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First Community Bankshares, Inc. Announces Record 2021 Full Year Results, Fourth Quarter 2021 Results, and Quarterly Cash Dividend Declared

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BLUEFIELD, Va., Jan. 26, 2022 (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 year and quarter ended December 31, 2021. Annual net income for 2021 was a record $51.17 million, or $2.94 per diluted common share. The Company reported net income of $10.56 million, or $0.62 per diluted common share, for the quarter ended December 31, 2021.

The Company also declared a quarterly cash dividend to common shareholders of twenty-seven cents ($0.27) per common share, which is an increase of 8.00% over the same quarter last year. The quarterly dividend is payable to common shareholders of record on February 11, 2022, and is expected to be paid on or about February 25, 2022. 2022 is the 37th consecutive year of regular dividends to common shareholders.

Fourth Quarter 2021 and Current Highlights

Income Statement

  • Annual net income for 2021 of $51.17 million, or $2.94 per diluted common share, was an increase of $15.24 million over 2020 and represents a 45.54% increase in diluted earnings per share compared to 2020. A reversal of $8.47 million in the allowance for credit losses in 2021 accounts for a large portion of the increase in net income. The decreases in credit loss provisioning are primarily due to significantly improved economic forecasts and GDP growth in the current year, as well as strong credit quality metrics, versus prior year provisioning driven by the pandemic. The increase was offset by a decrease in net interest income of $6.10 million, or 5.62%, driven by the current historically low interest rate environment, as well as a $3.33 million decrease in accretion on acquired loans.

  • Net income for the fourth quarter of 2021 decreased $995 thousand to $10.56 million, or $0.62 per diluted common share, compared to the same quarter of 2020. The decrease was primarily driven by a decrease in net interest income of $2.49 million, or 8.97%, due to the current historically low interest rate environment, as well as a $1.67 million decrease in accretion on acquired loans. The decrease in net interest income was offset by the reversal of $846 thousand in allowance for credit losses for the fourth quarter.

  • 2021 year-to-date return on average common equity increased to 11.96% compared to 8.54% in 2020. Annualized fourth quarter-to-date return on average common equity decreased to 9.77% compared to 10.82% over the same quarter of 2020.

  • 2021 year-to-date return on average assets increased to 1.63% compared to 1.24% for 2020. Annualized quarter-to-date return on average assets decreased to 1.32% compared to 1.54% over the same quarter of 2020.

  • Year-to-date non-interest income increased 14.98% to $34.30 million, over last year. Non-interest income for the fourth quarter of 2021 increased $1.48 million, or 19.16%, compared to the same quarter of the prior year. Both increases are largely attributable to increases in other service charges due to the more vibrant state of local economies with increased customer activity compared with last year.

Balance Sheet and Asset Quality

  • Year-to-date, the Company has repurchased 949,386 common shares, or 5.36% of outstanding, for $28.88 million.

  • During the fourth quarter, the Company repurchased 222,700 common shares for $7.45 million.

  • Net charge-offs for the fourth quarter of 2021 were $1.17 million, or 0.22% of annualized average loans, compared to net charge-offs of $1.73 million, or 0.26% of annualized average loans, for the same period in 2020. Non-performing loans to total loans remained a very low 1.03%.

  • The allowance for credit losses to total loans remains very strong at 1.29% of total loans.

  • The SBA had forgiven $56.86 million, or 93.20%, of the Company’s first round Paycheck Protection Program (“PPP”) loan balances through December 31, 2021. Current PPP loan balances at December 31, 2021, which include second round originations, were $20.64 million.

  • Book value per share at December 31, 2021, was $25.34, an increase of $1.26 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 49 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of December 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 $1.32 billion in combined assets as of December 31, 2021. The Company reported consolidated assets of $3.19 billion as of December 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.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

(Amounts in thousands, except share and per share data)

2021

2021

2021

2021

2020

2021

2020

Interest income

Interest and fees on loans

$

25,236

$

25,119

$

25,937

$

26,540

$

28,101

$

102,832

$

110,447

Interest on securities

362

445

435

495

549

1,737

2,789

Interest on deposits in banks

234

225

166

116

96

741

800

Total interest income

25,832

25,789

26,538

27,151

28,746

105,310

114,036

Interest expense

Interest on deposits

600

642

724

869

1,029

2,835

5,460

Interest on borrowings

-

1

-

-

-

1

4

Total interest expense

600

643

724

869

1,029

2,836

5,464

Net interest income

25,232

25,146

25,814

26,282

27,717

102,474

108,572

(Recovery of) provision for credit losses

(846

)

(1,394

)

(2,230

)

(4,001

)

634

(8,471

)

12,668

Net interest income after provision

26,078

26,540

28,044

30,283

27,083

110,945

95,904

Noninterest income

9,215

8,720

8,797

7,569

7,733

34,301

29,833

Noninterest expense

21,701

18,836

19,361

18,820

19,877

78,718

79,625

Income before income taxes

13,592

16,424

17,480

19,032

14,939

66,528

46,112

Income tax expense

3,037

3,816

4,077

4,430

3,389

15,360

10,186

Net income

$

10,555

$

12,608

$

13,403

$

14,602

$

11,550

$

51,168

$

35,926

Earnings per common share

Basic

$

0.62

$

0.73

$

0.77

$

0.83

$

0.65

$

2.95

$

2.02

Diluted

0.62

0.73

0.76

0.82

0.65

2.94

2.02

Cash dividends per common share

Regular

0.27

0.27

0.25

0.25

0.25

1.04

1.00

Weighted average shares outstanding

Basic

16,974,005

17,221,244

17,486,182

17,669,937

17,717,356

17,335,615

17,781,748

Diluted

17,038,980

17,279,576

17,536,144

17,729,185

17,751,805

17,402,936

17,815,380

Performance ratios

Return on average assets

1.32

%

1.59

%

1.70

%

1.94

%

1.54

%

1.63

%

1.24

%

Return on average common equity

9.77

%

11.65

%

12.55

%

13.94

%

10.82

%

11.96

%

8.54

%

Return on average tangible common equity(1)

14.28

%

17.04

%

18.40

%

20.54

%

15.96

%

17.53

%

12.68

%

(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

Twelve Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

(Amounts in thousands)

2021

2021

2021

2021

2020

2021

2020

Noninterest income

Wealth management

$

940

$

974

$

1,058

$

881

$

810

$

3,853

$

3,417

Service charges on deposits

3,718

3,599

3,098

3,031

3,478

13,446

13,019

Other service charges and fees

3,091

3,143

3,166

3,022

2,737

12,422

10,333

Net gain on sale of securities

-

-

-

-

-

-

385

Net FDIC indemnification asset amortization

-

-

(946

)

(280

)

(338

)

(1,226

)

(1,690

)

Other operating income

1,466

1,004

2,421

915

1,046

5,806

4,369

Total noninterest income

$

9,215

$

8,720

$

8,797

$

7,569

$

7,733

$

34,301

$

29,833

Noninterest expense

Salaries and employee benefits

$

12,493

$

10,646

$

10,216

$

10,884

$

11,119

$

44,239

$

44,005

Occupancy expense

1,368

1,155

1,115

1,275

1,225

4,913

5,043

Furniture and equipment expense

1,418

1,385

1,457

1,367

1,446

5,627

5,558

Service fees

1,946

1,530

1,513

1,335

1,232

6,324

5,665

Advertising and public relations

589

536

616

335

534

2,076

1,951

Professional fees

455

313

290

466

276

1,524

1,224

Amortization of intangibles

364

365

360

357

364

1,446

1,450

FDIC premiums and assessments

213

216

204

199

202

832

426

Merger, acquisition, and divestiture expense

-

-

-

-

-

-

1,893

Other operating expense

2,855

2,690

3,590

2,602

3,479

11,737

12,410

Total noninterest expense

$

21,701

$

18,836

$

19,361

$

18,820

$

19,877

$

78,718

$

79,625


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

Three Months Ended

Twelve Months Ended

December 31,

September 30,

June 30,

March 31,

December 31,

December 31,

2021

2021

2021

2021

2020

2021

2020

(Amounts in thousands, except per share data)

Net income

$

10,555

$

12,608

$

13,403

$

14,602

$

11,550

$

51,168

$

35,926

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

$

10,555

$

12,608

$

13,403

$

14,602

$

11,550

$

51,168

$

37,080

Adjusted diluted earnings per common share, non-GAAP

$

0.62

$

0.73

$

0.76

$

0.82

$

0.65

$

2.94

$

2.08

Performance ratios, non-GAAP

Adjusted return on average assets

1.32

%

1.59

%

1.70

%

1.94

%

1.54

%

1.63

%

1.28

%

Adjusted return on average common equity

9.77

%

11.65

%

12.55

%

13.94

%

10.82

%

11.96

%

8.81

%

Adjusted return on average tangible common equity(1)

14.28

%

17.04

%

18.40

%

20.54

%

15.96

%

17.53

%

13.08

%

(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 December 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)

$

2,163,613

$

25,274

4.63

%

$

2,188,069

$

28,143

5.12

%

Securities available for sale

76,556

418

2.17

%

87,592

640

2.91

%

Interest-bearing deposits

613,377

237

0.15

%

375,088

99

0.11

%

Total earning assets

2,853,546

25,929

3.60

%

2,650,749

28,882

4.33

%

Other assets

328,866

337,906

Total assets

$

3,182,412

$

2,988,655

Liabilities and stockholders' equity

Interest-bearing deposits

Demand deposits

$

668,335

$

28

0.02

%

$

594,222

$

50

0.03

%

Savings deposits

843,501

64

0.03

%

739,312

112

0.06

%

Time deposits

362,869

509

0.56

%

428,849

867

0.80

%

Total interest-bearing deposits

1,874,705

601

0.13

%

1,762,383

1,029

0.23

%

Borrowings

Retail repurchase agreements

1,236

-

N/M

925

1

0.14

%

Total borrowings

1,236

-

N/M

925

1

0.14

%

Total interest-bearing liabilities

1,875,941

601

0.13

%

1,763,308

1,030

0.23

%

Noninterest-bearing demand deposits

838,920

763,412

Other liabilities

38,986

37,305

Total liabilities

2,753,847

2,564,025

Stockholders' equity

428,565

424,630

Total liabilities and stockholders' equity

$

3,182,412

$

2,988,655

Net interest income, FTE(1)

$

25,328

$

27,852

Net interest rate spread

3.47

%

4.10

%

Net interest margin, FTE(1)

3.52

%

4.18

%

(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 $1.10 million and $2.77 million for the three months ended December 31, 2021 and 2020, respectively.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

Twelve Months Ended December 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)

$

2,153,099

$

102,996

4.78

%

$

2,142,637

$

110,619

5.16

%

Securities available for sale

81,049

2,008

2.48

%

105,005

3,259

3.10

%

Interest-bearing deposits

570,040

745

0.13

%

296,495

805

0.27

%

Total earning assets

2,804,188

105,749

3.77

%

2,544,137

114,683

4.51

%

Other assets

330,640

348,150

Total assets

$

3,134,828

$

2,892,287

Liabilities and stockholders' equity

Interest-bearing deposits

Demand deposits

$

646,999

$

127

0.02

%

$

556,279

$

311

0.06

%

Savings deposits

816,845

281

0.03

%

711,831

902

0.13

%

Time deposits

387,249

2,427

0.63

%

456,755

4,247

0.93

%

Total interest-bearing deposits

1,851,093

2,835

0.15

%

1,724,865

5,460

0.32

%

Borrowings

Retail repurchase agreements

1,194

1

0.07

%

1,145

3

0.28

%

FHLB advances and other borrowings

-

-

-

36

1

2.23

%

Total borrowings

1,194

1

0.07

%

1,181

4

0.34

%

Total interest-bearing liabilities

1,852,287

2,836

0.15

%

1,726,046

5,464

0.32

%

Noninterest-bearing demand deposits

816,638

707,623

Other liabilities

38,151

37,826

Total liabilities

2,707,076

2,471,495

Stockholders' equity

427,752

420,792

Total liabilities and stockholders' equity

$

3,134,828

$

2,892,287

Net interest income, FTE(1)

$

102,913

$

109,219

Net interest rate spread

3.62

%

4.19

%

Net interest margin, FTE(1)

3.67

%

4.29

%

(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 $4.66 million and $7.99 million for the twelve months ended December 31, 2021 and 2020, respectively.


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

December 31,

September 30,

June 30,

March 31,

December 31,

(Amounts in thousands, except per share data)

2021

2021

2021

2021

2020

Assets

Cash and cash equivalents

$

677,439

$

635,007

$

618,738

$

628,745

$

456,561

Debt securities available for sale

76,292

77,440

79,842

87,643

83,358

Loans held for investment, net of unearned income (includes covered loans of $0, $9,041, $9,680, $10,744, and $11,257, for the stated periods, respectively) (1)

2,165,569

2,152,103

2,153,731

2,146,640

2,186,632

Allowance for credit losses (2)

(27,858

)

(29,877

)

(31,857

)

(34,563

)

(26,182

)

Loans held for investment, net

2,137,711

2,122,226

2,121,874

2,112,077

2,160,450

FDIC indemnification asset

-

-

-

946

1,223

Premises and equipment, net

52,284

52,842

53,560

57,371

57,700

Other real estate owned

1,015

1,240

1,324

1,740

2,083

Interest receivable

7,900

8,146

8,480

8,724

9,052

Goodwill

129,565

129,565

129,565

129,565

129,565

Other intangible assets

5,622

5,987

6,352

6,712

7,069

Other assets

106,691

107,258

109,548

106,543

104,075

Total assets

$

3,194,519

$

3,139,711

$

3,129,283

$

3,140,066

$

3,011,136

Liabilities

Deposits

Noninterest-bearing

$

842,783

$

820,147

$

819,138

$

824,576

$

772,795

Interest-bearing

1,886,608

1,853,699

1,846,556

1,848,524

1,773,452

Total deposits

2,729,391

2,673,846

2,665,694

2,673,100

2,546,247

Securities sold under agreements to repurchase

1,536

1,106

994

1,519

964

Interest, taxes, and other liabilities

35,817

37,395

35,061

39,448

37,195

Total liabilities

2,766,744

2,712,347

2,701,749

2,714,067

2,584,406

Stockholders' equity

Common stock

16,878

17,071

17,335

17,592

17,723

Additional paid-in capital

147,619

154,086

161,853

169,173

173,345

Retained earnings

264,824

258,860

250,911

241,889

237,585

Accumulated other comprehensive loss

(1,546

)

(2,653

)

(2,565

)

(2,655

)

(1,923

)

Total stockholders' equity

427,775

427,364

427,534

425,999

426,730

Total liabilities and stockholders' equity

$

3,194,519

$

3,139,711

$

3,129,283

$

3,140,066

$

3,011,136

Shares outstanding at period-end

16,878,220

17,071,052

17,334,547

17,592,009

17,722,507

Book value per common share

$

25.34

$

25.03

$

24.66

$

24.22

$

24.08

Tangible book value per common share(3)

17.34

17.09

16.82

16.47

16.37

(1) No covered loans for December 2021 and September 2021. FDIC Loss Share agreement terminated in September 2021.

(2) Effective January 1, 2021, the Company adopted the current expected credit loss methodology ("CECL"); prior to January 1, 2021, the Company utilized the incurred credit loss methodology.

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


SELECTED CREDIT QUALITY INFORMATION (Unaudited)

December 31,

September 30,

June 30,

March 31,

December 31,

(Amounts in thousands)

2021

2021

2021

2021

2020

Allowance for Credit Losses (1)

Beginning balance

$

29,877

$

31,857

$

34,563

$

26,182

$

27,277

Cumulative effect of adoption of ASU 2016-13

-

-

-

13,107

-

(Recovery of) provision for credit/loan losses charged to operations

(846

)

(1,394

)

(2,230

)

(4,001

)

634

Charge-offs

(1,887

)

(1,255

)

(1,902

)

(1,730

)

(2,194

)

Recoveries

714

669

1,426

1,005

465

Net charge-offs

(1,173

)

(586

)

(476

)

(725

)

(1,729

)

Ending balance

$

27,858

$

29,877

$

31,857

$

34,563

$

26,182

Nonperforming Assets

Nonaccrual loans

$

20,768

$

22,070

$

24,085

$

26,106

$

22,003

Accruing loans past due 90 days or more

87

5

327

171

295

Troubled debt restructurings ("TDRs")(2)

1,367

359

133

308

187

Total nonperforming loans

22,222

22,434

24,545

26,585

22,485

OREO

1,015

1,240

1,324

1,740

2,083

Total nonperforming assets

$

23,237

$

23,674

$

25,869

$

28,325

$

24,568

Additional Information

Total Accruing TDRs(3)

$

8,652

$

8,185

$

8,309

$

9,027

$

10,248

Asset Quality Ratios

Nonperforming loans to total loans

1.03

%

1.04

%

1.14

%

1.24

%

1.03

%

Nonperforming assets to total assets

0.73

%

0.75

%

0.83

%

0.90

%

0.82

%

Allowance for credit/loan losses to nonperforming loans

125.36

%

133.18

%

129.79

%

130.01

%

116.44

%

Allowance for credit/loan losses to total loans

1.29

%

1.39

%

1.48

%

1.61

%

1.20

%

Annualized net charge-offs to average loans

0.22

%

0.11

%

0.09

%

0.14

%

0.26

%

(1) Effective January 1, 2021, the Company adopted the current expected credit loss methodology ("CECL"); prior to January 1, 2021, the Company utilized the incurred credit loss methodology.

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

(3) Accruing total TDRs

FOR MORE INFORMATION, CONTACT:
David D. Brown
(276) 326-9000