First Community Bankshares, Inc. Announces First Quarter 2022 Results and Quarterly Cash Dividend
04/26/2022 - 04:30 PM
BLUEFIELD, Va., April 26, 2022 (GLOBE NEWSWIRE) -- First Community Bankshares, Inc. (NASDAQ: FCBC) (www.firstcommunitybank.com $9.52 million , or $0.56 per diluted common share, for the quarter ended March 31, 2022.
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 May 6, 2022, and is expected to be paid on or about May 20, 2022. This marks the 37th consecutive year of regular dividends to common shareholders.
First Quarter 2022 and Current Highlights
Income Statement
Net income of $9.52 million for the quarter was a decrease of $5.09 million , or $0.26 per diluted common share, compared to the same quarter of 2021. The decrease was primarily driven by a return to more normalized expense in the provision for credit losses of $1.96 million for the first quarter of 2022 compared to a $4.00 million reversal of provision in the first quarter of 2021. The current year provision is largely due to robust loan growth in the first quarter, principally led by commercial loan demand. The reversal of provision in the first quarter of 2021 was driven by a significantly improved economic outlook than in early 2020. Despite the significant increase in credit loss provision between the two periods, annualized first quarter return on average assets was 1.20% and return on average common equity was 8.98% . Net interest margin for the first quarter was 3.55% , which was a three basis point increase from 3.52% reported for the fourth quarter of 2021. The cost of interest-bearing deposits declined another three basis points to 0.10% . Salaries and employee benefits increased $787 thousand , or 7.23% , from last year. During the quarter, the Company implemented annualized wage increases of approximately $2.5 million as part of its ongoing strategic initiative to enhance Human Capital Management, which included an increased minimum wage. Balance Sheet and Asset Quality
The Company’s loan portfolio increased by $78.73 million , or an annualized growth rate of 14.74% , during the first quarter of 2022. Loan demand and originations were strong in all categories, including construction, commercial real estate, residential mortgage, and consumer loans. During the first quarter, the Company repurchased 132,000 common shares for $4.09 million . Non-performing loans to total loans remained very low at 0.96% of total loans and continues the declining trend experienced over the past four quarters. Net charge-offs for the first quarter of 2022 were $838 thousand , or 0.15% of annualized average loans, compared to net charge-offs of $725 thousand , or 0.14% of annualized average loans, for the same period in 2021. The allowance for credit losses to total loans remained at 1.29% of total loans. Book value per share at March 31, 2022, was $25.27, a decrease of $0.07 from year-end 2021. 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 March 31, 2022. First Community Bank offers wealth management and investment advice and services through its Trust Division and through its wholly owned subsidiary, First Community Wealth Management, which collectively managed and administered $1.28 billion in combined assets as of March 31, 2022. The Company reported consolidated assets of $3.24 billion as of March 31, 2022. 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 (Amounts in thousands, except share and per share data) March 31, December September June 30, March 31, Interest income Interest and fees on loans $ 24,641 $ 25,236 $ 25,119 $ 25,937 $ 26,540 Interest on securities 750 362 445 435 495 Interest on deposits in banks 248 234 225 166 116 Total interest income 25,639 25,832 25,789 26,538 27,151 Interest expense Interest on deposits 486 600 642 724 869 Interest on borrowings - - 1 - - Total interest expense 486 600 643 724 869 Net interest income 25,153 25,232 25,146 25,814 26,282 (Recovery of) provision for credit losses 1,961 (846 ) (1,394 ) (2,230 ) (4,001 ) Net interest income after provision 23,192 26,078 26,540 28,044 30,283 Noninterest income 9,194 9,215 8,720 8,797 7,569 Noninterest expense 19,986 21,701 18,836 19,361 18,820 Income before income taxes 12,400 13,592 16,424 17,480 19,032 Income tax expense 2,885 3,037 3,816 4,077 4,430 Net income $ 9,515 $ 10,555 $ 12,608 $ 13,403 $ 14,602 Earnings per common share Basic $ 0.57 $ 0.62 $ 0.73 $ 0.77 $ 0.83 Diluted 0.56 0.62 0.73 0.76 0.82 Cash dividends per common share Regular 0.27 0.27 0.27 0.25 0.25 Weighted average shares outstanding Basic 16,817,284 16,974,005 17,221,244 17,486,182 17,669,937 Diluted 16,864,515 17,038,980 17,279,576 17,536,144 17,729,185 Performance ratios Return on average assets 1.20 % 1.32 % 1.59 % 1.70 % 1.94 % Return on average common equity 8.98 % 9.77 % 11.65 % 12.55 % 13.94 % Return on average tangible common equity(1) 13.10 % 14.28 % 17.04 % 18.40 % 20.54 % (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 (Amounts in thousands) March 31, December September June 30, March 31, Noninterest income Wealth management $ 972 $ 940 $ 974 $ 1,058 $ 881 Service charges on deposits 3,498 3,718 3,599 3,098 3,031 Other service charges and fees 3,017 3,091 3,143 3,166 3,022 Net FDIC indemnification asset amortization - - - (946 ) (280 ) Other operating income 1,707 1,466 1,004 2,421 915 Total noninterest income $ 9,194 $ 9,215 $ 8,720 $ 8,797 $ 7,569 Noninterest expense Salaries and employee benefits $ 11,671 $ 12,493 $ 10,646 $ 10,216 $ 10,884 Occupancy expense 1,269 1,368 1,155 1,115 1,275 Furniture and equipment expense 1,614 1,418 1,385 1,457 1,367 Service fees 1,503 1,946 1,530 1,513 1,335 Advertising and public relations 540 589 536 616 335 Professional fees 453 455 313 290 466 Amortization of intangibles 357 364 365 360 357 FDIC premiums and assessments 218 213 216 204 199 Other operating expense 2,361 2,855 2,690 3,590 2,602 Total noninterest expense $ 19,986 $ 21,701 $ 18,836 $ 19,361 $ 18,820
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) Three Months Ended March 31, 2022 2021 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) $ 2,200,003 $ 24,698 4.55 % $ 2,165,054 $ 26,582 4.98 % Securities available for sale 140,975 800 2.30 % 83,634 573 2.78 % Interest-bearing deposits 544,718 249 0.19 % 468,067 118 0.10 % Total earning assets 2,885,696 25,747 3.62 % 2,716,755 27,273 4.07 % Other assets 328,212 331,483 Total assets $ 3,213,908 $ 3,048,238 Liabilities and stockholders' equity Interest-bearing deposits Demand deposits $ 679,211 $ 28 0.02 % $ 613,003 $ 39 0.03 % Savings deposits 881,295 66 0.03 % 778,430 91 0.05 % Time deposits 346,902 392 0.46 % 412,986 739 0.73 % Total interest-bearing deposits 1,907,408 486 0.10 % 1,804,419 869 0.19 % Borrowings Retail repurchase agreements 1,993 - N/M 1,234 - N/M Total borrowings 1,993 - N/M 1,234 - N/M Total interest-bearing liabilities 1,909,401 486 0.10 % 1,805,653 869 0.19 % Noninterest-bearing demand deposits 835,921 777,876 Other liabilities 38,956 39,926 Total liabilities 2,784,278 2,623,455 Stockholders' equity 429,630 424,783 Total liabilities and stockholders' equity $ 3,213,908 $ 3,048,238 Net interest income, FTE(1) $ 25,261 $ 26,404 Net interest rate spread 3.52 % 3.88 % Net interest margin, FTE(1) 3.55 % 3.94 % (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 $866 thousand and $1.18 million for the three months ended March 31, 2022 and 2021, respectively.
CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) (Amounts in thousands, except per share data) March 31, December September June 30, March 31, Assets Cash and cash equivalents $ 457,306 $ 677,439 $ 635,007 $ 618,738 $ 628,745 Debt securities available for sale 268,703 76,292 77,440 79,842 87,643 Loans held for investment, net of unearned income (includes covered loans of $7,503 and $9,041 for June 30 and March 31, 2021, respectively) (1) 2,244,296 2,165,569 2,152,103 2,153,731 2,146,640 Allowance for credit losses (28,981 ) (27,858 ) (29,877 ) (31,857 ) (34,563 ) Loans held for investment, net 2,215,315 2,137,711 2,122,226 2,121,874 2,112,077 FDIC indemnification asset - - - - 946 Premises and equipment, net 50,912 52,284 52,842 53,560 57,371 Other real estate owned 848 1,015 1,240 1,324 1,740 Interest receivable 8,100 7,900 8,146 8,480 8,724 Goodwill 129,565 129,565 129,565 129,565 129,565 Other intangible assets 5,266 5,622 5,987 6,352 6,712 Other assets 108,112 106,691 107,258 109,548 106,543 Total assets $ 3,244,127 $ 3,194,519 $ 3,139,711 $ 3,129,283 $ 3,140,066 Liabilities Deposits Noninterest-bearing $ 860,652 $ 842,783 $ 820,147 $ 819,138 $ 824,576 Interest-bearing 1,922,292 1,886,608 1,853,699 1,846,556 1,848,524 Total deposits 2,782,944 2,729,391 2,673,846 2,665,694 2,673,100 Securities sold under agreements to repurchase 2,488 1,536 1,106 994 1,519 Interest, taxes, and other liabilities 34,539 35,817 37,395 35,061 39,448 Total liabilities 2,819,971 - 2,766,744 - 2,712,347 - 2,701,749 - 2,714,067 Stockholders' equity Common stock 16,782 16,878 17,071 17,335 17,592 Additional paid-in capital 144,088 147,619 154,086 161,853 169,173 Retained earnings 269,798 264,824 258,860 250,911 241,889 Accumulated other comprehensive loss (6,512 ) (1,546 ) (2,653 ) (2,565 ) (2,655 ) Total stockholders' equity 424,156 427,775 427,364 427,534 425,999 Total liabilities and stockholders' equity $ 3,244,127 $ 3,194,519 $ 3,139,711 $ 3,129,283 $ 3,140,066 Shares outstanding at period-end 16,781,975 16,878,220 17,071,052 17,334,547 17,592,009 Book value per common share $ 25.27 $ 25.34 $ 25.03 $ 24.66 $ 24.22 Tangible book value per common share(2) 17.24 17.34 17.09 16.82 16.47 (1) FDIC Loss Share agreement terminated in September 2021. (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) (Amounts in thousands) March 31, December September June 30, March 31, Allowance for Credit Losses Beginning balance $ 27,858 $ 29,877 $ 31,857 $ 34,563 $ 26,182 Cumulative effect of adoption of ASU 2016-13 - - - - 13,107 Provision for (recovery of) credit/loan losses charged to operations 1,961 (846 ) (1,394 ) (2,230 ) (4,001 ) Charge-offs (1,302 ) (1,887 ) (1,255 ) (1,902 ) (1,730 ) Recoveries 464 714 669 1,426 1,005 Net charge-offs (838 ) (1,173 ) (586 ) (476 ) (725 ) Ending balance $ 28,981 $ 27,858 $ 29,877 $ 31,857 $ 34,563 Nonperforming Assets Nonaccrual loans $ 20,487 $ 20,768 $ 22,070 $ 24,085 $ 26,106 Accruing loans past due 90 days or more - 87 5 327 171 Troubled debt restructurings ("TDRs")(1) 1,141 1,367 359 133 308 Total nonperforming loans 21,628 22,222 22,434 24,545 26,585 OREO 848 1,015 1,240 1,324 1,740 Total nonperforming assets $ 22,476 $ 23,237 $ 23,674 $ 25,869 $ 28,325 Additional Information Total Accruing TDRs(3) $ 8,782 $ 8,652 $ 8,185 $ 8,309 $ 9,027 Asset Quality Ratios Nonperforming loans to total loans 0.96 % 1.03 % 1.04 % 1.14 % 1.24 % Nonperforming assets to total assets 0.69 % 0.73 % 0.75 % 0.83 % 0.90 % Allowance for credit/loan losses to nonperforming loans 134.00 % 125.36 % 133.18 % 129.79 % 130.01 % Allowance for credit/loan losses to total loans 1.29 % 1.29 % 1.39 % 1.48 % 1.61 % Annualized net charge-offs to average loans 0.15 % 0.22 % 0.11 % 0.09 % 0.14 % (1) Accruing TDRs restructured within the past six months or nonperforming (2) Accruing total TDRs
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