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

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BLUEFIELD, Va., Oct. 24, 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 nine months ended September 30, 2017. The Company reported net income available to common shareholders of $7.65 million, or $0.45 per diluted common share for the quarter ended September 30, 2017, which represents a 21.62% increase in per share diluted earnings compared to the same quarter of 2016. Net income available to common shareholders was $20.27 million, or $1.19 per diluted common share for the nine months ended September 30, 2017, which represents an 11.21% increase in per share diluted earnings compared to the same period of 2016.

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

Third Quarter 2017 Highlights

  • Income Statement
    • Net income available to common shareholders increased $1.27 million, or 19.88%, to $7.65 million compared to the same quarter of 2016.
    • Return on average assets increased 26 basis points to 1.29% and return on average common equity increased 103 basis points to 8.61% compared to the same quarter of 2016.
    • The non-GAAP efficiency ratio improved to 54.68% compared to 62.45% in the same quarter of 2016.
    • Diluted earnings per share increased $0.08, or 21.62%, to $0.45 compared to the same quarter of 2016.
    • Net interest margin increased 30 basis points to 4.25%, and normalized net interest margin increased 23 basis points to 4.00% compared to the same quarter of 2016.
       
  • Balance Sheet
    • Net charge-offs decreased $456 thousand, or 33.68%, to $898 thousand for the nine months ended September 30, 2017, compared to the same period of 2016.
    • Book value per common share increased $0.81 to $20.76 compared to December 31, 2016.
    • Tangible book value per common share increased $0.85 to $14.74 compared to December 31, 2016.
    • The Company and its subsidiary bank both significantly exceed regulatory "well capitalized" targets as of September 30, 2017.

Non-GAAP Financial Measures 

The Company prepares its financial statements in accordance with generally accepted accounting principles in the United States ("GAAP"). This press release also refers to certain non-GAAP financial measures that the Company believes provide investors with important information, when used in conjunction with results presented in accordance with GAAP, regarding its operational performance. The Company's non-GAAP financial measures presented in this release include core earnings, the efficiency ratio, tangible book value per common share, average tangible common equity, and normalized net interest margin. Management believes that core earnings provide the Company and investors a valuable tool to evaluate the Company's financial results. Management believes that the efficiency ratio provides important information about the Company's operating expense control and efficiency of operations. Management also believes this ratio focuses attention on the core operating performance of the Company over time and is highly useful in comparing period-to-period operating performance of core business operations. The efficiency ratio used by the Company may not be comparable to efficiency ratios reported by other financial institutions. The reconciliations of these measures to GAAP measures are provided within this news release.

About First Community Bancshares, Inc.

First Community Bancshares, Inc., a financial holding company headquartered in Bluefield, Virginia, provides banking products and services through its wholly owned subsidiary First Community Bank. First Community Bank operated 44 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of September 30, 2017. First Community Bank provides insurance services through First Community Insurance Services, which operates 6 in-branch locations in Virginia and West Virginia and offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed $936 million in combined assets as of September 30, 2017. The Company reported consolidated assets of $2.37 billion as of September 30, 2017. The Company's common stock is listed on the NASDAQ Global Select Market under the trading symbol, "FCBC". Additional investor information is available on the Company's website at www.fcbinc.com.

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company's Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.


Financial Performance

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
 
  Three Months Ended   Nine Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,   September 30,
(Amounts in thousands, except share and per share data) 2017   2017   2017   2016   2016   2017   2016
Interest income                          
Interest and fees on loans $ 22,694     $ 22,914     $ 21,827     $ 21,956     $ 21,952     $ 67,435     $ 65,762  
Interest on securities   1,080       1,170       1,206       1,362       1,643       3,456       5,491  
Interest on deposits in banks   275       221       159       98       26       655       55  
Total interest income   24,049       24,305       23,192       23,416       23,621       71,546       71,308  
Interest expense                          
Interest on deposits   1,275       1,233       1,166       1,145       1,133       3,674       3,334  
Interest on borrowings   724       778       885       1,314       1,367       2,387       4,051  
Total interest expense   1,999       2,011       2,051       2,459       2,500       6,061       7,385  
Net interest income   22,050       22,294       21,141       20,957       21,121       65,485       63,923  
Provision for (recovery of) loan losses   730       934       492       500       (1,154 )     2,156       755  
Net interest income after                          
provision (recovery)   21,320       21,360       20,649       20,457       22,275       63,329       63,168  
Total noninterest income   7,135       5,475       5,691       6,238       5,895       18,301       20,828  
Total noninterest expense   16,909       17,458       17,083       16,653       18,557       51,450       56,093  
Income before income taxes   11,546       9,377       9,257       10,042       9,613       30,180       27,903  
Income tax expense   3,894       2,959       3,055       3,638       3,230       9,908       9,181  
Net income available to common shareholders $ 7,652     $ 6,418     $ 6,202     $ 6,404     $ 6,383     $ 20,272     $ 18,722  
                           
Earnings per common share                          
Basic $ 0.45     $ 0.38     $ 0.36     $ 0.38     $ 0.37     $ 1.19     $ 1.07  
Diluted   0.45       0.38       0.36       0.38       0.37       1.19       1.07  
Cash dividends per common share   0.18       0.16       0.16       0.16       0.16       0.50       0.44  
Weighted average shares outstanding                          
Basic   17,005,654       16,998,125       16,998,125       16,891,010       17,031,074       17,005,350       17,433,406  
Diluted   17,082,729       17,072,174       17,072,174       17,043,869       17,083,526       17,076,958       17,475,211  
Performance ratios                          
Return on average assets   1.29 %     1.08 %     1.06 %     1.05 %     1.03 %     1.14 %     1.01 %
Return on average common equity   8.61 %     7.41 %     7.35 %     7.49 %     7.58 %     7.80 %     7.40 %
Return on average tangible common equity(1)   12.13 %     10.51 %     10.50 %     10.75 %     11.07 %     11.06 %     10.76 %
                           
                                                       
(1) A non-GAAP financial measure defined as average stockholders' equity less average goodwill, other intangibles, and preferred stock liquidation preference
                           

 

RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited)
                           
  Three Months Ended   Nine Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,   September 30,
  2017   2017   2017   2016   2016   2017   2016
(Amounts in thousands, except per share data)                          
Net income, GAAP $ 7,652     $ 6,418     $ 6,202     $ 6,404     $ 6,383     $ 20,272     $ 18,722  
Non-GAAP adjustments:                          
Net gain on divestitures   -       -       -       (619 )     (3,065 )     -       (3,065 )
Allowance reversal for sold loans   -       -       -       -       (1,354 )     -       (1,354 )
Merger, acquisition, and divestiture expense   -       -       -       55       226       -       675  
Net loss (gain) on sale of securities   -       657       -       (388 )     (25 )     657       53  
Net impairment losses   -       -       -       -       4,635       -       4,646  
Other non-core items   34       (174 )     (18 )     (48 )     (264 )     (158 )     (504 )
Total adjustments to core earnings   34       483       (18 )     (1,000 )     153       499       451  
Tax effect   12       345       (7 )     (708 )     56       350       166  
Core earnings, non-GAAP(1) $ 7,674     $ 6,556     $ 6,191     $ 6,112     $ 6,480     $ 20,421     $ 19,007  
                           
Core diluted earnings per common share $ 0.45     $ 0.38     $ 0.36     $ 0.36     $ 0.38     $ 1.19     $ 1.09  
Performance ratios                          
Core return on average assets   1.29 %     1.11 %     1.06 %     1.01 %     1.05 %     1.15 %     1.03 %
Core return on average common equity   8.63 %     7.57 %     7.33 %     7.15 %     7.70 %     7.86 %     7.51 %
Core return on average tangible common equity(2)   12.16 %     10.74 %     10.48 %     10.26 %     11.24 %     11.14 %     10.92 %
                           
                                                       
(1) Excludes gains, losses, and impairment losses on securities; goodwill and intangible impairment; taxes; and other non-recurring income and expense items from net income
(2) A non-GAAP financial measure defined as average stockholders' equity less average goodwill, other intangibles, and preferred stock liquidation preference
 


Net Interest Income and Margin

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
                       
  Three Months Ended September 30,
  2017   2016
  Average       Average Yield/   Average       Average Yield/
(Amounts in thousands) Balance   Interest(1)   Rate(1)   Balance   Interest(1)   Rate(1)
Assets                      
Earning assets                      
Loans(2) $ 1,843,612   $ 22,765   4.90 %   $ 1,820,899   $ 21,974   4.80 %
Securities available for sale   157,038     1,373   3.47 %     266,162     1,941   2.90 %
Securities held to maturity   25,199     106   1.67 %     72,210     189   1.04 %
Interest-bearing deposits   73,802     275   1.48 %     19,025     26   0.54 %
Total earning assets   2,099,651     24,519   4.63 %     2,178,296     24,130   4.41 %
Other assets   258,763             282,310        
Total assets $ 2,358,414           $ 2,460,606        
                       
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
Demand deposits $ 384,594   $ 89   0.09 %   $ 337,893   $ 60   0.07 %
Savings deposits   518,355     43   0.03 %     523,503     62   0.05 %
Time deposits   509,251     1,143   0.89 %     529,344     1,011   0.76 %
Total interest-bearing deposits   1,412,200     1,275   0.36 %     1,390,740     1,133   0.32 %
Borrowings                      
Federal funds purchased   -     -   -       3,696     6   0.65 %
Retail repurchase agreements   58,194     10   0.07 %     64,385     12   0.07 %
Wholesale repurchase agreements   25,000     203   3.22 %     50,000     473   3.76 %
FHLB advances and other borrowings   50,000     511   4.05 %     133,838     876   2.60 %
Total borrowings   133,194     724   2.16 %     251,919     1,367   2.16 %
Total interest-bearing liabilities   1,545,394     1,999   0.51 %     1,642,659     2,500   0.61 %
Noninterest-bearing demand deposits   440,227             462,588        
Other liabilities   20,101             20,462        
Total liabilities   2,005,722             2,125,709        
Stockholders' equity   352,692             334,897        
Total liabilities and stockholders' equity $ 2,358,414           $ 2,460,606        
Net interest income, FTE     $ 22,520           $ 21,630    
Net interest rate spread         4.12 %           3.80 %
Net interest margin         4.25 %           3.95 %
                       
                                   
(1) Fully taxable equivalent ("FTE") basis based on the federal statutory rate of 35%
(2) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual.
                       

 

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
                       
  Nine Months Ended September 30,
  2017   2016
  Average       Average Yield/   Average       Average Yield/
(Amounts in thousands) Balance   Interest(1)   Rate(1)   Balance   Interest(1)   Rate(1)
Assets                      
Earning assets                      
Loans(2) $ 1,841,981   $ 67,645   4.91 %   $ 1,775,744   $ 65,836   4.95 %
Securities available for sale   162,198     4,312   3.55 %     318,891     6,403   2.68 %
Securities held to maturity   35,578     382   1.44 %     72,350     575   1.06 %
Interest-bearing deposits   66,069     655   1.33 %     13,288     55   0.55 %
Total earning assets   2,105,826     72,994   4.63 %     2,180,273     72,869   4.47 %
Other assets   264,333             287,784        
Total assets $ 2,370,159           $ 2,468,057        
                       
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
Demand deposits $ 384,265   $ 301   0.10 %   $ 339,920   $ 177   0.07 %
Savings deposits   523,219     114   0.03 %     533,799     191   0.05 %
Time deposits   513,072     3,259   0.85 %     527,056     2,966   0.75 %
Total interest-bearing deposits   1,420,556     3,674   0.35 %     1,400,775     3,334   0.32 %
Borrowings                      
Federal funds purchased   2     -   0.00 %     5,393     26   0.64 %
Retail repurchase agreements   61,951     31   0.07 %     69,347     37   0.07 %
Wholesale repurchase agreements   25,000     602   3.22 %     50,000     1,410   3.77 %
FHLB advances and other borrowings   57,357     1,754   4.09 %     124,803     2,578   2.76 %
Total borrowings   144,310     2,387   2.21 %     249,543     4,051   2.17 %
Total interest-bearing liabilities   1,564,866     6,061   0.52 %     1,650,318     7,385   0.60 %
Noninterest-bearing demand deposits   435,825             457,250        
Other liabilities   21,905             22,581        
Total liabilities   2,022,596             2,130,149        
Stockholders' equity   347,563             337,908        
Total liabilities and stockholders' equity $ 2,370,159           $ 2,468,057        
Net interest income, FTE     $ 66,933           $ 65,484    
Net interest rate spread         4.12 %           3.87 %
Net interest margin         4.25 %           4.01 %
                       
                                   
(1) Fully taxable equivalent ("FTE") basis based on the federal statutory rate of 35%
(2) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual.
                       

 

RECONCILIATION OF GAAP NET INTEREST MARGIN TO NON-GAAP NORMALIZED NET INTEREST MARGIN (Unaudited)
                 
    Three Months Ended September 30,
    2017   2016
(Amounts in thousands) Interest(1)   Average Yield/
Rate(1)
  Interest(1)   Average Yield/
Rate(1)
Earning assets              
Loans(2) $ 22,765   4.90 %   $ 21,974   4.80 %
Accretion income   1,925         1,683    
Less: cash accretion income   548         699    
Non-cash accretion income   1,377         984    
Loans, normalized(3)   21,388   4.60 %     20,990   4.59 %
Other earning assets   1,754   2.72 %     2,156   2.40 %
Total earning assets   23,142   4.37 %     23,146   4.23 %
Total interest-bearing liabilities   1,999   0.51 %     2,500   0.61 %
Net interest income, FTE(3) $ 21,143       $ 20,646    
Net interest rate spread, normalized(3)     3.86 %       3.62 %
Net interest margin, normalized(3)     4.00 %       3.77 %
                 
                   
(1 ) FTE basis based on the federal statutory rate of 35%              
(2 ) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual.
(3 ) Normalized totals are non-GAAP financial measures that exclude non-cash loan interest accretion related to PCI loans.
                 
    Nine Months Ended September 30,
      2017       2016  
(Amounts in thousands) Interest(1)   Average Yield/
Rate(1)
  Interest(1)   Average Yield/
Rate(1)
Earning assets              
Loans(2) $ 67,645   4.91 %   $ 65,836   4.95 %
Accretion income   6,243         6,183    
Less: cash accretion income   1,986         2,290    
Non-cash accretion income   4,257         3,893    
Loans, normalized(3)   63,388   4.60 %     61,943   4.66 %
Other earning assets   5,349   2.71 %     7,033   2.32 %
Total earning assets   68,737   4.36 %     68,976   4.23 %
Total interest-bearing liabilities   6,061   0.52 %     7,385   0.60 %
Net interest income, FTE(3) $ 62,676       $ 61,591    
Net interest rate spread, normalized(3)     3.84 %       3.63 %
Net interest margin, normalized(3)     3.98 %       3.77 %
                 
                   
(1 ) FTE basis based on the federal statutory rate of 35%              
(2 ) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual.
(3 ) Normalized totals are non-GAAP financial measures that exclude non-cash loan interest accretion related to PCI loans.
                 


Noninterest Income and Expense

CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)
                           
  Three Months Ended   Nine Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,   September 30,
(Amounts in thousands) 2017   2017   2017   2016   2016   2017   2016
Noninterest income                          
Wealth management $ 758     $ 791     $ 790     $ 681     $ 653     $ 2,339     $ 2,147  
Service charges on deposits   3,605       3,360       3,113       3,442       3,494       10,078       10,146  
Other service charges and fees   2,141       2,168       2,078       2,014       2,024       6,387       6,088  
Insurance commissions   306       325       373       59       1,592       1,004       5,383  
Net impairment losses recognized in earnings   -       -       -       -       (4,635 )     -       (4,646 )
Net gain (loss) on sale of securities   -       (657 )     -       388       25       (657 )     (53 )
Net FDIC indemnification asset amortization   (268 )     (1,586 )     (1,332 )     (1,618 )     (1,369 )     (3,186 )     (3,856 )
Net gain on divestitures   -       -       -       619       3,065       -       3,065  
Other operating income   593       1,074       669       653       1,046       2,336       2,554  
Total noninterest income   7,135       5,475       5,691       6,238       5,895       18,301       20,828  
Noninterest expense                          
Salaries and employee benefits   9,137       9,157       8,884       9,411       9,828       27,178       30,501  
Occupancy expense   1,082       1,341       1,248       1,158       1,249       3,671       4,139  
Furniture and equipment expense   1,133       1,087       1,091       1,070       1,066       3,311       3,271  
Amortization of intangibles   266       263       261       265       316       790       871  
FDIC premiums and assessments   227       227       244       274       363       698       1,109  
Merger, acquisition, and divestiture expense   -       -       -       55       226       -       675  
Other operating expense   5,064       5,383       5,355       4,420       5,509       15,802       15,527  
Total noninterest expense   16,909       17,458       17,083       16,653       18,557       51,450       56,093  
                           


Efficiency Ratio

EFFICIENCY RATIO CALCULATION (Unaudited)
                           
  Three Months Ended   Nine Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,   September 30,
  2017   2017   2017   2016   2016   2017   2016
(Amounts in thousands)                          
Noninterest expense, GAAP $ 16,909     $ 17,458     $ 17,083     $ 16,653     $ 18,557     $ 51,450     $ 56,093  
Non-GAAP adjustments                          
Merger, acquisition, and divestiture expense   -       -       -       (55 )     (226 )     -       (675 )
OREO expense and net loss   (647 )     (213 )     (328 )     (184 )     (278 )     (1,188 )     (1,236 )
Other non-core items   (64 )     (327 )     -       8       (168 )     (391 )     (372 )
Adjusted noninterest expense   16,198       16,918       16,755       16,422       17,885       49,871       53,810  
                           
Net interest income, GAAP   22,050       22,294       21,141       20,957       21,121       65,485       63,923  
Noninterest income, GAAP   7,135       5,475       5,691       6,238       5,895       18,301       20,828  
Non-GAAP adjustments                          
Tax equivalency adjustment   470       481       497       520       509       1,448       1,561  
Net impairment losses   -       -       -       -       4,635       -       4,646  
Net loss (gain) on sale of securities   -       657       -       (388 )     (25 )     657       53  
Net gain on divestitures   -       -       -       (619 )     (3,065 )     -       (3,065 )
Other non-core items   (30 )     (501 )     (18 )     (40 )     (432 )     (549 )     (876 )
Adjusted net interest and noninterest income   29,625       28,406       27,311       26,668       28,638       85,342       87,070  
                           
Non-GAAP efficiency ratio(1)   54.68 %     59.56 %     61.35 %     61.58 %     62.45 %     58.44 %     61.80 %
GAAP efficiency ratio   57.94 %     62.87 %     63.67 %     61.24 %     68.69 %     61.41 %     66.19 %
                           
                                               
(1) A non-GAAP financial measure computed by dividing adjusted noninterest expense by the sum of tax equivalent net interest income and adjusted noninterest income        
         


Balance Sheet and Capital

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
                   
  September 30,   June 30,   March 31,   December 31,   September 30,
(Amounts in thousands, except per share data)  2017     2017     2017     2016     2016 
Assets                  
Total cash and cash equivalents $ 105,119     $ 106,799     $ 152,851     $ 76,307     $ 65,929  
Securities available for sale   174,424       157,854       158,685       165,579       220,856  
Securities held to maturity   25,182       25,216       47,092       47,133       72,182  
Loans held for investment, net of unearned income                  
Non-covered   1,805,429       1,796,263       1,784,371       1,795,954       1,774,547  
Covered   32,292       45,845       51,412       56,994       61,837  
Less allowance for loan losses   (19,206 )     (18,886 )     (18,458 )     (17,948 )     (19,633 )
Loans held for investment, net   1,818,515       1,823,222       1,817,325       1,835,000       1,816,751  
FDIC indemnification asset   7,465       8,159       9,931       12,173       14,332  
Premises and equipment, net   48,949       49,598       50,057       50,085       50,564  
Other real estate owned, non-covered   3,543       3,914       4,477       5,109       4,052  
Other real estate owned, covered   54       124       241       276       2,437  
Interest receivable   5,156       5,072       5,059       5,553       5,498  
Goodwill   95,779       95,779       95,779       95,779       101,776  
Other intangible assets   6,417       6,683       6,947       7,207       7,964  
Other assets   84,177       84,183       82,069       86,197       87,932  
Total assets $ 2,374,780     $ 2,366,603     $ 2,430,513     $ 2,386,398     $ 2,450,273  
                   
Liabilities                  
Deposits                  
Noninterest-bearing $ 452,940     $ 443,800     $ 467,677     $ 427,705     $ 473,509  
Interest-bearing   1,410,880       1,413,574       1,438,917       1,413,633       1,388,390  
Total deposits   1,863,820       1,857,374       1,906,594       1,841,338       1,861,899  
Securities sold under agreements to repurchase   83,783       86,011       90,653       98,005       118,532  
FHLB borrowings   50,000       50,000       65,000       65,000       90,000  
Other borrowings   -       -       244       15,708       15,707  
Interest, taxes, and other liabilities   24,540       24,443       24,618       27,290       26,599  
Total liabilities   2,022,143       2,017,828       2,087,109       2,047,341       2,112,737  
                   
Stockholders' equity                  
Common stock   21,382       21,382       21,382       21,382       21,382  
Additional paid-in capital   228,510       228,326       228,176       228,142       227,884  
Retained earnings   182,145       177,556       173,860       170,377       166,689  
Treasury stock, at cost   (79,333 )     (78,488 )     (78,533 )     (78,833 )     (78,789 )
Accumulated other comprehensive (loss) income   (67 )     (1 )     (1,481 )     (2,011 )     370  
Total stockholders' equity   352,637       348,775       343,404       339,057       337,536  
Total liabilities and stockholders' equity $ 2,374,780     $ 2,366,603     $ 2,430,513     $ 2,386,398     $ 2,450,273  
                   
Shares outstanding at period-end   16,986,502       17,017,071       17,013,185       16,994,208       16,988,972  
Book value per common share(1) $ 20.76     $ 20.50     $ 20.18     $ 19.95     $ 19.87  
Tangible book value per common share(2)   14.74       14.47       14.15       13.89       13.41  
                   
                                       
(1) Stockholders' equity divided by as-converted common shares outstanding
(2) A non-GAAP financial measure defined as stockholders' equity less goodwill and other intangibles, divided by as-converted common shares outstanding
                   


Asset Quality

SELECTED CREDIT QUALITY INFORMATION (Unaudited)
                   
  September 30,   June 30,   March 31,   December 31,   September 30,
(Amounts in thousands) 2017   2017   2017   2016   2016
Allowance for Loan Losses                  
Beginning balance $ 18,886     $ 18,458     $ 17,948     $ 19,633     $ 21,099  
Provision for (recovery of) loan losses charged                  
to operations   730       934       492       500       (1,154 )
Charge-offs   (717 )     (902 )     (357 )     (2,485 )     (772 )
Recoveries   307       396       375       300       460  
Net (charge-offs) recoveries   (410 )     (506 )     18       (2,185 )     (312 )
Ending balance $ 19,206     $ 18,886     $ 18,458     $ 17,948     $ 19,633  
                   
Nonperforming Assets                  
Non-covered nonperforming assets                  
Nonaccrual loans $ 18,942     $ 20,146     $ 18,537     $ 15,854     $ 17,487  
Accruing loans past due 90 days or more   -       -       20       -       62  
Troubled debt restructurings ("TDRs")(1)   141       100       -       114       115  
Total non-covered nonperforming loans   19,083       20,246       18,557       15,968       17,664  
OREO   3,543       3,914       4,477       5,109       4,052  
Total non-covered nonperforming assets $ 22,626     $ 24,160     $ 23,034     $ 21,077     $ 21,716  
                   
Covered nonperforming assets                  
Nonaccrual loans $ 420     $ 446     $ 918     $ 608     $ 688  
Total covered nonperforming loans   420       446       918       608       688  
OREO   54       124       241       276       2,437  
Total covered nonperforming assets $ 474     $ 570     $ 1,159     $ 884     $ 3,125  
                   
Additional Information                  
Performing TDRs(2) $ 8,101     $ 8,485     $ 8,593     $ 12,838     $ 13,336  
Total TDRs(3)   8,242       8,585       8,593       12,952       13,451  
                   
Non-covered ratios                  
Nonperforming loans to total loans   1.06 %     1.13 %     1.04 %     0.89 %     1.00 %
Nonperforming assets to total assets   0.97 %     1.04 %     0.97 %     0.90 %     0.91 %
Non-PCI allowance to nonperforming loans   100.64 %     93.24 %     99.40 %     112.32 %     111.08 %
Non-PCI allowance to total loans   1.06 %     1.05 %     1.03 %     1.00 %     1.11 %
Annualized net charge-offs to average loans   0.09 %     0.11 %     0.00 %     0.49 %     0.07 %
                   
Total ratios                  
Nonperforming loans to total loans   1.06 %     1.12 %     1.06 %     0.89 %     1.00 %
Nonperforming assets to total assets   0.97 %     1.04 %     1.00 %     0.92 %     1.01 %
Allowance for loan losses to nonperforming loans   98.48 %     91.27 %     94.78 %     108.28 %     106.98 %
Allowance for loan losses to total loans   1.05 %     1.03 %     1.01 %     0.97 %     1.07 %
Annualized net charge-offs to average loans   0.09 %     0.11 %     0.00 %     0.47 %     0.07 %
                   
                                                                               
(1) Accruing TDRs restructured within the past six months or nonperforming
(2) Accruing TDRs with six months or more of satisfactory payment performance
(3) Accruing total TDRs


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

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