First Community Bankshares, Inc. · NASDAQ:FCBC
First Community Bankshares — First Community Bancshares — Keefe, Bruyette and Woods 10th Annual Community Bank Investor Conference 2009
36 slides from First Community Bankshares's conference presentation, Jul 27, 2009
Slide 1: First Community Bancshares, Inc. KBW Community Bank Investor Conference
coe First Community Bancshares, Inc. Keefe, Bruyette and Woods 10® Annual Community Bank Investor Conference July 28-29, 2009
Slide 2: Forward-Looking Disclosures
36 First . . Community Forward-Looking Disclosures Bancshares, Inc. This presentation 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 mate
Slide 3: First Community Bancshares Overview
CHER iy First Community Bancshares Overview
Slide 4: Investment Highlights
Investment Highlights Bancshares, Inc. = A $2.2 billion VA, WV, NC and TN branch franchise — 135 years of continuous operation — Strong history of core earnings and dividend payments — Robust market share in legacy markets and attractive expansion into growth markets — Positioned as regional consoli
Slide 5: Investment Highlights
Investment Highlights Bancshares: Inc. True retail franchise generating low cost core deposits — Over 115,000 customer accounts with 1.85% average cost of deposits, below peer average of 2.28% for the three months ended June 30, 2009 = Strong loan quality — NPLs / Loans of 0.92% versus peers of 3.05
Slide 6: Experienced, Executive Management Team
Experienced, Executive Management Team Strong culture of management and employee ownership — Established and experienced management team with average tenure > 18 years; total insider ownership of 7.23% C 3 First « ele A Years in Banking Years with FCB John M. Mendez 24 24 President and CEO Robert L.
Slide 7: Current Franchise Overview: Branch Map
CoE ty Current Franchise Overview: Branch Map Bancshares, Inc. 71 locations across five-states (Virginia, West Virginia, North Carolina, Legacy Tennessee and South Carolina ) Markets Attractive urban and suburban markets in the Carolinas, Virginia, West Virginia, and Tennessee Full array of services
Slide 8: Current Franchise Overview: Market Demographics and Position
Current Franchise Overview: Market Demographics and Position Bancshares, Inc. =: MSA/Comney Zo ear
Slide 9: Strategic Direction
CHR wy Strategic Direction Bancshares, Inc, Balanced Growth and Profitability Strategy Alternative Solution vs. Large Banks Position as Regional Consolidator Pursue Growth Markets around Key MSA's Develop Legacy Markets/Earnings Driver Diversify Revenues into Associated Financial Service Lines (Weal
Slide 10: Three Pillars
Three Pillars CREDIT EARNINGS GROWTH THROUGH QUALITY LEADERSHIP CONSOLIDATION — —_—- — 10
Slide 11: Credit Quality
30 First Credit Quality Bancshares, inc, " Protect the culture/defend underwriting " Defensive posture on real estate * Cutting all exposures to A&D through remainder onthe eyele = Outstandings have fallen US. wy VA FCB 3.39% 2.50% 242% 0.30% = Carry excess liquidity « Early detection of emerging pr
Slide 12: Earnings Leadership
Earnings Leadership Bancshares, Inc. zs Efcency Ratio . Efficiency ae == — Conservative business approach 2208 Seam TH — Low cost structure in headquarters region |__21208__ Sas 28% 2008 seams =a — Lower cost workforce = Core Deposits Top Market Share — Built over years of operation ean tase ech: Ma
Slide 13: Efficiency
See Fist ; Community Efficiency Bancshares, Inc. = Low cost structure = Consistently outperformed peer group 719 70.0% BFCEC MPeers 6a 65.0% e 62g ous 60.0% soe a % 5g, 5 55.0% + 53 5 sug 50.0% : : a 2004 2005 2006 2007 2008 QL09 Q209 ‘eer ache pl tad aks wish ses between $1 and § 3 linen NC, SC, WW
Slide 14: Key Franchise Differentiator: Retail Franchise with Core, Low Cost Deposits
Key Franchise Differentiator: CMR iy Retail Franchise with Core, Low Cost Deposits Bancshares, Inc. Deposit Composition as of June 30, 2009 Demand 31,458 0.0005 Intesest-Beasing Demand 33.110 195,903 0.177% Total DDA 64,568 398,445 0.087% Savings 25,069 311,435 0.778% Time 19,762 435,457 2.980% Time
Slide 15: Cost of Funds
rise Community Cost of Funds Bancshares, Inc. 3.5% MFCBC @Peers 3.56 314g. 3.0% 4 2.81 23 2a 2.5% 4 2.23 2,16 2.12 2 2.0% i oe 1.5% T T T T 1 1 a 2004 2005 2006 2007 2008 Q109 Q209 ‘eer he pol aed backs with set between $1 an § 3 losin NCSC, WV and VA (STEL, SCBT, VOBI,FBNC, UBSHE,CHCO, ENB NBC, CFN
Slide 16: Net Interest Margin
Net Interest Margin j dlale? Inc. 45% 7 4 439 4.13 4.22 4.13 mFCBC @Peers 4.00 4.0% 5 38 3573.88 3.55 a 3 3.5% 3.25 Ett 3.0% 2.5% 2.0% T T T 1 T T i 0% + 2004 2005 2006 2007 2008 Qi09 Q209 ‘eer ache pl tad aks wish ses between $1 and § 3 linen NC, SC, WW and Va STEL, SCST, VOBE,FBNC, UBSEE,CHCO, ENB
Slide 17: Key Franchise Differentiator: Rapid Growth in Non-Interest Income
Key Franchise Differentiator: CHEE any Rapid Growth in Non-Interest Income Bancshares, Inc. = Since 2004, the Company has grown non-interest income sources to reduce interest rate cycle exposure — Increased wealth management line of business — Grown insurance line of business — Re-engineered retail
Slide 18: M&A Opportunity
M&A Opportunity: FCB is a strong partner FCB provides exit strategy for institutions under pressure Look to augment existing franchise Opportunistic Assisted transactions Strong currency Predominately stock Growing opportunity throughout credit cycle C Bre, Bancshares? Inc. Filters: Like minded comm
Slide 19: Recent Acquisitions: Bank & Thrift Transactions
Recent Acquisitions: Bank & Thrift Transactions * November 2008: Acquired Coddle Creek Financial Corp. (Mooresville, NC) = Transaction: = $33 millon deal value, 158% Price to TBV = 24.0% Price to Deposits, 13.8% Fran. Prem. to Core Deposits > 39% Stock and 41% Cash + Peo Forma Financial Impact: ® Si
Slide 20: Recent Acquisitions: Insurance Agency Transactions
Recent Acquisitions: Commi Insurance Agency Transactions Bancshares, = Acquired GreenPoint Insurance (High Point, NC) in September 2007 — Full service insurance agency headquartered in High Point, NC — Provider of commercial and personal insurance lines, employee benefits and life and health insuran
Slide 21: Loan Portfolio: Diversified Portfolio with Strong Loan Quality
Loan Portfolio: Diversified Portfolio with CHEE ay Bancshares, Inc. Strong Loan Quality Loan Composition at June 30, 2009 = Strong loan quality — NPLs / Net Loans at June 30, 2009 of 0.92% — Loan / Deposit Ratio of 82% "Geographically diversified portfolio across the region "Highly Granular: — Major
Slide 22: Loan Portfolio: Strong Loan Quality
Loan Portfolio: Community Strong Loan Quality Bancshares, Inc. Non-Performing Loans / Total Loans e = 3.50% 4 MECAC_MPeo 5 ts 3.00% § 2.50% + 2.00% * a = 1.50% 3—= z 2 1.00% 33. 86 0.50% + = | o.oo 4 Ls 2004 2005 +2006 = 2007-2008 :)S 109 Q209 Reserves / Nonperforming Loans Net Charge-Offs / Average
Slide 23: Loan Portfolio: Residential Real Estate Portfolio
Loan Portfolio: Residential Real Estate Portfolio = The residential real estate portfolio is made up of 10,478 loans with an average balance of $56,571 = Second quarter 2009 consumer credit scoring shows weighted average FICO of 693 = Majority of loans are fixed rate 3-5 year balloons "Total FCBC mo
Slide 24: Loan Portfolio: CRE Non-Owner Occupied
Loan Portfolio: can rst unity CRE Non-Owner Occupied Bancshares, Inc. The Company holds 1,276 CRE Loans with an average balance of $246,543; the average term of the portfolio is 95 months and 24% of the loans are floating rate 52% of CRE Loans are owner-occupied and the composition of non-owner occu
Slide 25: Loan Portfolio: A&D and Construction
F i First Loan Portfolio: Community Inc, A&D and Construction Bancshares, = The Company holds 641 A&D and Construction Loans with an average balance of $174,120 + The A&D and Construction loan book is geographically diversified with the three largest market areas being: NC 41%, WV 33% and VA 22% = A
Slide 26: Second Quarter 2009 Update
Second Quarter 2009 Update eae Inc. = Second quarter GAAP net income of $3.47 million and diluted EPS of $0.23 per share. — Includes securities impairment charges of $2.08 million and FDIC special assessment of $1.0 million = Core earnings remained strong at $4.38 million, or $0.34 per share " Tangi
Slide 27: Current Franchise Overview: Financial Results
Current Franchise Overview: Financial Results 2005 2006 2007 2008* Net Income $26.5 mil $289 mil $296 mil $22.3 mil Diluted EPS $2.52 $2.57 $2.62 2.00 Dividend $1.02 $1.04 $1.08 $1.12 ROAA 137% 146% 1.39% 1.06% ROAE 13.79% 14.32% 13.54% 10.20% ROACE 13.79% 14.32% 13.54% 10.74% Margin 439% 422% 3.80%
Slide 28: June 2009 Capital Raise
3s First June 2009 Capital Raise Bancshares, Inc, "Additional capital enhanced First Community’s already strong balance sheet and capital position increase tangible common equity ratio Lee t ible ity rati "Drive additional increases in non-interest income through business line expansion and growth "
Slide 29: TARP Repayment
3 First Community TARP Repayment Bancshares, Inc. = Redeemed $41.50 million = 7% tax-effective cost elimination preferred investment on . July 8, 2009 — Favorable strike price = Allows First Community — Anti-dilutive operational flexibility Leaving warrant position open ‘Tangible Common / Taagble Te
Slide 30: Investment Portfolio: Composition
Investment Portfolio: Composition Available-for-Sale Secusitie: as of June 30, 2009 ‘Maturity Schedule for / Fair Market Value of $521.9 million Demian] Year 02%. Within1 -5 Yea St ‘WishinS -10 “eeace 14926 30
Slide 31: Investment Portfolio: Mortgage Backed Securities
Investment Portfolio: Community Mortgage Backed Securities Bancshares, Inc. lortgage Backed Securities 08 aaa ssez S288 S595 1.338) eco $2500 $ 10503, $2096, $10,465 ‘Non-Agency Total $32250 $16,516 <S25,17# (611,658) "The Company made a cumulative effect adjustment of $10.2 million pre-tax, as of J
Slide 32: Investment Portfolio: Trust Preferred Securities
Investment Portfolio: Community Trust Preferred Securities Bancshares, Inc. = Single-Issue — $32.51 million market value at June 30" representing 57% of par value = Pooled Trust Preferred holdings — $28.15 million market value at June 30" representing 26% of par value BB Single Issue Total Pooled Tm
Slide 33: Upside Opportunities to TBV
Upside Opportunities to TBV = Earnings Potential = Single Issue TRUPS " TriStone Bargain Purchase = All Accretive to TBV Ce Fi
Slide 34: Why buy FCBC?
CoE ay Why buy FCBC? Bancshares, Inc. = A $2.2 billion VA, WV, NC and TN branch franchise — Robust market share in legacy markets and attractive expansion into growth markets = Positioned as regional consolidator = True retail franchise generating low cost core deposits — Over 115,000 customer accou
Slide 35: Why buy FCBC?
Why buy FCBC? Ranshares inc. = Resilient net interest margin of 3.62% for Q2 2009 = Strong non-margin, fee-based revenue diversification = Strong dividend yield at 3% = Strong upside potential for TBV = Positioned to emerge as one of the strongest players in the region and build one of the best fran
Slide 36: ee First.
ee First. Community Bancshares, Inc. WEE YOUR FIRST FINANCIAL RESOURCE