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

First Community Bankshares, Inc.
15 min read
0
In this article:

BLUEFIELD, Va., April 27, 2021 (GLOBE NEWSWIRE) -- First Community Bankshares, Inc. (NASDAQ: FCBC) (www.firstcommunitybank.com) (the “Company”) today reported its unaudited results of operations and other financial information for the quarter ended March 31, 2021. The Company reported record quarterly net income of $14.60 million, or $0.82 per diluted common share, for the quarter ended March 31, 2021, which was an increase of $0.38 per diluted common share, or 86.36%, over the same quarter of 2020.

The Company also declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share. The quarterly dividend is payable to common shareholders of record on May 7, 2021, and is expected to be paid on or about May 21, 2021. 2021 is the 36th consecutive year of regular dividends to common shareholders.

First Quarter 2021 and Current Highlights

General

  • Net income for the quarter increased $6.73 million to $14.60 million compared to the same quarter of 2020. The large increase includes the reversal of $4.00 million in allowance for credit losses due to improved economic forecasts from those seen at year-end 2020.

  • Effective January 1, 2021, the Company adopted CECL and recorded an additional allowance for credit loss for loans of $13.11 million, deferred tax assets of $1.81 million, an additional reserve for unfunded commitments of $509 thousand, and an adjustment to retained earnings of $5.87 million.

  • On January 26, 2021, the Board of Directors approved a new plan to repurchase, on the open market at prevailing prices, up to 2.4 million shares of the Company’s common stock through January 26, 2024. During the quarter, the Company repurchased 187,700 common shares for $4.99 million.

Income Statement

  • Diluted earnings per share increased $0.38 to $0.82 compared to the same quarter of 2020.

  • Due to expected growth in the U.S. GDP, improving jobless rates, and other economic indicators, as well as strong asset quality metrics, the Company released a substantial amount of allowance for credit losses for the quarter resulting in a reversal of $4.00 million in the provision for credit losses; a significant improvement from the $3.50 million loan loss provision recorded in the first quarter of 2020 at the onset of the COVID-19 pandemic.

  • Return on average assets increased to 1.94% compared to 1.16% from the same quarter of 2020; return on average equity increased to 13.94% compared to 7.49% from the same quarter of 2020 as well.

Balance Sheet and Asset Quality

  • Net charge-offs for the first quarter of 2021 were $725 thousand and the allowance for credit losses remains very strong at 1.61% of total loans.

  • As of March 31, 2021, total COVID-19 loan deferrals stood at $17.48 million, down significantly from the peak of $436.11 at June 30, 2020.

  • The SBA had forgiven $32.73 million, or 53.58%, of the Company’s first round Paycheck Protection Program loan balances through March 31, 2021. Current PPP loan balances at March 31, 2021, which include second round originations, were $50.75 million.

  • Book value per share at March 31, 2021, was $24.22, an increase of $0.14 from year-end 2020.

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 50 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of March 31, 2021. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.23 billion in combined assets as of March 31, 2021. The Company reported consolidated assets of $3.14 billion as of March 31, 2021. 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.

FOR MORE INFORMATION, CONTACT:

David D. Brown

(276) 326-9000


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)

2021

2020

2020

2020

2020

Interest income

Interest and fees on loans

$

26,540

$

28,101

$

27,297

$

26,991

$

28,058

Interest on securities

495

549

609

713

918

Interest on deposits in banks

116

96

89

82

533

Total interest income

27,151

28,746

27,995

27,786

29,509

Interest expense

Interest on deposits

869

1,029

1,161

1,445

1,825

Interest on borrowings

-

-

-

2

2

Total interest expense

869

1,029

1,161

1,447

1,827

Net interest income

26,282

27,717

26,834

26,339

27,682

(Recovery of) provision for credit losses

(4,001

)

634

4,703

3,831

3,500

Net interest income after provision

30,283

27,083

22,131

22,508

24,182

Noninterest income

7,569

7,733

7,638

6,913

7,549

Noninterest expense

18,820

19,877

19,171

18,913

21,664

Income before income taxes

19,032

14,939

10,598

10,508

10,067

Income tax expense

4,430

3,389

2,332

2,270

2,195

Net income

$

14,602

$

11,550

$

8,266

$

8,238

$

7,872

Earnings per common share

Basic

$

0.83

$

0.65

$

0.47

$

0.47

$

0.44

Diluted

0.82

0.65

0.47

0.46

0.44

Cash dividends per common share

Regular

0.25

0.25

0.25

0.25

0.25

Weighted average shares outstanding

Basic

17,669,937

17,717,356

17,710,283

17,701,853

17,998,994

Diluted

17,729,185

17,751,805

17,732,428

17,728,300

18,050,071

Performance ratios

Return on average assets

1.94

%

1.54

%

1.11

%

1.15

%

1.16

%

Return on average common equity

13.94

%

10.82

%

7.83

%

7.97

%

7.49

%

Return on average tangible common equity(1)

20.54

%

15.96

%

11.62

%

11.91

%

11.12

%

(1) A non-GAAP financial measure defined as net income divided by average stockholders' equity less average goodwill and other intangible assets


CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE (Unaudited)

Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

(Amounts in thousands)

2021

2020

2020

2020

2020

Noninterest income

Wealth management

$

881

$

810

$

909

$

854

$

844

Service charges on deposits

3,031

3,478

3,250

2,560

3,731

Other service charges and fees

3,022

2,737

2,748

2,617

2,231

Net gain on sale of securities

-

-

-

-

385

Net FDIC indemnification asset amortization

(280

)

(338

)

(383

)

(483

)

(486

)

Other operating income

915

1,046

1,114

1,365

844

Total noninterest income

$

7,569

$

7,733

$

7,638

$

6,913

$

7,549

Noninterest expense

Salaries and employee benefits

$

10,884

$

11,119

$

10,485

$

11,015

$

11,386

Occupancy expense

1,275

1,225

1,228

1,275

1,315

Furniture and equipment expense

1,367

1,446

1,412

1,316

1,384

Service fees

1,335

1,232

1,581

1,329

1,523

Advertising and public relations

335

534

430

475

512

Professional fees

466

276

408

307

233

Amortization of intangibles

357

364

365

360

361

FDIC premiums and assessments

199

202

191

33

-

Merger, acquisition, and divestiture expense

-

-

-

-

1,893

Other operating expense

2,602

3,479

3,071

2,803

3,057

Total noninterest expense

$

18,820

$

19,877

$

19,171

$

18,913

$

21,664


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)

Three Months Ended

March 31,

December 31,

September 30,

June 30,

March 31,

2021

2020

2020

2020

2020

(Amounts in thousands, except per share data)

Net income

$

14,602

$

11,550

$

8,266

$

8,238

$

7,872

Non-GAAP adjustments:

Net (gain) loss on sale of securities

-

-

-

-

(385

)

Merger, acquisition, and divestiture expense

-

-

-

-

1,893

Total adjustments

-

-

-

-

1,508

Tax effect

-

-

-

-

354

Adjusted earnings, non-GAAP

$

14,602

$

11,550

$

8,266

$

8,238

$

9,026

Adjusted diluted earnings per common share,

non-GAAP

$

0.82

$

0.65

$

0.47

$

0.46

$

0.50

Performance ratios, non-GAAP

Adjusted return on average assets

1.94

%

1.54

%

1.11

%

1.15

%

1.33

%

Adjusted return on average common equity

13.94

%

10.82

%

7.83

%

7.97

%

8.59

%

Adjusted return on average tangible

common equity(2)

20.54

%

15.96

%

11.62

%

11.91

%

12.75

%

(1) 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,

2021

2020

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)

$

2,165,054

$

26,582

4.98%

$

2,081,132

$

28,105

5.43%

Securities available for sale

83,634

573

2.78%

136,109

1,060

3.14%

Interest-bearing deposits

468,067

118

0.10%

163,483

535

1.31%

Total earning assets

2,716,755

27,273

4.07%

2,380,724

29,700

5.02%

Other assets

331,483

353,647

Total assets

$

3,048,238

$

2,734,371

Liabilities and stockholders' equity

Interest-bearing deposits

Demand deposits

$

613,003

$

39

0.03%

$

502,603

$

90

0.07%

Savings deposits

778,430

91

0.05%

679,656

414

0.24%

Time deposits

412,986

739

0.73%

485,085

1,322

1.10%

Total interest-bearing deposits

1,804,419

869

0.19%

1,667,344

1,826

0.44%

Borrowings

Retail repurchase agreements

1,234

-

N/M

1,459

2

0.56%

FHLB advances and other borrowings

-

-

-

134

1

N/M

Total borrowings

1,234

-

-

1,593

3

0.65%

Total interest-bearing liabilities

1,805,653

869

0.19%

1,668,937

1,829

0.44%

Noninterest-bearing demand deposits

777,876

600,636

Other liabilities

39,926

42,174

Total liabilities

2,623,455

2,311,747

Stockholders' equity

424,783

422,624

Total liabilities and stockholders' equity

$

3,048,238

$

2,734,371

Net interest income, FTE(1)

$

26,404

$

27,871

Net interest rate spread

3.88%

4.58%

Net interest margin, FTE(1)

3.94%

4.71%

(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 and accelerated purchase accounting accretion of $1.18 million and $1.95 million for the three months ended March 31, 2021 and 2020, respectively.


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

March 31,

December 31,

September 30,

June 30,

March 31,

(Amounts in thousands, except per share data)

2021

2020

2020

2020

2020

Assets

Cash and cash equivalents

$

628,745

$

456,561

$

375,664

$

421,492

$

241,613

Debt securities available for sale

87,643

83,358

90,972

98,367

107,753

Loans held for investment, net of unearned income

Noncovered

2,137,599

2,176,952

2,184,251

2,125,560

2,084,610

Covered

9,041

9,680

10,744

11,257

12,115

Allowance for credit/loan losses

(34,563

)

(26,182

)

(27,277

)

(23,758

)

(21,137

)

Loans held for investment, net

2,112,077

2,160,450

2,167,718

2,113,059

2,075,588

FDIC indemnification asset

946

1,223

1,598

1,943

2,433

Premises and equipment, net

57,371

57,700

60,488

62,658

63,319

Other real estate owned, noncovered

1,740

2,083

2,103

2,181

2,502

Interest receivable

8,724

9,052

9,151

8,380

6,117

Goodwill

129,565

129,565

129,565

129,565

129,565

Other intangible assets

6,712

7,069

7,433

7,798

8,159

Other assets

106,543

104,075

103,236

103,623

101,912

Total assets

$

3,140,066

$

3,011,136

$

2,947,928

$

2,949,066

$

2,738,961

Liabilities

Deposits

Noninterest-bearing

$

824,576

$

772,795

$

750,277

$

752,899

$

620,292

Interest-bearing

1,848,524

1,773,452

1,741,962

1,744,947

1,668,122

Total deposits

2,673,100

2,546,247

2,492,239

2,497,846

2,288,414

Securities sold under agreements to repurchase

1,519

964

956

1,100

1,348

FHLB and other borrowings

-

-

-

-

1,000

Interest, taxes, and other liabilities

39,448

37,195

34,816

34,290

36,593

Total liabilities

2,714,067

2,584,406

2,528,011

2,533,236

2,327,355

Stockholders' equity

Common stock

17,592

17,723

17,717

17,710

17,700

Additional paid-in capital

169,173

173,345

172,980

172,601

172,231

Retained earnings

241,889

237,585

230,464

226,627

222,814

Accumulated other comprehensive loss

(2,655

)

(1,923

)

(1,244

)

(1,108

)

(1,139

)

Total stockholders' equity

425,999

426,730

419,917

415,830

411,606

Total liabilities and stockholders' equity

$

3,140,066

$

3,011,136

$

2,947,928

$

2,949,066

$

2,738,961

Shares outstanding at period-end

17,592,009

17,722,507

17,716,522

17,709,569

17,700,140

Book value per common share

$

24.22

$

24.08

$

23.70

$

23.48

$

23.25

Tangible book value per common share(1)

16.47

16.37

15.97

15.72

15.47

(1) A non-GAAP financial measure defined as stockholders' equity less goodwill and other intangible assets, divided by shares outstanding


SELECTED CREDIT QUALITY INFORMATION (Unaudited)

March31,

December 31,

September 30,

June 30,

March 31,

(Amounts in thousands)

2021

2020

2020

2020

2020

Allowance for Loan Losses

Beginning balance

$

26,182

$

27,277

$

23,758

$

21,137

$

18,425

Cumulative effect of adoption of ASU 2016-13

13,107

-

-

-

-

(Recovery of) provision for

credit/loan losses charged to operations

(4,001

)

634

4,703

3,831

3,500

Charge-offs

(1,730

)

(2,194

)

(1,563

)

(1,672

)

(1,194

)

Recoveries

1,005

465

379

462

406

Net charge-offs

(725

)

(1,729

)

(1,184

)

(1,210

)

(788

)

Ending balance

$

34,563

$

26,182

$

27,277

$

23,758

$

21,137

Nonperforming Assets

Non-covered nonperforming assets

Nonaccrual loans

$

25,747

$

21,706

$

24,423

$

24,471

$

20,263

Accruing loans past due 90 days or more

171

295

43

284

329

Troubled debt restructurings ("TDRs")(1)

308

187

456

598

623

Total non-covered nonperforming loans

26,226

22,188

24,922

25,353

21,215

OREO

1,740

2,083

2,103

2,181

2,502

Total non-covered nonperforming assets

$

27,966

$

24,271

$

27,025

$

27,534

$

23,717

Covered nonperforming assets

Nonaccrual loans

$

359

$

297

$

333

$

299

$

145

Total covered nonperforming loans

359

297

333

299

145

Total covered nonperforming assets

$

359

$

297

$

333

$

299

$

145

Additional Information

Performing TDRs(2)

$

8,719

$

10,061

$

10,480

$

10,822

$

8,429

Total Accruing TDRs(3)

9,027

10,248

10,936

11,420

9,052

Asset Quality Ratios

Nonperforming loans to total loans

1.24

%

1.03

%

1.15

%

1.20

%

1.02

%

Nonperforming assets to total assets

0.90

%

0.82

%

0.93

%

0.94

%

0.87

%

Allowance for credit/loan losses to nonperforming loans

130.01

%

116.44

%

108.01

%

92.62

%

98.96

%

Allowance for credit/loan losses to total loans

1.61

%

1.20

%

1.24

%

1.11

%

1.01

%

Annualized net charge-offs to average loans

0.14

%

0.26

%

0.22

%

0.23

%

0.15

%

(1) Accruing TDRs restructured within the past six months or nonperforming

(2) Accruing TDRs with six months or more of satisfactory payment performance

(3) Accruing total TDRs


Advertisement

Recommended Stories