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CST: 24/08/2019 02:34:42   

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

122 Days ago

BLUEFIELD, Va., April 23, 2019 (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, 2019. The Company reported net income of $9.63 million, or $0.60 per diluted common share, for the quarter ended March 31, 2019, which was an increase of $763 thousand, or 8.60%, over the same quarter of 2018.

The Company also announced today that the Board of Directors declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share, an increase of seven cents ($0.07), or 38.89%, over last second quarter's dividend. The quarterly dividend is payable to common shareholders of record on May 3, 2019, and is expected to be paid on or about May 17, 2019. The current year marks the 34th consecutive year of regular cash dividends paid to shareholders.

First Quarter 2019 Highlights

• General

  • The Company’s remaining wholesale repurchase agreement of $25 million matured during the first quarter.  The company repaid the borrowing with current liquidity, which should result in annualized net pre-tax savings of $378 thousand. This culminates the Company's 5-year strategic shift back to a more traditional community bank balance sheet, during which the Company paid off $200 million in wholesale debt.
  • The Company declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share, an increase of seven cents ($0.07), or 38.89%, over last second quarter's dividend.
  • The Company received $1.68 million from litigation settlements during the first quarter.

• Income Statement

  • Net income increased $763 thousand, or 8.60%, to $9.63 million compared to the same quarter of 2018.
  • Diluted earnings per share increased $.08 to $.60 compared to the same quarter of 2018, for an increase of 15.38%.
  • Return on average assets for the quarter increased to 1.75%. Return on average equity for the quarter increased to 11.77%.
  • Net interest margin increased 22 basis points to 4.60% compared to the same quarter of 2018.

• Balance Sheet

  • Book value per common share increased $0.27 to $21.06, and tangible book value per common share increased $0.20 to a record $14.89, compared to December 31, 2018.
  • The Company repurchased 232,900 common shares for $7.78 million during the quarter.
  • The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of March 31, 2019.

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 44 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of March 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 $1.02 billion in combined assets as of March 31, 2019. The Company reported consolidated assets of $2.24 billion as of March 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
      March 31,   December 31,   September 30,   June 30,   March 31,
(Amounts in thousands, except share and per share data) 2019
  2018
  2018
  2018
  2018
Interest income                  
  Interest and fees on loans $ 22,179     $ 23,938     $ 22,556     $ 22,422     $ 22,755  
  Interest on securities   1,094       1,249       1,372       1,361       1,104  
  Interest on deposits in banks   338       194       358       514       471  
Total interest income   23,611       25,381       24,286       24,297       24,330  
Interest expense                  
  Interest on deposits   1,305       1,297       1,269       1,327       1,251  
  Interest on borrowings   120       205       692       708       700  
Total interest expense   1,425       1,502       1,961       2,035       1,951  
Net interest income   22,186       23,879       22,325       22,262       22,379  
Provision for loan losses   1,220       908       495       495       495  
Net interest income after provision   20,966       22,971       21,830       21,767       21,884  
Noninterest income   8,080       6,297       6,519       6,959       6,668  
Noninterest expense   16,785       17,366       18,131       17,160       17,116  
Income before income taxes   12,261       11,902       10,218       11,566       11,436  
Income tax expense   2,630       2,596       1,118       2,500       2,568  
Net income $ 9,631     $ 9,306     $ 9,100     $ 9,066     $ 8,868  
                       
Earnings per common share                  
  Basic $ 0.61     $ 0.57     $ 0.55     $ 0.54     $ 0.52  
  Diluted   0.60       0.57       0.55       0.54       0.52  
Cash dividends per common share                  
  Regular   0.21       0.21       0.21       0.18       0.18  
  Special   -       -       -       -       0.48  
Weighted average shares outstanding                  
  Basic   15,839,424       16,201,148       16,512,823       16,689,398       16,955,758  
  Diluted   15,920,950       16,280,404       16,612,416       16,788,615       17,047,638  
Performance ratios                  
  Return on average assets   1.75 %     1.63 %     1.55 %     1.53 %     1.52 %
  Return on average common equity   11.77 %     11.01 %     10.59 %     10.68 %     10.30 %
  Return on average tangible common equity(1)   16.66 %     15.58 %     15.06 %     15.21 %     14.53 %
                       
                                           
(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
      March 31,   December 31,   September 30,   June 30,   March 31,
      2019   2018   2018   2018   2018
(Amounts in thousands, except per share data)                  
Net income $ 9,631     $ 9,306     $ 9,100     $ 9,066     $ 8,868  
Non-GAAP adjustments:                  
  Net loss on sale of securities   -       -       618       -       -  
  Loss on extinguishment of debt   -       -       1,096       -       -  
  Goodwill impairment   -       -       1,492       -       -  
  Deferred tax asset revaluation   -       -       (1,669 )     -       -  
  Other items(1)   (1,675 )     254       -       297       (130 )
Total adjustments   (1,675 )     254       1,537       297       (130 )
Tax effect   (328 )     61       411       96       (24 )
Adjusted earnings, non-GAAP $ 8,284     $ 9,499     $ 10,226     $ 9,267     $ 8,762  
                       
Adjusted diluted earnings per common share,                  
  non-GAAP $ 0.52     $ 0.58     $ 0.62     $ 0.55     $ 0.51  
Performance ratios, non-GAAP                  
  Adjusted return on average assets   1.51 %     1.67 %     1.74 %     1.57 %     1.50 %
  Adjusted return on average common equity   10.12 %     11.23 %     11.90 %     10.91 %     10.17 %
  Adjusted return on average tangible                  
    common equity(2)   14.33 %     15.90 %     16.93 %     15.55 %     14.36 %
                       
                                             
(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 March 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) $ 1,765,132   $ 22,236   5.11 %   $ 1,805,839   $ 22,827   5.13 %
  Securities available for sale   145,783     1,231   3.43 %     165,103     1,384   3.40 %
  Securities held to maturity   12,348     45   1.48 %     25,132     105   1.69 %
  Interest-bearing deposits   54,694     338   2.50 %     117,953     471   1.62 %
Total earning assets   1,977,957     23,850   4.89 %     2,114,027     24,787   4.76 %
Other assets   247,965             252,284        
Total assets $ 2,225,922           $ 2,366,311        
                           
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
  Demand deposits $ 447,023   $ 37   0.03 %   $ 462,741   $ 63   0.06 %
  Savings deposits   501,276     175   0.14 %     518,560     82   0.06 %
  Time deposits   438,454     1,093   1.01 %     493,545     1,106   0.91 %
Total interest-bearing deposits   1,386,753     1,305   0.38 %     1,474,846     1,251   0.34 %
Borrowings                      
  Retail repurchase agreements   3,259     1   0.13 %     4,444     1   0.09 %
  Wholesale repurchase agreements   15,278     119   3.17 %     25,000     199   3.23 %
  FHLB advances and other borrowings   -     -   -       50,000     500   4.06 %
Total borrowings   18,537     120   2.63 %     79,444     700   3.57 %
Total interest-bearing liabilities   1,405,290     1,425   0.41 %     1,554,290     1,951   0.51 %
Noninterest-bearing demand deposits   459,766             432,606        
Other liabilities   28,894             30,142        
Total liabilities   1,893,950             2,017,038        
Stockholders' equity   331,972             349,273        
Total liabilities and stockholders' equity $ 2,225,922           $ 2,366,311        
Net interest income, FTE(1)     $ 22,425           $ 22,836    
Net interest rate spread         4.48 %           4.25 %
Net interest margin, FTE(1)         4.60 %           4.38 %
                           
                                         
(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 purchase accounting accretion of $764 thousand and $1.8 million for the three months ended March 31, 2019 and 2018, respectively.
                           

 

 

CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE   (Unaudited)
                   
  Three Months Ended
  March   31,   December 31,   September 30,   June 30,   March 31,
(Amounts in thousands) 2019   2018   2018   2018   2018
Noninterest income                  
Wealth management $ 745     $ 854     $ 791     $ 823     $ 794  
Service charges on deposits   3,408       3,850       3,803       3,612       3,468  
Other service charges and fees   2,049       2,017       1,925       1,934       1,857  
Insurance commissions   -       -       299       338       329  
Net loss on sale of securities   -       -       (618 )     -       -  
Net FDIC indemnification asset amortization   (552 )     (579 )     (645 )     (575 )     (382 )
Other income   1,675       -       -       -       -  
Other operating income   755       155       964       827       602  
Total noninterest income $ 8,080     $ 6,297     $ 6,519     $ 6,959     $ 6,668  
Noninterest expense                  
Salaries and employee benefits $ 9,166     $ 9,273     $ 8,983     $ 8,993     $ 9,441  
Occupancy expense   1,153       1,134       1,075       1,083       1,250  
Furniture and equipment expense   1,033       1,004       985       945       1,046  
Service fees   1,030       1,047       1,134       851       828  
Advertising and public relations   524       550       478       461       522  
Professional fees   414       356       337       430       307  
Amortization of intangibles   246       254       261       263       261  
FDIC premiums and assessments   168       209       234       252       211  
Loss on extinguishment of debt   -       -       1,096       -       -  
Goodwill impairment   -       -       1,492       -       -  
Other operating expense   3,051       3,539       2,056       3,882       3,250  
Total noninterest expense $ 16,785     $ 17,366     $ 18,131     $ 17,160     $ 17,116  
                   

 

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
                       
      March 31,   December 31,   September 30,   June 30,   March 31,
(Amounts in thousands, except per share data) 2019   2018   2018   2018   2018
Assets                  
Cash and cash equivalents $ 148,546     $ 76,873     $ 73,679     $ 107,957     $ 205,140  
Debt securities available for sale   132,597       153,116       163,593       196,425       164,192  
Debt securities held to maturity   -       25,013       25,047       25,082       25,115  
Loans held for investment, net of unearned income                  
  Noncovered   1,719,905       1,756,269       1,770,426       1,776,112       1,767,703  
  Covered   17,475       18,815       20,483       22,919       25,406  
  Allowance for loan losses   (18,243 )     (18,267 )     (18,256 )     (19,583 )     (19,500 )
Loans held for investment, net   1,719,137       1,756,817       1,772,653       1,779,448       1,773,609  
FDIC indemnification asset   4,578       5,108       5,653       6,390       6,884  
Premises and equipment, net   46,636       45,785       45,537       45,547       46,415  
Other real estate owned, noncovered   3,903       3,806       4,754       4,805       4,620  
Other real estate owned, covered   152       32       44       44       70  
Interest receivable   5,227       5,481       5,374       5,580       5,155  
Goodwill   92,744       92,744       94,287       95,779       95,779  
Other intangible assets   4,780       5,026       5,366       5,628       5,891  
Other assets   84,035       74,573       73,701       75,435       95,437  
Total assets $ 2,242,335     $ 2,244,374     $ 2,269,688     $ 2,348,120     $ 2,428,307  
                       
Liabilities                  
Deposits                  
  Noninterest-bearing $ 479,299     $ 459,550     $ 463,945     $ 462,851     $ 460,478  
  Interest-bearing   1,399,138       1,396,200       1,411,906       1,441,887       1,520,141  
Total deposits   1,878,437       1,855,750       1,875,851       1,904,738       1,980,619  
Securities sold under agreements to repurchase   3,700       29,370       30,151       27,869       29,115  
FHLB borrowings   -       -       -       50,000       50,000  
Interest, taxes, and other liabilities   27,096       26,397       25,284       26,392       26,536  
Total liabilities   1,909,233       1,911,517       1,931,286       2,008,999       2,086,270  
                       
Stockholders' equity                  
Common stock(2)   15,818       16,007       21,382       21,382       21,382  
Additional paid-in capital(2)   115,914       122,486       229,182       228,949       228,774  
Retained earnings   202,103       195,793       189,902       184,279       178,227  
Treasury stock, at cost(2)   -       -       (99,247 )     (92,904 )     (83,865 )
Accumulated other comprehensive loss   (733 )     (1,429 )     (2,817 )     (2,585 )     (2,481 )
Total stockholders' equity   333,102       332,857       338,402       339,121       342,037  
Total liabilities and stockholders' equity $ 2,242,335     $ 2,244,374     $ 2,269,688     $ 2,348,120     $ 2,428,307  
                       
Shares outstanding at period-end   15,818,368       16,007,263       16,390,502       16,574,347       16,847,452  
Book value per common share $ 21.06     $ 20.79     $ 20.65     $ 20.46     $ 20.30  
Tangible book value per common share(1)   14.89       14.69       14.57       14.34       14.27  
                       
                                             
(1) A non-GAAP financial measure defined as stockholders' equity less goodwill and other intangible assets, divided by shares outstanding
(2) In accordance with the Company's reincorporation from Nevada to Virginia on October 2, 2018, treasury stock is not recognized.
                       

 

SELECTED CREDIT QUALITY INFORMATION (Unaudited)
                   
  March 31,   December 31,   September 30,   June 30,   March 31,
(Amounts in thousands) 2019   2018   2018   2018   2018
Allowance for Loan Losses                    
Beginning balance $ 18,267     $ 18,256     $ 19,583     $ 19,500     $ 19,276  
Provision for loan losses charged to operations   1,220       908       495       495       495  
Charge-offs   (1,622 )     (1,282 )     (2,177 )     (750 )     (698 )
Recoveries   378       385       355       338       427  
Net charge-offs   (1,244 )     (897 )     (1,822 )     (412 )     (271 )
Ending balance $ 18,243     $ 18,267     $ 18,256     $ 19,583     $ 19,500  
                   
Nonperforming Assets                  
Non-covered nonperforming assets                  
Nonaccrual loans $ 18,544     $ 19,583     $ 20,542     $ 21,467     $ 21,650  
Accruing loans past due 90 days or more   156       58       46       -       27  
Troubled debt restructurings ("TDRs")(1)   835       161       189       133       77  
Total non-covered nonperforming loans   19,535       19,802       20,777       21,600       21,754  
OREO   3,903       3,806       4,754       4,805       4,620  
Total non-covered nonperforming assets $ 23,438     $ 23,608     $ 25,531     $ 26,405     $ 26,374  
                   
Covered nonperforming assets                  
Nonaccrual loans $ 237     $ 322     $ 330     $ 509     $ 596  
Total covered nonperforming loans   237       322       330       509       596  
OREO   152       32       44       44       70  
Total covered nonperforming assets $ 389     $ 354     $ 374     $ 553     $ 666  
                   
Additional Information                  
Performing TDRs(2) $ 5,654     $ 6,266     $ 6,953     $ 6,847     $ 7,220  
Total TDRs(3)   6,489       6,427       7,142       6,980       7,297  
                   
Non-covered ratios                  
Nonperforming loans to total loans   1.14 %     1.13 %     1.17 %     1.22 %     1.23 %
Nonperforming assets to total assets   1.05 %     1.06 %     1.14 %     1.14 %     1.10 %
Non-PCI allowance to nonperforming loans   93.39 %     92.25 %     87.87 %     90.66 %     89.64 %
Non-PCI allowance to total loans   1.06 %     1.04 %     1.03 %     1.10 %     1.10 %
Annualized net charge-offs to average loans   0.29 %     0.20 %     0.41 %     0.09 %     0.06 %
                   
Total ratios                  
Nonperforming loans to total loans   1.14 %     1.13 %     1.18 %     1.23 %     1.25 %
Nonperforming assets to total assets   1.06 %     1.07 %     1.14 %     1.15 %     1.11 %
Allowance for loan losses to nonperforming loans   92.27 %     90.77 %     86.49 %     88.57 %     87.25 %
Allowance for loan losses to total loans   1.05 %     1.03 %     1.02 %     1.09 %     1.09 %
Annualized net charge-offs to average loans   0.29 %     0.20 %     0.40 %     0.09 %     0.06 %
                   
                                       
(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


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

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