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

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 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 Ended																				Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,
(Amounts in thousands, except share and per share data)		2024				2024				2023				2023				2023				2024				2023
Interest income
Interest and fees on loans		$	32,696			$	33,418			$	33,676			$	33,496			$	31,927			$	66,114			$	59,555
Interest on securities			1,211				1,698				1,888				1,912				2,057				2,909				4,156
Interest on deposits in banks			2,882				913				438				697				885				3,795				1,347
Total interest income			36,789				36,029				36,002				36,105				34,869				72,818				65,058
Interest expense
Interest on deposits			4,877				4,365				3,935				2,758				1,930				9,242				2,648
Interest on borrowings			-				35				4				-				77				35				136
Total interest expense			4,877				4,400				3,939				2,758				2,007				9,277				2,784
Net interest income			31,912				31,629				32,063				33,347				32,862				63,541				62,274
Provision for credit losses			144				1,011				1,029				1,109				4,105				1,155				5,847
Net interest income after provision			31,768				30,618				31,034				32,238				28,757				62,386				56,427
Noninterest income			9,342				9,259				10,462				9,622				8,785				18,601				17,368
Noninterest expense			24,897				23,386				26,780				22,913				24,671				48,283				45,484
Income before income taxes			16,213				16,491				14,716				18,947				12,871				32,704				28,311
Income tax expense			3,527				3,646				2,932				4,307				3,057				7,173				6,715
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
Regular			0.29				0.29				0.29				0.29				0.29				0.58				0.58
Weighted average shares outstanding
Basic			18,343,958				18,476,128				18,530,114				18,786,032				18,407,078				18,410,043				17,323,706
Diluted			18,409,876				18,545,910				18,575,226				18,831,836				18,431,598				18,475,110				17,363,478
Performance ratios
Return on average assets			1.58	%			1.60	%			1.43	%			1.74	%			1.18	%			1.59	%			1.36	%
Return on average common equity			10.02	%			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 Ended																				Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,
(Amounts in thousands)		2024				2024				2023				2023				2023				2024				2023
Noninterest income
Wealth management		$	1,064			$	1,099			$	1,052			$	1,145			$	965			$	2,163			$	1,982
Service charges on deposits			3,428				3,310				3,637				3,729				3,471				6,738				6,630
Other service charges and fees			3,670				3,450				3,541				3,564				3,460				7,120				6,542
(Loss) gain on sale of securities			-				-				-				-				(28	)			-				(21	)
Other operating income			1,180				1,400				2,232				1,184				917				2,580				2,235
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 expense			1,309				1,378				1,252				1,271				1,276				2,687				2,444
Furniture and equipment expense			1,687				1,545				1,489				1,480				1,508				3,232				2,909
Service fees			2,427				2,449				2,255				2,350				2,284				4,876				4,303
Advertising and public relations			933				796				843				968				846				1,729				1,489
Professional fees			330				372				787				172				281				702				608
Amortization of intangibles			530				530				536				536				425				1,060				659
FDIC premiums and assessments			364				369				376				392				423				733				743
Merger expense			-				-				-				-				2,014				-				2,393
Litigation expense			1,800				-				3,000				-				-				1,800				-
Other operating expense			3,026				3,366				3,309				3,071				2,928				6,392				5,655
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 Ended																				Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,
(Amounts in thousands, except per share data)		2024				2024				2023				2023				2023				2024				2023
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 expense			1,800				-				3,000				-				-				1,800				-
Other items(1)			-				-				-				(204	)			-				-				-
Total adjustments			1,800				-				3,000				(204	)			3,656				1,800				4,028
Tax effect			432				-				720				(49	)			522				432				532
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 assets			1.81	%			1.63	%			1.77	%			1.75	%			1.60	%			1.72	%			1.60	%
Adjusted return on average common equity			11.45	%			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,
		2024												2023
		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)		$	2,499,212			$	32,777				5.27	%		$	2,570,477			$	31,997				4.99	%
Securities available for sale			144,755				1,242				3.45	%			318,263				2,099				2.65	%
Interest-bearing deposits			210,432				2,883				5.51	%			63,322				885				5.61	%
Total earning assets			2,854,399				36,902				5.20	%			2,952,062				34,981				4.75	%
Other assets			373,029												382,162
Total assets		$	3,227,428											$	3,334,224
Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits		$	664,707			$	174				0.10	%		$	712,943			$	34				0.02	%
Savings deposits			874,420				3,582				1.65	%			861,315				1,306				0.61	%
Time deposits			246,291				1,121				1.83	%			282,229				590				0.84	%
Total interest-bearing deposits			1,785,418				4,877				1.10	%			1,856,487				1,930				0.42	%
Borrowings
Federal funds purchased			-				-				-				5,927				76				5.14	%
Retail repurchase agreements			1,002				-				0.04	%			1,693				1				0.06	%
Total borrowings			1,002				-				0.04	%			7,620				77				3.94	%
Total interest-bearing liabilities			1,786,420				4,877				1.10	%			1,864,107				2,007				0.43	%
Noninterest-bearing demand deposits			884,681												939,902
Other liabilities			47,123												40,705
Total liabilities			2,718,224												2,844,714
Stockholders' equity			509,204												489,510
Total liabilities and stockholders' equity		$	3,227,428											$	3,334,224
Net interest income, FTE(1)						$	32,025											$	32,974
Net interest rate spread											4.10	%											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,
		2024												2023
		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)		$	2,524,159			$	66,278				5.28	%		$	2,482,606			$	59,695				4.85	%
Securities available for sale			191,882				2,974				3.12	%			317,503				4,239				2.69	%
Interest-bearing deposits			138,458				3,798				5.52	%			52,219				1,350				5.21	%
Total earning assets			2,854,499				73,050				5.15	%			2,852,328				65,284				4.62	%
Other assets			373,322												352,643
Total assets		$	3,227,821											$	3,204,971
Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits		$	665,291			$	336				0.10	%		$	689,823			$	60				0.02	%
Savings deposits			870,252				6,995				1.62	%			844,459				1,790				0.43	%
Time deposits			248,133				1,911				1.55	%			276,752				798				0.58	%
Total interest-bearing deposits			1,783,676				9,242				1.04	%			1,811,034				2,648				0.29	%
Borrowings
Federal funds purchased			1,264				35				5.52	%			5,326				135				5.11	%
Retail repurchase agreements			1,065				-				0.05	%			1,889				1				0.06	%
Total borrowings			2,329				35				3.02	%			7,215				136				3.80	%
Total interest-bearing liabilities			1,786,005				9,277				1.04	%			1,818,249				2,784				0.31	%
Noninterest-bearing demand deposits			885,813												889,253
Other liabilities			47,710												38,204
Total liabilities			2,719,528												2,745,706
Stockholders' equity			508,293												459,265
Total liabilities and stockholders' equity		$	3,227,821											$	3,204,971
Net interest income, FTE(1)						$	63,773											$	62,500
Net interest rate spread											4.11	%											4.31	%
Net interest margin, FTE(1)											4.49	%											4.42	%

 

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(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)		2024				2024				2023				2023				2023
Assets
Cash and cash equivalents		$	329,877			$	248,905			$	116,420			$	113,397			$	152,660
Debt securities available for sale, at fair value			129,686				166,247				280,961				275,332				314,373
Loans held for investment, net of unearned income			2,473,268				2,519,833				2,572,298				2,593,472				2,621,073
Allowance for credit losses			(34,885	)			(35,461	)			(36,189	)			(36,031	)			(36,177	)
Loans held for investment, net			2,438,383				2,484,372				2,536,109				2,557,441				2,584,896
Premises and equipment, net			50,528				51,333				50,680				51,205				53,546
Other real estate owned			100				374				192				243				339
Interest receivable			9,984				10,719				10,881				10,428				10,185
Goodwill			143,946				143,946				143,946				143,946				143,946
Other intangible assets			14,085				14,615				15,145				15,681				16,217
Other assets			116,230				115,470				114,211				116,552				115,275
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-bearing			1,787,810				1,779,819				1,790,405				1,801,835				1,877,683
Total deposits			2,677,272				2,682,215				2,722,325				2,746,136				2,852,678
Securities sold under agreements to repurchase			894				1,006				1,119				1,029				1,348
Interest, taxes, and other liabilities			45,769				45,816				41,807				41,393				38,691
Total liabilities			2,723,935				2,729,037				2,765,251				2,788,558				2,892,717
Stockholders' equity
Common stock			18,270				18,413				18,502				18,671				18,969
Additional paid-in capital			168,272				173,041				175,841				180,951				189,917
Retained earnings			334,756				327,389				319,902				313,489				304,295
Accumulated other comprehensive loss			(12,414	)			(11,899	)			(10,951	)			(17,444	)			(14,461	)
Total stockholders' equity			508,884				506,944				503,294				495,667				498,720
Total liabilities and stockholders' equity		$	3,232,819			$	3,235,981			$	3,268,545			$	3,284,225			$	3,391,437
Shares outstanding at period-end			18,270,273				18,413,088				18,502,396				18,671,470				18,969,281
Book value per common share		$	27.85			$	27.53			$	27.20			$	26.55			$	26.29
Tangible book value per common share(1)			19.20				18.92				18.60				18.00				17.85

 

____________

(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)		2024				2024				2023				2023				2023
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 commitments			746				746				758				964				964
Total allowance for credit losses beginning of period			36,207				36,935				36,789				37,141				31,753
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 - loans			449				1,011				1,041				1,315				4,105
(Recovery of) provision for credit losses - loan commitments			(305	)			-				(12	)			(206	)			-
Total provision for credit losses - loans and loan commitments			144				1,011				1,029				1,109				4,105
Charge-offs			(1,599	)			(2,448	)			(2,105	)			(2,157	)			(1,993	)
Recoveries			574				709				1,222				696				1,265
Net (charge-offs) recoveries			(1,025	)			(1,739	)			(883	)			(1,461	)			(728	)
Balance at end of period:
Allowance for credit losses - loans			34,885				35,461				36,189				36,031				36,177
Allowance for credit losses - loan commitments			441				746				746				758				964
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 more			19				30				104				59				-
Modified loans past due 90 days or more			-				-				-				-				-
Total nonperforming loans			19,834				19,647				19,460				18,425				18,628
OREO			100				374				192				243				339
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 loans			0.80	%			0.78	%			0.76	%			0.71	%			0.71	%
Nonperforming assets to total assets			0.62	%			0.62	%			0.60	%			0.57	%			0.56	%
Allowance for credit losses to nonperforming loans			175.88	%			180.49	%			185.97	%			195.55	%			194.21	%
Allowance for credit losses to total loans			1.41	%			1.41	%			1.41	%			1.39	%			1.38	%
Annualized net charge-offs (recoveries) to average loans			0.16	%			0.27	%			0.14	%			0.22	%			0.11	%

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