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