ex_222148.htm

EX-99.1 2 ex_222148.htm EXHIBIT 99.1 ex_222148.htm

Exhibit 99.1



NEWS RELEASE
FOR IMMEDIATE RELEASE:		FOR MORE INFORMATION, CONTACT:
January 26, 2021		David D. Brown
		(276) 326-9000

First Community Bankshares, Inc. Announces Fourth Quarter Results,

Quarterly Cash Dividend, and Stock Repurchase Plan

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 December 31, 2020. The Company reported net income of $11.55 million, or $0.65 per diluted common share, for the quarter ended December 31, 2020, which was an increase of $0.04, or 6.56%, over the same quarter of 2019. Net income was $35.93 million, or $2.02 per diluted common share, for the twelve months ended December 31, 2020, which represents a 17.89% decrease in per share diluted earnings compared to the same period of 2019.

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 February 5, 2021, and is expected to be paid on or about February 19, 2021. The current year is the 11^th consecutive year of regular dividend increases and the 36^th consecutive year of regular dividends to common shareholders.

Additionally, today the Board of Directors authorized the repurchase of up to 2.4 million shares of the Company's outstanding common stock through January 26, 2024. Repurchases may be made through open market purchases or in privately negotiated transactions at prevailing market prices. The actual means and timing of any purchases, target number of shares and range of prices under the program will be determined by management in its discretion and will depend on a number of factors, including the market price of the shares, general market and economic conditions, share issuances under equity plans, and applicable legal requirements and other conditions.

Fourth Quarter 2020 and Current Highlights

●	General

The Company booked $63.56 million of new residential mortgage loans during the fourth quarter and the pipeline remains strong at $38.15 million at January 25, 2021.

As of December 31, 2020, $3.94 million, or 6.46%, of the Company’s Paycheck Protection Program loan balances had been forgiven by the SBA.

As of December 31, 2020, current commercial and consumer COVID-19 loan deferrals stand at $26.54 million and $5.72 million, respectively, down significantly from $436.11 million at June 30, 2020.

On December 31, 2020, the Company closed two branches located in Abingdon, Virginia, acquired in the Highlands Union Bank transaction last year. The Company will continue to serve its customers in the important Abingdon market through two strategically placed branches, including its recently upgraded and remodeled Main Street branch, significantly improving efficiency while maintaining first-rate market presence.

●	Income Statement

Return on average assets remained strong at 1.54% for the fourth quarter and 1.24% for the twelve-month period.

Net interest margin decreased 29 basis points to 4.18% compared to the same quarter of 2019. Net interest margin decreased 30 basis points to 4.29% for the full year 2020 compared to 2019. Both period decreases are reflective of the current historic low interest rate environment partially offset by an increase in accelerated accretion of $3.73 million for the quarter and $6.23 million for the year.

Fourth quarter earnings reflect a loan loss provision of $634 thousand, an increase of $543 thousand over fourth quarter of 2019.

●	Balance Sheet

Interest-free deposits grew $144.93 million during 2020, and total deposits grew $216.34 million, or 9.29%, during 2020.

Book value per share at December 31, 2020, was $24.08, an increase of $0.75 during the year.

As of December 31, 2020, the Company continues to significantly exceed regulatory “well capitalized” targets, as well as all capital targets of its capital management plan.

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 December 31, 2020. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.18 billion in combined assets as of December 31, 2020. The Company reported consolidated assets of $3.01 billion as of December 31, 2020. 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															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,
(Amounts in thousands, except share and per share data)	2020			2020			2020			2020			2019			2020			2019
Interest income
Interest and fees on loans	$	28,101		$	27,297		$	26,991		$	28,058		$	21,837		$	110,447		$	88,805
Interest on securities		549			609			713			918			870			2,789			3,716
Interest on deposits in banks		96			89			82			533			663			800			2,447
Total interest income		28,746			27,995			27,786			29,509			23,370			114,036			94,968
Interest expense
Interest on deposits		1,029			1,161			1,445			1,825			1,312			5,460			5,392
Interest on borrowings		-			-			2			2			1			4			123
Total interest expense		1,029			1,161			1,447			1,827			1,313			5,464			5,515
Net interest income		27,717			26,834			26,339			27,682			22,057			108,572			89,453
Provision for loan losses		634			4,703			3,831			3,500			91			12,668			3,571
Net interest income after provision		27,083			22,131			22,508			24,182			21,966			95,904			85,882
Noninterest income		7,733			7,638			6,913			7,549			9,314			29,833			33,677
Noninterest expense		19,877			19,171			18,913			21,664			18,883			79,625			69,763
Income before income taxes		14,939			10,598			10,508			10,067			12,397			46,112			49,796
Income tax expense		3,389			2,332			2,270			2,195			2,833			10,186			10,994
Net income	$	11,550		$	8,266		$	8,238		$	7,872		$	9,564		$	35,926		$	38,802

Earnings per common share
Basic	$	0.65		$	0.47		$	0.47		$	0.44		$	0.61		$	2.02		$	2.47
Diluted		0.65			0.47			0.46			0.44			0.61			2.02			2.46
Cash dividends per common share
Regular		0.25			0.25			0.25			0.25			0.25			1.00			0.96
Weighted average shares outstanding
Basic		17,717,356			17,710,283			17,701,853			17,998,994			15,611,093			17,781,748			15,690,812
Diluted		17,751,805			17,732,428			17,728,300			18,050,071			15,670,047			17,815,380			15,756,093
Performance ratios
Return on average assets		1.54	%		1.11	%		1.15	%		1.16	%		1.71	%		1.24	%		1.75	%
Return on average common equity		10.82	%		7.83	%		7.97	%		7.49	%		11.08	%		8.54	%		11.54	%
Return on average tangible common equity⁽¹⁾		15.96	%		11.62	%		11.91	%		11.12	%		15.33	%		12.68	%		16.09	%

(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															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,
(Amounts in thousands)	2020			2020			2020			2020			2019			2020			2019
Noninterest income
Wealth management	$	810		$	909		$	854		$	844		$	842		$	3,417		$	3,423
Service charges on deposits		3,478			3,250			2,560			3,731			3,702			13,019			14,594
Other service charges and fees		2,737			2,748			2,617			2,231			2,096			10,333			8,281
Net gain (loss) on sale of securities		-			-			-			385			-			385			(43	)
Net FDIC indemnification asset amortization		(338	)		(383	)		(483	)		(486	)		(590	)		(1,690	)		(2,377	)
Other income		-			-			-			-			2,395			-			6,995
Other operating income		1,046			1,114			1,365			844			869			4,369			2,804
Total noninterest income	$	7,733		$	7,638		$	6,913		$	7,549		$	9,314		$	29,833		$	33,677
Noninterest expense
Salaries and employee benefits	$	11,119		$	10,485		$	11,015		$	11,386		$	9,495		$	44,005		$	37,148
Occupancy expense		1,225			1,228			1,275			1,315			1,057			5,043			4,334
Furniture and equipment expense		1,446			1,412			1,316			1,384			1,179			5,558			4,457
Service fees		1,232			1,581			1,329			1,523			721			5,665			4,448
Advertising and public relations		534			430			475			512			478			1,951			2,310
Professional fees		276			408			307			233			408			1,224			1,698
Amortization of intangibles		364			365			360			361			251			1,450			997
FDIC premiums and assessments		202			191			33			-			-			426			318
Merger, acquisition, and divestiture expense		-			-			-			1,893			1,532			1,893			2,124
Other operating expense		3,479			3,071			2,803			3,057			3,762			12,410			11,929
Total noninterest expense	$	19,877		$	19,171		$	18,913		$	21,664		$	18,883		$	79,625		$	69,763

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)

	Three Months Ended															Twelve Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,
	2020			2020			2020			2020			2019			2020			2019
(Amounts in thousands, except per share data)
Net income	$	11,550		$	8,266		$	8,238		$	7,872		$	9,564		$	35,926		$	38,802
Adjustments:
Net (gain) loss on sale of securities		-			-			-			(385	)		-			(385	)		43
Merger, acquisition, and divestiture expense		-			-			-			1,893			1,532			1,893			2,124
Other items⁽¹⁾		-			-			-			-			(2,395	)		-			(6,995	)
Total adjustments		-			-			-			1,508			(863	)		1,508			(4,828	)
Tax effect		-			-			-			354			(331	)		354			(1,343	)
Adjusted earnings, non-GAAP	$	11,550		$	8,266		$	8,238		$	9,026		$	9,032		$	37,080		$	35,317

Adjusted diluted earnings per common share, non-GAAP	$	0.65		$	0.47		$	0.46		$	0.50		$	0.58		$	2.08		$	2.24
Performance ratios, non-GAAP
Adjusted return on average assets		1.54	%		1.11	%		1.15	%		1.33	%		1.61	%		1.28	%		1.59	%
Adjusted return on average common equity		10.82	%		7.83	%		7.97	%		8.59	%		10.46	%		8.81	%		10.51	%
Adjusted return on average tangible common equity⁽²⁾		15.96	%		11.62	%		11.91	%		12.75	%		14.48	%		13.08	%		14.65	%

(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 December 31,
	2020							2019
	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⁾	$	2,188,069	$	28,143		5.12	%	$	1,697,133	$	21,876		5.11	%
Securities available for sale		87,592		640		2.91	%		116,950		1,020		3.46	%
Interest-bearing deposits		375,088		99		0.11	%		159,904		663		1.64	%
Total earning assets		2,650,749		28,882		4.33	%		1,973,987		23,559		4.73	%
Other assets		337,906							249,300
Total assets	$	2,988,655						$	2,223,287

Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	594,222	$	50		0.03	%	$	463,235	$	88		0.08	%
Savings deposits		739,312		112		0.06	%		509,540		234		0.18	%
Time deposits		428,849		867		0.80	%		393,424		989		1.00	%
Total interest-bearing deposits		1,762,383		1,029		0.23	%		1,366,199		1,311		0.38	%
Borrowings
Retail repurchase agreements		925		1		0.14	%		1,515		-		0.00	%
FHLB advances and other borrowings		-		-		-			-		-		-
Total borrowings		925		1		0.14	%		1,515		-		0.00	%
Total interest-bearing liabilities		1,763,308		1,030		0.23	%		1,367,714		1,311		0.38	%
Noninterest-bearing demand deposits		763,412							480,096
Other liabilities		37,305							32,957
Total liabilities		2,564,025							1,880,767
Stockholders' equity		424,630							342,520
Total liabilities and stockholders' equity	$	2,988,655						$	2,223,287
Net interest income, FTE⁽¹⁾			$	27,852						$	22,248
Net interest rate spread						4.10	%						4.36	%
Net interest margin, FTE⁽¹⁾						4.18	%						4.47	%

(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 $4.24 million and $511 thousand for the three months ended December 31, 2020 and 2019, respectively.

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

	Twelve Months Ended December 31,
	2020							2019
	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⁾	$	2,142,637	$	110,619		5.16	%	$	1,722,419	$	88,990		5.17	%
Securities available for sale		105,005		3,259		3.10	%		126,732		4,334		3.42	%
Securities held to maturity		-		-		-			3,045		45		1.48	%
Interest-bearing deposits		296,495		805		0.27	%		116,119		2,447		2.10	%
Total earning assets		2,544,137		114,683		4.51	%		1,968,315		95,816		4.87	%
Other assets		348,150							248,926
Total assets	$	2,892,287						$	2,217,241

Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	556,279	$	311		0.06	%	$	453,824	$	281		0.06	%
Savings deposits		711,831		902		0.13	%		504,081		823		0.16	%
Time deposits		456,755		4,247		0.93	%		418,450		4,288		1.02	%
Total interest-bearing deposits		1,724,865		5,460		0.32	%		1,376,355		5,392		0.39	%
Borrowings
Retail repurchase agreements		1,145		3		0.28	%		2,471		4		0.14	%
Wholesale repurchase agreements		-		-		-			3,767		119		3.17	%
FHLB advances and other borrowings		36		1		2.23	%		-		-		-
Total borrowings		1,181		4		0.34	%		6,238		123		1.96	%
Total interest-bearing liabilities		1,726,046		5,464		0.32	%		1,382,593		5,515		0.40	%
Noninterest-bearing demand deposits		707,623							468,774
Other liabilities		37,826							29,736
Total liabilities		2,471,495							1,881,103
Stockholders' equity		420,792							336,138
Total liabilities and stockholders' equity	$	2,892,287						$	2,217,241
Net interest income, FTE⁽¹⁾			$	109,219						$	90,301
Net interest rate spread						4.19	%						4.47	%
Net interest margin, FTE⁽¹⁾						4.29	%						4.59	%

(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 $9.46 million and $3.23 million for the twelve months ended December 31, 2020 and 2019, respectively.

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

	December 31,			September 30,			June 30,			March 31,			December 31,
(Amounts in thousands, except per share data)	2020			2020			2020			2020			2019
Assets
Cash and cash equivalents	$	456,561		$	375,664		$	421,492		$	241,613		$	217,009
Debt securities available for sale		83,358			90,972			98,367			107,753			169,574
Loans held for sale		-			-			-			-			263
Loans held for investment, net of unearned income
Noncovered		2,176,952			2,184,251			2,125,560			2,084,610			2,101,599
Covered		9,680			10,744			11,257			12,115			12,861
Allowance for loan losses		(26,182	)		(27,277	)		(23,758	)		(21,137	)		(18,425	)
Loans held for investment, net		2,160,450			2,167,718			2,113,059			2,075,588			2,096,035
FDIC indemnification asset		1,223			1,598			1,943			2,433			2,883
Premises and equipment, net		57,700			60,488			62,658			63,319			62,824
Other real estate owned, noncovered		2,083			2,103			2,181			2,502			3,969
Interest receivable		9,052			9,151			8,380			6,117			6,677
Goodwill		129,565			129,565			129,565			129,565			129,565
Other intangible assets		7,069			7,433			7,798			8,159			8,519
Other assets		104,075			103,236			103,623			101,912			101,529
Total assets	$	3,011,136		$	2,947,928		$	2,949,066		$	2,738,961		$	2,798,847

Liabilities
Deposits
Noninterest-bearing	$	772,795		$	750,277		$	752,899		$	620,292		$	627,868
Interest-bearing		1,773,452			1,741,962			1,744,947			1,668,122			1,702,044
Total deposits		2,546,247			2,492,239			2,497,846			2,288,414			2,329,912
Securities sold under agreements to repurchase		964			956			1,100			1,348			1,601
FHLB and other borrowings		-			-			-			1,000			-
Interest, taxes, and other liabilities		37,195			34,816			34,290			36,593			38,515
Total liabilities		2,584,406			2,528,011			2,533,236			2,327,355			2,370,028

Stockholders' equity
Common stock		17,723			17,717			17,710			17,700			18,377
Additional paid-in capital		173,345			172,980			172,601			172,231			192,413
Retained earnings		237,585			230,464			226,627			222,814			219,535
Accumulated other comprehensive loss		(1,923	)		(1,244	)		(1,108	)		(1,139	)		(1,506	)
Total stockholders' equity		426,730			419,917			415,830			411,606			428,819
Total liabilities and stockholders' equity	$	3,011,136		$	2,947,928		$	2,949,066		$	2,738,961		$	2,798,847

Shares outstanding at period-end		17,722,507			17,716,522			17,709,569			17,700,140			18,376,991
Book value per common share	$	24.08		$	23.70		$	23.48		$	23.25		$	23.33
Tangible book value per common share⁽¹⁾		16.37			15.97			15.72			15.47			15.82

(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)

	December 31,			September 30,			June 30,			March31,			December 31,
(Amounts in thousands)	2020			2020			2020			2020			2019
Allowance for Loan Losses
Beginning balance	$	27,277		$	23,758		$	21,137		$	18,425		$	18,493
Provision for loan losses charged to operations		634			4,703			3,831			3,500			91
Charge-offs		(2,194	)		(1,563	)		(1,672	)		(1,194	)		(1,353	)
Recoveries		465			379			462			406			1,194
Net charge-offs		(1,729	)		(1,184	)		(1,210	)		(788	)		(159	)
Ending balance	$	26,182		$	27,277		$	23,758		$	21,137		$	18,425

Nonperforming Assets
Non-covered nonperforming assets
Nonaccrual loans	$	21,706		$	24,423		$	24,471		$	20,263		$	16,113
Accruing loans past due 90 days or more		295			43			284			329			144
Troubled debt restructurings ("TDRs")⁽¹⁾		187			456			598			623			720
Total non-covered nonperforming loans		22,188			24,922			25,353			21,215			16,977
OREO		2,083			2,103			2,181			2,502			3,969
Total non-covered nonperforming assets	$	24,271		$	27,025		$	27,534		$	23,717		$	20,946

Covered nonperforming assets
Nonaccrual loans	$	297		$	333		$	299		$	145		$	244
Total covered nonperforming loans		297			333			299			145			244
OREO		-			-			-			-			-
Total covered nonperforming assets	$	297		$	333		$	299		$	145		$	244

Additional Information
Performing TDRs⁽²⁾	$	10,061		$	10,480		$	10,822		$	8,429		$	5,855
Total Accruing TDRs⁽³⁾		10,248			10,936			11,420			9,052			6,575

Non-covered ratios
Nonperforming loans to total loans		1.02	%		1.14	%		1.19	%		1.02	%		0.81	%
Nonperforming assets to total assets		0.81	%		0.92	%		0.94	%		0.87	%		0.75	%
Non-PCI allowance to nonperforming loans		118.00	%		109.45	%		93.71	%		99.63	%		108.53	%
Non-PCI allowance to total loans		1.20	%		1.25	%		1.12	%		1.01	%		0.88	%
Annualized net charge-offs to average loans		0.26	%		0.22	%		0.23	%		0.15	%		0.04	%

Total ratios
Nonperforming loans to total loans		1.03	%		1.15	%		1.20	%		1.02	%		0.81	%
Nonperforming assets to total assets		0.82	%		0.93	%		0.94	%		0.87	%		0.76	%
Allowance for loan losses to nonperforming loans		116.44	%		108.01	%		92.62	%		98.96	%		106.99	%
Allowance for loan losses to total loans		1.20	%		1.24	%		1.11	%		1.01	%		0.87	%
Annualized net charge-offs to average loans		0.26	%		0.22	%		0.23	%		0.15	%		0.04	%

(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