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

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 36^th 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

[phone]

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