First Community Bankshares, Inc. Announces First Quarter 2022 Results and Quarterly Cash Dividend

Source: Nasdaq GlobeNewswire / 26 Apr 2022 15:30:59 America/Chicago

BLUEFIELD, Va., April 26, 2022 (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 March 31, 2022. The Company reported quarterly net income of $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 37^th 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, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021
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, 2022		December 31, 2021		September 30, 2021		June 30, 2021			March 31, 2021
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, 2022				December 31, 2021				September 30, 2021				June 30, 2021				March 31, 2021
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, 2022			December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021
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}

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

First Community Bankshares, Inc. Announces First Quarter 2022 Results and Quarterly Cash Dividend

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