ex_677310.htm

EX-99.1 2 ex_677310.htm EXHIBIT 99.1 ex_677310.htm

Exhibit 99.1


NEWS RELEASE
FOR IMMEDIATE RELEASE:		FOR MORE INFORMATION, CONTACT:
July 23, 2024		David D. Brown
		(276) 326-9000

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

	o	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.
	o	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.
	o	Net interest income decreased $950 thousand compared to the same quarter in 2023, primarily due to increases in rates paid on interest-bearing deposits.
	o	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.
	o	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.
	o	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

	o	Consolidated assets totaled $3.23 billion at June 30, 2024.
	o	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%.
	o	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.
	o	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	%

(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	%