First Community Prepays FHLBank Advances

First Community Bancshares Inc., Bluefield, Va., has announced the prepayment of $77 million in Federal Home Loan Bank advances, resulting in $3.7 million in penalties, as part of a restructuring of long-term borrowings.The holding company said the advances, which were prepaid Dec. 23, bore a weighted average interest rate of 5.96%. On Jan. 3, the company drew new FHLBank advances of $75 million with a floating interest rate based on the three-month London interbank offered rate and a maturity of 15 years. The FHLBank has the option to convert the new advances to a fixed interest rate of 4% after five years. Concurrently, the company entered into an interest rate swap agreement that effectively fixed the rate on $50 million of the new advances for five years. Under the swap, First Community will pay fixed interest of 4.335% on a notional $50 million and receive interest payments based on a floating rate of 45 basis points below the three-month LIBOR, the company said. First Community can be found online at http://www.fcbinc.com.