Advertisement

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

First Community Bankshares, Inc.
·18-min read

BLUEFIELD, Va., July 28, 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 June 30, 2021. The Company reported net income of $13.40 million, or $0.76 per diluted common share, for the quarter ended June 30, 2021, which was an increase of $0.30 per diluted common share, or 65.22%, over the same quarter of 2020. Net income for the six months ended June 30, 2021 was $28.01 million or $1.59 per diluted common share, which represents a 76.67% 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 last quarter and last year. The quarterly dividend is payable to common shareholders of record on August 9, 2021, and is expected to be paid on or about August 23, 2021. 2021 is the 36th consecutive year of regular dividends to common shareholders.

Second Quarter 2021 and Current Highlights

General

  • Net income for the quarter increased $5.17 million to $13.40 million compared to the same quarter of 2020. The large increase in net income includes the reversal of $2.23 million in allowance for credit losses for the second quarter of 2021. Net income for the six month period increased $11.90 million compared to the same period of 2020. Similarly, for the six month period, a reversal of $6.23 million in the allowance for credit losses accounts for a large part of the increase in 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, and prior year provisioning driven by the pandemic.

  • During the second quarter, the Company repurchased 261,600 common shares for $7.98 million. Year-to-date the Company has repurchased 449,300 common shares for $12.96 million.

ADVERTISEMENT

Income Statement

  • Diluted earnings per share increased $0.30 to $0.76 compared to the same quarter of 2020. Diluted earnings per share for the six month period increased $0.69 to $1.59 compared to 2020.

  • Due to forecasted continued improving jobless rates and other economic indicators, as well as strong credit quality metrics, the Company released a substantial amount of allowance for credit losses for the quarter resulting in a reversal of $2.23 million in the provision for credit losses; a significant improvement from the $3.83 million loan loss provision recorded in the second quarter of 2020 at the onset of the COVID-19 pandemic. For the six month period, the Company reversed $6.23 million compared to $7.33 million in loan loss provision recorded for the same period in 2020.

  • Annualized return on average equity increased to 12.55% compared to 7.97% from the same quarter of 2020, and return on average equity for the first six months increased to 13.24% compared to 7.73% from the same period last year.

  • Annualized return on average assets increased to 1.70% compared to 1.15% from the same quarter of 2020, while year-to-date return on average assets increased to 1.82% compared to 1.15% for the same period of 2020.

  • Non-interest income for the second quarter of 2021 increased $1.88 million, or 27.25%, compared to the prior year. Year-to-date non-interest income increased 13.17% to $16.37 million compared to last year. Both increases are largely attributable to the more vibrant state of local economies with increased customer activity compared with last spring.

  • Other income includes $946 thousand of accelerated amortization that eliminates the carrying value of the indemnification asset with no anticipated claims in the future.

Balance Sheet and Asset Quality

  • Net charge-offs for the first quarter of 2021 were $476 thousand and the allowance for credit losses remains very strong at 1.48% of total loans.

  • As of June 30, 2021, total COVID-19 loan deferrals stood at $4.02 million, down significantly from the peak of $436.11 million at June 30, 2020.

  • The SBA had forgiven $48.27 million, or 79.15%, of the Company’s first round Paycheck Protection Program loan balances through June 30, 2021. Current PPP loan balances at June 30, 2021, which include second round originations were, $41.63 million.

  • Book value per share at June 30, 2021, was $24.66, an increase of $0.58 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 June 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 June 30, 2021. The Company reported consolidated assets of $3.13 billion as of June 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

Six Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

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

2021

2021

2020

2020

2020

2021

2020

Interest income

Interest and fees on loans

$

25,937

$

26,540

$

28,101

$

27,297

$

26,991

$

52,477

$

55,049

Interest on securities

435

495

549

609

713

930

1,631

Interest on deposits in banks

166

116

96

89

82

282

615

Total interest income

26,538

27,151

28,746

27,995

27,786

53,689

57,295

Interest expense

Interest on deposits

724

869

1,029

1,161

1,445

1,593

3,270

Interest on borrowings

-

-

-

-

2

-

4

Total interest expense

724

869

1,029

1,161

1,447

1,593

3,274

Net interest income

25,814

26,282

27,717

26,834

26,339

52,096

54,021

(Recovery of) provision for credit losses

(2,230

)

(4,001

)

634

4,703

3,831

(6,231

)

7,331

Net interest income after provision

28,044

30,283

27,083

22,131

22,508

58,327

46,690

Noninterest income

8,797

7,569

7,733

7,638

6,913

16,366

14,462

Noninterest expense

19,361

18,820

19,877

19,171

18,913

38,181

40,577

Income before income taxes

17,480

19,032

14,939

10,598

10,508

36,512

20,575

Income tax expense

4,077

4,430

3,389

2,332

2,270

8,507

4,465

Net income

$

13,403

$

14,602

$

11,550

$

8,266

$

8,238

$

28,005

$

16,110

Earnings per common share

Basic

$

0.77

$

0.83

$

0.65

$

0.47

$

0.47

$

1.59

$

0.90

Diluted

0.76

0.82

0.65

0.47

0.46

1.59

0.90

Cash dividends per common share

Regular

0.25

0.25

0.25

0.25

0.25

0.50

0.50

Weighted average shares outstanding

Basic

17,486,182

17,669,937

17,717,356

17,710,283

17,701,853

17,577,552

17,850,423

Diluted

17,536,144

17,729,185

17,751,805

17,732,428

17,728,300

17,631,330

17,888,325

Performance ratios

Return on average assets

1.70

%

1.94

%

1.54

%

1.11

%

1.15

%

1.82

%

1.15

%

Return on average common equity

12.55

%

13.94

%

10.82

%

7.83

%

7.97

%

13.24

%

7.73

%

Return on average tangible common equity(1)

18.40

%

20.54

%

15.96

%

11.62

%

11.91

%

19.45

%

11.51

%

(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

Six Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

(Amounts in thousands)

2021

2021

2020

2020

2020

2021

2020

Noninterest income

Wealth management

$

1,058

$

881

$

810

$

909

$

854

$

1,939

$

1,698

Service charges on deposits

3,098

3,031

3,478

3,250

2,560

6,129

6,291

Other service charges and fees

3,166

3,022

2,737

2,748

2,617

6,188

4,848

Net gain on sale of securities

-

-

-

-

-

-

385

Net FDIC indemnification asset amortization

(946

)

(280

)

(338

)

(383

)

(483

)

(1,226

)

(969

)

Other operating income

2,421

915

1,046

1,114

1,365

3,336

2,209

Total noninterest income

$

8,797

$

7,569

$

7,733

$

7,638

$

6,913

$

16,366

$

14,462

Noninterest expense

Salaries and employee benefits

$

10,216

$

10,884

$

11,119

$

10,485

$

11,015

$

21,100

$

22,401

Occupancy expense

1,115

1,275

1,225

1,228

1,275

2,390

2,590

Furniture and equipment expense

1,457

1,367

1,446

1,412

1,316

2,824

2,700

Service fees

1,513

1,335

1,232

1,581

1,329

2,848

2,852

Advertising and public relations

616

335

534

430

475

951

987

Professional fees

290

466

276

408

307

756

540

Amortization of intangibles

360

357

364

365

360

717

721

FDIC premiums and assessments

204

199

202

191

33

403

33

Merger, acquisition, and divestiture expense

-

-

-

-

-

-

1,893

Other operating expense

3,590

2,602

3,479

3,071

2,803

6,192

5,860

Total noninterest expense

$

19,361

$

18,820

$

19,877

$

19,171

$

18,913

$

38,181

$

40,577


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

Three Months Ended

Six Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

June 30,

2021

2021

2020

2020

2020

2021

2020

(Amounts in thousands, except per share data)

Net income

$

13,403

$

14,602

$

11,550

$

8,266

$

8,238

$

28,005

$

16,110

Non-GAAP adjustments:

Net (gain) loss on sale of securities

-

-

-

-

-

-

(385

)

Merger, acquisition, and divestiture expense

-

-

-

-

-

-

1,893

Other items(1)

-

-

-

-

-

-

-

Total adjustments

-

-

-

-

-

-

1,508

Tax effect

-

-

-

-

-

-

354

Adjusted earnings, non-GAAP

$

13,403

$

14,602

$

11,550

$

8,266

$

8,238

$

28,005

$

17,264

Adjusted diluted earnings per common share,

non-GAAP

$

0.76

$

0.82

$

0.65

$

0.47

$

0.46

$

1.59

$

0.97

Performance ratios, non-GAAP

Adjusted return on average assets

1.70

%

1.94

%

1.54

%

1.11

%

1.15

%

1.82

%

1.24

%

Adjusted return on average common equity

12.55

%

13.94

%

10.82

%

7.83

%

7.97

%

13.24

%

8.28

%

Adjusted return on average tangible

common equity(2)

18.40

%

20.54

%

15.96

%

11.62

%

11.91

%

19.45

%

12.33

%

(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 June 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)

$

2,134,136

$

25,979

4.88

%

$

2,129,513

$

27,040

5.11

%

Securities available for sale

84,099

508

2.42

%

103,378

839

3.26

%

Interest-bearing deposits

610,148

166

0.11

%

293,791

81

0.11

%

Total earning assets

2,828,383

26,653

3.78

%

2,526,682

27,960

4.45

%

Other assets

331,563

356,913

Total assets

$

3,159,946

$

2,883,595

Liabilities and stockholders' equity

Interest-bearing deposits

Demand deposits

$

654,767

$

33

0.02

%

$

547,445

$

98

0.07

%

Savings deposits

818,490

63

0.03

%

707,298

240

0.14

%

Time deposits

394,889

628

0.64

%

465,212

1,107

0.96

%

Total interest-bearing deposits

1,868,146

724

0.15

%

1,719,955

1,445

0.34

%

Borrowings

Retail repurchase agreements

1,266

-

N/M

1,244

1

0.14

%

Total borrowings

1,266

-

-

1,244

1

0.32

%

Total interest-bearing liabilities

1,869,412

724

0.16

%

1,721,199

1,446

0.34

%

Noninterest-bearing demand deposits

824,888

711,174

Other liabilities

37,306

35,467

Total liabilities

2,731,606

2,467,840

Stockholders' equity

428,340

415,755

Total liabilities and stockholders' equity

$

3,159,946

$

2,883,595

Net interest income, FTE(1)

$

25,929

$

26,514

Net interest rate spread

3.62

%

4.11

%

Net interest margin, FTE(1)

3.68

%

4.22

%

(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 $1.25 million and $1.50 million for the three months ended June 30, 2021 and 2020, respectively.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

Six Months Ended June 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)

$

2,149,509

$

52,561

4.93

%

$

2,105,323

$

55,145

5.27

%

Securities available for sale

83,868

1,081

2.60

%

119,744

1,899

3.19

%

Interest-bearing deposits

539,500

284

0.11

%

228,636

616

0.53

%

Total earning assets

2,772,877

53,926

3.92

%

2,453,703

57,660

4.73

%

Other assets

331,524

355,280

Total assets

$

3,104,401

$

2,808,983

Liabilities and stockholders' equity

Interest-bearing deposits

Demand deposits

$

634,000

$

72

0.02

%

$

525,024

$

188

0.07

%

Savings deposits

798,571

154

0.04

%

693,477

654

0.19

%

Time deposits

403,888

1,367

0.68

%

475,149

2,429

1.03

%

Total interest-bearing deposits

1,836,459

1,593

0.16

%

1,693,650

3,271

0.39

%

Borrowings

Retail repurchase agreements

1,250

-

N/M

1,346

3

0.39

%

FHLB advances and other borrowings

-

-

-

72

1

2.23

%

Total borrowings

1,250

-

-

1,418

4

0.57

%

Total interest-bearing liabilities

1,837,709

1,593

0.17

%

1,695,068

3,275

0.39

%

Noninterest-bearing demand deposits

801,512

655,906

Other liabilities

38,609

38,820

Total liabilities

2,677,830

2,389,794

Stockholders' equity

426,571

419,189

Total liabilities and stockholders' equity

$

3,104,401

$

2,808,983

Net interest income, FTE(1)

$

52,333

$

54,385

Net interest rate spread

3.75

%

4.34

%

Net interest margin, FTE(1)

3.81

%

4.46

%

(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 $2.44 million and $3.46 million for the six months ended June 30, 2021 and 2020, respectively.


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

(Amounts in thousands, except per share data)

2021

2021

2020

2020

2020

Assets

Cash and cash equivalents

$

618,738

$

628,745

$

456,561

$

375,664

$

421,492

Debt securities available for sale

79,842

87,643

83,358

90,972

98,367

Loans held for investment, net of unearned income

(includes covered loans of $7,503, $9,041, $9,680,

$10,744, and $11,257, for the stated periods, respectively)

2,153,731

2,146,640

2,186,632

2,194,995

2,136,817

Allowance for credit losses (1)

(31,857

)

(34,563

)

(26,182

)

(27,277

)

(23,758

)

Loans held for investment, net

2,121,874

2,112,077

2,160,450

2,167,718

2,113,059

FDIC indemnification asset

-

946

1,223

1,598

1,943

Premises and equipment, net

53,560

57,371

57,700

60,488

62,658

Other real estate owned, noncovered

1,324

1,740

2,083

2,103

2,181

Interest receivable

8,480

8,724

9,052

9,151

8,380

Goodwill

129,565

129,565

129,565

129,565

129,565

Other intangible assets

6,352

6,712

7,069

7,433

7,798

Other assets

109,548

106,543

104,075

103,236

103,623

Total assets

$

3,129,283

$

3,140,066

$

3,011,136

$

2,947,928

$

2,949,066

Liabilities

Deposits

Noninterest-bearing

$

819,138

$

824,576

$

772,795

$

750,277

$

752,899

Interest-bearing

1,846,556

1,848,524

1,773,452

1,741,962

1,744,947

Total deposits

2,665,694

2,673,100

2,546,247

2,492,239

2,497,846

Securities sold under agreements to repurchase

994

1,519

964

956

1,100

Interest, taxes, and other liabilities

35,061

39,448

37,195

34,816

34,290

Total liabilities

2,701,749

2,714,067

2,584,406

2,528,011

2,533,236

Stockholders' equity

Common stock

17,335

17,592

17,723

17,717

17,710

Additional paid-in capital

161,853

169,173

173,345

172,980

172,601

Retained earnings

250,911

241,889

237,585

230,464

226,627

Accumulated other comprehensive loss

(2,565

)

(2,655

)

(1,923

)

(1,244

)

(1,108

)

Total stockholders' equity

427,534

425,999

426,730

419,917

415,830

Total liabilities and stockholders' equity

$

3,129,283

$

3,140,066

$

3,011,136

$

2,947,928

$

2,949,066

Shares outstanding at period-end

17,334,547

17,592,009

17,722,507

17,716,522

17,709,569

Book value per common share

$

24.66

$

24.22

$

24.08

$

23.70

$

23.48

Tangible book value per common share(2)

16.82

16.47

16.37

15.97

15.72

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


SELECTED CREDIT QUALITY INFORMATION (Unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

(Amounts in thousands)

2021

2021

2020

2020

2020

Allowance for Credit Losses (1)

Beginning balance

$

34,563

$

26,182

$

27,277

$

23,758

$

21,137

Cumulative effect of adoption of ASU 2016-13

-

13,107

-

-

-

(Recovery of) provision for

credit/loan losses charged to operations

(2,230

)

(4,001

)

634

4,703

3,831

Charge-offs

(1,902

)

(1,730

)

(2,194

)

(1,563

)

(1,672

)

Recoveries

1,426

1,005

465

379

462

Net charge-offs

(476

)

(725

)

(1,729

)

(1,184

)

(1,210

)

Ending balance

$

31,857

$

34,563

$

26,182

$

27,277

$

23,758

Nonperforming Assets

Nonaccrual loans

$

24,085

$

26,106

$

22,003

$

24,756

$

24,770

Accruing loans past due 90 days or more

327

171

295

43

284

Troubled debt restructurings ("TDRs")(2)

133

308

187

456

598

Total nonperforming loans

24,545

26,585

22,485

25,255

25,652

OREO

1,324

1,740

2,083

2,103

2,181

Total nonperforming assets

$

25,869

$

28,325

$

24,568

$

27,358

$

27,833

Additional Information

Total Accruing TDRs(3)

$

8,309

$

9,027

$

10,248

$

10,936

$

11,420

Asset Quality Ratios

Nonperforming loans to total loans

1.14

%

1.24

%

1.03

%

1.15

%

1.20

%

Nonperforming assets to total assets

0.83

%

0.90

%

0.82

%

0.93

%

0.94

%

Allowance for credit/loan losses to nonperforming loans

129.79

%

130.01

%

116.44

%

108.01

%

92.62

%

Allowance for credit/loan losses to total loans

1.48

%

1.61

%

1.20

%

1.24

%

1.11

%

Annualized net charge-offs to average loans

0.09

%

0.14

%

0.26

%

0.22

%

0.23

%

(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