First Community Bank posts earnings slump

First State Bancorporation and its subsidiary First Community Bank have reported a 39 percent decrease in earnings for the first quarter of 2008 compared with the same quarter of 2007.

Earnings for the quarter were $3.9 million, down from $6.5 million for the year-ago quarter. Earnings per share were also down 39 percent year-to-year, from 31 cents to 19 cents per share, falling short of analysts' estimates of 26 cents per share.

First State's stock (NASDAQ:FSNM) was trading at $10.96 at mid-day Monday, down 6.88 percent from its Friday close of $11.77.

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The bank's non-performing loans increased dramatically year-to-year, up 64 percent from $30.7 million in the first quarter of 2007 to $50.3 million in the first quarter of 2008. Total non-performing assets were up 37 percent over the same period. The bank said losses from these non-performing assets would be limited due to the value of the real estate collateral backing most of the loans. Nonetheless, a 91 percent increase in provision for loan losses cut into earnings to the tune of $1.9 million.

The bank's bottom line was also impacted by increases in salaries, benefits and other charges related to its acquisition of Front Range Capital Corp. and its subsidiary, Heritage Bank, in the first quarter of 2007.