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First Community Bankshares, Inc. Announces First Quarter Results and Increased Quarterly Dividend

First Community Bankshares, Inc. Announces First Quarter Results and Increased Quarterly Dividend

BLUEFIELD, Va., April 23, 2019 (GLOBE NEWSWIRE) -- First Community Bankshares, Inc. (FCBC) (www.firstcommunitybank.com) (the “Company”) today reported its unaudited results of operations and other financial information for the quarter ended March 31, 2019. The Company reported net income of $9.63 million, or $0.60 per diluted common share, for the quarter ended March 31, 2019, which was an increase of $763 thousand, or 8.60%, over the same quarter of 2018.

The Company also announced today that the Board of Directors declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share, an increase of seven cents ($0.07), or 38.89%, over last second quarter's dividend. The quarterly dividend is payable to common shareholders of record on May 3, 2019, and is expected to be paid on or about May 17, 2019. The current year marks the 34th consecutive year of regular cash dividends paid to shareholders.

First Quarter 2019 Highlights

• General

  • The Company’s remaining wholesale repurchase agreement of $25 million matured during the first quarter.  The company repaid the borrowing with current liquidity, which should result in annualized net pre-tax savings of $378 thousand. This culminates the Company's 5-year strategic shift back to a more traditional community bank balance sheet, during which the Company paid off $200 million in wholesale debt.
  • The Company declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share, an increase of seven cents ($0.07), or 38.89%, over last second quarter's dividend.
  • The Company received $1.68 million from litigation settlements during the first quarter.

• Income Statement

  • Net income increased $763 thousand, or 8.60%, to $9.63 million compared to the same quarter of 2018.
  • Diluted earnings per share increased $.08 to $.60 compared to the same quarter of 2018, for an increase of 15.38%.
  • Return on average assets for the quarter increased to 1.75%. Return on average equity for the quarter increased to 11.77%.
  • Net interest margin increased 22 basis points to 4.60% compared to the same quarter of 2018.

• Balance Sheet

  • Book value per common share increased $0.27 to $21.06, and tangible book value per common share increased $0.20 to a record $14.89, compared to December 31, 2018.
  • The Company repurchased 232,900 common shares for $7.78 million during the quarter.
  • The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of March 31, 2019.

Non-GAAP Financial Measures

In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this news release include “tangible book value per common share,” “return on average tangible common equity,” “adjusted earnings,” “adjusted diluted earnings per share,” “adjusted return on average assets,” “adjusted return on average common equity,” “adjusted return on average tangible common equity,” and certain financial measures presented on a fully taxable equivalent (“FTE”) basis. FTE basis is calculated using the federal statutory income tax rate of 21%.          While the Company believes certain non-GAAP financial measures enhance the understanding of its business and performance, they are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions.

About First Community Bankshares, Inc.

First Community Bankshares, Inc., a financial holding company headquartered in Bluefield, Virginia, provides banking products and services through its wholly owned subsidiary First Community Bank. First Community Bank operated 44 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of March 31, 2019. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.02 billion in combined assets as of March 31, 2019. The Company reported consolidated assets of $2.24 billion as of March 31, 2019. The Company’s common stock is listed on the NASDAQ Global Select Market under the trading symbol, “FCBC”. Additional investor information is available on the Company’s website at www.firstcommunitybank.com.

This news release 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 prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                       
      Three Months Ended
      March 31,   December 31,   September 30,   June 30,   March 31,
(Amounts in thousands, except share and per share data) 2019
  2018
  2018
  2018
  2018
Interest income                  
  Interest and fees on loans $ 22,179     $ 23,938     $ 22,556     $ 22,422     $ 22,755  
  Interest on securities   1,094       1,249       1,372       1,361       1,104  
  Interest on deposits in banks   338       194       358       514       471  
Total interest income   23,611       25,381       24,286       24,297       24,330  
Interest expense                  
  Interest on deposits   1,305       1,297       1,269       1,327       1,251  
  Interest on borrowings   120       205       692       708       700  
Total interest expense   1,425       1,502       1,961       2,035       1,951  
Net interest income   22,186       23,879       22,325       22,262       22,379  
Provision for loan losses   1,220       908       495       495       495  
Net interest income after provision   20,966       22,971       21,830       21,767       21,884  
Noninterest income   8,080       6,297       6,519       6,959       6,668  
Noninterest expense   16,785       17,366       18,131       17,160       17,116  
Income before income taxes   12,261       11,902       10,218       11,566       11,436  
Income tax expense   2,630       2,596       1,118       2,500       2,568  
Net income $ 9,631     $ 9,306     $ 9,100     $ 9,066     $ 8,868  
                       
Earnings per common share                  
  Basic $ 0.61     $ 0.57     $ 0.55     $ 0.54     $ 0.52  
  Diluted   0.60       0.57       0.55       0.54       0.52  
Cash dividends per common share                  
  Regular   0.21       0.21       0.21       0.18       0.18  
  Special   -       -       -       -       0.48  
Weighted average shares outstanding                  
  Basic   15,839,424       16,201,148       16,512,823       16,689,398       16,955,758  
  Diluted   15,920,950       16,280,404       16,612,416       16,788,615       17,047,638  
Performance ratios                  
  Return on average assets   1.75 %     1.63 %     1.55 %     1.53 %     1.52 %
  Return on average common equity   11.77 %     11.01 %     10.59 %     10.68 %     10.30 %
  Return on average tangible common equity(1)   16.66 %     15.58 %     15.06 %     15.21 %     14.53 %
                       
                                           
(1) A non-GAAP financial measure defined as net income divided by average stockholders' equity less average goodwill and other intangible assets
                       


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)
                       
      Three Months Ended
      March 31,   December 31,   September 30,   June 30,   March 31,
      2019   2018   2018   2018   2018
(Amounts in thousands, except per share data)                  
Net income $ 9,631     $ 9,306     $ 9,100     $ 9,066     $ 8,868  
Non-GAAP adjustments:                  
  Net loss on sale of securities   -       -       618       -       -  
  Loss on extinguishment of debt   -       -       1,096       -       -  
  Goodwill impairment   -       -       1,492       -       -  
  Deferred tax asset revaluation   -       -       (1,669 )     -       -  
  Other items(1)   (1,675 )     254       -       297       (130 )
Total adjustments   (1,675 )     254       1,537       297       (130 )
Tax effect   (328 )     61       411       96       (24 )
Adjusted earnings, non-GAAP $ 8,284     $ 9,499     $ 10,226     $ 9,267     $ 8,762  
                       
Adjusted diluted earnings per common share,                  
  non-GAAP $ 0.52     $ 0.58     $ 0.62     $ 0.55     $ 0.51  
Performance ratios, non-GAAP                  
  Adjusted return on average assets   1.51 %     1.67 %     1.74 %     1.57 %     1.50 %
  Adjusted return on average common equity   10.12 %     11.23 %     11.90 %     10.91 %     10.17 %
  Adjusted return on average tangible                  
    common equity(2)   14.33 %     15.90 %     16.93 %     15.55 %     14.36 %
                       
                                             
(1) Includes other non-recurring income and expense items
(2) A non-GAAP financial measure defined as adjusted earnings divided by average stockholders' equity less average goodwill and other intangible assets
 

 

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
                           
      Three Months Ended March 31,
      2019
  2018
      Average        Average Yield/   Average        Average Yield/
(Amounts in thousands) Balance   Interest(1)   Rate(1)   Balance   Interest(1)   Rate(1)
Assets                      
Earning assets                      
  Loans(2)(3) $ 1,765,132   $ 22,236   5.11 %   $ 1,805,839   $ 22,827   5.13 %
  Securities available for sale   145,783     1,231   3.43 %     165,103     1,384   3.40 %
  Securities held to maturity   12,348     45   1.48 %     25,132     105   1.69 %
  Interest-bearing deposits   54,694     338   2.50 %     117,953     471   1.62 %
Total earning assets   1,977,957     23,850   4.89 %     2,114,027     24,787   4.76 %
Other assets   247,965             252,284        
Total assets $ 2,225,922           $ 2,366,311        
                           
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
  Demand deposits $ 447,023   $ 37   0.03 %   $ 462,741   $ 63   0.06 %
  Savings deposits   501,276     175   0.14 %     518,560     82   0.06 %
  Time deposits   438,454     1,093   1.01 %     493,545     1,106   0.91 %
Total interest-bearing deposits   1,386,753     1,305   0.38 %     1,474,846     1,251   0.34 %
Borrowings                      
  Retail repurchase agreements   3,259     1   0.13 %     4,444     1   0.09 %
  Wholesale repurchase agreements   15,278     119   3.17 %     25,000     199   3.23 %
  FHLB advances and other borrowings   -     -   -       50,000     500   4.06 %
Total borrowings   18,537     120   2.63 %     79,444     700   3.57 %
Total interest-bearing liabilities   1,405,290     1,425   0.41 %     1,554,290     1,951   0.51 %
Noninterest-bearing demand deposits   459,766             432,606        
Other liabilities   28,894             30,142        
Total liabilities   1,893,950             2,017,038        
Stockholders' equity   331,972             349,273        
Total liabilities and stockholders' equity $ 2,225,922           $ 2,366,311        
Net interest income, FTE(1)     $ 22,425           $ 22,836    
Net interest rate spread         4.48 %           4.25 %
Net interest margin, FTE(1)         4.60 %           4.38 %
                           
                                         
(1) Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.
(2) Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.
(3) Interest on loans includes non-cash purchase accounting accretion of $764 thousand and $1.8 million for the three months ended March 31, 2019 and 2018, respectively.
                           

 

 

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CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE  (Unaudited)
                   
  Three Months Ended
  March  31,   December 31,   September 30,   June 30,   March 31,
(Amounts in thousands) 2019   2018   2018   2018   2018
Noninterest income                  
Wealth management $ 745     $ 854     $ 791     $ 823     $ 794  
Service charges on deposits   3,408       3,850       3,803       3,612       3,468  
Other service charges and fees   2,049       2,017       1,925       1,934       1,857  
Insurance commissions   -       -       299       338       329  
Net loss on sale of securities   -       -       (618 )     -       -  
Net FDIC indemnification asset amortization   (552 )     (579 )     (645 )     (575 )     (382 )
Other income   1,675       -       -       -       -  
Other operating income   755       155       964       827       602  
Total noninterest income $ 8,080     $ 6,297     $ 6,519     $ 6,959     $ 6,668  
Noninterest expense                  
Salaries and employee benefits $ 9,166     $ 9,273     $ 8,983     $ 8,993     $ 9,441  
Occupancy expense   1,153       1,134       1,075