• First Community Bankshares, Inc. Announces First Quarter 2023 Results and Quarterly Cash Dividend

    المصدر: Nasdaq GlobeNewswire / 25 أبريل 2023 16:00:32   America/New_York

    BLUEFIELD, Va., April 25, 2023 (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, 2023. The Company reported net income of $11.78 million, or $0.72 per diluted common share, for the quarter ended March 31, 2023.  

    The Company also declared a quarterly cash dividend to common shareholders of twenty-nine cents ($0.29) per common share, an increase of two cents $0.02, or 7.41%, over the quarterly dividend declared in the same quarter of 2022. The quarterly dividend is payable to common shareholders of record on May 12, 2023, and is expected to be paid on or about May 26, 2023. This marks the 38th consecutive year of regular dividends to common shareholders.

    On April 21, 2023, the Company completed its acquisition of Surrey Bancorp and its subsidiary Surrey Bank and Trust of Mount Airy, North Carolina. At closing, Surrey had approximately $468 million in assets, $253 million in loans, and $405 million in deposits. 

    First Quarter 2023 and Current Highlights

          Income Statement

    • Net income of $11.78 million for the quarter was an approximate 24% increase, or $2.27 million, compared to $9.52 million recorded in the same quarter of 2022. The increase is primarily attributable to an increase in net interest income of $4.26 million. The increase in net interest income was offset by an increase in noninterest expense of $827 thousand and a decrease in noninterest income of $611 thousand.
    • Annualized return on average assets was 1.55% for the first quarter of 2023 and 1.20% for the same quarter of 2022. Annualized return on average common equity was 11.15% for the first quarter of 2023 and 8.98% for the same quarter of 2022.
    • Net interest margin for the first quarter was 4.35%, which was an 80 basis point increase from 3.55% reported for the same quarter of 2022. The yield on earning assets increased 85 basis points, primarily driven by increased earnings on loans and securities.
    • The cost of interest-bearing deposits increased 6 basis points to 0.16%, primarily driven by an increase in the interest expense associated with savings and money market deposit accounts.
    • Interest and fees on loans increased $2.99 million from the same quarter of 2022 and is attributable to both an increase in yield and an increase in average balance compared to the yield and average balance of the prior year. Interest income from securities of $2.10 million was an increase of $1.35 million over the first quarter of 2022 primarily attributable to an increase in the portfolio. Interest income on deposits in banks also increased $214 thousand to $462 thousand for the first quarter primarily due to a significant increase in overnight rates as compared to the first quarter of 2022.
    • The net provision for credit losses of $1.74 million for the quarter was a decrease of $219 thousand compared to $1.96 million recorded in the same quarter of 2022. This quarter’s provision was a function of a $1.97 million provision for credit losses and a reduction in the allowance for unfunded commitments of $232 thousand.

          Balance Sheet and Asset Quality

    • The Company’s loan portfolio decreased by $11.3 million, or 0.47%, from year-end 2022, with the largest decreases in the consumer non-real estate loan type.
    • The Company did not repurchase any common shares during the first quarter of 2023. Share repurchases had been stopped in anticipation of the now completed acquisition of Surrey Bancorp.
    • Non-performing loans to total loans remained low at 0.65% of total loans and continues the declining trend experienced over the past four quarters. The Company experienced net charge-offs for the first quarter of 2023 of $1.74 million, or 0.29% of annualized average loans, compared to net charge-offs of $838 thousand, or 0.15% of annualized average loans, for the same period in 2022.
    • The allowance for credit losses to total loans was 1.29% at March 31, 2023.
    • Book value per share at March 31, 2023, was $26.58, an increase of $0.57 from year-end 2022.

    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 48 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of March 31, 2023. 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 $1.34 billion in combined assets as of March 31, 2023. The Company reported consolidated assets of $3.05 billion as of March 31, 2023. 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) 2023   2022   2022   2022   2022  
    Interest income          
     Interest and fees on loans$27,628  $27,873  $26,405  $25,651  $24,641  
     Interest on securities 2,099   1,900   1,785   1,551   750  
     Interest on deposits in banks 462   1,215   1,532   768   248  
    Total interest income 30,189    30,988    29,722    27,970    25,639   
    Interest expense          
     Interest on deposits 718   366   380   422   486  
     Interest on borrowings 59   1   -   1   -  
    Total interest expense 777    367    380    423    486   
    Net interest income 29,412    30,621    29,342    27,547    25,153   
    Provision for credit losses 1,742   3,416   685   510   1,961  
    Net interest income after provision 27,670    27,205    28,657    27,037    23,192   
    Noninterest income 8,583   9,184   9,950   8,854   9,194  
    Noninterest expense 20,813   20,730   21,145   21,255   19,986  
    Income before income taxes 15,440    15,659    17,462    14,636    12,400   
    Income tax expense 3,658   3,076   4,111   3,423   2,885  
    Net income$11,782   $12,583   $13,351   $11,213   $9,515   
                 
    Earnings per common share          
     Basic$0.73  $0.78  $0.82  $0.67  $0.57  
     Diluted 0.72   0.77   0.81   0.67   0.56  
    Cash dividends per common share          
     Regular 0.29   0.29   0.27   0.27   0.27  
    Weighted average shares outstanding          
     Basic 16,228,297   16,229,289   16,378,022   16,662,817   16,817,284  
     Diluted 16,289,489   16,281,922   16,413,202   16,682,615   16,864,515  
    Performance ratios          
     Return on average assets 1.55%  1.59%  1.63%  1.38%  1.20% 
     Return on average common equity 11.15%  11.99%  12.60%  10.61%  8.98% 
     Return on average tangible common equity(1) 16.19%  17.75%  18.51%  15.56%  13.10% 
                 
    (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) 2023  2022  2022  2022  2022 
    Noninterest income          
     Wealth management$1,017 $958 $932 $993 $972 
     Service charges on deposits 3,159  3,354  3,689  3,672  3,498 
     Other service charges and fees 3,082  3,006  2,988  3,297  3,017 
     Gain on sale of securities 7  -  -  -  - 
     Gain on divestiture -  -  1,658  -  - 
     Other operating income 1,318  1,866  683  892  1,707 
    Total noninterest income$8,583  $9,184  $9,950  $8,854  $9,194 
    Noninterest expense          
     Salaries and employee benefits$11,595 $11,913 $12,081 $11,518 $11,671 
     Occupancy expense 1,168  1,196  1,188  1,165  1,269 
     Furniture and equipment expense 1,401  1,413  1,478  1,496  1,614 
     Service fees 2,019  1,905  1,635  2,563  1,503 
     Advertising and public relations 643  574  718  577  540 
     Professional fees 327  98  208  544  453 
     Amortization of intangibles 234  364  365  360  357 
     FDIC premiums and assessments 320  330  321  257  218 
     Merger expense 379  596  -  -  - 
     Divestiture expense -  -  153  -  - 
     Other operating expense 2,727  2,341  2,998  2,775  2,361 
    Total noninterest expense$20,813 $20,730 $21,145 $21,255 $19,986 
                


    RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)
                 
       Three Months Ended
       March 31, December 31,September 30,June 30, March 31, 
        2023   2022   2022   2022   2022  
    (Amounts in thousands, except per share data)          
    Net income$11,782  $12,583  $13,351  $11,213  $9,515  
    Non-GAAP adjustments:          
     (Gain) loss on sale of securities (7)  -   -   -   -  
     Merger expense 379   596   -   -   -  
     Divestiture expense -   -   153   -   -  
     Gain on divestiture -   -   (1,658)  -   -  
     Other items(1) -   (450)  -   (92)  -  
    Total adjustments 372   146   (1,505)  (92)  -  
     Tax effect 10 - (29)- (361)- (22)- -  
    Adjusted earnings, non-GAAP$12,144  $12,758  $12,207  $11,143  $9,515  
                 
    Adjusted diluted earnings per common share,          
     non-GAAP$0.75  $0.78  $0.74  $0.67  $0.56  
    Performance ratios, non-GAAP          
     Adjusted return on average assets 1.60%  1.61%  1.49%  1.37%  1.20% 
     Adjusted return on average common equity 11.49%  12.16%  11.52%  10.55%  8.98% 
     Adjusted return on average tangible          
      common equity(2) 16.69%  17.93%  16.92%  15.46%  13.10% 
                 
    (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, 
       2023   2022  
      Average   Average Yield/ Average   Average Yield/
    (Amounts in thousands)BalanceInterest(1) Rate(1) BalanceInterest(1) Rate(1) 
    Assets          
    Earning assets          
     Loans(2)(3)$2,393,759$27,698 4.69% $2,200,003$24,698 4.55% 
     Securities available for sale 316,734 2,140 2.74%  140,975 800 2.30% 
     Interest-bearing deposits 40,993 465 4.60%  544,718 249 0.19% 
    Total earning assets 2,751,486 30,303 4.47%  2,885,696 25,747 3.62% 
    Other assets 322,789     328,212    
    Total assets$3,074,275    $3,213,908    
                
    Liabilities and stockholders' equity          
    Interest-bearing deposits          
     Demand deposits$666,447$26 0.02% $679,211$28 0.02% 
     Savings deposits 827,414 484 0.24%  881,295 66 0.03% 
     Time deposits 271,214 208 0.31%  346,902 392 0.46% 
    Total interest-bearing deposits 1,765,075 718 0.16%  1,907,408 486 0.10% 
    Borrowings          
     Federal funds purchased 4,719 58 5.07%  - - -  
     Retail repurchase agreements 2,086 1 0.06%  1,993 - N/M 
    Total borrowings 6,805 59 0.07%  1,993 - N/M 
    Total interest-bearing liabilities 1,771,880 777 0.18%  1,909,401 486 0.10% 
    Noninterest-bearing demand deposits 838,041     835,921    
    Other liabilities 35,669     38,956    
    Total liabilities 2,645,590     2,784,278    
    Stockholders' equity 428,685     429,630    
    Total liabilities and stockholders' equity$3,074,275    $3,213,908    
    Net interest income, FTE(1) $29,526    $25,261   
    Net interest rate spread   4.29%    3.52% 
    Net interest margin, FTE(1)   4.35%    3.55% 
                
    (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 $193 thousand and $866 thousand for the three months ended March 31, 2023 and 2022, respectively. 
                


    CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) 
                
      March 31, December 31,September 30, June 30, March 31, 
    (Amounts in thousands, except per share data) 2023   2022   2022   2022   2022  
    Assets          
    Cash and cash equivalents$92,385  $170,846  $229,095  $398,242  $457,306  
    Debt securities available for sale 308,269   300,349   299,620   287,767   268,703  
    Loans held for investment, net of unearned income 2,388,897   2,400,197   2,362,733   2,299,798   2,244,296  
     Allowance for credit losses (30,789)  (30,556)  (29,388)  (29,749)  (28,981) 
    Loans held for investment, net 2,358,108   2,369,641   2,333,345   2,270,049   2,215,315  
    Premises and equipment, net 47,407   47,340   47,891   49,752   50,912  
    Other real estate owned 481   703   559   579   848  
    Interest receivable 8,646   9,279   8,345   8,433   8,100  
    Goodwill 129,565   129,565   129,565   129,565   129,565  
    Other intangible assets 3,942   4,176   4,541   4,905   5,266  
    Other assets 102,869   103,673   107,838   109,085   108,112  
    Total assets$3,051,672  $3,135,572  $3,160,799  $3,258,377  $3,244,127  
                
    Liabilities          
    Deposits          
     Noninterest-bearing$823,297  $872,168  $878,423  $877,962  $860,652  
     Interest-bearing 1,761,327   1,806,647   1,831,798   1,920,577   1,922,292  
    Total deposits 2,584,624   2,678,815   2,710,221   2,798,539   2,782,944  
    Securities sold under agreements to repurchase 1,866   1,874   1,958   2,635   2,488  
    Interest, taxes, and other liabilities 33,451   32,898   36,362   39,157   34,539  
    Total liabilities 2,619,941   2,713,587   2,748,541   2,840,331   2,819,971  
                
    Stockholders' equity          
    Common stock 16,243   16,225   16,273   16,502   16,782  
    Additional paid-in capital 128,666   128,508   129,914   136,705   144,088  
    Retained earnings 300,047   292,971   285,096   276,499   269,798  
    Accumulated other comprehensive loss (13,225)  (15,719)  (19,025)  (11,660)  (6,512) 
    Total stockholders' equity 431,731   421,985   412,258   418,046   424,156  
    Total liabilities and stockholders' equity$3,051,672  $3,135,572  $3,160,799  $3,258,377  $3,244,127  
                
    Shares outstanding at period-end 16,243,551   16,225,399   16,273,177   16,502,144   16,781,975  
    Book value per common share$26.58  $26.01  $25.33  $25.33  $25.27  
    Tangible book value per common share(1) 18.36   17.76   17.09   17.18   17.24  
                
                
    (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) 
                
      March 31, December 31,September 30,June 30, March 31, 
    (Amounts in thousands) 2023   2022   2022   2022   2022  
    Allowance for Credit Losses           
    Balance at beginning of year:          
    Allowance for credit losses - loans$30,556  $29,388  $29,749  $28,981  $27,858  
    Allowance for credit losses - loan commitments (1) 1,196   1,416   956   775   678  
    Total allowance for credit losses beginning of year 31,752   30,804   30,705   29,756   28,536  
    Provision for credit losses:          
    Provision for credit losses - loans 1,974   3,416   685   510   1,961  
    (Recovery of) provision for credit losses - loan commitments (1)  (232)  (220)  460   181   97  
    Total provision for credit losses - loans and loan commitments  1,742   3,196   1,145   691   2,058  
    Charge-offs (2,570)  (2,873)  (2,158)  (1,469)  (1,302) 
    Recoveries 829   625   1,112   1,727   464  
    Net (charge-offs) recoveries (1,741)  (2,248)  (1,046)  258   (838) 
    Balance at end of period:          
    Allowance for credit losses - loans 30,789   30,556   29,388   29,749   28,981  
    Allowance for credit losses - loan commitments (1) 964   1,196   1,416   956   775  
    Ending balance$31,753  $30,556  $29,388  $29,749  $28,981  
                
    Nonperforming Assets          
    Nonaccrual loans$15,557  $15,208  $15,303  $17,826  $20,487  
    Accruing loans past due 90 days or more 23   142   131   131   -  
    Modified loans past due 90 days or more (2) -   -   -   -   -  
    Troubled debt restructurings ("TDRs") (3) -   1,346   1,331   515   1,141  
    Total nonperforming loans 15,580   16,696   16,765   18,472   21,628  
    OREO 481   703   559   579   848  
    Total nonperforming assets$16,061  $17,399  $17,324  $19,051  $22,476  
                
                
    Additional Information          
    Total modified loans (2)$429  $-  $-  $-  $-  
    Total accruing TDRs (4)$-  $7,112  $7,028  $8,313  $8,782  
                
    Asset Quality Ratios          
    Nonperforming loans to total loans 0.65%  0.70%  0.71%  0.80%  0.96% 
    Nonperforming assets to total assets 0.53%  0.55%  0.55%  0.58%  0.69% 
    Allowance for credit losses to nonperforming loans 197.62%  183.01%  175.29%  161.05%  134.00% 
    Allowance for credit losses to total loans 1.29%  1.27%  1.24%  1.29%  1.29% 
    Annualized net charge-offs (recoveries) to average loans 0.29%  0.37%  0.18%  -0.05%  0.15% 
                
                
    (1) Prior quarter information for loan commitments has been reclassed for presentation purposes. 
    (2) ASU 2022-02, Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. ASU adopted effective January 1, 2023. 
    (3) Accruing TDRs restructured within the past six months or nonperforming as reported prior to the adoption of ASU 2022-02 Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. 
    (4) Accruing total TDRs as reported prior to the adoption of ASU 2022-02 Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. 


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


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