BLUEFIELD, Va., Oct. 24, 2023 (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 September 30, 2023. The Company reported net income of $14.64 million, or $0.79 per diluted common share, for the quarter ended September 30, 2023. Net income for the nine months ended September 30, 2023, was $36.24 million or $2.06 per diluted common share.
The Company also declared a quarterly cash dividend to common shareholders of twenty-nine cents $0.29 per common share. The quarterly dividend is payable to common shareholders of record on November 10, 2023, and is expected to be paid on or about November 24, 2023. This marks the 38th consecutive year of regular dividends to common shareholders.
Third Quarter 2023 and Current Highlights
Income Statement
| o | Net income of $14.64 million for the quarter was approximately 9.66%, or $1.29 million, higher compared to net income of $13.35 million in the same quarter of 2022. Adjusted for non-recurring items, third quarter net income increased $2.52 million to $14.72 million compared to third quarter 2022. The increase is primarily attributable to a significant increase in net interest income. | |
| o | Net interest income increased $4.01 million compared to the same quarter in 2022, as increases in benchmark interest rates have improved net interest margin. | |
| o | Net interest margin of 4.51% is an increase of 50 basis points over the same quarter of 2022. The yield on earning assets increased 82 basis points primarily driven by increased earnings on loans and securities. | |
| o | Interest and fees on loans increased $7.09 million from the same quarter of 2022 and is attributable to both an increase in yield and an increase in average balance compared to the yield and average balance of the prior year. Interest income from securities of $1.91 million was an increase of $127 thousand over the same quarter of 2022 and is primarily attributable to an increase in yield from the same period of the prior year. Interest income on deposits in banks decreased $835 thousand to $697 thousand for the third quarter, primarily due to a significant decrease in the average balance compared to the third quarter of 2022. | |
| o | Annualized return on average assets was 1.74% for the third quarter and 1.49% for the first nine months of 2023 compared to 1.63% and 1.41% for the same periods, respectively of 2022. Annualized return on average common equity was 11.63% for the third quarter and 10.25% for the first nine months of 2023 compared to 12.60% and 10.73%, for the same periods, respectively of 2022. | |
Balance Sheet and Asset Quality
| o | The Company’s loan portfolio increased by $193.28 million, or 8.05%, from December 31, 2022. Excluding the Surrey transaction, the loan portfolio decreased approximately $45.81 million, or 1.91%. | |
| o | Deposits increased $67.32 million, or 2.51%, from year-end 2022. Excluding the Surrey transaction, deposits decreased approximately $336.31 million, or 12.55%, from December 31, 2022. | |
| o | The Company repurchased 299,012 common shares during the third quarter of 2023 for a total cost of $9.37 million. The Company repurchased 578,579 common shares year-to-date for a total cost of $17.06 million. The Company recently announced a new 2.7 million share repurchase program that replaces the small remainder of the prior program and expires December 31, 2026. | |
| o | Non-performing loans to total loans remained at 0.71% when compared with the prior quarter of June 30, 2023. The Company experienced net charge-offs for the third quarter of 2023 of $1.46 million, or 0.22%, of annualized average loans, compared to net charge-offs of $1.05 million, or 0.18%, of annualized average loans for the same period in 2022. | |
| o | The allowance for credit losses to total loans was 1.39% at September 30, 2023 compared to 1.38% for the second quarter of 2023. | |
| o | Accumulated other comprehensive loss of $17.44 million at September 30, 2023, is primarily attributable to a relatively small decline in the market value of investment securities compared to book value after the significant increases in benchmark interest rates over the last seven quarters. | |
| o | Book value per share at September 30, 2023, was $26.55, an increase of $0.54 from year-end 2022. | |
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 53 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of September 30, 2023. 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 $1.40 billion in combined assets as of September 30, 2023. The Company reported consolidated assets of $3.28 billion as of September 30, 2023. 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 | Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | |||||||||||||||||||||||
| (Amounts in thousands, except share and per share data) | 2023 | 2023 | 2023 | 2022 | 2022 | 2023 | 2022 | |||||||||||||||||||||
| Interest income | ||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 33,496 | $ | 31,927 | $ | 27,628 | $ | 27,873 | $ | 26,405 | $ | 93,051 | $ | 76,697 | ||||||||||||||
| Interest on securities | 1,912 | 2,057 | 2,099 | 1,900 | 1,785 | 6,068 | 4,086 | |||||||||||||||||||||
| Interest on deposits in banks | 697 | 885 | 462 | 1,215 | 1,532 | 2,044 | 2,548 | |||||||||||||||||||||
| Total interest income | 36,105 | 34,869 | 30,189 | 30,988 | 29,722 | 101,163 | 83,331 | |||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||||
| Interest on deposits | 2,758 | 1,930 | 718 | 366 | 380 | 5,406 | 1,288 | |||||||||||||||||||||
| Interest on borrowings | - | 77 | 59 | 1 | - | 136 | 1 | |||||||||||||||||||||
| Total interest expense | 2,758 | 2,007 | 777 | 367 | 380 | 5,542 | 1,289 | |||||||||||||||||||||
| Net interest income | 33,347 | 32,862 | 29,412 | 30,621 | 29,342 | 95,621 | 82,042 | |||||||||||||||||||||
| Provision for credit losses | 1,109 | 4,105 | 1,742 | 3,416 | 685 | 6,956 | 3,156 | |||||||||||||||||||||
| Net interest income after provision | 32,238 | 28,757 | 27,670 | 27,205 | 28,657 | 88,665 | 78,886 | |||||||||||||||||||||
| Noninterest income | 9,622 | 8,785 | 8,583 | 9,184 | 9,950 | 26,990 | 27,998 | |||||||||||||||||||||
| Noninterest expense | 22,913 | 24,671 | 20,813 | 20,730 | 21,145 | 68,397 | 62,386 | |||||||||||||||||||||
| Income before income taxes | 18,947 | 12,871 | 15,440 | 15,659 | 17,462 | 47,258 | 44,498 | |||||||||||||||||||||
| Income tax expense | 4,307 | 3,057 | 3,658 | 3,076 | 4,111 | 11,022 | 10,419 | |||||||||||||||||||||
| Net income | $ | 14,640 | $ | 9,814 | $ | 11,782 | $ | 12,583 | $ | 13,351 | $ | 36,236 | $ | 34,079 | ||||||||||||||
| Adjustment to Net Income for Fair Value Changes to Restricted Stock Units (tax-effected) | $ | 237 | $ | 335 | $ | 20 | $ | - | $ | - | $ | 592 | $ | - | ||||||||||||||
| Adjusted Net Income for diluted earnings per share | $ | 14,877 | $ | 10,149 | $ | 11,802 | $ | 12,583 | $ | 13,351 | $ | 36,828 | $ | 34,079 | ||||||||||||||
| Earnings per common share | ||||||||||||||||||||||||||||
| Basic | $ | 0.78 | $ | 0.53 | $ | 0.73 | $ | 0.78 | $ | 0.82 | $ | 2.03 | $ | 2.05 | ||||||||||||||
| Diluted | $ | 0.79 | $ | 0.55 | $ | 0.72 | $ | 0.77 | $ | 0.81 | $ | 2.06 | $ | 2.05 | ||||||||||||||
| Cash dividends per common share | ||||||||||||||||||||||||||||
| Regular | 0.29 | 0.29 | 0.29 | 0.29 | 0.27 | 0.87 | 0.83 | |||||||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||||||
| Basic | 18,786,032 | 18,407,078 | 16,228,297 | 16,229,289 | 16,378,022 | 17,816,505 | 16,617,766 | |||||||||||||||||||||
| Diluted | 18,831,836 | 18,431,598 | 16,289,489 | 16,281,922 | 16,413,202 | 17,857,494 | 16,654,697 | |||||||||||||||||||||
| Performance ratios | ||||||||||||||||||||||||||||
| Return on average assets | 1.74 | % | 1.18 | % | 1.55 | % | 1.59 | % | 1.63 | % | 1.49 | % | 1.41 | % | ||||||||||||||
| Return on average common equity | 11.63 | % | 8.04 | % | 11.15 | % | 11.99 | % | 12.60 | % | 10.25 | % | 10.73 | % | ||||||||||||||
| Return on average tangible common equity(1) | 17.11 | % | 11.65 | % | 16.19 | % | 17.75 | % | 18.51 | % | 14.94 | % | 15.71 | % | ||||||||||||||
| (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 | Nine Months Ended | |||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | |||||||||||||||||||||||
| (Amounts in thousands) | 2023 | |||||||||||||||||||||||||||
