ex_399311.htm

EX-99.1 2 ex_399311.htm EXHIBIT 99.1 ex_399311.htm

Exhibit 99.1


NEWS RELEASE
FOR IMMEDIATE RELEASE:		FOR MORE INFORMATION, CONTACT:
July 26, 2022		David D. Brown
		(276) 326-9000

First Community Bankshares, Inc. Announces Second Quarter 2022 Results and

Increased Quarterly Cash Dividend

Bluefield, Virginia – 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, 2022. The Company reported net income of $11.21 million, or $0.67 per diluted common share, for the quarter ended June 30, 2022. Net income for the six months ended June 30, 2022, was $20.73 million or $1.24 per diluted common share.

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 2021. The quarterly dividend is also an increase of two cents ($0.02) from the dividends declared in the previous two quarters of 2022. The quarterly dividend is payable to common shareholders of record on August 5, 2022, and is expected to be paid on or about August 19, 2022. This marks the 37^th consecutive year of regular dividends to common shareholders.

Second Quarter 2022 and Current Highlights

Income Statement

Net income of $11.21 million for the quarter was a decrease compared to the same quarter of 2021, which included a significant reversal of provision for credit losses. The normalized provision for credit losses drove much of the difference between current year-to-date net income of $20.73 million and the same period in 2021.

Interest income from securities of $1.55 million was an increase of $1.12 million over the second quarter of 2021, as the Company added to its portfolio with a significant weighting toward 2-year treasury securities. Interest on fed funds also increased $602 thousand to $768 thousand for the second quarter as a result of the Federal Open Market Committee’s 150 basis point increase in overnight rates.

	o	The total cost of funds remained very low at 0.06%, a decrease of 0.05% from the second quarter of 2021.
	o	Despite the significant increase in credit loss provision over 2021, annualized return on average assets was 1.38% for the second quarter and 1.29% for the first six months of 2022. Annualized return on average common equity was 10.61% for the second quarter and 9.80% for the first half of 2022.

Net interest margin for the second quarter was 3.78%, which was a 10 basis point increase from 3.68% reported for second quarter of 2021. The yield on earning assets increased 6 basis points, primarily driven by an increase in the yields on overnight funds. The cost of interest-bearing deposits declined 6 basis points to 0.09%, primarily driven by a decrease in the cost of time deposits.

Salaries and employee benefits for the second quarter increased $1.30 million, or 12.74%, over the same quarter in 2021. Salaries and employee benefits for the first six months increased $2.09 million, or 9.90%, over the first six months of 2021. During the first quarter of 2022, 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 $134.23 million, an annualized growth rate of 12.50%, during the first six months of 2022. Loan demand and originations were strong in all categories, including construction, commercial real estate, residential mortgage, and consumer loans.

During the second quarter, the Company repurchased 283,507 of its common shares for $7.95 million. The Company repurchased 415,507 common shares for $12.03 million during the six months of 2022.

Non-performing loans to total loans remained very low at 0.80% of total loans and continues the declining trend experienced over the past four quarters. The Company experienced net recoveries for the second quarter of 2022 of $258 thousand, or 0.05% of annualized average loans, compared to net charge-offs of $476 thousand, or 0.09% of annualized average loans, for the same period in 2021. Net charge-offs for the six-month period ended June 30, 2022, were $580 thousand, or 0.05% of annualized average loans, compared to net charge-offs of $1.20 million, or 0.11% 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 June 30, 2022, was $25.33, a slight decrease of $0.01 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 June 30, 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 $1.20 billion in combined assets as of June 30, 2022. The Company reported consolidated assets of $3.26 billion as of June 30, 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															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,
(Amounts in thousands, except share and per share data)	2022			2022			2021			2021			2021			2022			2021
Interest income
Interest and fees on loans	$	25,651		$	24,641		$	25,236		$	25,119		$	25,937		$	50,292		$	52,477
Interest on securities		1,551			750			362			445			435			2,301			930
Interest on deposits in banks		768			248			234			225			166			1,016			282
Total interest income		27,970			25,639			25,832			25,789			26,538			53,609			53,689
Interest expense
Interest on deposits		422			486			600			642			724			908			1,593
Interest on borrowings		1			-			-			1			-			1			-
Total interest expense		423			486			600			643			724			909			1,593
Net interest income		27,547			25,153			25,232			25,146			25,814			52,700			52,096
(Recovery of) provision for credit losses		510			1,961			(846	)		(1,394	)		(2,230	)		2,471			(6,231	)
Net interest income after provision		27,037			23,192			26,078			26,540			28,044			50,229			58,327
Noninterest income		8,854			9,194			9,215			8,720			8,797			18,048			16,366
Noninterest expense		21,255			19,986			21,701			18,836			19,361			41,241			38,181
Income before income taxes		14,636			12,400			13,592			16,424			17,480			27,036			36,512
Income tax expense		3,423			2,885			3,037			3,816			4,077			6,308			8,507
Net income	$	11,213		$	9,515		$	10,555		$	12,608		$	13,403		$	20,728		$	28,005

Earnings per common share
Basic	$	0.67		$	0.57		$	0.62		$	0.73		$	0.77		$	1.24		$	1.59
Diluted		0.67			0.56			0.62			0.73			0.76			1.24			1.59
Cash dividends per common share
Regular		0.27			0.27			0.27			0.27			0.25			0.54			0.50
Weighted average shares outstanding
Basic		16,662,817			16,817,284			16,974,005			17,221,244			17,486,182			16,739,624			17,577,552
Diluted		16,682,615			16,864,515			17,038,980			17,279,576			17,536,144			16,772,847			17,631,330
Performance ratios
Return on average assets		1.38	%		1.20	%		1.32	%		1.59	%		1.70	%		1.29	%		1.82	%
Return on average common equity		10.61	%		8.98	%		9.77	%		11.65	%		12.55	%		9.80	%		13.24	%
Return on average tangible common equity⁽¹⁾		15.56	%		13.10	%		14.28	%		17.04	%		18.40	%		14.32	%		19.45	%

(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)	2022		2022		2021		2021		2021			2022		2021
Noninterest income
Wealth management	$	993	$	972	$	940	$	974	$	1,058		$	1,965	$	1,939
Service charges on deposits		3,672		3,498		3,718		3,599		3,098			7,170		6,129
Other service charges and fees		3,297		3,017		3,091		3,143		3,166			6,314		6,188
Net FDIC indemnification asset amortization		-		-		-		-		(946	)		-		(1,226	)
Other operating income		892		1,707		1,466		1,004		2,421			2,599		3,336
Total noninterest income	$	8,854	$	9,194	$	9,215	$	8,720	$	8,797		$	18,048	$	16,366
Noninterest expense
Salaries and employee benefits	$	11,518	$	11,671	$	12,493	$	10,646	$	10,216		$	23,189	$	21,100
Occupancy expense		1,165		1,269		1,368		1,155		1,115			2,434		2,390
Furniture and equipment expense		1,496		1,614		1,418		1,385		1,457			3,110		2,824
Service fees		2,563		1,503		1,946		1,530		1,513			4,066		2,848
Advertising and public relations		577		540		589		536		616			1,117		951
Professional fees		544		453		455		313		290			997		756
Amortization of intangibles		360		357		364		365		360			717		717
FDIC premiums and assessments		257		218		213		216		204			475		403
Other operating expense		2,775		2,361		2,855		2,690		3,590			5,136		6,192
Total noninterest expense	$	21,255	$	19,986	$	21,701	$	18,836	$	19,361		$	41,241	$	38,181

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,
	2022			2022			2021			2021			2021			2022			2021
(Amounts in thousands, except per share data)
Net income	$	11,213		$	9,515		$	10,555		$	12,608		$	13,403		$	28,005		$	28,005
Non-GAAP adjustments:
Net (gain) loss on sale of securities		-			-			-			-			-			-			-
Merger, acquisition, and divestiture expense		-			-			-			-			-			-			-
Other items⁽¹⁾		(92	)		-			-			-			-			-			-
Total adjustments		(92	)		-			-			-			-			-			-
Tax effect		(22	)		-			-			-			-			-			-
Adjusted earnings, non-GAAP	$	11,143		$	9,515		$	10,555		$	12,608		$	13,403		$	28,005		$	28,005

Adjusted diluted earnings per common share, non-GAAP	$	0.67		$	0.56		$	0.62		$	0.73		$	0.76		$	1.59		$	1.59
Performance ratios, non-GAAP
Adjusted return on average assets		1.37	%		1.20	%		1.32	%		1.59	%		1.70	%		1.82	%		1.82	%
Adjusted return on average common equity		10.55	%		8.98	%		9.77	%		11.65	%		12.55	%		13.24	%		13.24	%
Adjusted return on average tangible common equity⁽²⁾		15.46	%		13.10	%		14.28	%		17.04	%		18.40	%		19.45	%		19.45	%

(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,
	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⁾	$	2,273,844	$	25,714	4.54%	$	2,134,136	$	25,979	4.88%
Securities available for sale		280,823		1,597	2.28%		84,099		508	2.42%
Interest-bearing deposits		377,931		769	0.82%		610,148		166	0.11%
Total earning assets		2,932,598		28,080	3.84%		2,828,383		26,653	3.78%
Other assets		331,774					331,563
Total assets	$	3,264,372				$	3,159,946

Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	698,978	$	29	0.02%	$	654,767	$	33	0.02%
Savings deposits		895,370		67	0.03%		818,490		63	0.03%
Time deposits		331,555		326	0.39%		394,889		628	0.64%
Total interest-bearing deposits		1,925,903		422	0.09%		1,868,146		724	0.15%
Borrowings
Retail repurchase agreements		2,105		1	0.08%		1,266		-	N/M
Total borrowings		2,105		1	0.08%		1,266		-	N/M
Total interest-bearing liabilities		1,928,008		423	0.09%		1,869,412		724	0.16%
Noninterest-bearing demand deposits		874,507					824,888
Other liabilities		38,106					37,306
Total liabilities		2,840,621					2,731,606
Stockholders' equity		423,751					428,340
Total liabilities and stockholders' equity	$	3,264,372				$	3,159,946
Net interest income, FTE⁽¹⁾			$	27,657				$	25,929
Net interest rate spread					3.75%					3.62%
Net interest margin, FTE⁽¹⁾					3.78%					3.68%

(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 $870 thousand and $1.25 million for the three months ended June 30, 2022 and 2021, respectively.

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

	Six Months Ended June 30,
	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⁾	$	2,237,128	$	50,412	4.54%	$	2,149,509	$	52,561	4.93%
Securities available for sale		211,285		2,397	2.29%		83,868		1,081	2.60%
Interest-bearing deposits		460,864		1,018	0.45%		539,500		284	0.11%
Total earning assets		2,909,277		53,827	3.73%		2,772,877		53,926	3.92%
Other assets		330,003					331,524
Total assets	$	3,239,280				$	3,104,401

Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	689,149	$	57	0.02%	$	634,000	$	72	0.02%
Savings deposits		888,371		133	0.03%		798,571		154	0.04%
Time deposits		339,186		718	0.43%		403,888		1,367	0.68%
Total interest-bearing deposits		1,916,706		908	0.10%		1,836,459		1,593	0.16%
Borrowings
Retail repurchase agreements		2,050		1	0.08%		1,250		-	N/M
Total borrowings		2,050		1	0.08%		1,250		-	N/M
Total interest-bearing liabilities		1,918,756		909	0.10%		1,837,709		1,593	0.17%
Noninterest-bearing demand deposits		855,321					801,512
Other liabilities		38,529					38,609
Total liabilities		2,812,606					2,677,830
Stockholders' equity		426,674					426,571
Total liabilities and stockholders' equity	$	3,239,280				$	3,104,401
Net interest income, FTE⁽¹⁾			$	52,918				$	52,333
Net interest rate spread					3.64%					3.75%
Net interest margin, FTE⁽¹⁾					3.67%					3.81%

(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 $1.74 million and $2.44 million for the six months ended June 30, 2022 and 2021, respectively.

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

	June 30,			March 31,			December 31,			September 30,			June 30,
(Amounts in thousands, except per share data)	2022			2022			2021			2021			2021
Assets
Cash and cash equivalents	$	398,242		$	457,306		$	677,439		$	635,007		$	618,738
Debt securities available for sale		287,767			268,703			76,292			77,440			79,842
Loans held for investment, net of unearned income (includes covered loans of $7,503 for June 30, 2021) ⁽¹⁾		2,299,798			2,244,296			2,165,569			2,152,103			2,153,731
Allowance for credit losses		(29,749	)		(28,981	)		(27,858	)		(29,877	)		(31,857	)
Loans held for investment, net		2,270,049			2,215,315			2,137,711			2,122,226			2,121,874
Premises and equipment, net		49,752			50,912			52,284			52,842			53,560
Other real estate owned		579			848			1,015			1,240			1,324
Interest receivable		8,433			8,100			7,900			8,146			8,480
Goodwill		129,565			129,565			129,565			129,565			129,565
Other intangible assets		4,905			5,266			5,622			5,987			6,352
Other assets		109,085			108,112			106,691			107,258			109,548
Total assets	$	3,258,377		$	3,244,127		$	3,194,519		$	3,139,711		$	3,129,283

Liabilities
Deposits
Noninterest-bearing	$	877,962		$	860,652		$	842,783		$	820,147		$	819,138
Interest-bearing		1,920,577			1,922,292			1,886,608			1,853,699			1,846,556
Total deposits		2,798,539			2,782,944			2,729,391			2,673,846			2,665,694
Securities sold under agreements to repurchase		2,635			2,488			1,536			1,106			994
Interest, taxes, and other liabilities		39,157			34,539			35,817			37,395			35,061
Total liabilities		2,840,331			2,819,971			2,766,744			2,712,347			2,701,749

Stockholders' equity
Common stock		16,502			16,782			16,878			17,071			17,335
Additional paid-in capital		136,705			144,088			147,619			154,086			161,853
Retained earnings		276,499			269,798			264,824			258,860			250,911
Accumulated other comprehensive loss		(11,660	)		(6,512	)		(1,546	)		(2,653	)		(2,565	)
Total stockholders' equity		418,046			424,156			427,775			427,364			427,534
Total liabilities and stockholders' equity	$	3,258,377		$	3,244,127		$	3,194,519		$	3,139,711		$	3,129,283

Shares outstanding at period-end		16,502,144			16,781,975			16,878,220			17,071,052			17,334,547
Book value per common share	$	25.33		$	25.27		$	25.34		$	25.03		$	24.66
Tangible book value per common share⁽²⁾		17.18			17.24			17.34			17.09			16.82

(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)

	June 30,			March 31,			December 31,			September 30,			June 30,
(Amounts in thousands)	2022			2022			2021			2021			2021
Allowance for Credit Losses
Beginning balance	$	28,981		$	27,858		$	29,877		$	31,857		$	34,563
Provision for (recovery of) credit/loan losses charged to operations		510			1,961			(846	)		(1,394	)		(2,230	)
Charge-offs		(1,469	)		(1,302	)		(1,887	)		(1,255	)		(1,902	)
Recoveries		1,727			464			714			669			1,426
Net recoveries (charge-offs)		258			(838	)		(1,173	)		(586	)		(476	)
Ending balance	$	29,749		$	28,981		$	27,858		$	29,877		$	31,857

Nonperforming Assets
Nonaccrual loans	$	17,826		$	20,487		$	20,768		$	22,070		$	24,085
Accruing loans past due 90 days or more		131			-			87			5			327
Troubled debt restructurings ("TDRs")⁽¹⁾		515			1,141			1,367			359			133
Total nonperforming loans		18,472			21,628			22,222			22,434			24,545
OREO		579			848			1,015			1,240			1,324
Total nonperforming assets	$	19,051		$	22,476		$	23,237		$	23,674		$	25,869


Additional Information
Total accruing TDRs⁽³⁾	$	8,313		$	8,782		$	8,652		$	8,185		$	8,309

Asset Quality Ratios
Nonperforming loans to total loans		0.80	%		0.96	%		1.03	%		1.04	%		1.14	%
Nonperforming assets to total assets		0.58	%		0.69	%		0.73	%		0.75	%		0.83	%
Allowance for credit/loan losses to nonperforming loans		161.05	%		134.00	%		125.36	%		133.18	%		129.79	%
Allowance for credit/loan losses to total loans		1.29	%		1.29	%		1.29	%		1.39	%		1.48	%
Annualized net (recoveries) charge-offs to average loans		-0.05	%		0.15	%		0.22	%		0.11	%		0.09	%

(1)	Accruing TDRs restructured within the past six months or nonperforming
(2)	Accruing total TDRs