First Community Bankshares, Inc. · NASDAQ:FCBC
First Community Bankshares — First Community Bancshares — Keefe, Bruyette & Woods 9th Annual Community Bank Investor Conference 2008
39 slides from First Community Bankshares's conference presentation, Jul 28, 2008
Slide 1: KBW 9th Annual Community Bank Investor Conference
Keefe, Bruyette & Woods 9th Annual Community Bank Investor Conference July 29th and 30th, 2008
Slide 2: Forward-Looking Disclosures
Forward-Looking Disclosures 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 materialize or should underlying assumptions
Slide 3: Company Overview
Efficient community bank model with 135 years of operating history Commanding market share and expanding into growth markets Utilizing state-of-the-art technology Strong non-margin, fee-based revenue diversification Outstanding credit quality Company Overview
Slide 4: Why Own FCBC? Strong balance sheet
Why Own FCBC? Strong balance sheet/ solid capital Total risk-based capital of ratio of 12.93% compared to peer of 11.51% Tier 1 capital ratio of 12.00% compared to peer of 10.37% Markets benefit from both economic stability and growth
Slide 5: Why Own FCBC? Highly efficient
Why Own FCBC? Highly efficient One of the top 100 nationally Exceptional Asset Quality Non-performing asset ratio of 0.24% while peers are 0.80% First half 2008 net charge-offs only 0.11% Positioned as regional consolidator
Slide 6: Why Own FCBC? Management and employee ownership
Why Own FCBC? Strong culture of management and employee ownership Average executive experience at FCB over 20 years Insider ownership of approximately 10%
Slide 7: Market Position
Market Position Regional Banking, Wealth, Insurance Midlantic/Southeast Alternative solution-space between Community and Regional Financial Partnership Array of Services Strong Technology
Slide 8: Market Position: Brand value ranking
Market Position Brand value ranking - 23rd nationally Rankings by Bancography Based on P/E multiples and premium on deposits Banks $2-$30 billion in assets
Slide 9: Franchise Map
Franchise Map Richmond Winston-Salem Charlottesville Roanoke Charlotte Raleigh Morgantown Charleston FCBC Headquarters Branch Loan Production Office Cornelius Virginia Beach Chesapeake Investment Planning Consultants Johnson City Norfolk Burlington GreenPoint Insurance HQ Greensboro
Slide 10: Growth Strategy
Growth Strategy Attractive urban and suburban markets in the Carolinas, Virginia, West Virginia, and Tennessee I-64 Virginia, I-77 and I-40 in North Carolina Expand Loan Production Offices Develop legacy markets in the Virginias
Slide 11: Business Development in New Markets
Business Development in New Markets Piedmont-Triad NC Dell FedEx Ralph Lauren Biotech corridor Eastern Virginia Fort Lee Circuit City Altria Charlotte NC Only growing real estate market on east coast East TN Strong medical presence Tourism - racing
Slide 12: Strategic Market Demographics
Strategic Market Demographics Total Population 2007 Projected Population Change 2007 to 2012 Median HH Income 2007 Projected HH Income Change 2007 to 2012 Projected HH Income Change 2007 to 2012 Total Deposit Base (millions) Winston Salem, NC MSA 464,838 6.88% $51,518 17.09% 17.09% $15,561 Raleigh/C
Slide 13: Loan Portfolio
Loan Portfolio Excellent asset quality Geographically diversified Declining AD&C exposure Small Business Lending unit that turns credits around in 48 hours with a one-page application Developing asset-based lending product line Stable residential real estate portfolio
Slide 14: Portfolio Composition
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Slide 15: Asset Quality: Net Charge-Offs
Asset Quality Net Charge-Offs 2003 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 0.0046 0.0022 0.0037 0.0023 0.0019 0.001 0.0012
Slide 16: Asset Quality: Non-Performing Loans to Total Loans
Asset Quality Non-Performing Loans to Total Loans 2003 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 0.0033 0.0042 0.0025 0.003 0.0024 0.0027 0.0035 SE Banks $1B-$3B 0.0035 0.0027 0.0023 0.0032 0.0052 0.0075 0.0072
Slide 17: Asset Quality: Total Delinquencies
Asset Quality Total Delinquencies 2003 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 0.0103 0.0083 0.0079 0.0091 0.0098 0.0065 0.0091
Slide 18: Asset Quality: Reserves to Nonperforming Assets
Asset Quality Reserves to Nonperforming Assets 2003 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 2.6882 2.3536 2.8669 3.35 3.4562 3.4062 2.77 SE Banks $1B-$3B 1.898 2.6989 2.8336 2.2553 1.7968 1.0959 0.913
Slide 19: Tactical Initiatives
Tactical Initiatives Grow non-interest income sources to reduce rate cycle exposure Increased wealth management line of business Continue growing insurance line of business Re-engineered retail product set and sales approach Focused on cash management services for commercial clients Increased capaci
Slide 20: Acquired GreenPoint Insurance in September 2007
Acquired GreenPoint Insurance in September 2007 Full service insurance agency headquartered in High Point, NC Approximately $5 million annual commission revenue Recent acquisition of REL Insurance Company Locations through central NC, including Charlotte and Raleigh Raleigh Raleigh Raleigh Raleigh R
Slide 21: Tactical Initiatives: New retail approach and product set
Tactical Initiatives Exciting new retail approach and product set Re-engineered DDA product set Same-day-close home equity lines of credit Targeted marketing programs Refer-a-friend gifts Greater utilization of overdraft program Expanded business day with 6:00 PM cut-off
Slide 22: Tactical Initiatives: Use of technology
Tactical Initiatives Use of technology Same-day banking offered throughout the footprint - no 2:00 pm cutoff Robust commercial treasury services suite Branch capture eliminates courier and time costs Efficient and effective in-house data processing model
Slide 23: Financial Results
Financial Results 2005 2006 2007 1Q 2008 2Q 2008 Net Income $26.3 mil $28.9 mil $29.6 mil $6.3 mil $6.2 mil Diluted EPS $2.32 $2.57 $2.62 $0.57 $0.56 Dividend $1.02 $1.04 $1.08 $0.28 $0.28 ROA 1.37% 1.46% 1.39% 1.21% 1.23% ROE 13.79% 14.32% 13.54% 11.66% 12.08% ROTE 20.53% 20.77% 19.39% 17.53% 18.75
Slide 24: Financial Results
Financial Results Return on assets and return on equity are above peer averages Efficiency ratio compares very favorably to peer averages Operations consolidation and line of business restructuring have produced significant cost savings. We expect those savings to continue.
Slide 25: Return on Average Assets
Return on Average Assets 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 0.0124 0.0137 0.0146 0.0139 0.0121 0.0123 SE Banks $1B-$3B 0.0102 0.0105 0.0101 0.0075 0.0064 0.0056
Slide 26: Return on Average Equity
Return on Average Equity 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 0.1253 0.1379 0.1432 0.1354 0.116 0.1208 SE Banks $1B-$3B 0.1071 0.1124 0.1123 0.0847 0.0681 0.0536
Slide 27: Efficiency Ratio Core
Efficiency Ratio Core 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 0.5318 0.5383 0.5105 0.512 0.58 0.5755
Slide 28: Investments Portfolio
Investments Portfolio CMO Two AAA-rated securities with total market value balance of $28.69 million. Trust-preferreds Single-issue - $44.48 million all rated A or better - Top banks in country Pooled - $79.09 million - all A-rated
Slide 29: TRUPS CDOs
TRUPS CDOs All single-A Modeled deferrals and defaults not expected to alter cash flows of the deals Monitor regularly for impairment, although none detected or expected All deals have very diverse geographic exposure Older deals have excellent experience working out collateral in deferral/default p
Slide 30: Dividends
Dividends 2007 dividend was $1.08 and was the 16th consecutive year of increasing dividends Dividend yield was 3.22% for 2007 Dividend payout is averaging over 44%, while peer is only 32%
Slide 31: Dividends
Dividends 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Estimated 0.225 0.234 0.25 0.327 0.435 0.513 0.59 0.672 0.68 0.72 0.774 0.801 0.9 0.98 1 1.02 1.04 1.08 1.12 CAGR = 9%
Slide 32: Dividend Payout Ratio
Dividend Payout Ratio 2003 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 0.4324 0.5076 0.4397 0.4047 0.4122 0.4912 0.5 SE Banks $1B-$3B 0.2932 0.3197 0.2933 0.3055 0.3605 0.3808 0.5
Slide 33: Dividend Yield
Dividend Yield 2003 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 0.0293 0.0277 0.0327 0.0263 0.0322 0.0308 0.0397 SE Banks $1B-$3B 0.0151 0.0178 0.0179 0.0166 0.0285 0.0308 0.0342 3.02% average
Slide 34: Price to Earnings Ratio
Price to Earnings Ratio 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 18.31 13.43 15.39 12.17 14.17 11.42 SE Banks $1B-$3B 19.08 16.15 17.51 14.38 14.19 12.26
Slide 35: Price to Tangible Book Ratio
Price to Tangible Book Ratio 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 3.33 2.63 2.95 2.4 2.91 2.46 SE Banks $1B-$3B 2.45 2.43 2.3 1.5 1.32 1.09
Slide 36: Historical Returns
Historical Returns With dividends reinvested, a $100,000 investment at the beginning of 2000 was worth $255,000 at June 20, 2008 2000 2001 2002 2003 2004 2005 2006 2007 1Q 08 2Q 08 FCBC 100 103.71 178.83 212.17 259.11 290.89 259.71 340.24 283.43 326.27 254.91 SNL Bank 100 123.81 125.06 114.67 154.69
Slide 37: Why own First Community?
Why own First Community? Inside ownership is approximately 10% Management's goals and interests are closely aligned with those of shareholders Poised as top-choice consolidator in the region History of efficiency Outperformed major averages As of June 30, 155% total return since January 2000
Slide 38: Why own First Community?
Why own First Community? Consistent and strong dividend 16 consecutive years of increases High pay-out ratio Stable performer in current troubled markets Solid asset quality
Slide 39: Your First Financial Resource
Your First Financial Resource