First Community Bankshares, Inc.
Q4 2008 Earnings Call Transcript

Published: 11 Feb 2009

[Executives:]

Bob Schumacher – SVP and General Counsel John Mendez – President and CEO David Brown – CFO Gary Mills – Chief Credit Officer

[Analysts:]

Brian Klock – Keefe, Bruyette & Woods

[Operator:]

Greetings and welcome to the First Community Bancshares, Inc. Fourth Quarter 2008 Earnings Conference Call. At this time, all participants are in a listen-only mode, and a brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Bob Schumacher, General Counsel for First Community Bancshares. Thank you, Mr. Schumacher, you may now begin.

[Bob Schumacher:]

Good morning. Thank you for joining us for First Community Bancshares fourth quarter earnings conference call. We want to remind everybody that any statements made today that are not historical are forward-looking, and we would refer you to the end of yesterday’s earnings release for more details on exactly what forward-looking statements are. Please review that language and keep it mind as we proceed through the call. With us today is President and CEO, John Mendez; Chief Financial Officer, Dave Brown; Chief Credit Officer, Gary Mills and Chief Investment Officer, John Spracher. At this time, I will turn it over to Mr. Mendez.

[John Mendez:]

Thank you, Bob. And welcome and good morning to each of you, and my thank you for joining us for our fourth quarter 2008 conference call. We certainly appreciate your interest in the Company and we look forward to sharing with you our owners, investors, stock holders and analysts. We would like to take some time this morning and discuss our fourth quarter earnings release, our annual performance and also highlight other activities of the Company over recent months. As Bob mentioned, joining me on the call today is Dave Brown, our Chief Financial Officer. Also with me is Gary Mills, our Chief Credit Officer. I’ll begin with some comments regarding the Company, strategies and the marketplace. Dave Brown will then follow with the financial results. Gary Mills will conclude with an overview of lending and credits, and then of course following our comments, we will take calls from registered callers. Beginning with the operating environment, I don’t think I need to tell you any of you that it continues to be difficult out there for banks on all fronts. We count ourselves fortunate that our basic operation is strong and we credit much of that to our legacy markets which continue to hold up rather well. You’ll hear from our Chief Credit Officer a bit later, and I think you will agree that although non-performing assets, charge-offs and reserves are climbing, we continue to be in pretty good territory. Net interest revenues for the year declined about 4.3% on sharp declines in key rates. However, we do continue to grow non-interest revenues with about an 18% increase and charges fees and commissions in 2008 over 2007. Back to the global environment for a moment and how that impacts us. I would note that beginning in the third quarter of 2007, we reported a multimillion dollar negative mark to market on our securities portfolio. As macroeconomic conditions deteriorated and throughout 2008, this negative mark worsened to about $56 million as at the third quarter. During that time, we were conducting extensive analysis of the portfolio, now those were primarily cash flow driven. And we determined that no other than temporary impairment existed. However, as of year end 2008, our updated analysis demonstrated impairment in one CMO holding and one trust preferred issue. For that model, estimated loss is of only $1.9 million in the CMO, as you are aware we are required to write these investments down to their estimated market values. And these market values, we feel are negatively influenced by extreme liquidity in the market place for every matter securitized instrument, particularly the CDOs and our market values reflect what we believe is an exorbitant discount. Nonetheless, we report OTTR related non-cash charges of $29.9 million on as I mentioned on the one CMO holding and one issue of full trust preferred. In addition, we also note that other comprehensive loss stands at $52 million, reflecting deterioration as I mentioned in the market value of the remaining portfolio net of the aforementioned write-down. On a non-GAAP basis, we are proud to report core operating pre-tax earning of $5.9 million and $29.7 million and the year respectively. This performance reflects the overall strength of our Company given the severe recessionary environment that presently exists. We credit our relative success to our strong loan quality, diversity of our geographic markets and lines of business and an operating culture that emphasizes shareholder value. As of year end, non-performing assets remained low at 66.66 or 66 basis points. Our annual out-net charge-offs decreased from the prior quarter to 77 basis points. Meanwhile, our allowance for loan losses as a percentage of total loans was steady at 1.23% or 123 basis points. Not only do we posses a strong credit culture but we also pride ourselves in proactively identifying and recognizing problem loans. Our experience demonstrates our willingness to work with borrowers at early stages of delinquency and collaborating to resolve issues in a manner that is mutually beneficial as expediently as possible. While the greater economy is in recession, our legacy operations in West Virginia and Southwest Virginia had continued to perform rather nicely. At present, the unemployment rate in our largest market, West Virginia remains at a low 4.9%. I believe that’s the lowest, the ninth lowest in the nation and that compares with 7.2% at a national rate. Virginia follows West Virginia closely at 5.4%. And these stable markets continue to produce solid core deposits, attractive lending opportunities. In addition, our seasoned commercial sales team has seized this opportunity to solidify our existing relationships and they are working hard to attract new clients given the necessary internal focus that we are seeing on the part of many of our competitors. While we have strategically exited certain credits, resulting in some higher loan run off, the factors noted above, when added to our fourth quarter acquisition of Coddle Creek Financial did lead to loan growth of $130 million for the quarter. In addition to growing diversity within our banking network, our revenue diversification strategy focusing on insurance and wealth management continues to impress. We continued expansion of these lines of business in the fourth quarter headlined by the completion of our acquisition of Carr & Hyde Insurance Agency headquartered in Warrenton, Virginia. The combination of this storied agency with our existing GreenPoint offices yields an insurance revenue run rate of more than $7 million. Carr & Hyde also represented the fifth insurance acquisition for First Community in 2008. We continue to believe that these acquisitions are an excellent use of capital and we expect continued activity in 2009. Based on the other than temporary impairment charge, our capital ratios remain strong despite that charge. As of year-end, Tier I Risk-Based Capital was 11.5%, which compares favorably with the regulatory defined threshold of 8% for well-capitalized banks. Our total capital – total risk based capital ratio was 11.7%, again comfortably ahead of the well-capitalized standard of 10%. Hopefully, we will see some positive impact on our remaining Pooled Trust Preferred in the coming months. However, we remain well-capitalized and we expect to build on our capital position through internal capital generation to continue to improve our position and our tangible common equity. We continue to believe opportunistic acquisitions may present themselves in the near term and we will manage capital accordingly to be in a position to take advantage of these opportunities and we would, of course, be focused on all-stock transactions in the event those opportunities arise. Moving to a short discussion of TARP, on November 21st, we issued 41.5 – excuse me 41,500 shares of fixed-rate cumulative perpetual preferred stock to the US Treasury that as part of the capital purchase program. In addition, we issued a warrant to the Treasury to purchase up to 176,500 shares of the Company's common stock with an exercise price of $35.26 per share. The Company issued this stock in exchange for a total consideration of $41.5 million. These funds have already been largely deployed in new credit originations of $26.9 million and with our current pipeline which includes over $58 million in commercial and small business credits with 75% or better odds of closing. We believe this represents strong utilization of TARP funds as well as our existing resources and liquidity. Quick update in the area of M&A, I would note that our integration of Coddle Creek Financial has gone quite smoothly and we remain bullish on the long-term growth prospects in the Lake Norman region. As previously noted, we continue to assess acquisition opportunities and we are focused on those with strong core deposit franchises which are situated within markets complimentary to our current footprint. We also anticipate an uptick in government-assisted transactions and we do plan to seriously consider any such opportunities in or near our current markets. In the insurance arena, we did close on three agencies in the most recent quarter. Two of those agencies are small, but featured product lines which helped round out our existing insurance product set and we were able to be consolidate those agencies with existing operations. The larger transaction, which I mentioned earlier, was Carr & Hyde in Warrenton, Virginia, and that represents our initial expansion into Virginia with our insurance operations. This firm is led by Wayne Eastham and Tab Vollrath, both of whom are highly regarded and we expect them to assist us and lead to future growth opportunities within that region and in Virginia in particular. And with that, I’m going to stop and turn the call over to our CFO, Dave Brown who will expand on our first quarter financial results. David?

[David Brown:]

Thank you, John and good morning to everyone. On an as-reported basis, we had a difficult quarter marred by the impairment of two investment securities. But on a core basis the Company performed pretty well given this tough environment. Core earnings for the quarter were – and year were $3.8 million and $20.7 million, respectively. We did see balance sheet growth across the board largely the result of the Coddle Creek acquisition and the TARP investment. Loans and deposits increased $129 million and $154 million, respectively. Average deposits increased over third quarter due mostly to the addition of Coddle Creek, but also included over $10 million in organic growth. During the fourth quarter, we also saw new and renewed loan production of about $100.5 million. Loan yields continue to fall as result of the Fed drastically cutting short-term interest rates and the commensurate drop in bank prime rates. Investment yields picked up from the third quarter, a result of lower asset valuations and through the fourth quarter we did see investment purchases with a weighted average yield of 5.4%. As noted earlier, we took an after-tax impairment charges of $18.25 million during the fourth quarter and that related to two investment securities. The first was $25.2 million book value collateralized mortgage obligation that showed probable losses over the next 27 years of approximately $1.7 million. That bond was written down to a level two value of $10.7 million. The next bond was a pooled trust preferred CDO with a book value of $18.4 million and we wrote that down to $2.9 million, another level two price. And as we completed our individual security evaluations, we determined there was a distinct probability of an adverse change in the cash flows from that trust preferred CDO. The cash flow tests for the remainder of the CDO portfolio showed no adverse cash flow changes. We made $2.7 million provision for loan losses during the fourth quarter, bringing allowance to 1.23% of loans. And for the year, we covered 136% of net charge-offs. Credit quality continues to compare favorably to peer performance and Gary will have an update for us here in just a minute. Wealth revenues increased nicely in the third quarter. IPC contributed $89,000 to the increase and our Trust division contributed $99,000. And on a linked-quarter basis, deposit account service charges decreased $111,000 and other fees decreased $17,000. These decreases were driven largely by slowing consumer spending as evidenced by a decline in the total number of swipes and average ticket. Insurance revenues were $1.3 million for the fourth quarter. The stage is set and the expectation is that GreenPoint will see great growth in the future, but the soft insurance market has really set in. We continue to see this line of business grow, but it too is affected by the slowing economy. Turing to the area of non-interest expense, fourth quarter efficiency ratio was 59.1%, a function more of decreasing spread than increasing expenses. Salaries and benefits decreased $236,000 on a linked-quarter basis. Within that increase, actual salaries and wages increased $218,000 solely attributable to Mooresville and GreenPoint. We also saw an increased health and welfare benefit – benefit costs over third quarter of close to $200,000. But as a result of 2008 performance, we reduced the incentive pool by $850,000 for the year. We ended the quarter with 637 full time equivalent employees reflective of the new acquisitions, and the bank actually saw a net decrease of 2 FTE before the addition of approximately 22 in the Mooresville area. And then within the other expense line, we saw increases in legal costs and other service fees over the last quarter of about $378,000. The remainder of the increase was mostly due from Coddle Creek and GreenPoint. Despite troubles in the investment book, we maintain strong levels of regulatory capital. Total risk-based capital at the holding company is expected to be approximately 11.8% and at the bank, 11.6%. And with that, I would like to turn it over to Chief Credit Officer, Gary Mills whose has got a little bit of detail on the loan portfolio.

[Gary Mills:]

Thank you, David and good morning. The loan portfolio at December 31, 2008, measured approximately $1.3 billion representing an increase of roughly $131 million during the quarter. The consummation of the Coddle Creek acquisition during the fourth quarter contributed approximately $135 million to the existing FCB loan portfolio. Therefore, the FCB loan portfolio net of the Coddle Creek acquisition declined approximately $4 million during the quarter. The decline can be primarily attributed to the payoff of three loan relationships of which $1.5 million was in the Land Development sector and the remaining $4.4 million was in the Commercial Real Estate bucket. Commercial loan demand remained fairly consistent during the quarter; while retail loan demand waned. The bank did begin to experience increased mortgage applications late in the fourth quarter that has carried over into January which is being primarily driven by refinance activity. Total delinquency as of year end measured $25.6 million or 1.97%, and was equally balanced between loans 30 days to 89 days past due of $12.8 million or 99 basis points, and non-accrual loans of $12.8 million or 98 basis points. This represents an increase in total delinquency as compared to the third quarter posting of 1.25% and year end 2007 at 0.98%. The primary contributing factor to the increase in 30 days to 89 day delinquencies during the quarter was the addition of the Coddle Creek loan portfolio which accounted for approximately $4 million of the 30 day to 89 day delinquency total. The increase in non-accrual loans during the quarter were primarily influenced by $2.9 million loan in the hospitality industry that was placed in non-accrual at year end and $2.8 million in non-accrual loans in the Coddle Creek loan portfolio. As it relates to the Coddle Creek loan portfolio, the potential for increased delinquency and non-accrual loans was identified during the due diligence process and was anticipated. Coddle Creek did not have a formal collection function in place and had historically been lackadaisical in its collection efforts. Based upon our initial evaluation of the typical collateral position of the Coddle Creek mortgage portfolio, we anticipate potential losses will be manageable. The $2.9 million hotel loan that was placed in non-accrual as of December 31 was approximately 45 days delinquent at year end and had been previously identified on the bank's watch list with workout efforts well under way. The borrowers have been cooperating with the bank and a foreclosure sale has been scheduled for mid-March. An auctioneer has been engaged to maximize the sales potential for the property. Non-performing assets as a percentage of loans measured 66 basis points at year-end driven by the aforementioned non-accrual loans and approximately $1.3 million in OREO. I would like to note that OREO consists of approximately 25 properties with the largest property being booked at approximately $320,000. The allowance for loan and lease losses was $15,978,000 at year end which is 1.23% of total loans and provides a coverage ratio to non-performing loans of 1.25%. The allowance has been trending upward throughout the year as it measured $12,833,000 or 1.05% of total loans, at December 31, 2007. The provision for the year was $7,422,000 as compared to net charge-offs of $5,446,000. And as it relates to net charge-offs, it is noteworthy that approximately two-thirds of the charge-offs were amounts that had been previously identified and specifically allocated within the reserve. This concludes my prepared remarks. So, I’m going to, at this time, turn the call back over to John.

[John Mendez:]

Thank you both, David and Gary, for those comments and expansion on the earnings release. And at this point, I would turn the call back to the operator as we would prepare for some questions

[Operator:]

Thank you. We will now be conducting a question-and-answer session. (Operator instructions) Your first question is coming from the line of Brian Klock of Keefe, Bruyette & Woods.

[Brian Klock – Keefe, Bruyette & Woods:]

Good morning, guys.

[John Mendez:]

Good morning, Brian.

[David Brown:]

Good morning, Brian.

[Brian Klock – Keefe, Bruyette & Woods:]

I guess you did give us a lot of transparency in the release. So, I don’t that many questions. But may be Dave, you can start with the OTTI and the Trust preferred?

[David Brown:]

Yes.

[Brian Klock – Keefe, Bruyette & Woods:]

And I guess actually I guess with the CMOs as well. I know the CMOs you mentioned that you estimated $1.7 million probable loss over the life of the bond. I guess from my understanding of the accounting rules on this that since you have the market value which obviously is lower or bigger impairment charge than what you would say from the cash flow loss that’s expected?

[David Brown:]

Correct.

[Brian Klock – Keefe, Bruyette & Woods:]

Did you get they were accrete that difference back over time right along in the bonds which continues its cash flow?

[David Brown:]

That’s how I understand too.

[Brian Klock – Keefe, Bruyette & Woods:]

And I guess how much of that would you expect to accrete back I guess we are talking about 30 year's periods of accretion. But I guess what was the cash flow analysis since you wrote the trust preferred down to $2.9 million or taken the $15.5 million impairment charge, how does that compare to the cash flow losses that’s expected on those bonds?

[David Brown:]

On the –

[Brian Klock – Keefe, Bruyette & Woods:]

On the CDOs?

[David Brown:]

On the CDO, Brian, I’m not sure we have a really good answer to expect the cash flow loss for this particular deal, just you couldn’t make the case that you were going to – that you can get all of your cash back and there was enough – there was enough of a change in – we were using very small changes in the assumptions in the amount of cash that you got back. So, I think we are going to – we know that there is a change. We are not quite sure how we are going to exactly to what level going to accrete that back. Over time I think that’s kind of the question.

[Brian Klock – Keefe, Bruyette & Woods:]

Yes.

[David Brown:]

In the CMO, the same way. I think we are still kind of in the process deciding exactly what level we want to accrete that back to.

[Brian Klock – Keefe, Bruyette & Woods:]

Okay. Okay. I guess from a liquidity discount at the market’s pricing has the cash flow – you could some incremental perfect claw back, I guess some of that back over time if they continue the cash flow?

[David Brown:]

Under the current accounting, yes.

[Brian Klock – Keefe, Bruyette & Woods:]

Okay. And I guess for a quick – the – I know these were marked down over $0.15 almost $0.16 just under $0.16 a $1. It looks like compared to –?

[David Brown:]

On the CDO?

[Brian Klock – Keefe, Bruyette & Woods:]

On the CDO? The other – and those rated pulls

[David Brown:]

Right.

[Brian Klock – Keefe, Bruyette & Woods:]

Whenever I get the double ‘D’ and single ‘D’, it looks like what you disclose as fair values of say $0.50 or more on $1. I wonder what make those differences on the single credit A rated?

[David Brown:]

I think in the end along the rest of the CDOs are going to be anywhere really from, Brian, from probably really 8 to may be 30 –

[Brian Klock – Keefe, Bruyette & Woods:]

Right.

[David Brown:]

– in terms of market prices that we are using year end. And in terms of just the actual credit rate, the credit rating agencies, I’m not sure I can figure out what order they are going in terms of re-rating these. Our view on the deals don’t – isn’t that affected by the rating agency point of view.

[Brian Klock – Keefe, Bruyette & Woods:]

Right.

[David Brown:]

We are looking at the actual things and the actual underlying collateral.

[Brian Klock – Keefe, Bruyette & Woods:]

Okay. Yes, I guess it’s pretty difficult to try to figure what the rating agencies are doing on these things too. I guess may be a question off of that because when you look at the impact what it does to tend to accommodate your – but your regulatory capital ratios are still strong augmented obviously by the TARP capital. And may be a question for you too, John, is where do I calculate a common equity at the end of the quarter is about 4.4% with 7% a year ago. How did you – how do you guys think about obviously regulatory capital is the main focus but how well will you be aligned with tangible common equity to – what’s your thought about dividend and context? May be we can talk about what you think about capital and how tangible common appears to that?

[John Mendez:]

Brian, clearly we would like to see tangible common building tangible book value, building. We have many things in progress today that we hope will be that and incremental to that, helpful in that process, renewed efficiency program. We are looking at every element of cost to assist us in terms of internal capital generation, and that will be of course our first line of battle in terms of working to build that. Yes, our dividend declaration really can’t say anything about that. We normally consider that and make those declarations for the first quarter in February. So, obviously, we will be looking at that to give information on it. But we are – we will be relying heavily on internal capital generation to build those values.

[Brian Klock – Keefe, Bruyette & Woods:]

And I guess you talked about acquisitions, and you do have $100 million shelf out there. What I want know is does the TARP capital, that $41.5 million, I guess takedown some of that self capacity? I guess still leave you over $50 million of potential –?

[John Mendez:]

Actually, Brian, that does not absorb capacity from that shelf. That was proper placement and we had followed next three in support of the Treasury transaction. So, as we deal, we still have $100 million capacity under the shelf and we will continue to evaluate that against market conditions.

[Brian Klock – Keefe, Bruyette & Woods:]

Got you. And we are seeing right now if you can – your currency is still 2.5 times tangible book. So, it seems like you have ability to either issue stock and appeal – I know it’s a tough market out there but it may be it’s something contemplating because may be you would able to I guess send [ph] you in a deal and may be boost your tangible common equity ratio out there?

[John Mendez:]

Good observation.

[Brian Klock – Keefe, Bruyette & Woods:]

I guess let me go back in queue and let someone else. Thanks for taking my questions.

[John Mendez:]

Thanks Brian. I appreciate it.

[Brian Klock – Keefe, Bruyette & Woods:]

Okay.

[Operator:]

Thank you. (Operator instructions) I think we have a follow up question coming from Brian Klock.

[Brian Klock – Keefe, Bruyette & Woods:]

I guess for a quick question. I think you guys covered most of my – Dave you did give the estimated regulatory capital ratios. Can you write them down on double tuck or whatever –?

[David Brown:]

Let me flip back here and find – it’s not on top of my head, Brain, I believe it was 11.8% and it’s the holding company and the bank at about 11.6% to total RBC.

[Brian Klock – Keefe, Bruyette & Woods:]

And I guess thinking about the margin, what I guess what we are seeing on the funding side and with all the change in Fed funds here and we got a flatter, lower yield curve. What can we expect about the margin here as we go into the first half of the year?

[David Brown:]

Without giving too much of a forecast, I could see deposit funding prices coming down. We see that in a lot of these premium and special money market and savings instrument. The rates are really – it took a lot of come down. They are beginning to fall across the marketplace CD funding. The prices are under so much pressure, they are hot right now. So, I think there’s a positive outlook coupled with deposit cost.

[John Mendez:]

I would add to that, Brain. Our wholesale guide [ph] is going to be relatively flat for the year, sort of fixed rate type of characteristic. But, also note that they were fairly liquid at this point in time. So, we are not really maximizing that as we balance that against liquidity needs. I mentioned the pipeline for commercial and small business lending and we have out there. Hopefully, if we can get some good fall through there, we would see some less than positive impact as well.

[Brian Klock – Keefe, Bruyette & Woods:]

Okay. And I guess bouncing on to credit, and I guess questions for you John and for Gary I guess. Looking at the 30 day to 89 day, you mentioned that $12.8 million of your total delinquency, $4 million of that coming out of Coddle Creek, I guess what you are saying I guess in that C&E? Are you seeing any cotangent in the commercial real estate or permanent income in real estate or C&I and is it by geography that you are starting to see any weakness popping up?

[David Brown:]

No. As it relates to Coddle Creek specifically, that portfolio was primarily residential real estate mortgage and that’s what we are seeing the delinquency there with our I guess formal consolidate collection effort and that we are now, that we now implemented down there, we are starting to see I think some good results from that. So, it’s too early to see the full benefit of that. But we think over the next 6 months to 8 months that should start having some positive impact on that portfolio. We are starting to see borrowers who have historically performed very well running into some difficultly. The areas that will highlight that are probably getting impacted the most, probably not going to surprise you, hospitality being one in addition to the credit that we have non-accrual that I have previously discussed. We have a couple bad credits within the hospitality sector that are experiencing some cash flow difficulty as a result in the decline in vacancy which can be attributed to economic factors. Also we are seeing businesses in someway are related to residential real estate sector getting impacted. That will include businesses that provided supplies, building material to that sector as well as we do have an A&D loan that we previously discussed in investor calls that has been experiencing some difficulty because the takeout, which was a end takeout, exited the market. So, I guess that’s impacting our numbers right now.

[Brian Klock – Keefe, Bruyette & Woods:]

Okay. And I think in context of the expectations, many of the economists out there, we are going to get into the teeth of the recession in the first half of the year, and obviously that’s going to affect a lot of the economy, even the local economy you guys operate in. And may be we could talk about, John, on the expectation of the reserve coverage, you are still reserved over 125% reserve coverage of your NTLs [ph], a little tighter than what it used to be. Do you think we may be seeing a reserve bill that maybe you think about how you guys are feeling the reserve and reserve coverage?

[John Mendez:]

I would expect to see reserve coverage improving. We hope that some of that improvement will come through the reduction in the non-performing loans that presently we are able to manage the flow. And we have a couple of the larger credits that are included in those non-performing that were reasonably optimistic could maybe better that category in fairly short order. That would obviously have a big impact. And that is where we lost some of the coverage throughout the third and fourth quarters. So, we would like to pull that back – call that back and improve that coverage ratio. In terms of provisions, we continue utilization of our methodology. We think we are fairly generous with that. We are comfortable with where that is taking as it has led us to higher reserves of $2 million plus increase over and above net charge-offs and that’s functional methodology as the charge-offs have upticked has led to higher reserve levels. And as that continues to be indicated to methodology, we will recognize those. But I think in terms of getting back to that territory that we are in terms of reserve coverage, it’s going to be a combination of reserves and clearing out a couple of these larger transactions which have led into our non-performing category.

[Brian Klock – Keefe, Bruyette & Woods:]

Okay. Appreciate that. My last question, Dave, do you think the effective tax rate will go back to say 28% to 30% range going forward?

[David Brown:]

I think that’s reasonable, Brian. I mean largely in our case that’s mostly just a function of the portfolio. It is largely within the HDM [ph] that is burning down. But to the extent that’s around – that’s going to drive the tax rate. So, I think 28% to 30% it’s probably a reasonable guess.

[Brian Klock – Keefe, Bruyette & Woods:]

Okay. Great. All right, thanks for taking the follow-up guys. Take care.

[David Brown:]

Certainly.

[Operator:]

Thank you. There are no further questions at this time. I would like to turn the floor back to the management for any closing comments.

[John Mendez:]

This is John Mendez and on behalf of First Community Bancshares, I would like to thank everyone for taking time out of your day for joining us today. Hope this has been helpful. We look forward to reporting to you again shortly. We certainly hope that economic conditions improve for us and everyone who is impacted throughout the country. Again, thank you and we look forward to reporting to you at the close of the first quarter.