BLUEFIELD, Va., Feb. 04, 2020 (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 December 31, 2019. The Company reported net income of $9.56 million, or $0.61 per diluted common share, for the quarter ended December 31, 2019, which was an increase of $0.04, or 7.02%, over the same quarter of 2018.  For the full year, the Company earned $38.80 million, or $2.46 per diluted share, an increase of $2.46 million over 2018.

Additionally, the Company recently declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share, an increase of four cents $(0.04) over the same quarter last year.  2020 is the 35^th consecutive year of regular dividends to common shareholders.

Fourth Quarter and Full Year 2019 Highlights

At the close of business on December 31, 2019, the Company closed the acquisition of Highlands Bankshares, Inc., headquartered in Abingdon, Virginia, with total assets of $563 million.  The completion of the transaction increased total consolidated assets to $2.80 billion.

• Income Statement
  • Diluted earnings per share increased $0.04 to $0.61 compared to the same quarter of 2018, an increase of 7.02%.
  • Compared to the same quarter last year, return on average assets for the quarter increased 0.08% to 1.71% and return on average equity for the quarter increased 0.07% to 11.08%.
  • Net interest margin decreased 29 basis points to 4.47% compared to the same quarter of 2018.
  • Diluted earnings per share for the full year of $2.46 was an increase of $0.28, or 12.84%, over 2018.
  • Return on average assets for 2019 increased 0.19% to 1.75% and return on average equity for the year increased 0.90% to 11.54%.
  • The Company received $2.40 million from litigation settlements during the fourth quarter.  Year to date, the Company has received $7.00 million.
  • The Company incurred $940 thousand in merger expenses related to the Highlands Bankshares, Inc. acquisition in the fourth quarter.
     
• Balance Sheet
  • Book value per common share increased $2.54 to $23.33, and tangible book value per common share increased $1.13 to a record $15.82, compared to December 31, 2018.
  • The Company’s capital management plan and philosophy require maintenance of a strong capital base from which to grow and serve customers. As reported in early 2018, due to a strong capital position, the Company’s current capital management plan aspires to return current earnings not needed to fund growth in core operations or other capital needs back to shareholders through regular cash dividends, stock repurchases, and special cash dividends when warranted. The Company earned approximately $38.80 million in 2019, from which it paid regular cash dividends of approximately $15.06 million. The Company also repurchased 487,400 common shares for approximately $16.36 million. Because the Company successfully leveraged capital with the Highlands acquisition, in addition to regular dividends and stock repurchases returning most current earnings to shareholders, the Board of Directors determined not to declare a special dividend related to 2019 earnings. As of December 31, 2019, the Company continues to significantly exceed regulatory “well capitalized” targets, as well as all capital targets of its capital management plan.

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 58 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of December 31, 2019. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.12 billion in combined assets as of December 31, 2019. The Company reported consolidated assets of $2.80 billion as of December 31, 2019. 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)				2019				2019				2019			2019			2018				2019				2018
Interest income
	Interest and fees on loans		$	21,837			$	22,068			$	22,721		$	22,179		$	23,938			$	88,805			$	91,671
	Interest on securities			870				857				895			1,094			1,249				3,716				5,086
	Interest on deposits in banks			663				680				766			338			194				2,447				1,537
Total interest income				23,370				23,605				24,382			23,611			25,381				94,968				98,294
Interest expense
	Interest on deposits			1,312				1,383				1,392			1,305			1,297				5,392				5,144
	Interest on borrowings			1				1				1			120			205				123				2,305
Total interest expense				1,313				1,384				1,393			1,425			1,502				5,515				7,449
Net interest income				22,057				22,221				22,989			22,186			23,879				89,453				90,845
Provision for loan losses				91				675				1,585			1,220			908				3,571				2,393
Net interest income after provision				21,966				21,546				21,404			20,966			22,971				85,882				88,452
Noninterest income				9,314				7,634				8,649			8,080			6,297				33,677				26,443
Noninterest expense				18,883				17,444				16,651			16,785			17,366				69,763				69,773
Income before income taxes				12,397				11,736				13,402			12,261			11,902				49,796				45,122
Income tax expense				2,833				2,580				2,951			2,630			2,596				10,994				8,782
Net income			$	9,564			$	9,156			$	10,451		$	9,631		$	9,306			$	38,802			$	36,340
Earnings per common share
	Basic		$	0.61			$	0.59			$	0.67		$	0.61		$	0.57			$	2.47			$	2.19
	Diluted			0.61				0.58				0.66			0.60			0.57				2.46				2.18
Cash dividends per common share
	Regular			0.25				0.25				0.25			0.21			0.21				0.96				1.26
Weighted average shares outstanding
	Basic			15,611,093				15,603,992				15,712,204			15,839,424			16,201,148				15,690,812				16,587,504
	Diluted			15,670,047				15,664,587				15,775,320			15,920,950			16,280,404				15,756,093				16,666,385
Performance ratios
	Return on average assets			1.71	%			1.65	%			1.89	%		1.75	%		1.63	%			1.75	%			1.56	%
	Return on average common equity			11.08	%			10.80	%			12.57	%		11.77	%		11.01	%			11.54	%			10.64	%
	Return on average tangible common equity(1)			15.33	%			15.19	%			17.57	%		16.66	%		15.58	%			16.09	%			15.09	%
(1)	A non-GAAP financial measure defined as net income divided by average stockholders' equity less average goodwill and other intangible assets

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,
					2019				2019				2019				2019				2018				2019				2018
(Amounts in thousands, except per share data)
Net income				$	9,564			$	9,156			$	10,451			$	9,631			$	9,306			$	38,802			$	36,340
Non-GAAP adjustments:
	Net loss on sale of securities				-				-				43				-				-				43				618
	Loss on extinguishment of debt				-				-				-				-				-				-				1,096
	Goodwill impairment				-				-				-				-				-				-				1,492
	Deferred tax asset revaluation				-				-				-				-				-				-				(1,669	)
	Merger, acquisition, and divestiture expense				940				592				-				-				-				1,532				-
	Other items(1)				(2,395	)			(900	)			(2,025	)			(1,675	)			254				(6,995	)			421
Total adjustments					(1,455	)			(308	)			(1,982	)			(1,675	)			254				(5,420	)			1,958
Tax effect					(331	)			(134	)			(550	)			(328	)			61				(1,343	)			544
Adjusted earnings, non-GAAP				$	8,440			$	8,982			$	9,019			$	8,284			$	9,499			$	34,725			$	37,754
Adjusted diluted earnings per common share,
	non-GAAP			$	0.54			$	0.57			$	0.57			$	0.52			$	0.58			$	2.20			$	2.27
Performance ratios, non-GAAP
	Adjusted return on average assets				1.51	%			1.62	%			1.63	%			1.51	%			1.67	%			1.57	%			1.62	%
	Adjusted return on average common equity				9.78	%			10.59	%			10.84	%			10.12	%			11.23	%			10.33	%			11.05	%
	Adjusted return on average tangible
			common equity(2)		13.53	%			14.90	%			15.16	%			14.33	%			15.90	%			14.40	%			15.68	%
(1		)	Includes other non-recurring income and expense items
(2		)	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,
			2019								2018
			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)		$	1,697,133		$	21,876		5.11%		$	1,788,570		$	23,976		5.32%
	Securities available for sale		116,950			1,020			3.46%		162,330			1,329			3.26%
	Securities held to maturity		-			-			-		25,030			104			1.65%
	Interest-bearing deposits		159,904			663			1.64%		33,736			194			2.28%
Total earning assets			1,973,987			23,559			4.73%		2,009,666			25,603			5.05%
Other assets			249,300								249,056
Total assets			$	2,223,287							$	2,258,722
Liabilities and stockholders' equity
Interest-bearing deposits
	Demand deposits		$	462,834		$	88		0.08%		$	458,458		$	40		0.03%
	Savings deposits		507,645			234			0.18%		494,868			132			0.10%
	Time deposits		393,424			989			1.00%		450,770			1,125			0.99%
Total interest-bearing deposits			1,363,903			1,311			0.38%		1,404,096			1,297			0.37%
Borrowings
	Retail repurchase agreements		1,515		-	-			-		4,526			2			0.19%
	Wholesale repurchase agreements		-			-			-		25,000			203			3.22%
Total borrowings			1,515			-			-		29,526			205			2.75%
Total interest-bearing liabilities			1,365,418			1,311			0.38%		1,433,622			1,502			0.42%
Noninterest-bearing demand deposits			482,391								461,457
Other liabilities			32,958								28,188
Total liabilities			1,880,767								1,923,267
Stockholders' equity			342,520								335,455
Total liabilities and stockholders' equity			$	2,223,287							$	2,258,722
Net interest income, FTE(1)						$	22,248							$	24,101
Net interest rate spread									4.36%								4.63%
Net interest margin, FTE(1)									4.47%								4.76%
(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 $511 thousand and $2.13 million for the three months ended December 31, 2019 and 2018, respectively.

 

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
			Twelve Months Ended December 31,
			2019								2018
			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)		$	1,722,419		$	88,990		5.17%		$	1,795,391		$	91,819		5.11%
	Securities available for sale		126,732			4,334			3.42%		176,766			5,419			3.07%
	Securities held to maturity		3,045			45			1.48%		25,081			418			1.67%
	Interest-bearing deposits		116,119			2,447			2.10%		81,520			1,537			1.89%
Total earning assets			1,968,315			95,816			4.87%		2,078,758			99,193			4.77%
Other assets			248,926								251,853
Total assets			$	2,217,241							$	2,330,611
Liabilities and stockholders' equity
Interest-bearing deposits
	Demand deposits		$	453,724		$	281		0.06%		$	466,403		$	246		0.05%
	Savings deposits		503,603			823			0.16%		508,353			382			0.08%
	Time deposits		418,450			4,288			1.02%		471,335			4,516			0.96%
Total interest-bearing deposits			1,375,777			5,392			0.39%		1,446,091			5,144			0.36%
Borrowings
	Retail repurchase agreements		2,471			3			0.14%		4,010			5			0.12%
	Wholesale repurchase agreements		3,767			119			3.17%		25,000			806			3.22%
	FHLB advances and other borrowings		-			-			-		36,849			1,494			4.05%
Total borrowings			6,238			122			1.96%		65,859			2,305			3.50%
Total interest-bearing liabilities			1,382,015			5,514			0.40%		1,511,950			7,449			0.49%
Noninterest-bearing demand deposits			469,352								448,903
Other liabilities			29,736								28,239
Total liabilities			1,881,103								1,989,092
Stockholders' equity			336,138								341,519
Total liabilities and stockholders' equity			$	2,217,241							$	2,330,611
Net interest income, FTE(1)						$	90,302							$	91,744
Net interest rate spread									4.47%								4.28%
Net interest margin, FTE(1)									4.59%								4.41%
(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 $3.23 million and $6.39 million for the years ended December 31, 2019 and 2018, respectively.

 

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)			2019				2019				2019				2019				2018				2019				2018
Noninterest income
	Wealth management	$	842			$	952			$	884			$	745			$	854			$	3,423			$	3,262
	Service charges on deposits		3,702				3,785				3,699				3,408				3,850				14,594				14,733
	Other service charges and fees		2,096				2,007				2,129				2,049				2,017				8,281				7,733
	Insurance commissions		-				-				-				-				-				-				966
	Net loss on sale of securities		-				-				(43	)			-				-				(43	)			(618	)
	Net FDIC indemnification asset amortization		(590	)			(719	)			(516	)			(552	)			(579	)			(2,377	)			(2,181	)
	Other income		2,395				900				2,025				1,675				-				6,995				-
	Other operating income		869				709				471				755				155				2,804				2,548
Total noninterest income		$	9,314			$	7,634			$	8,649			$	8,080			$	6,297			$	33,677			$	26,443
Noninterest expense
	Salaries and employee benefits	$	9,495			$	9,334			$	9,153			$	9,166			$	9,273			$	37,148			$	36,690
	Occupancy expense		1,057				1,042				1,082				1,153				1,134				4,334				4,542
	Furniture and equipment expense		1,179				1,183				1,062				1,033				1,004				4,457				3,980
	Service fees		721				1,053				1,231				1,030				1,047				4,448				3,860
	Advertising and public relations		478				795				513				524				550				2,310				2,011
	Professional fees		408				375				328				414				356				1,698				1,430
	Amortization of intangibles		251				251				249				246				254				997				1,039
	FDIC premiums and assessments		-				-				150				168				209				318				906
	Loss on extinguishment of debt		-				-				-				-				-				-				1,096
	Merger, acquisition, and divestiture expense		1,532				592				-				-				-				2,124				-
	Goodwill impairment		-				-				-				-				-				-				1,492
	Other operating expense		3,762				2,819				2,883				3,051				3,539				11,929				12,727
Total noninterest expense		$	18,883			$	17,444			$	16,651			$	16,785			$	17,366			$	69,763			$	69,773

 

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
					December 31,				September 30,				June 30,				March 31,				December 31,
(Amounts in thousands, except per share data)					2019				2019				2019				2019				2018
Assets
Cash and cash equivalents				$	217,009			$	182,458			$	156,478			$	148,546			$	76,873
Debt securities available for sale					169,574				115,537				119,076				132,597				153,116
Debt securities held to maturity					-				-				-				-				25,013
Loans held for sale					263				-				-				-				-
Loans held for investment, net of unearned income
	Noncovered				2,101,599				1,679,958				1,705,408				1,719,905				1,756,269
	Covered				12,861				14,158				15,520				17,475				18,815
	Allowance for loan losses				(18,425	)			(18,493	)			(18,540	)			(18,243	)			(18,267	)
Loans held for investment, net					2,096,035				1,675,623				1,702,388				1,719,137				1,756,817
FDIC indemnification asset					2,883				3,458				4,020				4,578				5,108
Premises and equipment, net					62,824				48,521				48,262				46,636				45,785
Other real estate owned, noncovered					3,969				2,528				3,810				3,903				3,806
Other real estate owned, covered					-				-				152				152				32
Interest receivable					5,094				4,842				5,317				5,227				5,481
Goodwill					129,565				92,744				92,744				92,744				92,744
Other intangible assets					8,519				4,280				4,532				4,780				5,026
Other assets					103,112				75,056				75,248				84,035				74,573
Total assets				$	2,798,847			$	2,205,047			$	2,212,027			$	2,242,335			$	2,244,374
Liabilities
Deposits
	Noninterest-bearing			$	838,974			$	472,478			$	480,573			$	479,299			$	459,550
	Interest-bearing				1,490,938				1,364,374				1,367,465				1,399,138				1,396,200
Total deposits					2,329,912				1,836,852				1,848,038				1,878,437				1,855,750
Securities sold under agreements to repurchase					1,601				1,863				3,083				3,700				29,370
FHLB borrowings					40				-				-				-				-
Interest, taxes, and other liabilities					38,475				28,969				27,220				27,096				26,397
Total liabilities					2,370,028				1,867,684				1,878,341				1,909,233				1,911,517
Stockholders' equity
Common stock					18,377				15,580				15,633				15,818				16,007
Additional paid-in capital					192,413				108,222				109,816				115,914				122,486
Retained earnings					219,535				213,866				208,618				202,103				195,793
Accumulated other comprehensive loss					(1,506	)			(305	)			(381	)			(733	)			(1,429	)
Total stockholders' equity					428,819				337,363				333,686				333,102				332,857
Total liabilities and stockholders' equity				$	2,798,847			$	2,205,047			$	2,212,027			$	2,242,335			$	2,244,374
Shares outstanding at period-end					18,376,991				15,579,740				15,633,388				15,818,368				16,007,263
Book value per common share				$	23.33			$	21.65			$	21.34			$	21.06			$	20.79
Tangible book value per common share(1)					15.82				15.43				15.12				14.89				14.69
(1)		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)					2019				2019				2019				2019				2018
Allowance for Loan Losses
Beginning balance				$	18,493			$	18,540			$	18,243			$	18,267			$	18,256
Provision for loan losses charged to operations					91				675				1,585				1,220				908
Charge-offs					(1,353	)			(964	)			(2,114	)			(1,622	)			(1,282	)
Recoveries					1,194				242				826				378				385
Net charge-offs					(159	)			(722	)			(1,288	)			(1,244	)			(897	)
Ending balance				$	18,425			$	18,493			$	18,540			$	18,243			$	18,267
Nonperforming Assets
Non-covered nonperforming assets
Nonaccrual loans				$	16,113			$	16,701			$	16,368			$	18,544			$	19,583
Accruing loans past due 90 days or more					144				107				37				156				58
Troubled debt restructurings ("TDRs")(1)					720				668				821				835				161
Total non-covered nonperforming loans					16,977				17,476				17,226				19,535				19,802
OREO					3,969				2,528				3,810				3,903				3,806
Total non-covered nonperforming assets				$	20,946			$	20,004			$	21,036			$	23,438			$	23,608
Covered nonperforming assets
Nonaccrual loans				$	244			$	243			$	203			$	237			$	322
Total covered nonperforming loans					244				243				203				237				322
OREO					-				-				152				152				32
Total covered nonperforming assets				$	244			$	243			$	355			$	389			$	354
Additional Information
Performing TDRs(2)				$	5,855			$	5,635			$	5,676			$	5,654			$	6,266
Total Accruing TDRs(3)					6,575				6,303				6,497				6,489				6,427
Non-covered ratios
Nonperforming loans to total loans					0.81	%			1.04	%			1.01	%			1.14	%			1.13	%
Nonperforming assets to total assets					0.75	%			0.91	%			0.96	%			1.05	%			1.06	%
Non-PCI allowance to nonperforming loans					108.53	%			105.82	%			107.63	%			93.39	%			92.25	%
Non-PCI allowance to total loans					0.88	%			1.10	%			1.09	%			1.06	%			1.04	%
Annualized net charge-offs to average loans					0.04	%			0.17	%			0.30	%			0.29	%			0.20	%
Total ratios
Nonperforming loans to total loans					0.81	%			1.05	%			1.01	%			1.14	%			1.13	%
Nonperforming assets to total assets					0.76	%			0.92	%			0.97	%			1.06	%			1.07	%
Allowance for loan losses to nonperforming loans					106.99	%			104.37	%			106.37	%			92.27	%			90.77	%
Allowance for loan losses to total loans					0.87	%			1.09	%			1.08	%			1.05	%			1.03	%
Annualized net charge-offs to average loans					0.04	%			0.17	%			0.30	%			0.29	%			0.20	%
(1)		Accruing TDRs restructured within the past six months or nonperforming
(2)		Accruing TDRs with six months or more of satisfactory payment performance

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