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First Community Bankshares, Inc. Announces Fourth Quarter Results, Quarterly Cash Dividend, and Stock Repurchase Plan

Company Release - 1/26/2021 04:30 PM ET

BLUEFIELD, Va., Jan. 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 December 31, 2020. The Company reported net income of $11.55 million, or $0.65 per diluted common share, for the quarter ended December 31, 2020, which was an increase of $0.04, or 6.56%, over the same quarter of 2019. Net income was $35.93 million, or $2.02 per diluted common share, for the twelve months ended December 31, 2020, which represents a 17.89% decrease in per share diluted earnings compared to the same period of 2019.

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 February 5, 2021, and is expected to be paid on or about February 19, 2021. The current year is the 11th consecutive year of regular dividend increases and the 36th consecutive year of regular dividends to common shareholders.

Additionally, today the Board of Directors authorized the repurchase of up to 2.4 million shares of the Company’s outstanding common stock through January 26, 2024. Repurchases may be made through open market purchases or in privately negotiated transactions at prevailing market prices. The actual means and timing of any purchases, target number of shares and range of prices under the program will be determined by management in its discretion and will depend on a number of factors, including the market price of the shares, general market and economic conditions, share issuances under equity plans, and applicable legal requirements and other conditions.

Fourth Quarter 2020 and Current Highlights

  • General
    • The Company booked $63.56 million of new residential mortgage loans during the fourth quarter and the pipeline remains strong at $38.15 million on January 25, 2021.
    • As of December 31, 2020, $3.94 million, or 6.46%, of the Company’s Paycheck Protection Program loan balances had been forgiven by the SBA.
    • As of December 31, 2020, current commercial and consumer COVID-19 loan deferrals stood at $26.54 million and $5.72 million, respectively, down significantly from $436.11 million at June 30, 2020.
    • On December 31, 2020, the Company closed two branches located in Abingdon, Virginia, acquired in the Highlands Union Bank transaction last year. The Company will continue to serve its customers in the important Abingdon market through two strategically placed branches, including its recently upgraded and remodeled Main Street branch, significantly improving efficiency while maintaining first-rate market presence.

  • Income Statement
    • Return on average assets remained strong at 1.54% for the fourth quarter and 1.24% for the twelve-month period.
    • Net interest margin decreased 29 basis points to 4.18% compared to the same quarter of 2019. Net interest margin decreased 30 basis points to 4.29% for the full year 2020 compared to 2019. Both period decreases are reflective of the current historic low interest rate environment partially offset by an increase in accelerated accretion of $3.73 million for the quarter and $6.23 million for the year.
    • Fourth quarter earnings reflect a loan loss provision of $634 thousand, an increase of $543 thousand over fourth quarter of 2019.
  • Balance Sheet
    • Interest-free deposits grew $144.93 million during 2020, and total deposits grew $216.34 million, or 9.29%, during 2020.
    • Book value per share at December 31, 2020, was $24.08, an increase of $0.75 during the year.
    • As of December 31, 2020, the Company continues to significantly exceed regulatory “well capitalized” targets, as well as all capital targets of its capital management plan.

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 December 31, 2020. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.18 billion in combined assets as of December 31, 2020. The Company reported consolidated assets of $3.01 billion as of December 31, 2020. 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)   2020       2020       2020       2020       2019       2020       2019    
Interest income                            
  Interest and fees on loans $ 28,101     $ 27,297     $ 26,991     $ 28,058     $ 21,837     $ 110,447     $ 88,805    
  Interest on securities   549       609       713       918       870       2,789       3,716    
  Interest on deposits in banks   96       89       82       533       663       800       2,447    
Total interest income   28,746       27,995       27,786       29,509       23,370       114,036       94,968    
Interest expense                            
  Interest on deposits   1,029       1,161       1,445       1,825       1,312       5,460       5,392    
  Interest on borrowings   -       -       2       2       1       4       123    
Total interest expense   1,029       1,161       1,447       1,827       1,313       5,464       5,515    
Net interest income   27,717       26,834       26,339       27,682       22,057       108,572       89,453    
Provision for loan losses   634       4,703       3,831       3,500       91       12,668       3,571    
Net interest income after provision   27,083       22,131       22,508       24,182       21,966       95,904       85,882    
Noninterest income   7,733       7,638       6,913       7,549       9,314       29,833       33,677    
Noninterest expense   19,877       19,171       18,913       21,664       18,883       79,625       69,763    
Income before income taxes   14,939       10,598       10,508       10,067       12,397       46,112       49,796    
Income tax expense   3,389       2,332       2,270       2,195       2,833       10,186       10,994    
Net income $ 11,550     $ 8,266     $ 8,238     $ 7,872     $ 9,564     $ 35,926     $ 38,802    
                                 
Earnings per common share                            
  Basic $ 0.65     $ 0.47     $ 0.47     $ 0.44     $ 0.61     $ 2.02     $ 2.47    
  Diluted   0.65       0.47       0.46       0.44       0.61       2.02       2.46    
Cash dividends per common share                            
  Regular   0.25       0.25       0.25       0.25       0.25       1.00       0.96    
Weighted average shares outstanding                            
  Basic   17,717,356       17,710,283       17,701,853       17,998,994       15,611,093       17,781,748       15,690,812    
  Diluted   17,751,805       17,732,428       17,728,300       18,050,071       15,670,047       17,815,380       15,756,093    
Performance ratios                            
  Return on average assets   1.54 %     1.11 %     1.15 %     1.16 %     1.71 %     1.24 %     1.75 %  
  Return on average common equity   10.82 %     7.83 %     7.97 %     7.49 %     11.08 %     8.54 %     11.54 %  
  Return on average tangible common equity(1)   15.96 %     11.62 %     11.91 %     11.12 %     15.33 %     12.68 %     16.09 %  
                                 
(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)   2020       2020       2020       2020       2019       2020       2019    
Noninterest income                          
  Wealth management $ 810     $ 909     $ 854     $ 844     $ 842     $ 3,417     $ 3,423    
  Service charges on deposits   3,478       3,250       2,560       3,731       3,702       13,019       14,594    
  Other service charges and fees   2,737       2,748       2,617       2,231       2,096       10,333       8,281    
  Net gain (loss) on sale of securities   -       -       -       385       -       385       (43 )  
  Net FDIC indemnification asset amortization   (338 )     (383 )     (483 )     (486 )     (590 )     (1,690 )     (2,377 )  
  Other income   -       -       -       -       2,395       -       6,995    
  Other operating income   1,046       1,114       1,365       844       869       4,369       2,804    
Total noninterest income $ 7,733     $ 7,638     $ 6,913     $ 7,549     $ 9,314     $ 29,833     $ 33,677    
Noninterest expense                          
  Salaries and employee benefits $ 11,119     $ 10,485     $ 11,015     $ 11,386     $ 9,495     $ 44,005     $ 37,148    
  Occupancy expense   1,225       1,228       1,275       1,315       1,057       5,043       4,334    
  Furniture and equipment expense   1,446       1,412       1,316       1,384       1,179       5,558       4,457    
  Service fees   1,232       1,581       1,329       1,523       721       5,665       4,448    
  Advertising and public relations   534       430       475       512       478       1,951       2,310    
  Professional fees   276       408       307       233       408       1,224       1,698    
  Amortization of intangibles   364       365       360       361       251       1,450       997    
  FDIC premiums and assessments   202       191       33       -       -       426       318    
  Merger, acquisition, and divestiture expense   -       -       -       1,893       1,532       1,893       2,124    
  Other operating expense   3,479       3,071       2,803       3,057       3,762       12,410       11,929    
Total noninterest expense $ 19,877     $ 19,171     $ 18,913     $ 21,664     $ 18,883     $ 79,625     $ 69,763    

 

 

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,  
        2020       2020       2020       2020       2019       2020       2019    
(Amounts in thousands, except per share data)                            
Net income $ 11,550     $ 8,266     $ 8,238     $ 7,872     $ 9,564     $ 35,926     $ 38,802    
Adjustments:                            
  Net (gain) loss on sale of securities   -       -       -       (385 )     -       (385 )     43    
  Merger, acquisition, and divestiture expense   -       -       -       1,893       1,532       1,893       2,124    
  Other items(1)   -       -       -       -       (2,395 )     -       (6,995 )  
Total adjustments   -       -       -       1,508       (863 )     1,508       (4,828 )  
Tax effect   -       -       -       354       (331 )     354       (1,343 )  
Adjusted earnings, non-GAAP $ 11,550     $ 8,266     $ 8,238     $ 9,026     $ 9,032     $ 37,080     $ 35,317    
                                 
Adjusted diluted earnings per common share,                            
  non-GAAP $ 0.65     $ 0.47     $ 0.46     $ 0.50     $ 0.58     $ 2.08     $ 2.24    
Performance ratios, non-GAAP                            
  Adjusted return on average assets   1.54 %     1.11 %     1.15 %     1.33 %     1.61 %     1.28 %     1.59 %  
  Adjusted return on average common equity   10.82 %     7.83 %     7.97 %     8.59 %     10.46 %     8.81 %     10.51 %  
  Adjusted return on average tangible                            
    common equity(2)   15.96 %     11.62 %     11.91 %     12.75 %     14.48 %     13.08 %     14.65 %  
                                 
(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 December 31,    
       2020    2019    
      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) $ 2,188,069   $ 28,143   5.12 %   $ 1,697,133   $ 21,876   5.11 %    
  Securities available for sale   87,592     640   2.91 %     116,950     1,020   3.46 %    
  Interest-bearing deposits   375,088     99   0.11 %     159,904     663   1.64 %    
Total earning assets   2,650,749     28,882   4.33 %     1,973,987     23,559   4.73 %    
Other assets   337,906             249,300            
Total assets $ 2,988,655           $ 2,223,287            
                               
Liabilities and stockholders' equity                          
Interest-bearing deposits                          
  Demand deposits $ 594,222   $ 50   0.03 %   $ 463,235   $ 88   0.08 %    
  Savings deposits   739,312     112   0.06 %     509,540     234   0.18 %    
  Time deposits   428,849     867   0.80 %     393,424     989   1.00 %    
Total interest-bearing deposits   1,762,383     1,029   0.23 %     1,366,199     1,311   0.38 %    
Borrowings                          
  Retail repurchase agreements   925 -   1   0.14 %     1,515     -   0.00 %    
  FHLB advances and other borrowings     -     -   -       -     -   -      
Total borrowings   925     1   0.14 %     1,515     -   0.00 %    
Total interest-bearing liabilities   1,763,308     1,030   0.23 %     1,367,714     1,311   0.38 %    
Noninterest-bearing demand deposits   763,412             480,096            
Other liabilities   37,305             32,957            
Total liabilities   2,564,025             1,880,767            
Stockholders' equity   424,630             342,520            
Total liabilities and stockholders' equity $ 2,988,655           $ 2,223,287            
Net interest income, FTE(1)     $ 27,852           $ 22,248        
Net interest rate spread         4.10 %           4.36 %    
Net interest margin, FTE(1)         4.18 %           4.47 %    
                               
(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 $4.24 million and $511 thousand for the three months ended December 31, 2020 and 2019, respectively.    

 

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)  
                               
      Twelve Months Ended December 31,    
       2020    2019    
      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) $ 2,142,637   $ 110,619   5.16 %   $ 1,722,419   $ 88,990   5.17 %    
  Securities available for sale   105,005     3,259   3.10 %     126,732     4,334   3.42 %    
  Securities held to maturity   -     -   -       3,045     45   1.48 %    
  Interest-bearing deposits   296,495     805   0.27 %     116,119     2,447   2.10 %    
Total earning assets   2,544,137     114,683   4.51 %     1,968,315     95,816   4.87 %    
Other assets   348,150             248,926            
Total assets $ 2,892,287           $ 2,217,241            
                               
Liabilities and stockholders' equity                          
Interest-bearing deposits                          
  Demand deposits $ 556,279   $ 311   0.06 %   $ 453,824   $ 281   0.06 %    
  Savings deposits   711,831     902   0.13 %     504,081     823   0.16 %    
  Time deposits   456,755     4,247   0.93 %     418,450     4,288   1.02 %    
Total interest-bearing deposits   1,724,865     5,460   0.32 %     1,376,355     5,392   0.39 %    
Borrowings                          
  Retail repurchase agreements   1,145 -   3   0.28 %     2,471     4   0.14 %    
  Wholesale repurchase agreements   -     -   -       3,767     119   3.17 %    
  FHLB advances and other borrowings     36     1   2.23 %     -     -   -      
Total borrowings   1,181     4   0.34 %     6,238     123   1.96 %    
Total interest-bearing liabilities   1,726,046     5,464   0.32 %     1,382,593     5,515   0.40 %    
Noninterest-bearing demand deposits   707,623             468,774            
Other liabilities   37,826             29,736            
Total liabilities   2,471,495             1,881,103            
Stockholders' equity   420,792             336,138            
Total liabilities and stockholders' equity $ 2,892,287           $ 2,217,241            
Net interest income, FTE(1)     $ 109,219           $ 90,301        
Net interest rate spread         4.19 %           4.47 %    
Net interest margin, FTE(1)         4.29 %           4.59 %    
                               
(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 $9.46 million and $3.23 million for the twelve months ended December 31, 2020 and 2019, respectively.    

 

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)  
                         
      December 31,
  September 30,
  June 30,   March 31,   December 31,
 
(Amounts in thousands, except per share data)   2020       2020       2020       2020       2019    
Assets                    
Cash and cash equivalents $ 456,561     $ 375,664     $ 421,492     $ 241,613     $ 217,009    
Debt securities available for sale   83,358       90,972       98,367       107,753       169,574    
Loans held for sale   -       -       -       -       263    
Loans held for investment, net of unearned income                  
  Noncovered   2,176,952       2,184,251       2,125,560       2,084,610       2,101,599    
  Covered   9,680       10,744       11,257       12,115       12,861    
  Allowance for loan losses   (26,182 )     (27,277 )     (23,758 )     (21,137 )     (18,425 )  
Loans held for investment, net   2,160,450       2,167,718       2,113,059       2,075,588       2,096,035    
FDIC indemnification asset   1,223       1,598       1,943       2,433       2,883    
Premises and equipment, net   57,700       60,488       62,658       63,319       62,824    
Other real estate owned, noncovered   2,083       2,103       2,181       2,502       3,969    
Interest receivable   9,052       9,151       8,380       6,117       6,677    
Goodwill   129,565       129,565       129,565       129,565       129,565    
Other intangible assets   7,069       7,433       7,798       8,159       8,519    
Other assets   104,075       103,236       103,623       101,912       101,529    
Total assets $ 3,011,136     $ 2,947,928     $ 2,949,066     $ 2,738,961     $ 2,798,847    
                         
Liabilities                    
Deposits                    
  Noninterest-bearing $ 772,795     $ 750,277     $ 752,899     $ 620,292     $ 627,868    
  Interest-bearing   1,773,452       1,741,962       1,744,947       1,668,122       1,702,044    
Total deposits   2,546,247       2,492,239       2,497,846       2,288,414       2,329,912    
Securities sold under agreements to repurchase   964       956       1,100       1,348       1,601    
FHLB and other borrowings   -       -       -       1,000       -    
Interest, taxes, and other liabilities   37,195       34,816       34,290       36,593       38,515    
Total liabilities   2,584,406       2,528,011       2,533,236       2,327,355       2,370,028    
                         
Stockholders' equity                    
Common stock   17,723       17,717       17,710       17,700       18,377    
Additional paid-in capital   173,345       172,980       172,601       172,231       192,413    
Retained earnings   237,585       230,464       226,627       222,814       219,535    
Accumulated other comprehensive loss   (1,923 )     (1,244 )     (1,108 )     (1,139 )     (1,506 )  
Total stockholders' equity   426,730       419,917       415,830       411,606       428,819    
Total liabilities and stockholders' equity $ 3,011,136     $ 2,947,928     $ 2,949,066     $ 2,738,961     $ 2,798,847    
                         
Shares outstanding at period-end   17,722,507       17,716,522       17,709,569       17,700,140       18,376,991    
Book value per common share $ 24.08     $ 23.70     $ 23.48     $ 23.25     $ 23.33    
Tangible book value per common share(1)   16.37       15.97       15.72       15.47       15.82    
                         
(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)
                       
      December 31,
  September 30,
  June 30,   March31,   December 31,
(Amounts in thousands)   2020       2020       2020       2020       2019  
Allowance for Loan Losses                  
Beginning balance $ 27,277     $ 23,758     $ 21,137     $ 18,425     $ 18,493  
Provision for loan losses charged to operations   634       4,703       3,831       3,500       91  
Charge-offs   (2,194 )     (1,563 )     (1,672 )     (1,194 )     (1,353 )
Recoveries   465       379       462       406       1,194  
Net charge-offs   (1,729 )     (1,184 )     (1,210 )     (788 )     (159 )
Ending balance $ 26,182     $ 27,277     $ 23,758     $ 21,137     $ 18,425  
                       
Nonperforming Assets                  
Non-covered nonperforming assets                  
Nonaccrual loans $ 21,706     $ 24,423     $ 24,471     $ 20,263     $ 16,113  
Accruing loans past due 90 days or more   295       43       284       329       144  
Troubled debt restructurings ("TDRs")(1)   187       456       598       623       720  
Total non-covered nonperforming loans   22,188       24,922       25,353       21,215       16,977  
OREO   2,083       2,103       2,181       2,502       3,969  
Total non-covered nonperforming assets $ 24,271     $ 27,025     $ 27,534     $ 23,717     $ 20,946  
                       
Covered nonperforming assets                  
Nonaccrual loans $ 297     $ 333     $ 299     $ 145     $ 244  
Total covered nonperforming loans   297       333       299       145       244  
OREO   -       -       -       -       -  
Total covered nonperforming assets $ 297     $ 333     $ 299     $ 145     $ 244  
                       
Additional Information                  
Performing TDRs(2) $ 10,061     $ 10,480     $ 10,822     $ 8,429     $ 5,855  
Total Accruing TDRs(3)   10,248       10,936       11,420       9,052       6,575  
                       
Non-covered ratios                  
Nonperforming loans to total loans   1.02 %     1.14 %     1.19 %     1.02 %     0.81 %
Nonperforming assets to total assets   0.81 %     0.92 %     0.94 %     0.87 %     0.75 %
Non-PCI allowance to nonperforming loans   118.00 %     109.45 %     93.71 %     99.63 %     108.53 %
Non-PCI allowance to total loans   1.20 %     1.25 %     1.12 %     1.01 %     0.88 %
Annualized net charge-offs to average loans   0.26 %     0.22 %     0.23 %     0.15 %     0.04 %
                       
Total ratios                  
Nonperforming loans to total loans   1.03 %     1.15 %     1.20 %     1.02 %     0.81 %
Nonperforming assets to total assets   0.82 %     0.93 %     0.94 %     0.87 %     0.76 %
Allowance for loan losses to nonperforming loans   116.44 %     108.01 %     92.62 %     98.96 %     106.99 %
Allowance for loan losses to total loans   1.20 %     1.24 %     1.11 %     1.01 %     0.87 %
Annualized net charge-offs to average loans   0.26 %     0.22 %     0.23 %     0.15 %     0.04 %
                       
(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

 

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Source: First Community Bankshares, Inc.