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

BLUEFIELD, Va., April 27, 2021 (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, 2021. The Company reported record quarterly net income of $14.60 million, or $0.82 per diluted common share, for the quarter ended March 31, 2021, which was an increase of $0.38 per diluted common share, or 86.36%, over the same quarter of 2020.  

The Company also declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share. The quarterly dividend is payable to common shareholders of record on May 7, 2021, and is expected to be paid on or about May 21, 2021. 2021 is the 36th consecutive year of regular dividends to common shareholders.

First Quarter 2021 and Current Highlights

General

  • Net income for the quarter increased $6.73 million to $14.60 million compared to the same quarter of 2020. The large increase includes the reversal of $4.00 million in allowance for credit losses due to improved economic forecasts from those seen at year-end 2020.
  • Effective January 1, 2021, the Company adopted CECL and recorded an additional allowance for credit loss for loans of $13.11 million, deferred tax assets of $1.81 million, an additional reserve for unfunded commitments of $509 thousand, and an adjustment to retained earnings of $5.87 million.
  • On January 26, 2021, the Board of Directors approved a new plan to repurchase, on the open market at prevailing prices, up to 2.4 million shares of the Company’s common stock through January 26, 2024. During the quarter, the Company repurchased 187,700 common shares for $4.99 million.

Income Statement

  • Diluted earnings per share increased $0.38 to $0.82 compared to the same quarter of 2020.
  • Due to expected growth in the U.S. GDP, improving jobless rates, and other economic indicators, as well as strong asset quality metrics, the Company released a substantial amount of allowance for credit losses for the quarter resulting in a reversal of $4.00 million in the provision for credit losses; a significant improvement from the $3.50 million loan loss provision recorded in the first quarter of 2020 at the onset of the COVID-19 pandemic.  
  • Return on average assets increased to 1.94% compared to 1.16% from the same quarter of 2020; return on average equity increased to 13.94% compared to 7.49% from the same quarter of 2020 as well.

Balance Sheet and Asset Quality

  • Net charge-offs for the first quarter of 2021 were $725 thousand and the allowance for credit losses remains very strong at 1.61% of total loans.
  • As of March 31, 2021, total COVID-19 loan deferrals stood at $17.48 million, down significantly from the peak of $436.11 at June 30, 2020.
  • The SBA had forgiven $32.73 million, or 53.58%, of the Company’s first round Paycheck Protection Program loan balances through March 31, 2021.  Current PPP loan balances at March 31, 2021, which include second round originations, were $50.75 million.
  • Book value per share at March 31, 2021, was $24.22, an increase of $0.14 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 50 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of March 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 $1.23 billion in combined assets as of March 31, 2021. The Company reported consolidated assets of $3.14 billion as of March 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.

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


CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                       
      Three Months Ended
      March 31,   December 31, September 30, June 30,   March 31,
(Amounts in thousands, except share and per share data)   2021       2020       2020       2020       2020  
Interest income                  
  Interest and fees on loans $ 26,540     $ 28,101     $ 27,297     $ 26,991     $ 28,058  
  Interest on securities   495       549       609       713       918  
  Interest on deposits in banks   116       96       89       82       533  
Total interest income   27,151       28,746       27,995       27,786       29,509  
Interest expense                  
  Interest on deposits   869       1,029       1,161       1,445       1,825  
  Interest on borrowings   -       -       -       2       2  
Total interest expense   869       1,029       1,161       1,447       1,827  
Net interest income   26,282       27,717       26,834       26,339       27,682  
(Recovery of) provision for credit losses   (4,001 )     634       4,703       3,831       3,500  
Net interest income after provision   30,283       27,083       22,131       22,508       24,182  
Noninterest income   7,569       7,733       7,638       6,913       7,549  
Noninterest expense   18,820       19,877       19,171       18,913       21,664  
Income before income taxes   19,032       14,939       10,598       10,508       10,067  
Income tax expense   4,430       3,389       2,332       2,270       2,195  
Net income $ 14,602     $ 11,550     $ 8,266     $ 8,238     $ 7,872  
                       
Earnings per common share                  
  Basic $ 0.83     $ 0.65     $ 0.47     $ 0.47     $ 0.44  
  Diluted   0.82       0.65       0.47       0.46       0.44  
Cash dividends per common share                  
  Regular   0.25       0.25       0.25       0.25       0.25  
Weighted average shares outstanding                  
  Basic   17,669,937       17,717,356       17,710,283       17,701,853       17,998,994  
  Diluted   17,729,185       17,751,805       17,732,428       17,728,300       18,050,071  
Performance ratios                  
  Return on average assets   1.94 %     1.54 %     1.11 %     1.15 %     1.16 %
  Return on average common equity   13.94 %     10.82 %     7.83 %     7.97 %     7.49 %
  Return on average tangible common equity(1)   20.54 %     15.96 %     11.62 %     11.91 %     11.12 %
                       
(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
    March 31,   December 31,
  September 30,
  June 30,   March 31,
(Amounts in thousands)   2021       2020       2020       2020       2020  
Noninterest income                  
  Wealth management $ 881     $ 810     $ 909     $ 854     $ 844  
  Service charges on deposits   3,031       3,478       3,250       2,560       3,731  
  Other service charges and fees   3,022       2,737       2,748       2,617       2,231  
  Net gain on sale of securities   -       -       -       -       385  
  Net FDIC indemnification asset amortization   (280 )     (338 )     (383 )     (483 )     (486 )
  Other operating income   915       1,046       1,114       1,365       844  
Total noninterest income $ 7,569     $ 7,733     $ 7,638     $ 6,913     $ 7,549  
Noninterest expense                  
  Salaries and employee benefits $ 10,884     $ 11,119     $ 10,485     $ 11,015     $ 11,386  
  Occupancy expense   1,275       1,225       1,228       1,275       1,315  
  Furniture and equipment expense   1,367       1,446       1,412       1,316       1,384  
  Service fees   1,335       1,232       1,581       1,329       1,523  
  Advertising and public relations   335       534       430       475       512  
  Professional fees   466       276       408       307       233  
  Amortization of intangibles   357       364       365       360       361  
  FDIC premiums and assessments   199       202       191       33       -  
  Merger, acquisition, and divestiture expense   -       -       -       -       1,893  
  Other operating expense   2,602       3,479       3,071       2,803       3,057  
Total noninterest expense $ 18,820     $ 19,877     $ 19,171     $ 18,913     $ 21,664  
                     


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)
                       
      Three Months Ended
      March 31,   December 31,
  September 30,
  June 30,   March 31,
        2021       2020       2020       2020       2020  
(Amounts in thousands, except per share data)                  
Net income $ 14,602     $ 11,550     $ 8,266     $ 8,238     $ 7,872  
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 $ 14,602     $ 11,550     $ 8,266     $ 8,238     $ 9,026  
                       
Adjusted diluted earnings per common share,                  
  non-GAAP $ 0.82     $ 0.65     $ 0.47     $ 0.46     $ 0.50  
Performance ratios, non-GAAP                  
  Adjusted return on average assets   1.94 %     1.54 %     1.11 %     1.15 %     1.33 %
  Adjusted return on average common equity   13.94 %     10.82 %     7.83 %     7.97 %     8.59 %
  Adjusted return on average tangible                  
    common equity(2)   20.54 %     15.96 %     11.62 %     11.91 %     12.75 %
                       
(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 March 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) $ 2,165,054   $ 26,582   4.98%   $ 2,081,132   $ 28,105   5.43%
  Securities available for sale   83,634     573   2.78%     136,109     1,060   3.14%
  Interest-bearing deposits   468,067     118   0.10%     163,483     535   1.31%
Total earning assets   2,716,755     27,273   4.07%     2,380,724     29,700   5.02%
Other assets   331,483             353,647        
Total assets $ 3,048,238           $ 2,734,371        
                           
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
  Demand deposits $ 613,003   $ 39   0.03%   $ 502,603   $ 90   0.07%
  Savings deposits   778,430     91   0.05%     679,656     414   0.24%
  Time deposits   412,986     739   0.73%     485,085     1,322   1.10%
Total interest-bearing deposits   1,804,419     869   0.19%     1,667,344     1,826   0.44%
Borrowings                      
  Retail repurchase agreements   1,234     -   N/M     1,459     2   0.56%
  FHLB advances and other borrowings     -     -   -     134     1   N/M
Total borrowings   1,234     -   -     1,593     3   0.65%
Total interest-bearing liabilities   1,805,653     869   0.19%     1,668,937     1,829   0.44%
Noninterest-bearing demand deposits   777,876             600,636        
Other liabilities   39,926             42,174        
Total liabilities   2,623,455             2,311,747        
Stockholders' equity   424,783             422,624        
Total liabilities and stockholders' equity $ 3,048,238           $ 2,734,371        
Net interest income, FTE(1)     $ 26,404           $ 27,871    
Net interest rate spread         3.88%           4.58%
Net interest margin, FTE(1)         3.94%           4.71%
                           
(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 $1.18 million and $1.95 million for the three months ended March 31, 2021 and 2020, respectively.


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
                       
      March 31,   December 31, September 30, June 30,   March 31,
(Amounts in thousands, except per share data)   2021       2020       2020       2020       2020  
Assets                  
Cash and cash equivalents $ 628,745     $ 456,561     $ 375,664     $ 421,492     $ 241,613  
Debt securities available for sale   87,643       83,358       90,972       98,367       107,753  
Loans held for investment, net of unearned income                
  Noncovered   2,137,599       2,176,952       2,184,251       2,125,560       2,084,610  
  Covered   9,041       9,680       10,744       11,257       12,115  
  Allowance for credit/loan losses   (34,563 )     (26,182 )     (27,277 )     (23,758 )     (21,137 )
Loans held for investment, net   2,112,077       2,160,450       2,167,718       2,113,059       2,075,588  
FDIC indemnification asset   946       1,223       1,598       1,943       2,433  
Premises and equipment, net   57,371       57,700       60,488       62,658       63,319  
Other real estate owned, noncovered   1,740       2,083       2,103       2,181       2,502  
Interest receivable   8,724       9,052       9,151       8,380       6,117  
Goodwill   129,565       129,565       129,565       129,565       129,565  
Other intangible assets   6,712       7,069       7,433       7,798       8,159  
Other assets   106,543       104,075       103,236       103,623       101,912  
Total assets $ 3,140,066     $ 3,011,136     $ 2,947,928     $ 2,949,066     $ 2,738,961  
                       
Liabilities                  
Deposits                  
  Noninterest-bearing $ 824,576     $ 772,795     $ 750,277     $ 752,899     $ 620,292  
  Interest-bearing   1,848,524       1,773,452       1,741,962       1,744,947       1,668,122  
Total deposits   2,673,100       2,546,247       2,492,239       2,497,846       2,288,414  
Securities sold under agreements to repurchase   1,519       964       956       1,100       1,348  
FHLB and other borrowings   -       -       -       -       1,000  
Interest, taxes, and other liabilities   39,448       37,195       34,816       34,290       36,593  
Total liabilities   2,714,067       2,584,406       2,528,011       2,533,236       2,327,355  
                       
Stockholders' equity                  
Common stock   17,592       17,723       17,717       17,710       17,700  
Additional paid-in capital   169,173       173,345       172,980       172,601       172,231  
Retained earnings   241,889       237,585       230,464       226,627       222,814  
Accumulated other comprehensive loss   (2,655 )     (1,923 )     (1,244 )     (1,108 )     (1,139 )
Total stockholders' equity   425,999       426,730       419,917       415,830       411,606  
Total liabilities and stockholders' equity $ 3,140,066     $ 3,011,136     $ 2,947,928     $ 2,949,066     $ 2,738,961  
                       
Shares outstanding at period-end   17,592,009       17,722,507       17,716,522       17,709,569       17,700,140  
Book value per common share $ 24.22     $ 24.08     $ 23.70     $ 23.48     $ 23.25  
Tangible book value per common share(1)   16.47       16.37       15.97       15.72       15.47  
                       
(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)
                       
      March31,   December 31, September 30, June 30,   March 31,
(Amounts in thousands)   2021       2020       2020       2020       2020  
Allowance for Loan Losses                  
Beginning balance $ 26,182     $ 27,277     $ 23,758     $ 21,137     $ 18,425  
Cumulative effect of adoption of ASU 2016-13   13,107       -       -       -       -  
(Recovery of) provision for                  
   credit/loan losses charged to operations   (4,001 )     634       4,703       3,831       3,500  
Charge-offs   (1,730 )     (2,194 )     (1,563 )     (1,672 )     (1,194 )
Recoveries   1,005       465       379       462       406  
Net charge-offs   (725 )     (1,729 )     (1,184 )     (1,210 )     (788 )
Ending balance $ 34,563     $ 26,182     $ 27,277     $ 23,758     $ 21,137  
                       
Nonperforming Assets                  
Non-covered nonperforming assets                  
Nonaccrual loans $ 25,747     $ 21,706     $ 24,423     $ 24,471     $ 20,263  
Accruing loans past due 90 days or more   171       295       43       284       329  
Troubled debt restructurings ("TDRs")(1)   308       187       456       598       623  
Total non-covered nonperforming loans   26,226       22,188       24,922       25,353       21,215  
OREO   1,740       2,083       2,103       2,181       2,502  
Total non-covered nonperforming assets $ 27,966     $ 24,271     $ 27,025     $ 27,534     $ 23,717  
                       
Covered nonperforming assets                  
Nonaccrual loans $ 359     $ 297     $ 333     $ 299     $ 145  
Total covered nonperforming loans   359       297       333       299       145  
Total covered nonperforming assets $ 359     $ 297     $ 333     $ 299     $ 145  
                       
Additional Information                  
Performing TDRs(2) $ 8,719     $ 10,061     $ 10,480     $ 10,822     $ 8,429  
Total Accruing TDRs(3)   9,027       10,248       10,936       11,420       9,052  
                       
Asset Quality Ratios                  
Nonperforming loans to total loans   1.24 %     1.03 %     1.15 %     1.20 %     1.02 %
Nonperforming assets to total assets   0.90 %     0.82 %     0.93 %     0.94 %     0.87 %
Allowance for credit/loan losses to nonperforming loans       130.01 %     116.44 %     108.01 %     92.62 %     98.96 %
Allowance for credit/loan losses to total loans   1.61 %     1.20 %     1.24 %     1.11 %     1.01 %
Annualized net charge-offs to average loans   0.14 %     0.26 %     0.22 %     0.23 %     0.15 %
                       
(1) Accruing TDRs restructured within the past six months or nonperforming
(2) Accruing TDRs with six months or more of satisfactory payment performance
(3) Accruing total TDRs

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