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CST: 11/12/2019 02:55:22   

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

140 Days ago

BLUEFIELD, Va., July 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 June 30, 2019. The Company reported net income of $10.45 million, or $0.66 per diluted common share, for the quarter ended June 30, 2019, which was an increase of $1.39 million, or 15.28%, 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 four cents ($0.04), or 19.05%, over last year’s third quarter dividend. The quarterly dividend is payable to common shareholders of record on August 2, 2019, and is expected to be paid on or about August 16, 2019. The current year marks the 34th consecutive year of regular cash dividends paid to shareholders.

Second Quarter 2019 Highlights

  • General
    - The Company declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share.
    - The Company received $2.03 million from litigation settlements during the second quarter.
  • Income Statement
    - Net income increased $1.39 million, or 15.28%, to $10.45 million compared to the same quarter of 2018.
    - Diluted earnings per share increased $0.12 to $0.66 compared to the same quarter of 2018, for an increase of 22.22%.
    - Return on average assets for the quarter increased to 1.89%. Return on average equity for the quarter increased to 12.57%.
    - Net interest margin increased 47 basis points to 4.72% compared to the same quarter of 2018.
     
  • Balance Sheet
    - Book value per common share increased $0.55 to $21.34, and tangible book value per common share increased $0.43 to a record $15.12, compared to December 31, 2018.
    - The Company repurchased 194,000 common shares for $6.58 million during the quarter. Year to date, the Company has repurchased 426,900 common shares for $14.36 million compared to 474,240 shares during same period of 2018.
    - The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of June 30, 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 June 30, 2019. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.05 billion in combined assets as of June 30, 2019. The Company reported consolidated assets of $2.21 billion as of June 30, 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.

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

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                               
      Three Months Ended   Six Months Ended
(Amounts in thousands, except share and per share data)
June 30,
 2019 
  March 31,
 2019 
  December 31,
 2018
  September 30,
 2018
  June 30,
 2018
  June 30,
 2019    2018
Interest income                          
Interest and fees on loans $ 22,721     $ 22,179     $ 23,938     $ 22,556     $ 22,422     $ 44,900     $ 45,177  
Interest on securities   895       1,094       1,249       1,372       1,361       1,989       2,465  
Interest on deposits in banks   766       338       194       358       514       1,104       985  
Total interest income   24,382       23,611       25,381       24,286       24,297       47,993       48,627  
Interest expense                          
Interest on deposits   1,392       1,305       1,297       1,269       1,327       2,697       2,578  
Interest on borrowings   1       120       205       692       708       121       1,408  
Total interest expense   1,393       1,425       1,502       1,961       2,035       2,818       3,986  
Net interest income   22,989       22,186       23,879       22,325       22,262       45,175       44,641  
Provision for loan losses   1,585       1,220       908       495       495       2,805       990  
Net interest income after provision   21,404       20,966       22,971       21,830       21,767       42,370       43,651  
Noninterest income   8,649       8,080       6,297       6,519       6,959       16,729       13,627  
Noninterest expense   16,651       16,785       17,366       18,131       17,160       33,436       34,276  
Income before income taxes   13,402       12,261       11,902       10,218       11,566       25,663       23,002  
Income tax expense   2,951       2,630       2,596       1,118       2,500       5,581       5,068  
Net income $ 10,451     $ 9,631     $ 9,306     $ 9,100     $ 9,066     $ 20,082     $ 17,934  
                               
Earnings per common share                          
Basic $ 0.67     $ 0.61     $ 0.57     $ 0.55     $ 0.54     $ 1.27     $ 1.06  
Diluted   0.66       0.60       0.57       0.55       0.54       1.27       1.06  
Cash dividends per common share                          
Regular   0.25       0.21       0.21       0.21       0.18       0.46       0.36  
Special   -       -       -       -       -       -       0.48  
Weighted average shares outstanding                          
Basic   15,712,204       15,839,424       16,201,148       16,512,823       16,689,398       15,775,462       16,821,842  
Diluted   15,775,320       15,920,950       16,280,404       16,612,416       16,788,615       15,847,498       16,912,872  
Performance ratios                          
Return on average assets   1.89 %     1.75 %     1.63 %     1.55 %     1.53 %     1.82 %     1.53 %
Return on average common equity   12.57 %     11.77 %     11.01 %     10.59 %     10.68 %     12.17 %     10.49 %
Return on average tangible common equity(1)   17.57 %     16.66 %     15.58 %     15.06 %     15.21 %     17.04 %     14.87 %
                               
                               
(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   Six Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,   June 30,
    2019       2019       2018       2018       2018       2019       2018  
(Amounts in thousands, except per share data)                          
Net income $ 10,451     $ 9,631     $ 9,306     $ 9,100     $ 9,066     $ 20,082     $ 17,934  
Non-GAAP adjustments:                          
Net loss on sale of securities   43       -       -       618       -       43       -  
Loss on extinguishment of debt   -       -       -       1,096       -       -       -  
Goodwill impairment   -       -       -       1,492       -       -       -  
Deferred tax asset revaluation   -       -       -       (1,669 )     -       -       -  
Other items(1)   (2,025 )     (1,675 )     254       -       297       (3,700 )     167  
Total adjustments   (1,982 )     (1,675 )     254       1,537       297       (3,657 )     167  
Tax effect   (550 )     (328 ) -   61       411       96       (878 ) -   72  
Adjusted earnings, non-GAAP $ 9,019     $ 8,284     $ 9,499     $ 10,226     $ 9,267     $ 17,303     $ 18,029  
                           
Adjusted diluted earnings per common share,                          
non-GAAP $ 0.57     $ 0.52     $ 0.58     $ 0.62     $ 0.55     $ 1.09     $ 1.07  
Performance ratios, non-GAAP                          
Adjusted return on average assets   1.63 %     1.51 %     1.67 %     1.74 %     1.57 %     1.57 %     1.53 %
Adjusted return on average common equity   10.84 %     10.12 %     11.23 %     11.90 %     10.91 %     10.48 %     10.54 %
Adjusted return on average tangible                          
common equity(2)   15.16 %     14.33 %     15.90 %     16.93 %     15.55 %     14.68 %     15.21 %
                           
                           
(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 June 30,
    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) $ 1,721,392   $ 22,772   5.31 %   $ 1,795,094   $ 22,458   5.02 %
Securities available for sale   126,153     1,068   3.41 %     190,605     1,447   3.04 %
Securities held to maturity   -     -   -       25,098     104   1.66 %
Interest-bearing deposits   125,759     766   2.44 %     109,349     514   1.89 %
Total earning assets   1,973,304     24,606   5.00 %     2,120,146     24,523   4.64 %
Other assets   248,270             252,843        
Total assets $ 2,221,574           $ 2,372,989        
                         
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
Demand deposits $ 454,246   $ 77   0.07 %   $ 484,776   $ 104   0.09 %
Savings deposits   504,854     192   0.15 %     518,055     83   0.06 %
Time deposits   429,469     1,123   1.05 %     477,691     1,140   0.96 %
Total interest-bearing deposits   1,388,569     1,392   0.40 %     1,480,522     1,327   0.36 %
Borrowings                      
Retail repurchase agreements   3,024     1   0.13 %     3,615     1   0.11 %
Wholesale repurchase agreements   -     -   -       25,000     201   3.22 %
FHLB advances and other borrowings   -     -   -       50,000     506   4.06 %
Total borrowings   3,024     1   0.13 %     78,615     708   3.61 %
Total interest-bearing liabilities   1,391,593     1,393   0.40 %     1,559,137     2,035   0.52 %
Noninterest-bearing demand deposits   468,782             447,048        
Other liabilities   27,904             26,222        
Total liabilities   1,888,279             2,032,407        
Stockholders' equity   333,595             340,582        
Total liabilities and stockholders' equity $ 2,221,874           $ 2,372,989        
Net interest income, FTE(1)     $ 23,213           $ 22,488    
Net interest rate spread         4.60 %           4.12 %
Net interest margin, FTE(1)         4.72 %           4.25 %
                         
                         
(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 $1.39 million and $1.36 million for the three months ended June 30, 2019 and 2018, respectively.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
                         
    Six Months Ended June 30,
    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) $ 1,743,141   $ 45,008   5.21 %   $ 1,800,438   $ 45,249   5.07 %
Securities available for sale   135,914     2,299   3.41 %     177,897     2,636   2.99 %
Securities held to maturity   6,140     45   1.48 %     25,115     209   1.68 %
Interest-bearing deposits   90,423     1,104   2.46 %     113,627     985   1.75 %
Total earning assets   1,975,618     48,456   4.95 %     2,117,077     49,079   4.67 %
Other assets   248,118             252,592        
Total assets $ 2,223,736           $ 2,369,669        
                         
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
Demand deposits $ 450,655   $ 114   0.05 %   $ 473,819   $ 167   0.07 %
Savings deposits   503,075     367   0.15 %     518,306     165   0.06 %
Time deposits   433,936     2,216   1.03 %     485,574     2,246   0.93 %
Total interest-bearing deposits   1,387,666     2,697   0.39 %     1,477,699     2,578   0.35 %
Borrowings                      
Retail repurchase agreements   3,141     2   0.13 %     4,031     2   0.10 %
Wholesale repurchase agreements   7,597     119   3.16 %     25,000     400   3.23 %
FHLB advances and other borrowings   -     -   -       50,000     1,006   4.06 %
Total borrowings   10,738     121   2.27 %     79,031     1,408   3.59 %
Total interest-bearing liabilities   1,398,404     2,818   0.41 %     1,556,730     3,986   0.52 %
Noninterest-bearing demand deposits   464,299             439,867        
Other liabilities   28,245             28,168        
Total liabilities   1,890,948             2,024,765        
Stockholders' equity   332,788             344,904        
Total liabilities and stockholders' equity $ 2,223,736           $ 2,369,669        
Net interest income, FTE(1)     $ 45,638           $ 45,093    
Net interest rate spread         4.54 %           4.16 %
Net interest margin, FTE(1)         4.66 %           4.30 %
                         
                         
(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 $2.15 million and $3.20 million for the six months ended June 30, 2019 and 2018, respectively.


CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE (Unaudited)
                           
  Three Months Ended   Six Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,   June 30,
(Amounts in thousands)   2019       2019       2018       2018       2018       2019       2018  
Noninterest income                          
Wealth management $ 884     $ 745     $ 854     $ 791     $ 823     $ 1,629     $ 1,617  
Service charges on deposits   3,699       3,408       3,850       3,803       3,612       7,107       7,080  
Other service charges and fees   2,129       2,049       2,017       1,925       1,934       4,178       3,791  
Insurance commissions   -       -       -       299       338       -       667  
Net loss on sale of securities   (43 )     -       -       (618 )     -       (43 )     -  
Net FDIC indemnification asset amortization   (516 )     (552 )     (579 )     (645 )     (575 )     (1,068 )     (957 )
Other income   2,025       1,675       -       -       -       3,700       -  
Other operating income   471       755       155       964       827       1,226       1,429  
Total noninterest income $ 8,649     $ 8,080     $ 6,297     $ 6,519     $ 6,959     $ 16,729     $ 13,627  
Noninterest expense                          
Salaries and employee benefits $ 9,153     $ 9,166     $ 9,273     $ 8,983     $ 8,993     $ 18,319     $ 18,434  
Occupancy expense   1,082       1,153       1,134       1,075       1,083       2,235       2,333  
Furniture and equipment expense   1,062       1,033       1,004       985       945       2,095       1,991  
Service fees   1,231       1,030       1,047       1,134       851       2,261       1,679  
Advertising and public relations   513       524       550       478       461       1,037       983  
Professional fees   328       414       356       337       430       742       737  
Amortization of intangibles   249       246       254       261       263       495       524  
FDIC premiums and assessments   150       168       209       234       252       318       463  
Loss on extinguishment of debt   -       -       -       1,096       -       -       -  
Goodwill impairment   -       -       -       1,492       -       -       -  
Other operating expense   2,883       3,051       3,539       2,056       3,882       5,934       7,132  
Total noninterest expense $ 16,651     $ 16,785     $ 17,366     $ 18,131     $ 17,160     $ 33,436     $ 34,276  


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
                     
    June 30,   March 31,   December 31,   September 30,   June 30,
(Amounts in thousands, except per share data)   2019       2019       2018       2018       2018  
Assets                  
Cash and cash equivalents $ 156,478     $ 148,546     $ 76,873     $ 73,679     $ 107,957  
Debt securities available for sale   119,076       132,597       153,116       163,593       196,425  
Debt securities held to maturity   -       -       25,013       25,047       25,082  
Loans held for investment, net of unearned income                  
Noncovered   1,705,408       1,719,905       1,756,269       1,770,426       1,776,112  
Covered   15,520       17,475       18,815       20,483       22,919  
Allowance for loan losses   (18,540 )     (18,243 )     (18,267 )     (18,256 )     (19,583 )
Loans held for investment, net   1,702,388       1,719,137       1,756,817       1,772,653       1,779,448  
FDIC indemnification asset   4,020       4,578       5,108       5,653       6,390  
Premises and equipment, net   48,262       46,636       45,785       45,537       45,547  
Other real estate owned, noncovered   3,810       3,903       3,806       4,754       4,805  
Other real estate owned, covered   152       152       32       44       44  
Interest receivable   5,317       5,227       5,481       5,374       5,580  
Goodwill   92,744       92,744       92,744       94,287       95,779  
Other intangible assets   4,532       4,780       5,026       5,366       5,628  
Other assets   75,248       84,035       74,573       73,701       75,435  
Total assets $ 2,212,027     $ 2,242,335     $ 2,244,374     $ 2,269,688     $ 2,348,120  
                     
Liabilities                  
Deposits                  
Noninterest-bearing $ 480,573     $ 479,299     $ 459,550     $ 463,945     $ 462,851  
Interest-bearing   1,367,465       1,399,138       1,396,200       1,411,906       1,441,887  
Total deposits   1,848,038       1,878,437       1,855,750       1,875,851       1,904,738  
Securities sold under agreements to repurchase   3,083       3,700       29,370       30,151       27,869  
FHLB borrowings   -       -       -       -       50,000  
Interest, taxes, and other liabilities   27,220       27,096       26,397       25,284       26,392  
Total liabilities   1,878,341       1,909,233       1,911,517       1,931,286       2,008,999  
                     
Stockholders' equity                  
Common stock(2)   15,633       15,818       16,007       21,382       21,382  
Additional paid-in capital(2)   109,816       115,914       122,486       229,182       228,949  
Retained earnings   208,618       202,103       195,793       189,902       184,279  
Treasury stock, at cost(2)   -       -       -       (99,247 )     (92,904 )
Accumulated other comprehensive loss   (381 )     (733 )     (1,429 )     (2,817 )     (2,585 )
Total stockholders' equity   333,686       333,102       332,857       338,402       339,121  
Total liabilities and stockholders' equity $ 2,212,027     $ 2,242,335     $ 2,244,374     $ 2,269,688     $ 2,348,120  
                     
Shares outstanding at period-end   15,633,388       15,818,368       16,007,263       16,390,502       16,574,347  
Book value per common share $ 21.34     $ 21.06     $ 20.79     $ 20.65     $ 20.46  
Tangible book value per common share(1)   15.12       14.89       14.69       14.57       14.34  
                     
                     
(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)
                       
      June 30,   March 31,   December 31,   September 30,   June 30,
(Amounts in thousands)   2019       2019       2018       2018       2018  
Allowance for Loan Losses                  
Beginning balance $ 18,243     $ 18,267     $ 18,256     $ 19,583     $ 19,500  
Provision for loan losses charged to operations   1,585       1,220       908       495       495  
Charge-offs   (2,114 )     (1,622 )     (1,282 )     (2,177 )     (750 )
Recoveries   826       378       385       355       338  
Net charge-offs   (1,288 )     (1,244 )     (897 )     (1,822 )     (412 )
Ending balance $ 18,540     $ 18,243     $ 18,267     $ 18,256     $ 19,583  
                       
Nonperforming Assets                  
Non-covered nonperforming assets                  
Nonaccrual loans $ 16,368     $ 18,544     $ 19,583     $ 20,542     $ 21,467  
Accruing loans past due 90 days or more   37       156       58       46       -  
Troubled debt restructurings ("TDRs")(1)   821       835       161       189       133  
Total non-covered nonperforming loans   17,226       19,535       19,802       20,777       21,600  
OREO   3,810       3,903       3,806       4,754       4,805  
Total non-covered nonperforming assets $ 21,036     $ 23,438     $ 23,608     $ 25,531     $ 26,405  
                       
Covered nonperforming assets                  
Nonaccrual loans $ 203     $ 237     $ 322     $ 330     $ 509  
Total covered nonperforming loans   203       237       322       330       509  
OREO   152       152       32       44       44  
Total covered nonperforming assets $ 355     $ 389     $ 354     $ 374     $ 553  
                       
Additional Information                  
Performing TDRs(2) $ 5,676     $ 5,654     $ 6,266     $ 6,953     $ 6,847  
Total TDRs(3)   6,497       6,489       6,427       7,142       6,980  
                       
Non-covered ratios                  
Nonperforming loans to total loans   1.01 %     1.14 %     1.13 %     1.17 %     1.22 %
Nonperforming assets to total assets   0.96 %     1.05 %     1.06 %     1.14 %     1.14 %
Non-PCI allowance to nonperforming loans   107.63 %     93.39 %     92.25 %     87.87 %     90.66 %
Non-PCI allowance to total loans   1.09 %     1.06 %     1.04 %     1.03 %     1.10 %
Annualized net charge-offs to average loans   0.30 %     0.29 %     0.20 %     0.41 %     0.09 %
                       
Total ratios                  
Nonperforming loans to total loans   1.01 %     1.14 %     1.13 %     1.18 %     1.23 %
Nonperforming assets to total assets   0.97 %     1.06 %     1.07 %     1.14 %     1.15 %
Allowance for loan losses to nonperforming loans   106.37 %     92.27 %     90.77 %     86.49 %     88.57 %
Allowance for loan losses to total loans   1.08 %     1.05 %     1.03 %     1.02 %     1.09 %
Annualized net charge-offs to average loans   0.30 %     0.29 %     0.20 %     0.40 %     0.09 %
                       
                       
(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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