First Community Bankshares, Inc. Announces First Quarter 2022 Results and Quarterly Cash Dividend

Rhea-AI Summary

First Community Bankshares reported a net income of $9.52 million for Q1 2022, a decline of $5.09 million from Q1 2021. The diluted earnings per share stood at $0.56. The company declared a quarterly cash dividend of $0.27, marking an 8% increase over the previous year, payable on May 20, 2022. The loan portfolio grew by $78.73 million, with a 14.74% annualized growth rate. Despite increased expenses, the return on average assets was 1.20%. The non-performing loans ratio remained low at 0.96%.

Positive

• Quarterly dividend increased by 8% to $0.27.
• Loan portfolio grew by $78.73 million, 14.74% annualized growth.
• Return on average assets at 1.20%.

Negative

• Net income decreased by $5.09 million compared to Q1 2021.
• Credit loss provision increased to $1.96 million from a reversal of $4 million.

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

FAQ

What is the dividend amount declared by FCBC in Q1 2022?

FCBC declared a dividend of $0.27 per share.

When is the dividend payable for FCBC?

The dividend is expected to be paid on or about May 20, 2022.

What was FCBC's net income in Q1 2022?

FCBC reported a net income of $9.52 million in Q1 2022.

What caused the decrease in net income for FCBC?

The decrease was primarily due to increased credit loss provisions.

What is the status of FCBC's non-performing loans?

FCBC's non-performing loans ratio remained low at 0.96%.