June 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 $926 million in combined assets as of June 30, 2017. The Company reported consolidated assets of $2.37 billion as of June 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.

Financial Performance

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                               
      Three Months Ended   Six Months Ended
      June 30,   March 31,   December 31,   September 30,   June 30,   June 30,
(Amounts in thousands, except share and per share data)   2017       2017       2016       2016       2016       2017       2016  
Interest income                          
  Interest and fees on loans $ 22,914     $ 21,827     $ 21,956     $ 21,952     $ 22,237     $ 44,741     $ 43,810  
  Interest on securities   1,170       1,206       1,362       1,643       1,891       2,376       3,848  
  Interest on deposits in banks   221       159       98       26       9       380       29  
Total interest income   24,305       23,192       23,416       23,621       24,137       47,497       47,687  
Interest expense                          
  Interest on deposits   1,233       1,166       1,145       1,133       1,087       2,399       2,201  
  Interest on borrowings   778       885       1,314       1,367       1,359       1,663       2,684  
Total interest expense   2,011       2,051       2,459       2,500       2,446       4,062       4,885  
Net interest income   22,294       21,141       20,957       21,121       21,691       43,435       42,802  
Provision for (recovery of) loan losses   934       492       500       (1,154 )     722       1,426       1,909  
Net interest income after                          
  provision (recovery)   21,360       20,649       20,457       22,275       20,969       42,009       40,893  
Total noninterest income   5,475       5,691       6,238       5,895       7,030       11,166       14,933  
Total noninterest expense   17,458       17,083       16,653       18,557       18,722       34,541       37,536  
Income before income taxes   9,377       9,257       10,042       9,613       9,277       18,634       18,290  
Income tax expense   2,959       3,055       3,638       3,230       3,022       6,014       5,951  
Net income   6,418       6,202       6,404       6,383       6,255       12,620       12,339  
Dividends on preferred stock   -       -       -       -       -       -       -  
Net income available to common shareholders $ 6,418     $ 6,202     $ 6,404     $ 6,383     $ 6,255     $ 12,620     $ 12,339  
                               
Earnings per common share                          
  Basic $ 0.38     $ 0.36     $ 0.38     $ 0.37     $ 0.36     $ 0.74     $ 0.70  
  Diluted   0.38       0.36       0.38       0.37       0.36       0.74       0.70  
Cash dividends per common share   0.16       0.16       0.16       0.16       0.14       0.32       0.28  
Weighted average shares outstanding                          
  Basic   17,012,189       16,998,125       16,891,010       17,031,074       17,414,320       17,005,196       17,636,783  
  Diluted   17,082,832       17,072,174       17,043,869       17,083,526       17,462,845       17,075,961       17,675,128  
Performance ratios                          
  Return on average assets   1.08%       1.06%       1.05%       1.03%       1.02%       1.07%       1.00%  
  Return on average common equity   7.41%       7.35%       7.49%       7.58%       7.47%       7.38%       7.31%  
  Return on average tangible common equity(1)   10.51%       10.50%       10.75%       11.07%       10.88%       10.51%       10.60%  
                               
                                                             
(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   Six Months Ended  
      June 30,   March 31,   December 31,   September 30,   June 30,   June 30,  
        2017       2017       2016       2016       2016       2017       2016    
(Amounts in thousands, except per share data)                            
Net income, GAAP $ 6,418     $ 6,202     $ 6,404     $ 6,383     $ 6,255     $ 12,620     $ 12,339    
Non-GAAP adjustments:                            
  Net gain on divestitures   -       -       (619 )     (3,065 )     -       -       -    
  Allowance reversal for sold loans   -       -       -       (1,354 )     -       -       -    
  Merger, acquisition, and divestiture expense   -       -       55       226       410       -       449    
  Net loss (gain) on sale of securities   657       -       (388 )     (25 )     79       657       78    
  Net impairment losses   -       -       -       4,635       11       -       11    
  Other non-core items   (174 )     (18 )     (48 )     (264 )     -       (192 )     (240 )  
Total adjustments to core earnings   483       (18 )     (1,000 )     153       500       465       298    
Tax effect   345       (7 )     (708 )     56       184       338       110    
Core earnings, non-GAAP(1) $ 6,556     $ 6,191     $ 6,112     $ 6,480     $ 6,571     $ 12,747     $ 12,527    
                                 
Core diluted earnings per common share $ 0.38     $ 0.36     $ 0.36     $ 0.38     $ 0.38     $ 0.74     $ 0.71    
Performance ratios                            
  Core return on average assets   1.11%       1.06%       1.01%       1.05%       1.07%       1.08%       1.02%    
  Core return on average common equity   7.57%       7.33%       7.15%       7.70%       7.85%       7.45%       7.42%    
  Core return on average tangible common equity(2)   10.74%       10.48%       10.26%       11.24%       11.43%       10.61%       10.77%    
                                 
                                                               
(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  
                                 

Net Interest Income and Margin

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
                           
      Three Months Ended June 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) $ 1,843,441   $ 22,986   5.00 %   $ 1,775,435   $ 22,263   5.04 %
  Securities available for sale   167,869     1,455   3.48 %     336,510     2,195   2.62 %
  Securities held to maturity   34,664     125   1.45 %     72,331     191   1.06 %
  Interest-bearing deposits   68,455     221   1.29 %     5,184     9   0.70 %
Total earning assets   2,114,429     24,787   4.70 %     2,189,460     24,658   4.53 %
Other assets   263,767             283,945        
Total assets $ 2,378,196           $ 2,473,405        
                           
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
  Demand deposits $ 387,113   $ 110   0.11 %   $ 339,365   $ 60   0.07 %
  Savings deposits   525,808     35   0.03 %     542,238     63   0.05 %
  Time deposits   514,527     1,088   0.85 %     518,163     964   0.75 %
Total interest-bearing deposits   1,427,448     1,233   0.35 %     1,399,766     1,087   0.31 %
Borrowings                      
  Federal funds purchased   5     -   1.07 %     9,078     14   0.62 %
  Retail repurchase agreements   60,809     10   0.07 %     65,718     12   0.07 %
  Wholesale repurchase agreements   25,000     201   3.22 %     50,000     469   3.77 %
  FHLB advances and other borrowings   55,635     567   4.09 %     132,459     864   2.62 %
Total borrowings   141,449     778   2.21 %     257,255     1,359   2.12 %
Total interest-bearing liabilities   1,568,897     2,011   0.51 %     1,657,021     2,446   0.59 %
Noninterest-bearing demand deposits   441,547             460,255        
Other liabilities   20,197             19,520        
Total liabilities   2,030,641             2,136,796        
Stockholders' equity   347,555             336,609        
Total liabilities and stockholders' equity $ 2,378,196           $ 2,473,405        
Net interest income, FTE     $ 22,776           $ 22,212    
Net interest rate spread         4.19 %           3.94 %
Net interest margin         4.32 %           4.08 %
                           
                                         
(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.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
                           
      Six Months Ended June 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) $ 1,841,152   $ 44,880   4.92 %   $ 1,752,918   $ 43,862   5.03 %
  Securities available for sale   164,820     2,939   3.60 %     345,546     4,463   2.60 %
  Securities held to maturity   40,854     276   1.36 %     72,421     385   1.07 %
  Interest-bearing deposits   62,140     380   1.23 %     10,388     29   0.56 %
Total earning assets   2,108,966     48,475   4.64 %     2,181,273     48,739   4.49 %
Other assets   267,163             290,551        
Total assets $ 2,376,129           $ 2,471,824        
                           
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
  Demand deposits $ 384,098   $ 212   0.11 %   $ 340,945   $ 117   0.07 %
  Savings deposits   525,691     71   0.03 %     539,004     129   0.05 %
  Time deposits   515,014     2,116   0.83 %     525,899     1,955   0.75 %
Total interest-bearing deposits   1,424,803     2,399   0.34 %     1,405,848     2,201   0.31 %
Borrowings                      
  Federal funds purchased   3     -   1.07 %     6,251     20   0.64 %
  Retail repurchase agreements   63,861     21   0.07 %     71,855     25   0.07 %
  Wholesale repurchase agreements   25,000     399   3.22 %     50,000     937   3.77 %
  FHLB advances and other borrowings   61,096     1,243   4.10 %     120,236     1,702   2.85 %
Total borrowings   149,960     1,663   2.24 %     248,342     2,684   2.17 %
Total interest-bearing liabilities   1,574,763     4,062   0.53 %     1,654,190     4,885   0.59 %
Noninterest-bearing demand deposits   433,588             454,552        
Other liabilities   22,822             23,652        
Total liabilities   2,031,173             2,132,394        
Stockholders' equity   344,956             339,430        
Total liabilities and stockholders' equity $ 2,376,129           $ 2,471,824        
Net interest income, FTE     $ 44,413           $ 43,854    
Net interest rate spread         4.11 %           3.90 %
Net interest margin         4.25 %           4.04 %
                           
                                         
(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 NON-GAAP NORMALIZED NET INTEREST MARGIN (Unaudited)        
                           
      Three Months Ended June 30,        
      2017
  2016
       
(Amounts in thousands) Interest(1)   Average Yield/
Rate(1)
  Interest(1)   Average Yield/
Rate(1)
       
Earning assets                      
Loans(2) $ 22,986   5.00 %   $ 22,263   5.04 %        
  Accretion income   2,534         2,248            
  Less: cash accretion income   788         786            
  Non-cash accretion income   1,746         1,462            
Loans, normalized(3)   21,240   4.62 %     20,801   4.71 %        
Other earning assets   1,801   2.67 %     2,395   2.33 %        
Total earning assets   23,041   4.37 %     23,196   4.26 %        
Total interest-bearing liabilities   2,011   0.51 %     2,446   0.59 %        
Net interest income, FTE(3) $ 21,030       $ 20,750            
Net interest rate spread, normalized(3)     3.86 %       3.67 %        
Net interest margin, normalized(3)     3.99 %       3.81 %        
                           
                           
(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.        
                           
      Six Months Ended June 30,        
      2017
  2016
       
(Amounts in thousands) Interest(1)   Average Yield/
Rate(1)
  Interest(1)   Average Yield/
Rate(1)
       
Earning assets                      
Loans(2) $ 44,880   4.92 %   $ 43,862   5.03 %        
  Accretion income   4,318         4,500            
  Less: cash accretion income   1,438         1,591            
  Non-cash accretion income   2,880         2,909            
Loans, normalized(3)   42,000   4.60 %     40,953   4.70 %        
Other earning assets   3,595   2.71 %     4,877   2.29 %        
Total earning assets   45,595   4.36 %     45,830   4.23 %        
Total interest-bearing liabilities   4,062   0.53 %     4,885   0.59 %        
Net interest income, FTE(3) $ 41,533       $ 40,945            
Net interest rate spread, normalized(3)     3.83 %       3.63 %        
Net interest margin, normalized(3)     3.97 %       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.        
                           

Noninterest Income and Expense

CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)
                             
    Three Months Ended   Six Months Ended
    June 30,   March 31,   December 31,   September 30,   June 30,   June 30,
(Amounts in thousands)   2017       2017       2016       2016       2016       2017       2016  
Noninterest income                          
  Wealth management $ 791     $ 790     $ 681     $ 653     $ 810     $ 1,581     $ 1,494  
  Service charges on deposits   3,360       3,113       3,442       3,494       3,361       6,473       6,652  
  Other service charges and fees   2,168       2,078       2,014       2,024       2,054       4,246       4,064  
  Insurance commissions   325       373       59       1,592       1,600       698       3,791  
  Net impairment losses recognized in earnings   -       -       -       (4,635 )     (11 )     -       (11 )
  Net gain (loss) on sale of securities   (657 )     -       388       25       (79 )     (657 )     (78 )
  Net FDIC indemnification asset amortization   (1,586 )     (1,332 )     (1,618 )     (1,369 )     (1,328 )     (2,918 )     (2,487 )
  Net gain on divestitures   -       -       619       3,065       -       -       -  
  Other operating income   1,074       669       653       1,046       623       1,743       1,508  
Total noninterest income   5,475       5,691       6,238       5,895       7,030       11,166       14,933  
Noninterest expense                          
  Salaries and employee benefits   9,157       8,884       9,411       9,828       10,198       18,041       20,673  
  Occupancy expense   1,341       1,248       1,158       1,249       1,359       2,589       2,890  
  Furniture and equipment expense   1,087       1,091       1,070       1,066       1,109       2,178       2,205  
  Amortization of intangibles   263       261       265       316       277       524       555  
  FDIC premiums and assessments   227       244       274       363       372       471       746  
  Merger, acquisition, and divestiture expense   -       -       55       226       410       -       449  
  Other operating expense   5,383       5,355       4,420       5,509       4,997       10,738       10,018  
Total noninterest expense   17,458       17,083       16,653       18,557       18,722       34,541       37,536  
                             

Efficiency Ratio

EFFICIENCY RATIO CALCULATION (Unaudited)
                               
      Three Months Ended   Six Months Ended
      June 30,   March 31,   December 31,   September 30,   June 30,   June 30,
        2017       2017       2016       2016       2016       2017       2016  
(Amounts in thousands)                          
Noninterest expense, GAAP $   17,458     $   17,083     $   16,653     $   18,557     $   18,722     $   34,541     $   37,536  
Non-GAAP adjustments                          
  Merger, acquisition, and divestiture expense     -         -         (55 )       (226 )       (410 )       -         (449 )
  OREO expense and net loss     (213 )       (328 )       (184 )       (278 )       (247 )       (541 )       (958 )
  Other non-core items     (327 )       -         8         (168 )       (30 )       (327 )       (204 )
Adjusted noninterest expense     16,918         16,755          16,422         17,885         18,035         33,673         35,925  
                               
Net interest income, GAAP     22,294         21,141         20,957         21,121         21,691         43,435         42,802  
Noninterest income, GAAP     5,475         5,691         6,238         5,895         7,030         11,166         14,933  
Non-GAAP adjustments                          
  Tax equivalency adjustment     481         497         520         509         521         978         1,052  
  Net impairment losses     -         -         -         4,635         11         -         11  
  Net loss (gain) on sale of securities     657         -         (388 )       (25 )       79         657         78  
  Net gain on divestitures     -         -         (619 )       (3,065 )       -         -         -  
  Other non-core items     (501 )       (18 )       (40 )       (432 )       (30 )       (519 )       (444 )
Adjusted net interest and noninterest income     28,406         27,311         26,668         28,638         29,302         55,717         58,432  
                               
Non-GAAP efficiency ratio(1)   59.56 %     61.35 %     61.58 %     62.45 %     61.55 %     60.44 %     61.48 %
GAAP efficiency ratio   62.87 %     63.67 %     61.24 %     68.69 %     65.19 %     63.26 %     65.01 %
                               
                                                             
(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)
                       
      June 30,   March 31,   December 31,   September 30,   June 30,
(Amounts in thousands, except per share data)   2017       2017       2016       2016       2016  
Assets                  
Total cash and cash equivalents $ 106,799     $ 152,851     $ 76,307     $ 65,929     $ 44,301  
Securities available for sale   157,854       158,685       165,579       220,856       322,699  
Securities held to maturity   25,216       47,092       47,133       72,182       72,239  
Loans held for investment, net of unearned income                  
  Non-covered   1,796,263       1,784,371       1,795,954       1,774,547       1,733,398  
  Covered   45,845       51,412       56,994       61,837       68,585  
  Less allowance for loan losses   (18,886 )     (18,458 )     (17,948 )     (19,633 )     (21,099 )
Loans held for investment, net   1,823,222       1,817,325       1,835,000       1,816,751       1,780,884  
FDIC indemnification asset   8,159       9,931       12,173       14,332       16,431  
Premises and equipment, net   49,598       50,057       50,085       50,564       50,199  
Other real estate owned, non-covered   3,914       4,477       5,109       4,052       4,187  
Other real estate owned, covered   124       241       276       2,437       2,017  
Interest receivable   5,072       5,059       5,553       5,498       6,115  
Goodwill   95,779       95,779       95,779       101,776       100,486  
Other intangible assets   6,683       6,947       7,207       7,964       4,688  
Other assets   84,183       82,069       86,197       87,932       91,082  
Total assets $ 2,366,603     $ 2,430,513     $ 2,386,398     $ 2,450,273     $ 2,495,328  
                       
Liabilities                  
Deposits                  
  Noninterest-bearing $ 443,800     $ 467,677     $ 427,705     $ 473,509     $ 451,003  
  Interest-bearing   1,413,574       1,438,917       1,413,633       1,388,390       1,373,412  
Total deposits   1,857,374       1,906,594       1,841,338       1,861,899       1,824,415  
Federal funds purchased   -       -       -       -       42,000  
Securities sold under agreements to repurchase   86,011       90,653       98,005       118,532       113,392  
FHLB borrowings   50,000       65,000       65,000       90,000       140,000  
Other borrowings   -       244       15,708       15,707       15,756  
Interest, taxes, and other liabilities   24,443       24,618       27,290       26,599       25,553  
Total liabilities   2,017,828       2,087,109       2,047,341       2,112,737       2,161,116  
                       
Stockholders' equity                  
Common stock   21,382       21,382       21,382       21,382       21,382  
Additional paid-in capital   228,326       228,176       228,142       227,884       227,791  
Retained earnings   177,556       173,860       170,377       166,689       163,030  
Treasury stock, at cost   (78,488 )     (78,533 )     (78,833 )     (78,789 )     (74,974 )
Accumulated other comprehensive (loss) income   (1 )     (1,481 )     (2,011 )     370       (3,017 )
Total stockholders' equity   348,775       343,404       339,057       337,536       334,212  
Total liabilities and stockholders' equity $ 2,366,603     $ 2,430,513     $ 2,386,398     $ 2,450,273     $ 2,495,328  
                       
Shares outstanding at period-end   17,017,071       17,013,185       16,994,208       16,988,972       17,155,322  
Book value per common share(1) $ 20.50     $ 20.18     $ 19.95     $ 19.87     $ 19.48  
Tangible book value per common share(2)   14.47       14.15       13.89       13.41       13.35  
                       
                                             
(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
                       

Asset Quality

SELECTED CREDIT QUALITY INFORMATION (Unaudited)
                       
      June 30,   March 31,   December 31,   September 30,   June 30,
(Amounts in thousands)   2017       2017       2016       2016       2016  
Allowance for Loan Losses                  
Beginning balance $ 18,458     $ 17,948     $ 19,633     $ 21,099     $ 20,467  
Provision for (recovery of) loan losses charged                  
  to operations   934       492       500       (1,154 )     722  
Recovery of loan losses recorded                  
  through the FDIC indemnification asset   -       -       -       -       (10 )
Charge-offs   (902 )     (357 )     (2,485 )     (772 )     (691 )
Recoveries   396       375       300       460       611  
Net (charge-offs) recoveries   (506 )     18       (2,185 )     (312 )     (80 )
Ending balance $ 18,886     $ 18,458     $ 17,948     $ 19,633     $ 21,099  
                       
Nonperforming Assets                  
Non-covered nonperforming assets                  
Nonaccrual loans $ 20,146     $ 18,537     $ 15,854     $ 17,487     $ 16,626  
Accruing loans past due 90 days or more   -       20       -       62       64  
Troubled debt restructurings ("TDRs")(1)   100       -       114       115       115  
Total non-covered nonperforming loans   20,246       18,557       15,968       17,664       16,805  
OREO   3,914       4,477       5,109       4,052       4,187  
Total non-covered nonperforming assets $ 24,160     $ 23,034     $ 21,077     $ 21,716     $ 20,992  
                       
Covered nonperforming assets                  
Nonaccrual loans $ 446     $ 918     $ 608     $ 688     $ 680  
Total covered nonperforming loans   446       918       608       688       680  
OREO   124       241       276       2,437       2,017  
Total covered nonperforming assets $ 570     $ 1,159     $ 884     $ 3,125     $ 2,697  
                       
Additional Information                  
Performing TDRs(2) $ 8,485     $ 8,593     $ 12,838     $ 13,336     $ 13,562  
Total TDRs(3)   8,585       8,593       12,952       13,451       13,677  
                       
Non-covered ratios                  
Nonperforming loans to total loans   1.13 %     1.04 %     0.89 %     1.00 %     0.97 %
Nonperforming assets to total assets   1.04 %     0.97 %     0.90 %     0.91 %     0.87 %
Non-PCI allowance to nonperforming loans   93.24 %     99.40 %     112.32 %     111.08 %     125.48 %
Non-PCI allowance to total loans   1.05 %     1.03 %     1.00 %     1.11 %     1.22 %
Annualized net charge-offs to average loans   0.11 %     0.00 %     0.49 %     0.07 %     0.02 %
                       
Total ratios                  
Nonperforming loans to total loans   1.12 %     1.06 %     0.89 %     1.00 %     0.97 %
Nonperforming assets to total assets   1.04 %     1.00 %     0.92 %     1.01 %     0.95 %
Allowance for loan losses to nonperforming loans   91.27 %     94.78 %     108.28 %     106.98 %     120.67 %
Allowance for loan losses to total loans   1.03 %     1.01 %     0.97 %     1.07 %     1.17 %
Annualized net charge-offs to average loans   0.11 %     0.00 %     0.47 %     0.07 %     0.02 %
                       
                                             
(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


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

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