First Community Bankshares, Inc. Announces Record Third Quarter Results and Quarterly Cash Dividend
10/26/2021 - 05:00 PM
BLUEFIELD, Va., Oct. 26, 2021 (GLOBE NEWSWIRE) -- First Community Bankshares, Inc. (NASDAQ: FCBC) (www.firstcommunitybank.com $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 t o $0.73 compared to the same quarter of 2020. Diluted earnings per share for the nine-month period increased $0.95 t o $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
