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First Community Bankshares, Inc. Announces Record 2021 Full Year Results, Fourth Quarter 2021 Results, and Quarterly Cash Dividend Declared
Source: Nasdaq GlobeNewswire / 26 Jan 2022 15:00:01 America/Chicago
BLUEFIELD, Va., Jan. 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 year and quarter ended December 31, 2021. Annual net income for 2021 was a record $51.17 million, or $2.94 per diluted common share. The Company reported net income of $10.56 million, or $0.62 per diluted common share, for the quarter ended December 31, 2021.
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 February 11, 2022, and is expected to be paid on or about February 25, 2022. 2022 is the 37th consecutive year of regular dividends to common shareholders.
Fourth Quarter 2021 and Current Highlights
Income Statement
- Annual net income for 2021 of $51.17 million, or $2.94 per diluted common share, was an increase of $15.24 million over 2020 and represents a 45.54% increase in diluted earnings per share compared to 2020. A reversal of $8.47 million in the allowance for credit losses in 2021 accounts for a large portion of the increase in net income. The decreases in credit loss provisioning are primarily due to significantly improved economic forecasts and GDP growth in the current year, as well as strong credit quality metrics, versus prior year provisioning driven by the pandemic. The increase was offset by a decrease in net interest income of $6.10 million, or 5.62%, driven by the current historically low interest rate environment, as well as a $3.33 million decrease in accretion on acquired loans.
- Net income for the fourth quarter of 2021 decreased $995 thousand to $10.56 million, or $0.62 per diluted common share, compared to the same quarter of 2020. The decrease was primarily driven by a decrease in net interest income of $2.49 million, or 8.97%, due to the current historically low interest rate environment, as well as a $1.67 million decrease in accretion on acquired loans. The decrease in net interest income was offset by the reversal of $846 thousand in allowance for credit losses for the fourth quarter.
- 2021 year-to-date return on average common equity increased to 11.96% compared to 8.54% in 2020. Annualized fourth quarter-to-date return on average common equity decreased to 9.77% compared to 10.82% over the same quarter of 2020.
- 2021 year-to-date return on average assets increased to 1.63% compared to 1.24% for 2020. Annualized quarter-to-date return on average assets decreased to 1.32% compared to 1.54% over the same quarter of 2020.
- Year-to-date non-interest income increased 14.98% to $34.30 million, over last year. Non-interest income for the fourth quarter of 2021 increased $1.48 million, or 19.16%, compared to the same quarter of the prior 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
- Year-to-date, the Company has repurchased 949,386 common shares, or 5.36% of outstanding, for $28.88 million.
- During the fourth quarter, the Company repurchased 222,700 common shares for $7.45 million.
- Net charge-offs for the fourth quarter of 2021 were $1.17 million, or 0.22% of annualized average loans, compared to net charge-offs of $1.73 million, or 0.26% of annualized average loans, for the same period in 2020. Non-performing loans to total loans remained a very low 1.03%.
- The allowance for credit losses to total loans remains very strong at 1.29% of total loans.
- The SBA had forgiven $56.86 million, or 93.20%, of the Company’s first round Paycheck Protection Program (“PPP”) loan balances through December 31, 2021. Current PPP loan balances at December 31, 2021, which include second round originations, were $20.64 million.
- Book value per share at December 31, 2021, was $25.34, an increase of $1.26 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 December 31, 2021. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.32 billion in combined assets as of December 31, 2021. The Company reported consolidated assets of $3.19 billion as of December 31, 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 Twelve Months Ended December 31, September 30, June 30, March 31, December 31, December 31, (Amounts in thousands, except share and per share data) 2021 2021 2021 2021 2020 2021 2020 Interest income Interest and fees on loans $ 25,236 $ 25,119 $ 25,937 $ 26,540 $ 28,101 $ 102,832 $ 110,447 Interest on securities 362 445 435 495 549 1,737 2,789 Interest on deposits in banks 234 225 166 116 96 741 800 Total interest income 25,832 25,789 26,538 27,151 28,746 105,310 114,036 Interest expense Interest on deposits 600 642 724 869 1,029 2,835 5,460 Interest on borrowings - 1 - - - 1 4 Total interest expense 600 643 724 869 1,029 2,836 5,464 Net interest income 25,232 25,146 25,814 26,282 27,717 102,474 108,572 (Recovery of) provision for credit losses (846 ) (1,394 ) (2,230 ) (4,001 ) 634 (8,471 ) 12,668 Net interest income after provision 26,078 26,540 28,044 30,283 27,083 110,945 95,904 Noninterest income 9,215 8,720 8,797 7,569 7,733 34,301 29,833 Noninterest expense 21,701 18,836 19,361 18,820 19,877 78,718 79,625 Income before income taxes 13,592 16,424 17,480 19,032 14,939 66,528 46,112 Income tax expense 3,037 3,816 4,077 4,430 3,389 15,360 10,186 Net income $ 10,555 $ 12,608 $ 13,403 $ 14,602 $ 11,550 $ 51,168 $ 35,926 Earnings per common share Basic $ 0.62 $ 0.73 $ 0.77 $ 0.83 $ 0.65 $ 2.95 $ 2.02 Diluted 0.62 0.73 0.76 0.82 0.65 2.94 2.02 Cash dividends per common share Regular 0.27 0.27 0.25 0.25 0.25 1.04 1.00 Weighted average shares outstanding Basic 16,974,005 17,221,244 17,486,182 17,669,937 17,717,356 17,335,615 17,781,748 Diluted 17,038,980 17,279,576 17,536,144 17,729,185 17,751,805 17,402,936 17,815,380 Performance ratios Return on average assets 1.32 % 1.59 % 1.70 % 1.94 % 1.54 % 1.63 % 1.24 % Return on average common equity 9.77 % 11.65 % 12.55 % 13.94 % 10.82 % 11.96 % 8.54 % Return on average tangible common equity(1) 14.28 % 17.04 % 18.40 % 20.54 % 15.96 % 17.53 % 12.68 % (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) 2021 2021 2021 2021 2020 2021 2020 Noninterest income Wealth management $ 940 $ 974 $ 1,058 $ 881 $ 810 $ 3,853 $ 3,417 Service charges on deposits 3,718 3,599 3,098 3,031 3,478 13,446 13,019 Other service charges and fees 3,091 3,143 3,166 3,022 2,737 12,422 10,333 Net gain on sale of securities - - - - - - 385 Net FDIC indemnification asset amortization - - (946 ) (280 ) (338 ) (1,226 ) (1,690 ) Other operating income 1,466 1,004 2,421 915 1,046 5,806 4,369 Total noninterest income $ 9,215 $ 8,720 $ 8,797 $ 7,569 $ 7,733 $ 34,301 $ 29,833 Noninterest expense Salaries and employee benefits $ 12,493 $ 10,646 $ 10,216 $ 10,884 $ 11,119 $ 44,239 $ 44,005 Occupancy expense 1,368 1,155 1,115 1,275 1,225 4,913 5,043 Furniture and equipment expense 1,418 1,385 1,457 1,367 1,446 5,627 5,558 Service fees 1,946 1,530 1,513 1,335 1,232 6,324 5,665 Advertising and public relations 589 536 616 335 534 2,076 1,951 Professional fees 455 313 290 466 276 1,524 1,224 Amortization of intangibles 364 365 360 357 364 1,446 1,450 FDIC premiums and assessments 213 216 204 199 202 832 426 Merger, acquisition, and divestiture expense - - - - - - 1,893 Other operating expense 2,855 2,690 3,590 2,602 3,479 11,737 12,410 Total noninterest expense $ 21,701 $ 18,836 $ 19,361 $ 18,820 $ 19,877 $ 78,718 $ 79,625 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, 2021 2021 2021 2021 2020 2021 2020 (Amounts in thousands, except per share data) Net income $ 10,555 $ 12,608 $ 13,403 $ 14,602 $ 11,550 $ 51,168 $ 35,926 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 $ 10,555 $ 12,608 $ 13,403 $ 14,602 $ 11,550 $ 51,168 $ 37,080 Adjusted diluted earnings per common share, non-GAAP $ 0.62 $ 0.73 $ 0.76 $ 0.82 $ 0.65 $ 2.94 $ 2.08 Performance ratios, non-GAAP Adjusted return on average assets 1.32 % 1.59 % 1.70 % 1.94 % 1.54 % 1.63 % 1.28 % Adjusted return on average common equity 9.77 % 11.65 % 12.55 % 13.94 % 10.82 % 11.96 % 8.81 % Adjusted return on average tangible common equity(1) 14.28 % 17.04 % 18.40 % 20.54 % 15.96 % 17.53 % 13.08 % (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 December 31, 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) $ 2,163,613 $ 25,274 4.63 % $ 2,188,069 $ 28,143 5.12 % Securities available for sale 76,556 418 2.17 % 87,592 640 2.91 % Interest-bearing deposits 613,377 237 0.15 % 375,088 99 0.11 % Total earning assets 2,853,546 25,929 3.60 % 2,650,749 28,882 4.33 % Other assets 328,866 337,906 Total assets $ 3,182,412 $ 2,988,655 Liabilities and stockholders' equity Interest-bearing deposits Demand deposits $ 668,335 $ 28 0.02 % $ 594,222 $ 50 0.03 % Savings deposits 843,501 64 0.03 % 739,312 112 0.06 % Time deposits 362,869 509 0.56 % 428,849 867 0.80 % Total interest-bearing deposits 1,874,705 601 0.13 % 1,762,383 1,029 0.23 % Borrowings Retail repurchase agreements 1,236 - N/M 925 1 0.14 % Total borrowings 1,236 - N/M 925 1 0.14 % Total interest-bearing liabilities 1,875,941 601 0.13 % 1,763,308 1,030 0.23 % Noninterest-bearing demand deposits 838,920 763,412 Other liabilities 38,986 37,305 Total liabilities 2,753,847 2,564,025 Stockholders' equity 428,565 424,630 Total liabilities and stockholders' equity $ 3,182,412 $ 2,988,655 Net interest income, FTE(1) $ 25,328 $ 27,852 Net interest rate spread 3.47 % 4.10 % Net interest margin, FTE(1) 3.52 % 4.18 % (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 $1.10 million and $2.77 million for the three months ended December 31, 2021 and 2020, respectively. AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) Twelve Months Ended December 31, 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) $ 2,153,099 $ 102,996 4.78 % $ 2,142,637 $ 110,619 5.16 % Securities available for sale 81,049 2,008 2.48 % 105,005 3,259 3.10 % Interest-bearing deposits 570,040 745 0.13 % 296,495 805 0.27 % Total earning assets 2,804,188 105,749 3.77 % 2,544,137 114,683 4.51 % Other assets 330,640 348,150 Total assets $ 3,134,828 $ 2,892,287 Liabilities and stockholders' equity Interest-bearing deposits Demand deposits $ 646,999 $ 127 0.02 % $ 556,279 $ 311 0.06 % Savings deposits 816,845 281 0.03 % 711,831 902 0.13 % Time deposits 387,249 2,427 0.63 % 456,755 4,247 0.93 % Total interest-bearing deposits 1,851,093 2,835 0.15 % 1,724,865 5,460 0.32 % Borrowings Retail repurchase agreements 1,194 1 0.07 % 1,145 3 0.28 % FHLB advances and other borrowings - - - 36 1 2.23 % Total borrowings 1,194 1 0.07 % 1,181 4 0.34 % Total interest-bearing liabilities 1,852,287 2,836 0.15 % 1,726,046 5,464 0.32 % Noninterest-bearing demand deposits 816,638 707,623 Other liabilities 38,151 37,826 Total liabilities 2,707,076 2,471,495 Stockholders' equity 427,752 420,792 Total liabilities and stockholders' equity $ 3,134,828 $ 2,892,287 Net interest income, FTE(1) $ 102,913 $ 109,219 Net interest rate spread 3.62 % 4.19 % Net interest margin, FTE(1) 3.67 % 4.29 % (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 $4.66 million and $7.99 million for the twelve months ended December 31, 2021 and 2020, respectively. CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) December 31, September 30, June 30, March 31, December 31, (Amounts in thousands, except per share data) 2021 2021 2021 2021 2020 Assets Cash and cash equivalents $ 677,439 $ 635,007 $ 618,738 $ 628,745 $ 456,561 Debt securities available for sale 76,292 77,440 79,842 87,643 83,358 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) 2,165,569 2,152,103 2,153,731 2,146,640 2,186,632 Allowance for credit losses (2) (27,858 ) (29,877 ) (31,857 ) (34,563 ) (26,182 ) Loans held for investment, net 2,137,711 2,122,226 2,121,874 2,112,077 2,160,450 FDIC indemnification asset - - - 946 1,223 Premises and equipment, net 52,284 52,842 53,560 57,371 57,700 Other real estate owned 1,015 1,240 1,324 1,740 2,083 Interest receivable 7,900 8,146 8,480 8,724 9,052 Goodwill 129,565 129,565 129,565 129,565 129,565 Other intangible assets 5,622 5,987 6,352 6,712 7,069 Other assets 106,691 107,258 109,548 106,543 104,075 Total assets $ 3,194,519 $ 3,139,711 $ 3,129,283 $ 3,140,066 $ 3,011,136 Liabilities Deposits Noninterest-bearing $ 842,783 $ 820,147 $ 819,138 $ 824,576 $ 772,795 Interest-bearing 1,886,608 1,853,699 1,846,556 1,848,524 1,773,452 Total deposits 2,729,391 2,673,846 2,665,694 2,673,100 2,546,247 Securities sold under agreements to repurchase 1,536 1,106 994 1,519 964 Interest, taxes, and other liabilities 35,817 37,395 35,061 39,448 37,195 Total liabilities 2,766,744 2,712,347 2,701,749 2,714,067 2,584,406 Stockholders' equity Common stock 16,878 17,071 17,335 17,592 17,723 Additional paid-in capital 147,619 154,086 161,853 169,173 173,345 Retained earnings 264,824 258,860 250,911 241,889 237,585 Accumulated other comprehensive loss (1,546 ) (2,653 ) (2,565 ) (2,655 ) (1,923 ) Total stockholders' equity 427,775 427,364 427,534 425,999 426,730 Total liabilities and stockholders' equity $ 3,194,519 $ 3,139,711 $ 3,129,283 $ 3,140,066 $ 3,011,136 Shares outstanding at period-end 16,878,220 17,071,052 17,334,547 17,592,009 17,722,507 Book value per common share $ 25.34 $ 25.03 $ 24.66 $ 24.22 $ 24.08 Tangible book value per common share(3) 17.34 17.09 16.82 16.47 16.37 (1) No covered loans for December 2021 and 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) December 31, September 30, June 30, March 31, December 31, (Amounts in thousands) 2021 2021 2021 2021 2020 Allowance for Credit Losses (1) Beginning balance $ 29,877 $ 31,857 $ 34,563 $ 26,182 $ 27,277 Cumulative effect of adoption of ASU 2016-13 - - - 13,107 - (Recovery of) provision for credit/loan losses charged to operations (846 ) (1,394 ) (2,230 ) (4,001 ) 634 Charge-offs (1,887 ) (1,255 ) (1,902 ) (1,730 ) (2,194 ) Recoveries 714 669 1,426 1,005 465 Net charge-offs (1,173 ) (586 ) (476 ) (725 ) (1,729 ) Ending balance $ 27,858 $ 29,877 $ 31,857 $ 34,563 $ 26,182 Nonperforming Assets Nonaccrual loans $ 20,768 $ 22,070 $ 24,085 $ 26,106 $ 22,003 Accruing loans past due 90 days or more 87 5 327 171 295 Troubled debt restructurings ("TDRs")(2) 1,367 359 133 308 187 Total nonperforming loans 22,222 22,434 24,545 26,585 22,485 OREO 1,015 1,240 1,324 1,740 2,083 Total nonperforming assets $ 23,237 $ 23,674 $ 25,869 $ 28,325 $ 24,568 Additional Information Total Accruing TDRs(3) $ 8,652 $ 8,185 $ 8,309 $ 9,027 $ 10,248 Asset Quality Ratios Nonperforming loans to total loans 1.03 % 1.04 % 1.14 % 1.24 % 1.03 % Nonperforming assets to total assets 0.73 % 0.75 % 0.83 % 0.90 % 0.82 % Allowance for credit/loan losses to nonperforming loans 125.36 % 133.18 % 129.79 % 130.01 % 116.44 % Allowance for credit/loan losses to total loans 1.29 % 1.39 % 1.48 % 1.61 % 1.20 % Annualized net charge-offs to average loans 0.22 % 0.11 % 0.09 % 0.14 % 0.26 % (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
