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First Community Bankshares, Inc. Announces Record First Quarter Results and Quarterly Cash Dividend
Source: Nasdaq GlobeNewswire / 27 Apr 2021 16:00:00 America/New_York
BLUEFIELD, Va., April 27, 2021 (GLOBE NEWSWIRE) -- First Community Bankshares, Inc. (NASDAQ: FCBC) (www.firstcommunitybank.com) (the “Company”) today reported its unaudited results of operations and other financial information for the quarter ended March 31, 2021. The Company reported record quarterly net income of $14.60 million, or $0.82 per diluted common share, for the quarter ended March 31, 2021, which was an increase of $0.38 per diluted common share, or 86.36%, over the same quarter of 2020.
The Company also declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share. The quarterly dividend is payable to common shareholders of record on May 7, 2021, and is expected to be paid on or about May 21, 2021. 2021 is the 36th consecutive year of regular dividends to common shareholders.
First Quarter 2021 and Current Highlights
General
- Net income for the quarter increased $6.73 million to $14.60 million compared to the same quarter of 2020. The large increase includes the reversal of $4.00 million in allowance for credit losses due to improved economic forecasts from those seen at year-end 2020.
- Effective January 1, 2021, the Company adopted CECL and recorded an additional allowance for credit loss for loans of $13.11 million, deferred tax assets of $1.81 million, an additional reserve for unfunded commitments of $509 thousand, and an adjustment to retained earnings of $5.87 million.
- On January 26, 2021, the Board of Directors approved a new plan to repurchase, on the open market at prevailing prices, up to 2.4 million shares of the Company’s common stock through January 26, 2024. During the quarter, the Company repurchased 187,700 common shares for $4.99 million.
Income Statement
- Diluted earnings per share increased $0.38 to $0.82 compared to the same quarter of 2020.
- Due to expected growth in the U.S. GDP, improving jobless rates, and other economic indicators, as well as strong asset quality metrics, the Company released a substantial amount of allowance for credit losses for the quarter resulting in a reversal of $4.00 million in the provision for credit losses; a significant improvement from the $3.50 million loan loss provision recorded in the first quarter of 2020 at the onset of the COVID-19 pandemic.
- Return on average assets increased to 1.94% compared to 1.16% from the same quarter of 2020; return on average equity increased to 13.94% compared to 7.49% from the same quarter of 2020 as well.
Balance Sheet and Asset Quality
- Net charge-offs for the first quarter of 2021 were $725 thousand and the allowance for credit losses remains very strong at 1.61% of total loans.
- As of March 31, 2021, total COVID-19 loan deferrals stood at $17.48 million, down significantly from the peak of $436.11 at June 30, 2020.
- The SBA had forgiven $32.73 million, or 53.58%, of the Company’s first round Paycheck Protection Program loan balances through March 31, 2021. Current PPP loan balances at March 31, 2021, which include second round originations, were $50.75 million.
- Book value per share at March 31, 2021, was $24.22, an increase of $0.14 from year-end 2020.
Non-GAAP Financial Measures
In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this news release include “tangible book value per common share,” “return on average tangible common equity,” “adjusted earnings,” “adjusted diluted earnings per share,” “adjusted return on average assets,” “adjusted return on average common equity,” “adjusted return on average tangible common equity,” and certain financial measures presented on a fully taxable equivalent (“FTE”) basis. FTE basis is calculated using the federal statutory income tax rate of 21%. While the Company believes certain non-GAAP financial measures enhance the understanding of its business and performance, they are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions.
About First Community Bankshares, Inc.
First Community Bankshares, Inc., a financial holding company headquartered in Bluefield, Virginia, provides banking products and services through its wholly owned subsidiary First Community Bank. First Community Bank operated 50 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of March 31, 2021. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.23 billion in combined assets as of March 31, 2021. The Company reported consolidated assets of $3.14 billion as of March 31, 2021. The Company’s common stock is listed on the NASDAQ Global Select Market under the trading symbol, “FCBC”. Additional investor information is available on the Company’s website at www.firstcommunitybank.com.
This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
FOR MORE INFORMATION, CONTACT: David D. Brown (276) 326-9000 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, December 31, September 30, June 30, March 31, (Amounts in thousands, except share and per share data) 2021 2020 2020 2020 2020 Interest income Interest and fees on loans $ 26,540 $ 28,101 $ 27,297 $ 26,991 $ 28,058 Interest on securities 495 549 609 713 918 Interest on deposits in banks 116 96 89 82 533 Total interest income 27,151 28,746 27,995 27,786 29,509 Interest expense Interest on deposits 869 1,029 1,161 1,445 1,825 Interest on borrowings - - - 2 2 Total interest expense 869 1,029 1,161 1,447 1,827 Net interest income 26,282 27,717 26,834 26,339 27,682 (Recovery of) provision for credit losses (4,001 ) 634 4,703 3,831 3,500 Net interest income after provision 30,283 27,083 22,131 22,508 24,182 Noninterest income 7,569 7,733 7,638 6,913 7,549 Noninterest expense 18,820 19,877 19,171 18,913 21,664 Income before income taxes 19,032 14,939 10,598 10,508 10,067 Income tax expense 4,430 3,389 2,332 2,270 2,195 Net income $ 14,602 $ 11,550 $ 8,266 $ 8,238 $ 7,872 Earnings per common share Basic $ 0.83 $ 0.65 $ 0.47 $ 0.47 $ 0.44 Diluted 0.82 0.65 0.47 0.46 0.44 Cash dividends per common share Regular 0.25 0.25 0.25 0.25 0.25 Weighted average shares outstanding Basic 17,669,937 17,717,356 17,710,283 17,701,853 17,998,994 Diluted 17,729,185 17,751,805 17,732,428 17,728,300 18,050,071 Performance ratios Return on average assets 1.94 % 1.54 % 1.11 % 1.15 % 1.16 % Return on average common equity 13.94 % 10.82 % 7.83 % 7.97 % 7.49 % Return on average tangible common equity(1) 20.54 % 15.96 % 11.62 % 11.91 % 11.12 % (1) A non-GAAP financial measure defined as net income divided by average stockholders' equity less average goodwill and other intangible assets CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE (Unaudited) Three Months Ended March 31, December 31, September 30, June 30, March 31, (Amounts in thousands) 2021 2020 2020 2020 2020 Noninterest income Wealth management $ 881 $ 810 $ 909 $ 854 $ 844 Service charges on deposits 3,031 3,478 3,250 2,560 3,731 Other service charges and fees 3,022 2,737 2,748 2,617 2,231 Net gain on sale of securities - - - - 385 Net FDIC indemnification asset amortization (280 ) (338 ) (383 ) (483 ) (486 ) Other operating income 915 1,046 1,114 1,365 844 Total noninterest income $ 7,569 $ 7,733 $ 7,638 $ 6,913 $ 7,549 Noninterest expense Salaries and employee benefits $ 10,884 $ 11,119 $ 10,485 $ 11,015 $ 11,386 Occupancy expense 1,275 1,225 1,228 1,275 1,315 Furniture and equipment expense 1,367 1,446 1,412 1,316 1,384 Service fees 1,335 1,232 1,581 1,329 1,523 Advertising and public relations 335 534 430 475 512 Professional fees 466 276 408 307 233 Amortization of intangibles 357 364 365 360 361 FDIC premiums and assessments 199 202 191 33 - Merger, acquisition, and divestiture expense - - - - 1,893 Other operating expense 2,602 3,479 3,071 2,803 3,057 Total noninterest expense $ 18,820 $ 19,877 $ 19,171 $ 18,913 $ 21,664 RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited) Three Months Ended March 31, December 31, September 30, June 30, March 31, 2021 2020 2020 2020 2020 (Amounts in thousands, except per share data) Net income $ 14,602 $ 11,550 $ 8,266 $ 8,238 $ 7,872 Non-GAAP adjustments: Net (gain) loss on sale of securities - - - - (385 ) Merger, acquisition, and divestiture expense - - - - 1,893 Total adjustments - - - - 1,508 Tax effect - - - - 354 Adjusted earnings, non-GAAP $ 14,602 $ 11,550 $ 8,266 $ 8,238 $ 9,026 Adjusted diluted earnings per common share, non-GAAP $ 0.82 $ 0.65 $ 0.47 $ 0.46 $ 0.50 Performance ratios, non-GAAP Adjusted return on average assets 1.94 % 1.54 % 1.11 % 1.15 % 1.33 % Adjusted return on average common equity 13.94 % 10.82 % 7.83 % 7.97 % 8.59 % Adjusted return on average tangible common equity(2) 20.54 % 15.96 % 11.62 % 11.91 % 12.75 % (1) A non-GAAP financial measure defined as adjusted earnings divided by average stockholders' equity less average goodwill and other intangible assets AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) Three Months Ended March 31, 2021 2020 Average Average Yield/ Average Average Yield/ (Amounts in thousands) Balance Interest(1) Rate(1) Balance Interest(1) Rate(1) Assets Earning assets Loans(2)(3) $ 2,165,054 $ 26,582 4.98% $ 2,081,132 $ 28,105 5.43% Securities available for sale 83,634 573 2.78% 136,109 1,060 3.14% Interest-bearing deposits 468,067 118 0.10% 163,483 535 1.31% Total earning assets 2,716,755 27,273 4.07% 2,380,724 29,700 5.02% Other assets 331,483 353,647 Total assets $ 3,048,238 $ 2,734,371 Liabilities and stockholders' equity Interest-bearing deposits Demand deposits $ 613,003 $ 39 0.03% $ 502,603 $ 90 0.07% Savings deposits 778,430 91 0.05% 679,656 414 0.24% Time deposits 412,986 739 0.73% 485,085 1,322 1.10% Total interest-bearing deposits 1,804,419 869 0.19% 1,667,344 1,826 0.44% Borrowings Retail repurchase agreements 1,234 - N/M 1,459 2 0.56% FHLB advances and other borrowings - - - 134 1 N/M Total borrowings 1,234 - - 1,593 3 0.65% Total interest-bearing liabilities 1,805,653 869 0.19% 1,668,937 1,829 0.44% Noninterest-bearing demand deposits 777,876 600,636 Other liabilities 39,926 42,174 Total liabilities 2,623,455 2,311,747 Stockholders' equity 424,783 422,624 Total liabilities and stockholders' equity $ 3,048,238 $ 2,734,371 Net interest income, FTE(1) $ 26,404 $ 27,871 Net interest rate spread 3.88% 4.58% Net interest margin, FTE(1) 3.94% 4.71% (1) Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%. (2) Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual. (3) Interest on loans includes non-cash and accelerated purchase accounting accretion of $1.18 million and $1.95 million for the three months ended March 31, 2021 and 2020, respectively. CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) March 31, December 31, September 30, June 30, March 31, (Amounts in thousands, except per share data) 2021 2020 2020 2020 2020 Assets Cash and cash equivalents $ 628,745 $ 456,561 $ 375,664 $ 421,492 $ 241,613 Debt securities available for sale 87,643 83,358 90,972 98,367 107,753 Loans held for investment, net of unearned income Noncovered 2,137,599 2,176,952 2,184,251 2,125,560 2,084,610 Covered 9,041 9,680 10,744 11,257 12,115 Allowance for credit/loan losses (34,563 ) (26,182 ) (27,277 ) (23,758 ) (21,137 ) Loans held for investment, net 2,112,077 2,160,450 2,167,718 2,113,059 2,075,588 FDIC indemnification asset 946 1,223 1,598 1,943 2,433 Premises and equipment, net 57,371 57,700 60,488 62,658 63,319 Other real estate owned, noncovered 1,740 2,083 2,103 2,181 2,502 Interest receivable 8,724 9,052 9,151 8,380 6,117 Goodwill 129,565 129,565 129,565 129,565 129,565 Other intangible assets 6,712 7,069 7,433 7,798 8,159 Other assets 106,543 104,075 103,236 103,623 101,912 Total assets $ 3,140,066 $ 3,011,136 $ 2,947,928 $ 2,949,066 $ 2,738,961 Liabilities Deposits Noninterest-bearing $ 824,576 $ 772,795 $ 750,277 $ 752,899 $ 620,292 Interest-bearing 1,848,524 1,773,452 1,741,962 1,744,947 1,668,122 Total deposits 2,673,100 2,546,247 2,492,239 2,497,846 2,288,414 Securities sold under agreements to repurchase 1,519 964 956 1,100 1,348 FHLB and other borrowings - - - - 1,000 Interest, taxes, and other liabilities 39,448 37,195 34,816 34,290 36,593 Total liabilities 2,714,067 2,584,406 2,528,011 2,533,236 2,327,355 Stockholders' equity Common stock 17,592 17,723 17,717 17,710 17,700 Additional paid-in capital 169,173 173,345 172,980 172,601 172,231 Retained earnings 241,889 237,585 230,464 226,627 222,814 Accumulated other comprehensive loss (2,655 ) (1,923 ) (1,244 ) (1,108 ) (1,139 ) Total stockholders' equity 425,999 426,730 419,917 415,830 411,606 Total liabilities and stockholders' equity $ 3,140,066 $ 3,011,136 $ 2,947,928 $ 2,949,066 $ 2,738,961 Shares outstanding at period-end 17,592,009 17,722,507 17,716,522 17,709,569 17,700,140 Book value per common share $ 24.22 $ 24.08 $ 23.70 $ 23.48 $ 23.25 Tangible book value per common share(1) 16.47 16.37 15.97 15.72 15.47 (1) A non-GAAP financial measure defined as stockholders' equity less goodwill and other intangible assets, divided by shares outstanding SELECTED CREDIT QUALITY INFORMATION (Unaudited) March31, December 31, September 30, June 30, March 31, (Amounts in thousands) 2021 2020 2020 2020 2020 Allowance for Loan Losses Beginning balance $ 26,182 $ 27,277 $ 23,758 $ 21,137 $ 18,425 Cumulative effect of adoption of ASU 2016-13 13,107 - - - - (Recovery of) provision for credit/loan losses charged to operations (4,001 ) 634 4,703 3,831 3,500 Charge-offs (1,730 ) (2,194 ) (1,563 ) (1,672 ) (1,194 ) Recoveries 1,005 465 379 462 406 Net charge-offs (725 ) (1,729 ) (1,184 ) (1,210 ) (788 ) Ending balance $ 34,563 $ 26,182 $ 27,277 $ 23,758 $ 21,137 Nonperforming Assets Non-covered nonperforming assets Nonaccrual loans $ 25,747 $ 21,706 $ 24,423 $ 24,471 $ 20,263 Accruing loans past due 90 days or more 171 295 43 284 329 Troubled debt restructurings ("TDRs")(1) 308 187 456 598 623 Total non-covered nonperforming loans 26,226 22,188 24,922 25,353 21,215 OREO 1,740 2,083 2,103 2,181 2,502 Total non-covered nonperforming assets $ 27,966 $ 24,271 $ 27,025 $ 27,534 $ 23,717 Covered nonperforming assets Nonaccrual loans $ 359 $ 297 $ 333 $ 299 $ 145 Total covered nonperforming loans 359 297 333 299 145 Total covered nonperforming assets $ 359 $ 297 $ 333 $ 299 $ 145 Additional Information Performing TDRs(2) $ 8,719 $ 10,061 $ 10,480 $ 10,822 $ 8,429 Total Accruing TDRs(3) 9,027 10,248 10,936 11,420 9,052 Asset Quality Ratios Nonperforming loans to total loans 1.24 % 1.03 % 1.15 % 1.20 % 1.02 % Nonperforming assets to total assets 0.90 % 0.82 % 0.93 % 0.94 % 0.87 % Allowance for credit/loan losses to nonperforming loans 130.01 % 116.44 % 108.01 % 92.62 % 98.96 % Allowance for credit/loan losses to total loans 1.61 % 1.20 % 1.24 % 1.11 % 1.01 % Annualized net charge-offs to average loans 0.14 % 0.26 % 0.22 % 0.23 % 0.15 % (1) Accruing TDRs restructured within the past six months or nonperforming (2) Accruing TDRs with six months or more of satisfactory payment performance (3) Accruing total TDRs 