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CST: 20/11/2019 18:21:13   

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

29 Days ago

BLUEFIELD, Va., Oct. 22, 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 September 30, 2019. The Company reported net income of $9.16 million, or $0.58 per diluted common share, for the quarter ended September 30, 2019, which was an increase of $0.03, or 5.45%, 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 fourth quarter dividend. The quarterly dividend is payable to common shareholders of record on November 1, 2019, and is expected to be paid on or about November 15, 2019. The current year marks the 34th consecutive year of regular cash dividends paid to shareholders.

Third Quarter 2019 Highlights

  • General
    • On September 11, 2019, the Company announced the pending acquisition of Highlands Bankshares, Inc., headquartered in Abingdon, Virginia, with total assets of approximately $612 million.  Upon completion of the transaction, the Company is expected to have total consolidated assets in excess of $2.8 billion.
    • The Company 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 last year.
    • The Company incurred $592 thousand in merger expenses related to the Highlands Bankshares, Inc. acquisition for the third quarter.
    • The Company received $900 thousand from litigation settlements during the third quarter.  Year to date, the Company has received $4.60 million.
       
  • Income Statement
    • Diluted earnings per share increased $0.03 to $0.58 compared to the same quarter of 2018, an increase of 5.45%.
    • Compared to the same quarter last year, return on average assets for the quarter increased 0.10% to 1.65% and return on average equity for the quarter increased 0.21% to 10.80%.
    • Net interest margin increased 24 basis points to 4.56% compared to the same quarter of 2018.
       
  • Balance Sheet
    • Book value per common share increased $0.86 to $21.65, and tangible book value per common share increased $0.74 to a record $15.43, compared to December 31, 2018.
    • The Company repurchased 60,500 common shares for $2.00 million during the quarter.  Year to date, the Company has repurchased 487,400 common shares for $16.36 million.
    • The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of September 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 September 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 $1.08 billion in combined assets as of September 30, 2019. The Company reported consolidated assets of $2.21 billion as of September 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.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                               
      Three Months Ended   Nine Months Ended
      September 30,   June 30,   March 31,   December 31,   September 30,   September 30,
(Amounts in thousands, except share and per share data)   2019       2019       2019       2018       2018       2019       2018  
Interest income                          
  Interest and fees on loans $ 22,068     $ 22,721     $ 22,179     $ 23,938     $ 22,556     $ 66,968     $ 67,733  
  Interest on securities   857       895       1,094       1,249       1,372       2,846       3,837  
  Interest on deposits in banks   680       766       338       194       358       1,784       1,343  
Total interest income   23,605       24,382       23,611       25,381       24,286       71,598       72,913  
Interest expense                          
  Interest on deposits   1,383       1,392       1,305       1,297       1,269       4,080       3,847  
  Interest on borrowings   1       1       120       205       692       122       2,100  
Total interest expense   1,384       1,393       1,425       1,502       1,961       4,202       5,947  
Net interest income   22,221       22,989       22,186       23,879       22,325       67,396       66,966  
Provision for loan losses   675       1,585       1,220       908       495       3,480       1,485  
Net interest income after provision   21,546       21,404       20,966       22,971       21,830       63,916       65,481  
Noninterest income   7,634       8,649       8,080       6,297       6,519       24,363       20,146  
Noninterest expense   17,444       16,651       16,785       17,366       18,131       50,880       52,407  
Income before income taxes   11,736       13,402       12,261       11,902       10,218       37,399       33,220  
Income tax expense   2,580       2,951       2,630       2,596       1,118       8,161       6,186  
Net income $ 9,156     $ 10,451     $ 9,631     $ 9,306     $ 9,100     $ 29,238     $ 27,034  
                               
Earnings per common share                          
  Basic $ 0.59     $ 0.67     $ 0.61     $ 0.57     $ 0.55     $ 1.86     $ 1.62  
  Diluted   0.58       0.66       0.60       0.57       0.55       1.85       1.61  
Cash dividends per common share                          
  Regular   0.25       0.25       0.21       0.21       0.21       0.71       1.05  
Weighted average shares outstanding                          
  Basic   15,603,992       15,712,204       15,839,424       16,201,148       16,512,823       15,717,678       16,717,704  
  Diluted   15,664,587       15,775,320       15,920,950       16,280,404       16,612,416       15,785,484       16,810,425  
Performance ratios                          
  Return on average assets   1.65%       1.89%       1.75%       1.63%       1.55%       1.76%       1.53%  
  Return on average common equity   10.80%       12.57%       11.77%       11.01%       10.59%       11.70%       10.52%  
  Return on average tangible common equity(1)   15.19%       17.57%       16.66%       15.58%       15.06%       16.52%       14.93%  
                               
   
(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   Nine Months Ended
      September 30,   June 30,   March 31,   December 31,   September 30,   September 30,
        2019       2019       2019       2018       2018       2019       2018  
(Amounts in thousands, except per share data)                          
Net income $ 9,156     $ 10,451     $ 9,631     $ 9,306     $ 9,100     $ 29,238     $ 27,034  
Non-GAAP adjustments:                          
  Net loss on sale of securities   -       43       -       -       618       43       618  
  Loss on extinguishment of debt   -       -       -       -       1,096       -       1,096  
  Goodwill impairment   -       -       -       -       1,492       -       1,492  
  Deferred tax asset revaluation   -       -       -       -       (1,669 )     -       (1,669 )
  Merger, acquisition, and divestiture expense   592       -       -       -       -       592       -  
  Other items(1)   (900 )     (2,025 )     (1,675 )     254       -       (4,600 )     167  
Total adjustments   (308 )     (1,982 )     (1,675 )     254       1,537       (3,965 )     1,704  
Tax effect   (134 )     (550 )     (328 )     61       411       (1,012 )     483  
Adjusted earnings, non-GAAP $ 8,982     $ 9,019     $ 8,284     $ 9,499     $ 10,226     $ 26,285     $ 28,255  
                               
Adjusted diluted earnings per common share,                          
  non-GAAP $ 0.57     $ 0.57     $ 0.52     $ 0.58     $ 0.62     $ 1.67     $ 1.68  
Performance ratios, non-GAAP                          
  Adjusted return on average assets   1.62%       1.63%       1.51%       1.67%       1.74%       1.59%       1.60%  
  Adjusted return on average common equity   10.59%       10.84%       10.12%       11.23%       11.90%       10.52%       11.00%  
  Adjusted return on average tangible                          
    common equity(2)   14.90%       15.16%       14.33%       15.90%       16.93%       14.85%       15.61%  
                               
   
(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 September 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) $ 1,706,936   $ 22,106   5.14 %   $ 1,792,284   $ 22,594   5.00 %
  Securities available for sale   118,450     1,015   3.40 %     188,975     1,455   3.06 %
  Securities held to maturity   -     -   -       25,064     104   1.65 %
  Interest-bearing deposits   122,891     680   2.20 %     66,137     358   2.15 %
Total earning assets   1,948,277     23,801   4.85 %     2,072,460     24,511   4.69 %
Other assets   250,142             253,199        
Total assets $ 2,198,419           $ 2,325,659        
                           
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
  Demand deposits $ 450,650   $ 78   0.07 %   $ 459,759   $ 39   0.03 %
  Savings deposits   500,600     222   0.18 %     502,255     85   0.06 %
  Time deposits   413,012     1,083   1.04 %     463,885     1,145   0.98 %
Total interest-bearing deposits   1,364,262     1,383   0.40 %     1,425,899     1,269   0.35 %
Borrowings                      
  Retail repurchase agreements   2,107     1   0.17 %     3,455     1   0.12 %
  Wholesale repurchase agreements   -     -   -       25,000     203   3.22 %
  FHLB advances and other borrowings   -     -   -       47,826     488   4.06 %
Total borrowings   2,107     1   0.17 %     76,281     692   3.60 %
Total interest-bearing liabilities   1,366,369     1,384   0.40 %     1,502,180     1,961   0.52 %
Noninterest-bearing demand deposits   466,253             454,126        
Other liabilities   29,449             28,430        
Total liabilities   1,862,071             1,984,736        
Stockholders' equity   336,348             340,923        
Total liabilities and stockholders' equity $ 2,198,419           $ 2,325,659        
Net interest income, FTE(1)     $ 22,417           $ 22,550    
Net interest rate spread         4.44 %           4.17 %
Net interest margin, FTE(1)         4.56 %           4.32 %
                           
   
(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 $566 thousand and $1.05 million for the three months ended September 30, 2019 and 2018, respectively.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
                           
      Nine Months Ended September 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) $   1,730,940   $   67,114   5.18 %   $   1,797,689   $   67,842   5.05 %
  Securities available for sale     130,029       3,314   3.41 %       181,630       4,091   3.01 %
  Securities held to maturity     4,071       45   1.48 %       25,098       314   1.67 %
  Interest-bearing deposits     101,364       1,784   2.34 %       97,623       1,343   1.84 %
Total earning assets     1,966,404       72,257   4.91 %       2,102,040       73,590   4.68 %
Other assets     248,801               252,797        
Total assets $   2,215,205           $   2,354,837        
                           
Liabilities and stockholders' equity                      
Interest-bearing deposits                      
  Demand deposits $   450,653   $   192   0.06 %   $   469,081   $   206   0.06 %
  Savings deposits     502,241       589   0.16 %       512,897       250   0.07 %
  Time deposits     426,885       3,299   1.03 %       478,265       3,391   0.95 %
Total interest-bearing deposits     1,379,779       4,080   0.40 %       1,460,243       3,847   0.35 %
Borrowings                      
  Retail repurchase agreements     2,792       3   0.13 %       3,836       3   0.10 %
  Wholesale repurchase agreements     5,037       119   3.17 %       25,000       603   3.22 %
  FHLB advances and other borrowings     -       -   -         49,267       1,494   4.05 %
Total borrowings     7,829       122   2.08 %       78,103       2,100   3.59 %
Total interest-bearing liabilities     1,387,608       4,202   0.40 %       1,538,346       5,947   0.52 %
Noninterest-bearing demand deposits     464,958               444,672        
Other liabilities     28,651               28,257        
Total liabilities     1,881,217               2,011,275        
Stockholders' equity     333,988               343,562        
Total liabilities and stockholders' equity $   2,215,205           $   2,354,837        
Net interest income, FTE(1)     $   68,055           $   67,643    
Net interest rate spread         4.51 %           4.16 %
Net interest margin, FTE(1)         4.63 %           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 $2.72 million and $4.26 million for the nine months ended September 30, 2019 and 2018, respectively.


CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE  (Unaudited)
                             
    Three Months Ended   Nine Months Ended
    September 30,   June 30,   March  31,   December 31,   September 30,   September 30,
(Amounts in thousands)   2019       2019       2019       2018       2018       2019       2018  
Noninterest income                          
  Wealth management $ 952     $ 884     $ 745     $ 854     $ 791     $ 2,581     $ 2,408  
  Service charges on deposits   3,785       3,699       3,408       3,850       3,803       10,892       10,883  
  Other service charges and fees   2,007       2,129       2,049       2,017       1,925       6,185       5,716  
  Insurance commissions   -       -       -       -       299       -       966  
  Net loss on sale of securities   -       (43 )     -       -       (618 )     (43 )     (618 )
  Net FDIC indemnification asset amortization   (719 )     (516 )     (552 )     (579 )     (645 )     (1,787 )     (1,602 )
  Other income   900       2,025       1,675       -       -       4,600       -  
  Other operating income   709       471       755       155       964       1,935       2,393  
Total noninterest income $ 7,634     $ 8,649     $ 8,080     $ 6,297     $ 6,519     $ 24,363     $ 20,146  
Noninterest expense                          
  Salaries and employee benefits $ 9,334     $ 9,153     $ 9,166     $ 9,273     $ 8,983     $ 27,653     $ 27,417  
  Occupancy expense   1,042       1,082       1,153       1,134       1,075       3,277       3,408  
  Furniture and equipment expense   1,183       1,062       1,033       1,004       985       3,278       2,976  
  Service fees   1,466       1,231       1,030       1,047       1,134       3,727       2,813  
  Advertising and public relations   795       513       524       550       478       1,832       1,461  
  Professional fees   548       328       414       356       337       1,290       1,074  
  Amortization of intangibles   251       249       246       254       261       746       785  
  FDIC premiums and assessments   -       150       168       209       234       318       697  
  Loss on extinguishment of debt   -       -       -       -       1,096       -       1,096  
  Merger, acquisition, and divestiture expense   592       -       -       -       -       592       -  
  Goodwill impairment   -       -       -       -       1,492       -       1,492  
  Other operating expense   2,233       2,883       3,051       3,539       2,056       8,167       9,188  
Total noninterest expense $ 17,444     $ 16,651     $ 16,785     $ 17,366     $ 18,131     $ 50,880     $ 52,407  
                             


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
                       
      September 30,   June 30,   March 31,   December 31,   September 30,
(Amounts in thousands, except per share data)   2019       2019       2019       2018       2018  
Assets                  
Cash and cash equivalents $ 182,458     $ 156,478     $ 148,546     $ 76,873     $ 73,679  
Debt securities available for sale   115,537       119,076       132,597       153,116       163,593  
Debt securities held to maturity   -       -       -       25,013       25,047  
Loans held for investment, net of unearned income                  
  Noncovered   1,679,958       1,705,408       1,719,905       1,756,269       1,770,426  
  Covered   14,158       15,520       17,475       18,815       20,483  
  Allowance for loan losses   (18,493 )     (18,540 )     (18,243 )     (18,267 )     (18,256 )
Loans held for investment, net   1,675,623       1,702,388       1,719,137       1,756,817       1,772,653  
FDIC indemnification asset   3,458       4,020       4,578       5,108       5,653  
Premises and equipment, net   48,521       48,262       46,636       45,785       45,537  
Other real estate owned, noncovered   2,528       3,810       3,903       3,806       4,754  
Other real estate owned, covered   -       152       152       32       44  
Interest receivable   4,842       5,317       5,227       5,481       5,374  
Goodwill   92,744       92,744       92,744       92,744       94,287  
Other intangible assets   4,280       4,532       4,780       5,026       5,366  
Other assets   75,056       75,248       84,035       74,573       73,701  
Total assets $ 2,205,047     $ 2,212,027     $ 2,242,335     $ 2,244,374     $ 2,269,688  
                       
Liabilities                  
Deposits                  
  Noninterest-bearing $ 472,478     $ 480,573     $ 479,299     $ 459,550     $ 463,945  
  Interest-bearing   1,364,374       1,367,465       1,399,138       1,396,200       1,411,906  
Total deposits   1,836,852       1,848,038       1,878,437       1,855,750       1,875,851  
Securities sold under agreements to repurchase   1,863       3,083       3,700       29,370       30,151  
Interest, taxes, and other liabilities   28,969       27,220       27,096       26,397       25,284  
Total liabilities   1,867,684       1,878,341       1,909,233       1,911,517       1,931,286  
                       
Stockholders' equity                  
Common stock(2)   15,580       15,633       15,818       16,007       21,382  
Additional paid-in capital(2)   108,222       109,816       115,914       122,486       229,182  
Retained earnings   213,866       208,618       202,103       195,793       189,902  
Treasury stock, at cost(2)   -       -       -       -       (99,247 )
Accumulated other comprehensive loss   (305 )     (381 )     (733 )     (1,429 )     (2,817 )
Total stockholders' equity   337,363       333,686       333,102       332,857       338,402  
Total liabilities and stockholders' equity $ 2,205,047     $ 2,212,027     $ 2,242,335     $ 2,244,374     $ 2,269,688  
                       
Shares outstanding at period-end   15,579,740       15,633,388       15,818,368       16,007,263       16,390,502  
Book value per common share $ 21.65     $ 21.34     $ 21.06     $ 20.79     $ 20.65  
Tangible book value per common share(1)   15.43       15.12       14.89       14.69       14.57  
                       
   
(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)
                       
      September 30,   June 30,   March 31,   December 31,   September 30,
(Amounts in thousands)   2019       2019       2019       2018       2018  
Allowance for Loan Losses                  
Beginning balance $ 18,540     $ 18,243     $ 18,267     $ 18,256     $ 19,583  
Provision for loan losses charged to operations   675       1,585       1,220       908       495  
Charge-offs   (964 )     (2,114 )     (1,622 )     (1,282 )     (2,177 )
Recoveries   242       826       378       385       355  
Net charge-offs   (722 )     (1,288 )     (1,244 )     (897 )     (1,822 )
Ending balance $ 18,493     $ 18,540     $ 18,243     $ 18,267     $ 18,256  
                       
Nonperforming Assets                  
Non-covered nonperforming assets                  
Nonaccrual loans $ 16,701     $ 16,368     $ 18,544     $ 19,583     $ 20,542  
Accruing loans past due 90 days or more   107       37       156       58       46  
Troubled debt restructurings ("TDRs")(1)   668       821       835       161       189  
Total non-covered nonperforming loans   17,476       17,226       19,535       19,802       20,777  
OREO   2,528       3,810       3,903       3,806       4,754  
Total non-covered nonperforming assets $ 20,004     $ 21,036     $ 23,438     $ 23,608     $ 25,531  
                       
Covered nonperforming assets                  
Nonaccrual loans $ 243     $ 203     $ 237     $ 322     $ 330  
Total covered nonperforming loans   243       203       237       322       330  
OREO   -       152       152       32       44  
Total covered nonperforming assets $ 243     $ 355     $ 389     $ 354     $ 374  
                       
Additional Information                  
Performing TDRs(2) $ 5,635     $ 5,676     $ 5,654     $ 6,266     $ 6,953  
Total Accruing TDRs(3)   6,303       6,497       6,489       6,427       7,142  
                       
Non-covered ratios                  
Nonperforming loans to total loans   1.04 %     1.01 %     1.14 %     1.13 %     1.17 %
Nonperforming assets to total assets   0.91 %     0.96 %     1.05 %     1.06 %     1.14 %
Non-PCI allowance to nonperforming loans   105.82 %     107.63 %     93.39 %     92.25 %     87.87 %
Non-PCI allowance to total loans   1.10 %     1.09 %     1.06 %     1.04 %     1.03 %
Annualized net charge-offs to average loans   0.17 %     0.30 %     0.29 %     0.20 %     0.41 %
                       
Total ratios                  
Nonperforming loans to total loans   1.05 %     1.01 %     1.14 %     1.13 %     1.18 %
Nonperforming assets to total assets   0.92 %     0.97 %     1.06 %     1.07 %     1.14 %
Allowance for loan losses to nonperforming loans   104.37 %     106.37 %     92.27 %     90.77 %     86.49 %
Allowance for loan losses to total loans   1.09 %     1.08 %     1.05 %     1.03 %     1.02 %
Annualized net charge-offs to average loans   0.17 %     0.30 %     0.29 %     0.20 %     0.40 %
                       
 
(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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