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

First Community Bankshares, Inc.
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BLUEFIELD, Va., Oct. 26, 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 September 30, 2021. The Company reported net income of $12.61 million, or $0.73 per diluted common share, for the quarter ended September 30, 2021, which was an increase of $0.26 per diluted common share, or 55.32%, over the same quarter of 2020. Net income for the nine months ended September 30, 2021, was $40.61 million, or $2.32 per diluted common share, which represents a 69.34% increase in diluted earnings per share compared to the same period of 2020.

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 November 5, 2021, and is expected to be paid on or about November 19, 2021. 2021 is the 36th consecutive year of regular dividends to common shareholders.

Third Quarter 2021 and Current Highlights

General

  • Net income for the quarter increased $4.34 million to $12.61 million compared to the same quarter of 2020. The large increase in net income reflects the reversal of $1.39 million in allowance for credit losses for the third quarter of 2021 compared to $4.70 million in loan loss provision recorded in the third quarter of 2020. Net income for the nine month period ended September 30, 2021, increased $16.24 million compared to the same period of 2020. Similarly, for the nine-month period, a reversal of $7.63 million in the allowance for credit losses for 2021 compared to $12.03 million in loan loss provision for the same period in 2020 accounts for a large part of the increase in net income over the same period in 2020. The decreases in credit loss provisioning are primarily due to significantly improved economic forecasts and GDP growth in the current year, versus prior year provisioning driven by the pandemic.

  • During the third quarter, the Company repurchased 277,386 common shares for $8.46 million. Year-to-date the Company has repurchased 726,686 common shares for $21.43 million.

  • The Company terminated its last loss share agreement with the FDIC and received a payment of $176 thousand in consideration. The termination eliminates the FDIC guarantee on particular loan losses associated with Waccamaw Bank and largely removes future responsibility related to the agreement.

Income Statement

  • Diluted earnings per share increased $0.26 to $0.73 compared to the same quarter of 2020. Diluted earnings per share for the nine-month period increased $0.95 to $2.32 compared to 2020.

  • Due to continued improving economic forecasts, as well as strong credit quality metrics, the Company released allowance for credit losses for the quarter resulting in a reversal of $1.39 million in the provision for credit losses; a significant improvement from the $4.70 million loan loss provision recorded in the third quarter of 2020 amidst general economic slowdowns and market conditions resulting from the COVID-19 pandemic. For the nine-month period, the Company reversed $7.63 million compared to $12.03 million in loan loss provision recorded for the same period in 2020.

  • Annualized return on average equity increased to 11.65% compared to 7.83% over the same quarter of 2020, and annualized return on average equity for the first nine months increased to 12.70% compared to 7.76% for the same period last year.

  • Annualized return on average assets increased to 1.59% compared to 1.11% over the same quarter of 2020, while year-to-date annualized return on average assets increased to 1.74% compared to 1.14% for the same period of 2020.

  • Non-interest income for the third quarter of 2021 increased $1.08 million, or 14.17%, compared to the prior year. Year-to-date non-interest income increased 13.51% to $25.09 million compared to last 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

  • Net charge-offs for the third quarter of 2021 were $586 thousand, or 0.11% annualized of average loans, and non-performing loans to total loans remains a very low 1.05%.

  • The SBA had forgiven $56.74 million, or 93.03%, of the Company’s first round Paycheck Protection Program loan balances through September 30, 2021. Current PPP loan balances at September 30, 2021, which include second round originations were, $26.93 million.

  • Book value per share at September 30, 2021, was $25.03, an increase of $0.95 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 September 30, 2021. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.27 billion in combined assets as of September 30, 2021. The Company reported consolidated assets of $3.14 billion as of September 30, 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

Nine Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

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

2021

2021

2021

2020

2020

2021

2020

Interest income

Interest and fees on loans

$

25,119

$

25,937

$

26,540

$

28,101

$

27,297

$

77,596

$

82,346

Interest on securities

445

435

495

549

609

1,375

2,240

Interest on deposits in banks

225

166

116

96

89

507

704

Total interest income

25,789

26,538

27,151

28,746

27,995

79,478

85,290

Interest expense

Interest on deposits

642

724

869

1,029

1,161

2,235

4,431

Interest on borrowings

1

-

-

-

-

1

4

Total interest expense

643

724

869

1,029

1,161

2,236

4,435

Net interest income

25,146

25,814

26,282

27,717

26,834

77,242

80,855

(Recovery of) provision for credit losses

(1,394

)

(2,230

)

(4,001

)

634

4,703

(7,625

)

12,034

Net interest income after provision

26,540

28,044

30,283

27,083

22,131

84,867

68,821

Noninterest income

8,720

8,797

7,569

7,733

7,638

25,086

22,100

Noninterest expense

18,836

19,361

18,820

19,877

19,171

57,017

59,748

Income before income taxes

16,424

17,480

19,032

14,939

10,598

52,936

31,173

Income tax expense

3,816

4,077

4,430

3,389

2,332

12,323

6,797

Net income

$

12,608

$

13,403

$

14,602

$

11,550

$

8,266

$

40,613

$

24,376

Earnings per common share

Basic

$

0.73

$

0.77

$

0.83

$

0.65

$

0.47

$

2.32

$

1.37

Diluted

0.73

0.76

0.82

0.65

0.47

2.32

1.37

Cash dividends per common share

Regular

0.27

0.25

0.25

0.25

0.25

0.77

0.75

Weighted average shares outstanding

Basic

17,221,244

17,486,182

17,669,937

17,717,356

17,710,283

17,457,477

17,803,369

Diluted

17,279,576

17,536,144

17,729,185

17,751,805

17,732,428

17,511,900

17,836,963

Performance ratios

Return on average assets

1.59%

1.70%

1.94%

1.54%

1.11%

1.74%

1.14%

Return on average common equity

11.65%

12.55%

13.94%

10.82%

7.83%

12.70%

7.76%

Return on average tangible common equity(1)

17.04%

18.40%

20.54%

15.96%

11.62%

18.63%

11.55%

(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

Nine Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

(Amounts in thousands)

2021

2021

2021

2020

2020

2021

2020

Noninterest income

Wealth management

$

974

$

1,058

$

881

$

810

$

909

$

2,913

$

2,607

Service charges on deposits

3,599

3,098

3,031

3,478

3,250

9,728

9,541

Other service charges and fees

3,143

3,166

3,022

2,737

2,748

9,331

7,596

Net gain on sale of securities

-

-

-

-

-

-

385

Net FDIC indemnification asset amortization

-

(946

)

(280

)

(338

)

(383

)

(1,226

)

(1,352

)

Other operating income

1,004

2,421

915

1,046

1,114

4,340

3,323

Total noninterest income

$

8,720

$

8,797

$

7,569

$

7,733

$

7,638

$

25,086

$

22,100

Noninterest expense

Salaries and employee benefits

$

10,646

$

10,216

$

10,884

$

11,119

$

10,485

$

31,746

$

32,886

Occupancy expense

1,155

1,115

1,275

1,225

1,228

3,545

3,818

Furniture and equipment expense

1,385

1,457

1,367

1,446

1,412

4,209

4,112

Service fees

1,530

1,513

1,335

1,232

1,581

4,378

4,433

Advertising and public relations

536

616

335

534

430

1,487

1,417

Professional fees

313

290

466

276

408

1,069

948

Amortization of intangibles

365

360

357

364

365

1,082

1,086

FDIC premiums and assessments

216

204

199

202

191

619

224

Merger, acquisition, and divestiture expense

-

-

-

-

-

-

1,893

Other operating expense

2,690

3,590

2,602

3,479

3,071

8,882

8,931

Total noninterest expense

$

18,836

$

19,361

$

18,820

$

19,877

$

19,171

$

57,017

$

59,748


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

Three Months Ended

Nine Months Ended

September 30,

June 30,

March 31,

December 31,

September 30,

September 30,

2021

2021

2021

2020

2020

2021

2020

(Amounts in thousands, except per share data)

Net income

$

12,608

$

13,403

$

14,602

$

11,550

$

8,266

$

40,613

$

24,376

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

$

12,608

$

13,403

$

14,602

$

11,550

$

8,266

$

40,613

$

25,530

Adjusted diluted earnings per common share,

non-GAAP

$

0.73

$

0.76

$

0.82

$

0.65

$

0.47

$

2.32

$

1.43

Performance ratios, non-GAAP

Adjusted return on average assets

1.59%

1.70%

1.94%

1.54%

1.11%

1.74%

1.19%

Adjusted return on average common equity

11.65%

12.55%

13.94%

10.82%

7.83%

12.70%

8.13%

Adjusted return on average tangible

common equity(1)

17.04%

18.40%

20.54%

15.96%

11.62%

18.63%

12.09%

(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 September 30,

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)

$

2,149,647

$

25,161

4.64%

$

2,171,023

$

27,331

5.01%

Securities available for sale

79,995

509

2.52%

93,263

720

3.07%

Interest-bearing deposits

586,787

224

0.15%

352,144

90

0.10%

Total earning assets

2,816,429

25,894

3.65%

2,616,430

28,141

4.28%

Other assets

330,679

344,285

Total assets

$

3,147,108

$

2,960,715

Liabilities and stockholders' equity

Interest-bearing deposits

Demand deposits

$

651,237

$

27

0.02%

$

580,165

$

73

0.05%

Savings deposits

826,144

63

0.03%

720,657

136

0.08%

Time deposits

378,895

551

0.58%

448,275

951

0.84%

Total interest-bearing deposits

1,856,276

641

0.14%

1,749,097

1,160

0.26%

Borrowings

Retail repurchase agreements

1,040

1

0.07%

969

1

0.14%

Total borrowings

1,040

1

0.07%

969

1

0.14%

Total interest-bearing liabilities

1,857,316

642

0.14%

1,750,066

1,161

0.26%

Noninterest-bearing demand deposits

824,112

754,147

Other liabilities

36,419

36,379

Total liabilities

2,717,847

2,540,592

Stockholders' equity

429,261

420,123

Total liabilities and stockholders' equity

$

3,147,108

$

2,960,715

Net interest income, FTE(1)

$

25,252

$

26,980

Net interest rate spread

3.51%

4.02%

Net interest margin, FTE(1)

3.56%

4.10%

(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 $1.01 million and $1.77 million for the three months ended September 30, 2021 and 2020, respectively.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

Nine Months Ended September 30,

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)

$

2,149,556

$

77,722

4.83%

$

2,127,383

$

82,476

5.18%

Securities available for sale

82,563

1,590

2.57%

110,852

2,619

3.16%

Interest-bearing deposits

555,435

508

0.12%

270,106

706

0.34%

Total earning assets

2,787,554

79,820

3.83%

2,508,341

85,801

4.57%

Other assets

331,239

351,589

Total assets

$

3,118,793

$

2,859,930

Liabilities and stockholders' equity

Interest-bearing deposits

Demand deposits

$

639,809

$

99

0.02%

$

543,539

$

261

0.06%

Savings deposits

807,863

217

0.04%

702,604

790

0.15%

Time deposits

395,465

1,918

0.65%

466,126

3,380

0.97%

Total interest-bearing deposits

1,843,137

2,234

0.16%

1,712,269

4,431

0.35%

Borrowings

Retail repurchase agreements

1,179

1

0.07%

1,218

3

0.32%

FHLB advances and other borrowings

-

-

-

48

1

2.23%

Total borrowings

1,179

1

0.07%

1,266

4

0.42%

Total interest-bearing liabilities

1,844,316

2,235

0.16%

1,713,535

4,435

0.35%

Noninterest-bearing demand deposits

809,128

688,891

Other liabilities

37,871

38,001

Total liabilities

2,691,315

2,440,427

Stockholders' equity

427,478

419,503

Total liabilities and stockholders' equity

$

3,118,793

$

2,859,930

Net interest income, FTE(1)

$

77,585

$

81,366

Net interest rate spread

3.67%

4.22%

Net interest margin, FTE(1)

3.72%

4.33%

(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 $3.45 million and $5.22 million for the nine months ended September 30, 2021 and 2020, respectively.


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

September 30,

June 30,

March 31,

December 31,

September 30,

(Amounts in thousands, except per share data)

2021

2021

2021

2020

2020

Assets

Cash and cash equivalents

$

635,007

$

618,738

$

628,745

$

456,561

$

375,664

Debt securities available for sale

77,440

79,842

87,643

83,358

90,972

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)

2,152,103

2,153,731

2,146,640

2,186,632

2,194,995

Allowance for credit losses (2)

(29,877

)

(31,857

)

(34,563

)

(26,182

)

(27,277

)

Loans held for investment, net

2,122,226

2,121,874

2,112,077

2,160,450

2,167,718

FDIC indemnification asset

-

-

946

1,223

1,598

Premises and equipment, net

52,842

53,560

57,371

57,700

60,488

Other real estate owned, noncovered

1,240

1,324

1,740

2,083

2,103

Interest receivable

8,146

8,480

8,724

9,052

9,151

Goodwill

129,565

129,565

129,565

129,565

129,565

Other intangible assets

5,987

6,352

6,712

7,069

7,433

Other assets

107,258

109,548

106,543

104,075

103,236

Total assets

$

3,139,711

$

3,129,283

$

3,140,066

$

3,011,136

$

2,947,928

Liabilities

Deposits

Noninterest-bearing

$

820,147

$

819,138

$

824,576

$

772,795

$

750,277

Interest-bearing

1,853,699

1,846,556

1,848,524

1,773,452

1,741,962

Total deposits

2,673,846

2,665,694

2,673,100

2,546,247

2,492,239

Securities sold under agreements to repurchase

1,106

994

1,519

964

956

Interest, taxes, and other liabilities

37,395

35,061

39,448

37,195

34,816

Total liabilities

2,712,347

2,701,749

2,714,067

2,584,406

2,528,011

Stockholders' equity

Common stock

17,071

17,335

17,592

17,723

17,717

Additional paid-in capital

154,086

161,853

169,173

173,345

172,980

Retained earnings

258,860

250,911

241,889

237,585

230,464

Accumulated other comprehensive loss

(2,653

)

(2,565

)

(2,655

)

(1,923

)

(1,244

)

Total stockholders' equity

427,364

427,534

425,999

426,730

419,917

Total liabilities and stockholders' equity

$

3,139,711

$

3,129,283

$

3,140,066

$

3,011,136

$

2,947,928

Shares outstanding at period-end

17,071,052

17,334,547

17,592,009

17,722,507

17,716,522

Book value per common share

$

25.03

$

24.66

$

24.22

$

24.08

$

23.70

Tangible book value per common share(3)

17.09

16.82

16.47

16.37

15.97

(1) No covered loans for 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)

September 30,

June 30,

March 31,

December 31,

September 30,

(Amounts in thousands)

2021

2021

2021

2020

2020

Allowance for Credit Losses (1)

Beginning balance

$

31,857

$

34,563

$

26,182

$

27,277

$

23,758

Cumulative effect of adoption of ASU 2016-13

-

-

13,107

-

-

(Recovery of) provision for

credit/loan losses charged to operations

(1,394

)

(2,230

)

(4,001

)

634

4,703

Charge-offs

(1,255

)

(1,902

)

(1,730

)

(2,194

)

(1,563

)

Recoveries

669

1,426

1,005

465

379

Net charge-offs

(586

)

(476

)

(725

)

(1,729

)

(1,184

)

Ending balance

$

29,877

$

31,857

$

34,563

$

26,182

$

27,277

Nonperforming Assets

Nonaccrual loans

$

22,067

$

24,085

$

26,106

$

22,003

$

24,756

Accruing loans past due 90 days or more

5

327

171

295

43

Troubled debt restructurings ("TDRs")(2)

584

133

308

187

456

Total nonperforming loans

22,656

24,545

26,585

22,485

25,255

OREO

1,240

1,324

1,740

2,083

2,103

Total nonperforming assets

$

23,896

$

25,869

$

28,325

$

24,568

$

27,358

Additional Information

Total Accruing TDRs(3)

$

8,185

$

8,309

$

9,027

$

10,248

$

10,936

Asset Quality Ratios

Nonperforming loans to total loans

1.05

%

1.14

%

1.24

%

1.03

%

1.15

%

Nonperforming assets to total assets

0.76

%

0.83

%

0.90

%

0.82

%

0.93

%

Allowance for credit/loan losses to nonperforming loans

131.87

%

129.79

%

130.01

%

116.44

%

108.01

%

Allowance for credit/loan losses to total loans

1.39

%

1.48

%

1.61

%

1.20

%

1.24

%

Annualized net charge-offs to average loans

0.11

%

0.09

%

0.14

%

0.26

%

0.22

%

(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


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