First Community Bankshares, Inc. Announces First Quarter 2022 Results and Quarterly Cash Dividend
BLUEFIELD, Va., April 26, 2022 (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, 2022. The Company reported quarterly net income of $9.52 million, or $0.56 per diluted common share, for the quarter ended March 31, 2022.The Company also declared a quarterly cash dividend to common shareholders of twenty-seven cents ($0.27) per common share, which is an increase of 8.00% over the same quarter last year. The quarterly dividend is payable to common shareholders of record on May 6, 2022, and is expected to be paid on or about May 20, 2022. This marks the 37^th consecutive year of regular dividends to common shareholders.
*First Quarter 2022 and Current Highlights*
* Income Statement*
· Net income of $9.52 million for the quarter was a decrease of $5.09 million, or $0.26 per diluted common share, compared to the same quarter of 2021. The decrease was primarily driven by a return to more normalized expense in the provision for credit losses of $1.96 million for the first quarter of 2022 compared to a $4.00 million reversal of provision in the first quarter of 2021. The current year provision is largely due to robust loan growth in the first quarter, principally led by commercial loan demand. The reversal of provision in the first quarter of 2021 was driven by a significantly improved economic outlook than in early 2020.
· Despite the significant increase in credit loss provision between the two periods, annualized first quarter return on average assets was 1.20% and return on average common equity was 8.98%.
· Net interest margin for the first quarter was 3.55%, which was a three basis point increase from 3.52% reported for the fourth quarter of 2021. The cost of interest-bearing deposits declined another three basis points to 0.10%.
· Salaries and employee benefits increased $787 thousand, or 7.23%, from last year. During the quarter, the Company implemented annualized wage increases of approximately $2.5 million as part of its ongoing strategic initiative to enhance Human Capital Management, which included an increased minimum wage.
* Balance Sheet and Asset Quality*
· The Company’s loan portfolio increased by $78.73 million, or an annualized growth rate of 14.74%, during the first quarter of 2022. Loan demand and originations were strong in all categories, including construction, commercial real estate, residential mortgage, and consumer loans.
· During the first quarter, the Company repurchased 132,000 common shares for $4.09 million.
· Non-performing loans to total loans remained very low at 0.96% of total loans and continues the declining trend experienced over the past four quarters. Net charge-offs for the first quarter of 2022 were $838 thousand, or 0.15% of annualized average loans, compared to net charge-offs of $725 thousand, or 0.14% of annualized average loans, for the same period in 2021.
· The allowance for credit losses to total loans remained at 1.29% of total loans.
· Book value per share at March 31, 2022, was $25.27, a decrease of $0.07 from year-end 2021.*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 49 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of March 31, 2022. First Community Bank offers wealth management and investment advice and services through its Trust Division and through its wholly owned subsidiary, First Community Wealth Management, which collectively managed and administered $1.28 billion in combined assets as of March 31, 2022. The Company reported consolidated assets of $3.24 billion as of March 31, 2022. 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*
(Amounts in thousands, except share and per share data) *March 31,
2022
* *December
31, 2021
* *September
30, 2021**
* *June 30,
2021
* *March 31,
2021
*
*Interest income*
Interest and fees on loans $ 24,641 $ 25,236 $ 25,119 $ 25,937 $ 26,540
Interest on securities 750 362 445 435 495
Interest on deposits in banks 248 234 225 166 116
Total interest income 25,639 25,832 25,789 26,538 27,151
*Interest expense*
Interest on deposits 486 600 642 724 869
Interest on borrowings - - 1 - -
Total interest expense 486 600 643 724 869
*Net interest income* 25,153 25,232 25,146 25,814 26,282
(Recovery of) provision for credit losses 1,961 (846 ) (1,394 ) (2,230 ) (4,001 )
*Net interest income after provision* 23,192 26,078 26,540 28,044 30,283
Noninterest income 9,194 9,215 8,720 8,797 7,569
Noninterest expense 19,986 21,701 18,836 19,361 18,820
Income before income taxes 12,400 13,592 16,424 17,480 19,032
Income tax expense 2,885 3,037 3,816 4,077 4,430
*Net income* $ 9,515 $ 10,555 $ 12,608 $ 13,403 $ 14,602
Earnings per common share
Basic $ 0.57 $ 0.62 $ 0.73 $ 0.77 $ 0.83
Diluted 0.56 0.62 0.73 0.76 0.82
Cash dividends per common share
Regular 0.27 0.27 0.27 0.25 0.25
Weighted average shares outstanding
Basic 16,817,284 16,974,005 17,221,244 17,486,182 17,669,937
Diluted 16,864,515 17,038,980 17,279,576 17,536,144 17,729,185
Performance ratios
Return on average assets 1.20 % 1.32 % 1.59 % 1.70 % 1.94 %
Return on average common equity 8.98 % 9.77 % 11.65 % 12.55 % 13.94 %
Return on average tangible common equity^(1) 13.10 % 14.28 % 17.04 % 18.40 % 20.54 %
^(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*
(Amounts in thousands) *March 31,
2022
* *December
31, 2021**
* *September
30, 2021**
* *June 30,
2021* *March 31,
2021*
*Noninterest income*
Wealth management $ 972 $ 940 $ 974 $ 1,058 $ 881
Service charges on deposits 3,498 3,718 3,599 3,098 3,031
Other service charges and fees 3,017 3,091 3,143 3,166 3,022
Net FDIC indemnification asset amortization - - - (946 ) (280 )
Other operating income 1,707 1,466 1,004 2,421 915
Total noninterest income $ 9,194 $ 9,215 $ 8,720 $ 8,797 $ 7,569
*Noninterest expense*
Salaries and employee benefits $ 11,671 $ 12,493 $ 10,646 $ 10,216 $ 10,884
Occupancy expense 1,269 1,368 1,155 1,115 1,275
Furniture and equipment expense 1,614 1,418 1,385 1,457 1,367
Service fees 1,503 1,946 1,530 1,513 1,335
Advertising and public relations 540 589 536 616 335
Professional fees 453 455 313 290 466
Amortization of intangibles 357 364 365 360 357
FDIC premiums and assessments 218 213 216 204 199
Other operating expense 2,361 2,855 2,690 3,590 2,602
Total noninterest expense $ 19,986 $ 21,701 $ 18,836 $ 19,361 $ 18,820
*AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)* *Three Months Ended March 31,* *2022* *2021* *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) $ 2,200,003 $ 24,698 4.55 % $ 2,165,054 $ 26,582 4.98 %
Securities available for sale 140,975 800 2.30 % 83,634 573 2.78 %
Interest-bearing deposits 544,718 249 0.19 % 468,067 118 0.10 %
Total earning assets 2,885,696 25,747 3.62 % 2,716,755 27,273 4.07 %
Other assets 328,212 331,483
Total assets $ 3,213,908 $ 3,048,238
*Liabilities and stockholders' equity*
Interest-bearing deposits
Demand deposits $ 679,211 $ 28 0.02 % $ 613,003 $ 39 0.03 %
Savings deposits 881,295 66 0.03 % 778,430 91 0.05 %
Time deposits 346,902 392 0.46 % 412,986 739 0.73 %
Total interest-bearing deposits 1,907,408 486 0.10 % 1,804,419 869 0.19 %
Borrowings
Retail repurchase agreements 1,993 - N/M 1,234 - N/M
Total borrowings 1,993 - N/M 1,234 - N/M
Total interest-bearing liabilities 1,909,401 486 0.10 % 1,805,653 869 0.19 %
Noninterest-bearing demand deposits 835,921 777,876
Other liabilities 38,956 39,926
Total liabilities 2,784,278 2,623,455
Stockholders' equity 429,630 424,783
Total liabilities and stockholders' equity $ 3,213,908 $ 3,048,238
Net interest income, FTE^(1) $ 25,261 $ 26,404
Net interest rate spread 3.52 % 3.88 %
Net interest margin, FTE^(1) 3.55 % 3.94 %
^(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 $866 thousand and $1.18 million for the three months ended March 31, 2022 and 2021, respectively.
*CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)*
(Amounts in thousands, except per share data) *March 31,
2022
* *December
31, 2021**
* *September
30, 2021* *June 30,
2021
* *March 31,
2021
*
*Assets*
Cash and cash equivalents $ 457,306 $ 677,439 $ 635,007 $ 618,738 $ 628,745
Debt securities available for sale 268,703 76,292 77,440 79,842 87,643
Loans held for investment, net of unearned income
(includes covered loans of $7,503 and $9,041 for
June 30 and March 31, 2021, respectively) ^(1) 2,244,296 2,165,569 2,152,103 2,153,731 2,146,640
Allowance for credit losses (28,981 ) (27,858 ) (29,877 ) (31,857 ) (34,563 )
Loans held for investment, net 2,215,315 2,137,711 2,122,226 2,121,874 2,112,077
FDIC indemnification asset - - - - 946
Premises and equipment, net 50,912 52,284 52,842 53,560 57,371
Other real estate owned 848 1,015 1,240 1,324 1,740
Interest receivable 8,100 7,900 8,146 8,480 8,724
Goodwill 129,565 129,565 129,565 129,565 129,565
Other intangible assets 5,266 5,622 5,987 6,352 6,712
Other assets 108,112 106,691 107,258 109,548 106,543
Total assets $ 3,244,127 $ 3,194,519 $ 3,139,711 $ 3,129,283 $ 3,140,066
*Liabilities*
Deposits
Noninterest-bearing $ 860,652 $ 842,783 $ 820,147 $ 819,138 $ 824,576
Interest-bearing 1,922,292 1,886,608 1,853,699 1,846,556 1,848,524
Total deposits 2,782,944 2,729,391 2,673,846 2,665,694 2,673,100
Securities sold under agreements to repurchase 2,488 1,536 1,106 994 1,519
Interest, taxes, and other liabilities 34,539 35,817 37,395 35,061 39,448
Total liabilities 2,819,971 - 2,766,744 - 2,712,347 - 2,701,749 - 2,714,067
*Stockholders' equity*
Common stock 16,782 16,878 17,071 17,335 17,592
Additional paid-in capital 144,088 147,619 154,086 161,853 169,173
Retained earnings 269,798 264,824 258,860 250,911 241,889
Accumulated other comprehensive loss (6,512 ) (1,546 ) (2,653 ) (2,565 ) (2,655 )
Total stockholders' equity 424,156 427,775 427,364 427,534 425,999
Total liabilities and stockholders' equity $ 3,244,127 $ 3,194,519 $ 3,139,711 $ 3,129,283 $ 3,140,066
Shares outstanding at period-end 16,781,975 16,878,220 17,071,052 17,334,547 17,592,009
Book value per common share $ 25.27 $ 25.34 $ 25.03 $ 24.66 $ 24.22
Tangible book value per common share^(2) 17.24 17.34 17.09 16.82 16.47
^(1) FDIC Loss Share agreement terminated in September 2021.
^(2) A non-GAAP financial measure defined as stockholders' equity less goodwill and other intangible assets, divided by shares outstanding
*SELECTED CREDIT QUALITY INFORMATION (Unaudited)*
(Amounts in thousands) *March 31,
2022
* *December
31, 2021**
* *September
30, 2021**
* *June 30,
2021
* *March 31,
2021
*
*Allowance for Credit Losses *
Beginning balance $ 27,858 $ 29,877 $ 31,857 $ 34,563 $ 26,182
Cumulative effect of adoption of ASU 2016-13 - - - - 13,107
Provision for (recovery of)
credit/loan losses charged to operations 1,961 (846 ) (1,394 ) (2,230 ) (4,001 )
Charge-offs (1,302 ) (1,887 ) (1,255 ) (1,902 ) (1,730 )
Recoveries 464 714 669 1,426 1,005
Net charge-offs (838 ) (1,173 ) (586 ) (476 ) (725 )
Ending balance $ 28,981 $ 27,858 $ 29,877 $ 31,857 $ 34,563
*Nonperforming Assets*
Nonaccrual loans $ 20,487 $ 20,768 $ 22,070 $ 24,085 $ 26,106
Accruing loans past due 90 days or more - 87 5 327 171
Troubled debt restructurings ("TDRs")^(1) 1,141 1,367 359 133 308
Total nonperforming loans 21,628 22,222 22,434 24,545 26,585
OREO 848 1,015 1,240 1,324 1,740
Total nonperforming assets $ 22,476 $ 23,237 $ 23,674 $ 25,869 $ 28,325
*Additional Information*
Total Accruing TDRs^(3) $ 8,782 $ 8,652 $ 8,185 $ 8,309 $ 9,027
*Asset Quality Ratios*
Nonperforming loans to total loans 0.96 % 1.03 % 1.04 % 1.14 % 1.24 %
Nonperforming assets to total assets 0.69 % 0.73 % 0.75 % 0.83 % 0.90 %
Allowance for credit/loan losses to nonperforming loans 134.00 % 125.36 % 133.18 % 129.79 % 130.01 %
Allowance for credit/loan losses to total loans 1.29 % 1.29 % 1.39 % 1.48 % 1.61 %
Annualized net charge-offs to average loans 0.15 % 0.22 % 0.11 % 0.09 % 0.14 %
^(1) Accruing TDRs restructured within the past six months or nonperforming
^(2) Accruing total TDRs
*FOR MORE INFORMATION, CONTACT:*
David D. Brown
(276) 326-9000