First Community Bankshares, Inc. Announces Second Quarter 2024 Results and Quarterly Cash Dividend

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Jul 23, 2024

BLUEFIELD, Va., July 23, 2024 (GLOBE NEWSWIRE) -- First Community Bankshares, Inc. ( FCBC) (www.firstcommunitybank.com) (the “Company”) today reported its unaudited results of operations and other financial information for the quarter ended June 30, 2024. The Company reported net income of $12.69 million, or $0.71 per diluted common share, for the quarter ended June 30, 2024. Net income for the six months ended June 30, 2024, was $25.53 million or $1.42 per diluted common share.

The Company also declared a quarterly cash dividend to common shareholders of thirty-one cents, $0.31 per common share. The quarterly dividend is payable to common shareholders of record on August 9, 2024, and is expected to be paid on or about August 23, 2024. This marks the 39th consecutive year of regular dividends to common shareholders.

Second Quarter 2024 Highlights

Income Statement

  • Net income of $12.69 million for the second quarter of 2024, was an increase of $2.87 million, or 29.26%, from the same quarter of 2023. Net income of $25.53 million for the first six months of 2024, was an increase of $3.94 million, or 18.22%, from the same period of 2023.
  • The provision for credit losses decreased $3.96 million, or 96.49%, from the same quarter of 2023. The second quarter of 2023 included $1.61 million of Day 2 provision associated with the Surrey Bancorp acquisition. The majority of the difference is due to a much smaller required credit loss provision as the loan portfolio has experienced a decline of $147.81 million from the same period of 2023. In addition, there was a recovery of provision for the allowance for unfunded commitments of $305 thousand for the current quarter; there was no provision for the same period of 2023.
  • Net interest income decreased $950 thousand compared to the same quarter in 2023, primarily due to increases in rates paid on interest-bearing deposits.
  • Net interest margin of 4.51% was an increase of 3 basis points over the same quarter of 2023. The yield on earning assets increased 45 basis points from the same period of 2023 and is attributable to an increase in interest income resulting from an increase in yield and an increase in average balance. There was an increase in yield for both loans and securities available for sale. The average balance for interest-bearing deposits with banks increased $147.11 million over the same period of 2023. The yield on interest-bearing liabilities increased 67 basis points when compared with the same period of 2023 and is primarily attributable to increased rates on interest-bearing deposit liabilities.
  • Noninterest income increased approximately $557 thousand, or 6.34%, when compared to the same quarter of 2023. Noninterest expense increased $226 thousand, or 0.92%. Noninterest expense for the quarter ending June 30, 2024, included a non-recurring charge of $1.80 million to settle a putative class action lawsuit. Noninterest expense for the same period of 2023 included non-recurring expense of $2.01 million in merger charges related to the Surrey Bancorp acquisition.
  • Annualized return on average assets ("ROA") was 1.58% for the second quarter and 1.59% for the first six months of 2024 compared to 1.18% and 1.36% for the same periods, respectively, of 2023. Annualized return on average common equity ("ROE") was 10.02% for the second quarter and 10.10% for the first six months of 2024 compared to 8.04% and 9.48% for the same periods, respectively, of 2023.

Balance Sheet and Asset Quality


  • Consolidated assets totaled $3.23 billion at June 30, 2024.
  • Securities available for sale decreased $151.28 million, or 53.84%, from December 31, 2023. The decrease is primarily attributable to the maturity of $141.50 million in U.S. Treasury Notes during the first six months of 2024. Loans decreased $99.03 million, or 3.85%. Deposits decreased $45.05 million, or 1.65%. The net effect of these balance sheet changes resulted in an increase in cash and cash equivalents of $213.46 million, or 183.35%.
  • The Company repurchased 155,044 common shares during the second quarter of 2024 at a total cost of $5.28 million. The Company repurchased 244,440 common shares during the first six months of 2024 at a total cost of $8.25 million.
  • Non-performing loans to total loans increased to 0.80% when compared with the same quarter of 2023. The Company experienced net charge-offs for the second quarter of 2024 of $1.03 million, or 0.16% of annualized average loans, compared to net charge-offs of $728 thousand, or 0.11%, of annualized average loans for the same period in 2023.
  • The allowance for credit losses to total loans was 1.41% at June 30, 2024, compared to 1.41% at December 31, 2023, and 1.38% for June 30, 2023.
  • Book value per share at June 30, 2024, was $ 27.85, an increase of $0.65 from year-end 2023.

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%. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to that comparable GAAP financial measure can be found in the attached tables to this press release. 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 53 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of June 30, 2024. 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 $1.58 billion in combined assets as of June 30, 2024. The Company reported consolidated assets of $3.23 billion as of June 30, 2024. 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; changes in banking laws and regulations; the degree of competition by traditional and non-traditional competitors; the impact of natural disasters, extreme weather events, military conflict , terrorism or other geopolitical events; 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 EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,
(Amounts in thousands, except share and per share data)2024202420232023202320242023
Interest income
Interest and fees on loans$32,696$33,418$33,676$33,496$31,927$66,114$59,555
Interest on securities1,2111,6981,8881,9122,0572,9094,156
Interest on deposits in banks2,8829134386978853,7951,347
Total interest income36,78936,02936,00236,10534,86972,81865,058
Interest expense
Interest on deposits4,8774,3653,9352,7581,9309,2422,648
Interest on borrowings-354-7735136
Total interest expense4,8774,4003,9392,7582,0079,2772,784
Net interest income31,91231,62932,06333,34732,86263,54162,274
Provision for credit losses1441,0111,0291,1094,1051,1555,847
Net interest income after provision31,76830,61831,03432,23828,75762,38656,427
Noninterest income9,3429,25910,4629,6228,78518,60117,368
Noninterest expense24,89723,38626,78022,91324,67148,28345,484
Income before income taxes16,21316,49114,71618,94712,87132,70428,311
Income tax expense3,5273,6462,9324,3073,0577,1736,715
Net income$12,686$12,845$11,784$14,640$9,814$25,531$21,596
Earnings per common share
Basic$0.69$0.70$0.64$0.78$0.53$1.39$1.25
Diluted$0.71$0.71$0.66$0.79$0.55$1.42$1.26
Cash dividends per common share
Regular0.290.290.290.290.290.580.58
Weighted average shares outstanding
Basic18,343,95818,476,12818,530,11418,786,03218,407,07818,410,04317,323,706
Diluted18,409,87618,545,91018,575,22618,831,83618,431,59818,475,11017,363,478
Performance ratios
Return on average assets1.58%1.60%1.43%1.74%1.18%1.59%1.36%
Return on average common equity10.02%10.18%9.39%11.63%8.04%10.10%9.48%
Return on average tangible common equity(1)14.54%14.82%13.82%17.11%11.65%14.68%13.76%

____________

(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 EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,
(Amounts in thousands)2024202420232023202320242023
Noninterest income
Wealth management$1,064$1,099$1,052$1,145$965$2,163$1,982
Service charges on deposits3,4283,3103,6373,7293,4716,7386,630
Other service charges and fees3,6703,4503,5413,5643,4607,1206,542
(Loss) gain on sale of securities----(28)-(21)
Other operating income1,1801,4002,2321,1849172,5802,235
Total noninterest income$9,342$9,259$10,462$9,622$8,785$18,601$17,368
Noninterest expense
Salaries and employee benefits$12,491$12,581$12,933$12,673$12,686$25,072$24,281
Occupancy expense1,3091,3781,2521,2711,2762,6872,444
Furniture and equipment expense1,6871,5451,4891,4801,5083,2322,909
Service fees2,4272,4492,2552,3502,2844,8764,303
Advertising and public relations9337968439688461,7291,489
Professional fees330372787172281702608
Amortization of intangibles5305305365364251,060659
FDIC premiums and assessments364369376392423733743
Merger expense----2,014-2,393
Litigation expense1,800-3,000--1,800-
Other operating expense3,0263,3663,3093,0712,9286,3925,655
Total noninterest expense$24,897$23,386$26,780$22,913$24,671$48,283$45,484


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)
Three Months EndedSix Months Ended
June 30,March 31,December 31,September 30,June 30,June 30,
(Amounts in thousands, except per share data)2024202420232023202320242023
Adjusted Net Income for diluted earnings per share$13,125$13,085$12,314$14,855$10,149$26,210$21,951
Non-GAAP adjustments:
Loss (gain) on sale of securities----28-21
Merger expense----2,014-2,393
Day 2 provision for allowance for credit losses - Surrey----1,614-1,614
Litigation expense1,800-3,000--1,800-
Other items(1)---(204)---
Total adjustments1,800-3,000(204)3,6561,8004,028
Tax effect432-720(49)522432532
Adjusted earnings, non-GAAP$14,493$13,085$14,594$14,700$13,283$27,578$25,447
Adjusted diluted earnings per common share, non-GAAP$0.79$0.71$0.79$0.78$0.72$1.49$1.47
Performance ratios, non-GAAP
Adjusted return on average assets1.81%1.63%1.77%1.75%1.60%1.72%1.60%
Adjusted return on average common equity11.45%10.37%11.63%11.68%10.88%10.91%11.17%
Adjusted return on average tangible common equity (2)16.61%15.10%17.11%17.18%15.77%15.86%16.21%

____________

(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 June 30,
20242023
AverageAverage Yield/AverageAverage Yield/
(Amounts in thousands)BalanceInterest(1)Rate(1)BalanceInterest(1)Rate(1)
Assets
Earning assets
Loans(2)(3)$2,499,212$32,7775.27%$2,570,477$31,9974.99%
Securities available for sale144,7551,2423.45%318,2632,0992.65%
Interest-bearing deposits210,4322,8835.51%63,3228855.61%
Total earning assets2,854,39936,9025.20%2,952,06234,9814.75%
Other assets373,029382,162
Total assets$3,227,428$3,334,224
Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits$664,707$1740.10%$712,943$340.02%
Savings deposits874,4203,5821.65%861,3151,3060.61%
Time deposits246,2911,1211.83%282,2295900.84%
Total interest-bearing deposits1,785,4184,8771.10%1,856,4871,9300.42%
Borrowings
Federal funds purchased---5,927765.14%
Retail repurchase agreements1,002-0.04%1,69310.06%
Total borrowings1,002-0.04%7,620773.94%
Total interest-bearing liabilities1,786,4204,8771.10%1,864,1072,0070.43%
Noninterest-bearing demand deposits884,681939,902
Other liabilities47,12340,705
Total liabilities2,718,2242,844,714
Stockholders' equity509,204489,510
Total liabilities and stockholders' equity$3,227,428$3,334,224
Net interest income, FTE(1)$32,025$32,974
Net interest rate spread4.10%4.32%
Net interest margin, FTE(1)4.51%4.48%


____________

(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 $661 thousand and $884 thousand for the three months ended June 30, 2024 and 2023, respectively.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
Six Months Ended June 30,
20242023
AverageAverage Yield/AverageAverage Yield/
(Amounts in thousands)BalanceInterest(1)Rate(1)BalanceInterest(1)Rate(1)
Assets
Earning assets
Loans(2)(3)$2,524,159$66,2785.28%$2,482,606$59,6954.85%
Securities available for sale191,8822,9743.12%317,5034,2392.69%
Interest-bearing deposits138,4583,7985.52%52,2191,3505.21%
Total earning assets2,854,49973,0505.15%2,852,32865,2844.62%
Other assets373,322352,643
Total assets$3,227,821$3,204,971
Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits$665,291$3360.10%$689,823$600.02%
Savings deposits870,2526,9951.62%844,4591,7900.43%
Time deposits248,1331,9111.55%276,7527980.58%
Total interest-bearing deposits1,783,6769,2421.04%1,811,0342,6480.29%
Borrowings
Federal funds purchased1,264355.52%5,3261355.11%
Retail repurchase agreements1,065-0.05%1,88910.06%
Total borrowings2,329353.02%7,2151363.80%
Total interest-bearing liabilities1,786,0059,2771.04%1,818,2492,7840.31%
Noninterest-bearing demand deposits885,813889,253
Other liabilities47,71038,204
Total liabilities2,719,5282,745,706
Stockholders' equity508,293459,265
Total liabilities and stockholders' equity$3,227,821$3,204,971
Net interest income, FTE(1)$63,773$62,500
Net interest rate spread4.11%4.31%
Net interest margin, FTE(1)4.49%4.42%


____________

(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 $1.44 million and $1.08 million for the six months ended June 30, 2024 and 2023, respectively.


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
June 30,March 31,December 31,September 30,June 30,
(Amounts in thousands, except per share data)20242024202320232023
Assets
Cash and cash equivalents$329,877$248,905$116,420$113,397$152,660
Debt securities available for sale, at fair value129,686166,247280,961275,332314,373
Loans held for investment, net of unearned income2,473,2682,519,8332,572,2982,593,4722,621,073
Allowance for credit losses(34,885)(35,461)(36,189)(36,031)(36,177)
Loans held for investment, net2,438,3832,484,3722,536,1092,557,4412,584,896
Premises and equipment, net50,52851,33350,68051,20553,546
Other real estate owned100374192243339
Interest receivable9,98410,71910,88110,42810,185
Goodwill143,946143,946143,946143,946143,946
Other intangible assets14,08514,61515,14515,68116,217
Other assets116,230115,470114,211116,552115,275
Total assets$3,232,819$3,235,981$3,268,545$3,284,225$3,391,437
Liabilities
Deposits
Noninterest-bearing$889,462$902,396$931,920$944,301$974,995
Interest-bearing1,787,8101,779,8191,790,4051,801,8351,877,683
Total deposits2,677,2722,682,2152,722,3252,746,1362,852,678
Securities sold under agreements to repurchase8941,0061,1191,0291,348
Interest, taxes, and other liabilities45,76945,81641,80741,39338,691
Total liabilities2,723,9352,729,0372,765,2512,788,5582,892,717
Stockholders' equity
Common stock18,27018,41318,50218,67118,969
Additional paid-in capital168,272173,041175,841180,951189,917
Retained earnings334,756327,389319,902313,489304,295
Accumulated other comprehensive loss(12,414)(11,899)(10,951)(17,444)(14,461)
Total stockholders' equity508,884506,944503,294495,667498,720
Total liabilities and stockholders' equity$3,232,819$3,235,981$3,268,545$3,284,225$3,391,437
Shares outstanding at period-end18,270,27318,413,08818,502,39618,671,47018,969,281
Book value per common share$27.85$27.53$27.20$26.55$26.29
Tangible book value per common share(1)19.2018.9218.6018.0017.85


____________

(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)
June 30,March 31,December 31,September 30,June 30,
(Amounts in thousands)20242024202320232023
Allowance for Credit Losses
Balance at beginning of period:
Allowance for credit losses - loans$35,461$36,189$36,031$36,177$30,789
Allowance for credit losses - loan commitments746746758964964
Total allowance for credit losses beginning of period36,20736,93536,78937,14131,753
Adjustments to beginning balance:
Allowance for credit losses - loans - Surrey acquisition for purchased credit deteriorated loans----2,011
Allowance for credit losses - loan commitments-----
Net Adjustments----2,011
Provision for credit losses:
Provision for credit losses - loans4491,0111,0411,3154,105
(Recovery of) provision for credit losses - loan commitments(305)-(12)(206)-
Total provision for credit losses - loans and loan commitments1441,0111,0291,1094,105
Charge-offs(1,599)(2,448)(2,105)(2,157)(1,993)
Recoveries5747091,2226961,265
Net (charge-offs) recoveries(1,025)(1,739)(883)(1,461)(728)
Balance at end of period:
Allowance for credit losses - loans34,88535,46136,18936,03136,177
Allowance for credit losses - loan commitments441746746758964
Ending balance$35,326$36,207$36,935$36,789$37,141
Nonperforming Assets
Nonaccrual loans$19,815$19,617$19,356$18,366$18,628
Accruing loans past due 90 days or more193010459-
Modified loans past due 90 days or more-----
Total nonperforming loans19,83419,64719,46018,42518,628
OREO100374192243339
Total nonperforming assets$19,934$20,021$19,652$18,668$18,967
Additional Information
Total modified loans$2,290$2,177$1,873$1,674$642
Asset Quality Ratios
Nonperforming loans to total loans0.80%0.78%0.76%0.71%0.71%
Nonperforming assets to total assets0.62%0.62%0.60%0.57%0.56%
Allowance for credit losses to nonperforming loans175.88%180.49%185.97%195.55%194.21%
Allowance for credit losses to total loans1.41%1.41%1.41%1.39%1.38%
Annualized net charge-offs (recoveries) to average loans0.16%0.27%0.14%0.22%0.11%

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

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