First Community Bancshares, Inc. Announces Record First Quarter 2018 Results and Quarterly Dividend

Company Release - 4/24/2018 4:00 PM ET

BLUEFIELD, Va., April 24, 2018 (GLOBE NEWSWIRE) -- First Community Bancshares, 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, 2018. The Company reported net income of $8.87 million, or $0.52 per diluted common share for the quarter ended March 31, 2018, which represents a 44.44% increase in per share diluted earnings compared to the same quarter of 2017.

The Company also announced today that the Board of Directors declared a quarterly cash dividend to common shareholders of eighteen cents ($0.18) per common share. The quarterly dividend is payable to common shareholders of record on May 4, 2018, and is expected to be paid on or about May 18, 2018. The current year marks the 33rd consecutive year of regular cash dividends paid to shareholders.

First Quarter 2018 Highlights

  • Income Statement
    ○  
    Pre-tax income increased $2.18 million, or 23.54%, to $11.44 million compared to the same quarter of 2017.
    ○  Net income increased $2.67 million, or 42.99%, to $8.87 million compared to the same quarter of 2017.
    ○  Diluted earnings per share increased $0.16, or 44.44%, to $0.52 compared to the same quarter of 2017.
    ○  The non-GAAP efficiency ratio improved to 58.29% compared to 61.35% in the same quarter of 2017.
    ○  Net interest margin increased 21 basis points to 4.38%, and normalized net interest margin increased 8 basis points to 4.03% compared to the same quarter of 2017.

  • Balance Sheet
    ○  
    The Company repurchased 187,300 common shares during the quarter for $5.41 million compared to 6,800 shares during the same quarter of 2017.
    ○  The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of March 31, 2018.

  • Other
    ○  
    The Company paid a one-time special cash dividend to common shareholders of $0.48 per common share on March 23, 2018. The special dividend was in addition to the regular cash dividend of $0.18 per common share paid on February 16, 2018.

Non-GAAP Financial Measures

The Company prepares its financial statements in accordance with GAAP. This press release also refers to certain non-GAAP financial measures that the Company believes provide investors with important information, when used in conjunction with results presented in accordance with GAAP, regarding its operational performance. The Company’s non-GAAP financial measures presented in this release include core earnings, the efficiency ratio, tangible book value per common share, average tangible common equity, and normalized net interest margin. Management believes that core earnings provide the Company and investors a valuable tool to evaluate the Company’s financial results. Management believes that the efficiency ratio provides important information about the Company’s operating expense control and efficiency of operations. Management also believes this ratio focuses attention on the core operating performance of the Company over time and is highly useful in comparing period-to-period operating performance of core business operations. The efficiency ratio used by the Company may not be comparable to efficiency ratios reported by other financial institutions. The reconciliations of these measures to GAAP measures are provided within this news release.

About First Community Bancshares, Inc.

First Community Bancshares, 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, 2018. First Community Bank provides insurance services through First Community Insurance Services, which operates in-branch locations in Virginia and West Virginia and offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed $945 million in combined assets as of March 31, 2018. The Company reported consolidated assets of $2.43 billion as of March 31, 2018. 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.

Financial Performance

           
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)2018 2017 2017 2017 2017
Interest income         
 Interest and fees on loans$22,755  $22,314  $22,694  $22,914  $21,827 
 Interest on securities 1,104   1,095   1,080   1,170   1,206 
 Interest on deposits in banks 471   353   275   221   159 
Total interest income 24,330   23,762   24,049   24,305   23,192 
Interest expense         
 Interest on deposits 1,251   1,313   1,275   1,233   1,166 
 Interest on borrowings 700   716   724   778   885 
Total interest expense 1,951   2,029   1,999   2,011   2,051 
Net interest income 22,379   21,733   22,050   22,294   21,141 
Provision for loan losses 495   615   730   934   492 
Net interest income after provision 21,884   21,118   21,320   21,360   20,649 
Total noninterest income 7,096   7,947   7,135   5,475   5,691 
Total noninterest expense 17,544   17,132   16,909   17,458   17,083 
Income before income taxes 11,436   11,933   11,546   9,377   9,257 
Income tax expense 2,568   10,720   3,894   2,959   3,055 
Net income$8,868  $1,213  $7,652  $6,418  $6,202 
           
Earnings per common share         
 Basic$0.52  $0.07  $0.45  $0.38  $0.36 
 Diluted 0.52   0.07   0.45   0.38   0.36 
Cash dividends per common share 0.66   0.18   0.16   0.16   0.16 
Weighted average shares outstanding        
 Basic 16,955,758   16,992,519   17,005,654   17,012,189   16,998,125 
 Diluted 17,047,638   17,083,949   17,082,729   17,082,832   17,072,174 
Performance ratios         
 Return on average assets 1.52%  0.20%  1.29%  1.08%  1.06%
 Return on average common equity 10.30%  1.35%  8.61%  7.41%  7.35%
 Return on average tangible common equity(1) 14.53%  1.89%  12.13%  10.51%  10.50%
           
(1) A non-GAAP financial measure defined as average stockholders’ equity less average goodwill and other intangibles
           


           
RECONCILIATION OF GAAP NET INCOME TO CORE EARNINGS (Unaudited)
           
  Three Months Ended        
  March 31, December 31, September 30, June 30, March 31,
  2018 2017 2017 2017 2017
(Amounts in thousands, except per share data)         
Net income, GAAP$8,868  $1,213  $7,652  $6,418  $6,202 
Non-GAAP adjustments:         
 Net loss on sale of securities -   4   -   657   - 
 Deferred tax asset revaluation -   6,552   -   -   - 
 Other non-core items (130)  (140)  34   (174)  (18)
Total adjustments to core earnings (130)  6,416   34   483   (18)
Tax effect (24)  (50)  12   345   (7)
Core earnings, non-GAAP(1)$8,762  $7,679  $7,674  $6,556  $6,191 
           
Core diluted earnings per common share$0.51  $0.45  $0.45  $0.38  $0.36 
Performance ratios         
 Core return on average assets 1.50%  1.28%  1.29%  1.11%  1.06%
 Core return on average common equity 10.17%  8.56%  8.63%  7.57%  7.33%
 Core return on average tangible common equity(2) 14.36%  11.99%  12.16%  10.74%  10.48%
           
(1) Excludes gains, losses, and impairment losses on securities; goodwill and intangible impairment; taxes; and other non-recurring income and expense items from net income
(2) A non-GAAP financial measure defined as average stockholders’ equity less average goodwill and other intangibles
           

Net Interest Income and Margin

             
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
             
  Three Months Ended March 31,     
  2018 2017
  Average    Average Yield/ Average    Average Yield/
(Amounts in thousands)Balance Interest(1) Rate(1) Balance Interest(1) Rate(1)
Assets           
Earning assets           
 Loans(2)$1,805,839 $22,827 5.13% $1,838,837 $21,895 4.83%
 Securities available for sale 165,103  1,384 3.40%  161,738  1,483 3.72%
 Securities held to maturity 25,132  105 1.69%  47,112  152 1.31%
 Interest-bearing deposits 117,953  471 1.62%  55,754  159 1.16%
Total earning assets 2,114,027  24,787 4.76%  2,103,441  23,689 4.57%
Other assets 252,284      270,597    
Total assets$2,366,311     $2,374,038    
             
Liabilities and stockholders' equity          
Interest-bearing deposits           
 Demand deposits$462,741 $63 0.06% $381,050 $54 0.06%
 Savings deposits 518,560  82 0.06%  525,573  84 0.06%
 Time deposits 493,545  1,106 0.91%  515,506  1,028 0.81%
Total interest-bearing deposits 1,474,846  1,251 0.34%  1,422,129  1,166 0.33%
Borrowings           
 Retail repurchase agreements 4,444  1 0.09%  66,947  11 0.07%
 Wholesale repurchase agreements 25,000  199 3.23%  25,000  199 3.23%
 FHLB advances and other borrowings 50,000  500 4.06%  66,618  675 4.11%
Total borrowings 79,444  700 3.57%  158,565  885 2.26%
Total interest-bearing liabilities 1,554,290  1,951 0.51%  1,580,694  2,051 0.53%
Noninterest-bearing demand deposits 432,606      425,540    
Other liabilities 30,142      25,477    
Total liabilities 2,017,038      2,031,711    
Stockholders' equity 349,273      342,327    
Total liabilities and stockholders' equity$2,366,311     $2,374,038    
Net interest income, FTE  $22,836     $21,638  
Net interest rate spread    4.25%     4.04%
Net interest margin    4.38%     4.17%
             
(1) Fully taxable equivalent ("FTE") basis based on the federal statutory rate of 21% for periods after January 1, 2018, and 35% for periods prior to January 1, 2018
(2) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual.
             


         
RECONCILIATION OF GAAP NET INTEREST MARGIN TO NON-GAAP NORMALIZED NET INTEREST MARGIN (Unaudited)
         
  Three Months Ended March 31, 
  2018 2017
(Amounts in thousands)Interest(1) Average Yield/
Rate
(1) 
 Interest(1) Average Yield/
Rate
(1) 
Earning assets       
Loans(2)$22,827 5.13% $21,895 4.83%
 Accretion income 2,324    1,784  
 Less: cash accretion income 479    650  
 Non-cash accretion income 1,845    1,134  
Loans, normalized(3) 20,982 4.71%  20,761 4.58%
Other earning assets 1,960 2.58%  1,794 2.75%
Total earning assets 22,942 4.40%  22,555 4.35%
Total interest-bearing liabilities 1,951 0.51%  2,051 0.53%
Net interest income, FTE(3)$20,991   $20,504  
Net interest rate spread, normalized(3) 3.89%   3.82%
Net interest margin, normalized(3)  4.03%   3.95%
         
(1) FTE basis based on the federal statutory rate of 21% for periods after January 1, 2018, and 35% for periods prior to January 1, 2018
(2) Nonaccrual loans are included in average balances; however, no related interest income is recorded during the period of nonaccrual.
(3) Normalized totals are non-GAAP financial measures that exclude non-cash loan interest accretion related to PCI loans.
         

Noninterest Income and Expense

 
CONDENSED QUARTERLY STATEMENTS OF INCOME (Unaudited)
           
  Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
(Amounts in thousands)2018 2017 2017 2017 2017
Noninterest income         
 Wealth management$794  $811  $758  $791  $790 
 Service charges on deposits 3,468   3,725   3,605   3,360   3,113 
 Other service charges and fees 2,285   2,237   2,141   2,168   2,078 
 Insurance commissions 329   343   306   325   373 
 Net loss on sale of securities -   (4)  -   (657)  - 
 Net FDIC indemnification asset amortization (382)  (331)  (268)  (1,586)  (1,332)
 Other operating income 602   1,166   593   1,074   669 
Total noninterest income 7,096   7,947   7,135   5,475   5,691 
Noninterest expense         
 Salaries and employee benefits 9,441   9,003   9,001   9,022   9,020 
 Occupancy expense 1,250   1,104   1,082   1,341   1,248 
 Furniture and equipment expense 1,046   1,114   1,133   1,087   1,091 
 Service fees 828   703   705   1,095   845 
 Interchange expense 593   577   555   561   517 
 Advertising and public relations 522   506   551   544   605 
 Professional fees 307   589   339   817   822 
 Amortization of intangibles 261   266   266   263   261 
 FDIC premiums and assessments 211   212   227   227   244 
 Other operating expense 3,085   3,058   3,050   2,501   2,430 
Total noninterest expense 17,544   17,132   16,909   17,458   17,083 
                    

Efficiency Ratio

           
EFFICIENCY RATIO CALCULATION (Unaudited)
           
  Three Months Ended        
  March 31, December 31, September 30, June 30, March 31,
  2018 2017 2017 2017 2017
(Amounts in thousands)         
Noninterest expense, GAAP$17,544  $17,132  $16,909  $17,458  $17,083 
Non-GAAP adjustments         
 OREO expense and net loss (171)  (14)  (647)  (213)  (328)
 Other non-core items -   -   (64)  (327)  - 
Adjusted noninterest expense 17,373   17,118   16,198   16,918   16,755 
           
Net interest income, GAAP 22,379   21,733   22,050   22,294   21,141 
Noninterest income, GAAP 7,096   7,947   7,135   5,475   5,691 
Non-GAAP adjustments         
 Tax equivalency adjustment 457   466   470   481   497 
 Net loss on sale of securities -   4   -   657   - 
 Other non-core items (130)  (140)  (30)  (501)  (18)
Adjusted net interest and noninterest income 29,802   30,010   29,625   28,406   27,311 
           
Non-GAAP efficiency ratio(1) 58.29%  57.04%  54.68%  59.56%  61.35%
GAAP efficiency ratio 59.52%  57.72%  57.94%  62.87%  63.67%
           
(1) A non-GAAP financial measure computed by dividing adjusted noninterest expense by the sum of tax equivalent net interest income and adjusted noninterest income
           

Balance Sheet and Capital

           
CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
           
  March 31, December 31, September 30, June 30, March 31,
(Amounts in thousands, except per share data)2018 2017 2017 2017 2017
Assets         
Total cash and cash equivalents$205,140  $157,951  $105,119  $106,799  $152,851 
Securities available for sale 164,192   165,580   174,424   157,854   158,685 
Securities held to maturity 25,115   25,149   25,182   25,216   47,092 
Loans held for investment, net of unearned income                   
 Non-covered 1,767,703   1,789,236   1,806,434   1,796,263   1,784,371 
 Covered 25,406   27,948   31,287   45,845   51,412 
 Less allowance for loan losses (19,500)  (19,276)  (19,206)  (18,886)  (18,458)
Loans held for investment, net 1,773,609   1,797,908   1,818,515   1,823,222   1,817,325 
FDIC indemnification asset 6,884   7,161   7,465   8,159   9,931 
Premises and equipment, net 46,415   48,126   48,949   49,598   50,057 
Other real estate owned, non-covered 4,620   2,409   3,543   3,914   4,477 
Other real estate owned, covered 70   105   54   124   241 
Interest receivable 5,155   5,778   5,156   5,072   5,059 
Goodwill 95,779   95,779   95,779   95,779   95,779 
Other intangible assets 5,891   6,151   6,417   6,683   6,947 
Other assets 95,437   76,363   84,177   84,183   82,069 
Total assets$2,428,307  $2,388,460  $2,374,780  $2,366,603  $2,430,513 
           
Liabilities         
Deposits         
 Noninterest-bearing$460,478  $454,143  $452,940  $443,800  $467,677 
 Interest-bearing 1,520,141   1,475,748   1,410,880   1,413,574   1,438,917 
Total deposits 1,980,619   1,929,891   1,863,820   1,857,374   1,906,594 
Securities sold under agreements to repurchase 29,115   30,086   83,783   86,011   90,653 
FHLB borrowings 50,000   50,000   50,000   50,000   65,000 
Other borrowings -   -   -   -   244 
Interest, taxes, and other liabilities 26,536   27,769   24,540   24,443   24,618 
Total liabilities 2,086,270   2,037,746   2,022,143   2,017,828   2,087,109 
           
Stockholders' equity         
Common stock 21,382   21,382   21,382   21,382   21,382 
Additional paid-in capital 228,774   228,750   228,510   228,326   228,176 
Retained earnings 178,227   180,543   182,145   177,556   173,860 
Treasury stock, at cost (83,865)  (79,121)  (79,333)  (78,488)  (78,533)
Accumulated other comprehensive loss (2,481)  (840)  (67)  (1)  (1,481)
Total stockholders' equity 342,037   350,714   352,637   348,775   343,404 
Total liabilities and stockholders' equity$2,428,307  $2,388,460  $2,374,780  $2,366,603  $2,430,513 
           
Shares outstanding at period-end 16,847,452   16,998,226   16,986,502   17,017,071   17,013,185 
Book value per common share$20.30  $20.63  $20.76  $20.50  $20.18 
Tangible book value per common share(1) 14.27   14.64   14.74   14.47   14.15 
           
(1) A non-GAAP financial measure defined as stockholders’ equity less goodwill and other intangibles, divided by common shares outstanding
           

Asset Quality

          
SELECTED CREDIT QUALITY INFORMATION (Unaudited)
          
 March 31, December 31, September 30, June 30, March 31,
(Amounts in thousands)2018 2017 2017 2017 2017
Allowance for Loan Losses          
Beginning balance$19,276  $19,206  $18,886  $18,458  $17,948 
Provision for loan losses charged to operations 495   615   730   934   492 
Charge-offs (698)  (967)  (717)  (902)  (357)
Recoveries 427   422   307   396   375 
Net (charge-offs) recoveries (271)  (545)  (410)  (506)  18 
Ending balance$19,500  $19,276  $19,206  $18,886  $18,458 
          
Nonperforming Assets         
Non-covered nonperforming assets        
Nonaccrual loans$21,650  $18,997  $18,942  $20,146  $18,537 
Accruing loans past due 90 days or more 27   1   -   -   20 
Troubled debt restructurings ("TDRs")(1) 77   120   141   100   - 
Total non-covered nonperforming loans 21,754   19,118   19,083   20,246   18,557 
OREO 4,620   2,409   3,543   3,914   4,477 
Total non-covered nonperforming assets$26,374  $21,527  $22,626  $24,160  $23,034 
          
Covered nonperforming assets         
Nonaccrual loans$596  $342  $420  $446  $918 
Total covered nonperforming loans 596   342   420   446   918 
OREO 70   105   54   124   241 
Total covered nonperforming assets$666  $447  $474  $570  $1,159 
          
Additional Information         
Performing TDRs(2)$7,220  $7,614  $8,101  $8,485  $8,593 
Total TDRs(3) 7,297   7,734   8,242   8,585   8,593 
          
Non-covered ratios         
Nonperforming loans to total loans 1.23%  1.07%  1.06%  1.13%  1.04%
Nonperforming assets to total assets 1.10%  0.91%  0.97%  1.04%  0.97%
Non-PCI allowance to nonperforming loans 89.64%  100.83%  100.64%  93.24%  99.40%
Non-PCI allowance to total loans 1.10%  1.08%  1.06%  1.05%  1.03%
Annualized net charge-offs to average loans 0.06%  0.12%  0.09%  0.11%  0.00%
          
Total ratios         
Nonperforming loans to total loans 1.25%  1.07%  1.06%  1.12%  1.06%
Nonperforming assets to total assets 1.11%  0.92%  0.97%  1.04%  1.00%
Allowance for loan losses to nonperforming loans 87.25%  99.05%  98.48%  91.27%  94.78%
Allowance for loan losses to total loans 1.09%  1.06%  1.05%  1.03%  1.01%
Annualized net charge-offs to average loans 0.06%  0.12%  0.09%  0.11%  0.00%
          
(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
          

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

Primary Logo

Source: First Community Bancshares, Inc.