FCBC First Community Bancshares Inc

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 March 31, 2024. The Company reported net income of $12.85 million, or $0.71 per diluted common share, for the quarter ended March 31, 2024.   

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 May 10, 2024, and is expected to be paid on or about May 24, 2024. This marks the 39th consecutive year of regular dividends to common shareholders.

First Quarter 2024 Highlights

Income Statement

• Net income of $12.85 million for the first quarter of 2024, was an increase of $1.06 million, or 9.02%, from the same quarter of 2023.  
• Net interest income increased $2.22 million compared to the same quarter in 2023, as increases in benchmark interest rates have improved net interest margin.  Provision for credit losses was approximately $731 thousand lower than the same quarter last year.  
• Net interest margin of 4.47% is an increase of 12 basis points over the same quarter of 2023.  The yield on earning assets increased 62 basis points primarily driven by increased earnings on loans.  
• Interest and fees on loans increased $5.79 million from the same quarter of 2023 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. The Company acquired Surrey Bancorp on April 21, 2023, adding approximately $239.08 million in loans.   
• Noninterest income increased approximately $676 thousand, or 7.88%, when compared to the same quarter of 2023.  The increase was primarily driven by increased interchange income.  Noninterest expense increased $2.57 million, or 12.36%.  The increase in noninterest expense was primarily driven by salaries and employee benefits, service fees, and other operating expense.  The increase in non interest expense is primarily attributable to the addition of Surrey branches and staff.  
• Annualized return on average assets ("ROA") was 1.60% for the first quarter of 2024 compared to 1.55% for the same period of 2023. Annualized return on average common equity ("ROE") was 10.18% for the first quarter of 2024 compared to 11.15% for the same period of 2023.  

Balance Sheet and Asset Quality

• Consolidated assets totaled $3.24 billion at March 31, 2024.  
• Securities available for sale decreased $114.71 million, or 40.83%, from December 31,2023.  The decrease is primarily attributable to the maturity of $115.75 million in U.S. Treasury Notes during the first quarter of 2024.  Loans decreased $52.47 million, or 2.04%.  Deposits decreased $40.11 million, or 1.47%.  The net effect of these balance sheet changes resulted in an increase in cash and cash equivalents of $132.49 million, or 113.80%.  The increase in cash and cash equivalents is primarily attributable to an increase in federal funds sold of $142.63 million.  
• The Company repurchased 89,396 common shares during the first quarter of 2024 for a total cost of $2.97 million.   
• Non-performing loans to total loans increased to 0.78% when compared with the same quarter of 2023.  The Company experienced net charge-offs for the first quarter of 2024 of $1.74 million, or 0.27%, of annualized average loans, compared to net charge-offs of $1.74 million, or 0.29%, of annualized average loans for the same period in 2023. 
• The allowance for credit losses to total loans was 1.41% at March 31, 2024, compared to 1.41% at December 31, 2023, and 1.29% for March 31, 2023.
• Book value per share at March 31, 2024, was $27.53, an increase of $0.33 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 March 31, 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 $1.55 billion in combined assets as of March 31, 2024. The Company reported consolidated assets of $3.24 billion as of March 31, 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
(Amounts in thousands, except share and per share data)		March 31,				December 31,				September 30,				June 30,				March 31,
		2024				2023				2023				2023				2023
Interest income
Interest and fees on loans		$	33,418			$	33,676			$	33,496			$	31,927			$	27,628
Interest on securities			1,698				1,888				1,912				2,057				2,099
Interest on deposits in banks			913				438				697				885				462
Total interest income			36,029				36,002				36,105				34,869				30,189
Interest expense
Interest on deposits			4,365				3,935				2,758				1,930				718
Interest on borrowings			35				4				0				77				59
Total interest expense			4,400				3,939				2,758				2,007				777
Net interest income			31,629				32,063				33,347				32,862				29,412
Provision for credit losses			1,011				1,029				1,109				4,105				1,742
Net interest income after provision			30,618				31,034				32,238				28,757				27,670
Noninterest income			9,259				10,462				9,622				8,785				8,583
Noninterest expense			23,386				26,780				22,913				24,671				20,813
Income before income taxes			16,491				14,716				18,947				12,871				15,440
Income tax expense			3,646				2,932				4,307				3,057				3,658
Net income		$	12,845			$	11,784			$	14,640			$	9,814			$	11,782
Adjustment to Net Income for Fair Value Changes to Restricted Stock Units (tax-effected)		$	240			$	530			$	215			$	335			$	20
Adjusted Net Income for diluted earnings per share		$	13,085			$	12,314			$	14,855			$	10,149			$	11,802
Earnings per common share
Basic		$	0.70			$	0.64			$	0.78			$	0.53			$	0.73
Diluted		$	0.71			$	0.66			$	0.79			$	0.55			$	0.72
Cash dividends per common share
Regular			0.29				0.29				0.29				0.29				0.29
Weighted average shares outstanding
Basic			18,476,128				18,530,114				18,786,032				18,407,078				16,228,297
Diluted			18,545,910				18,575,226				18,831,836				18,431,598				16,289,489
Performance ratios
Return on average assets			1.60	%			1.43	%			1.74	%			1.18	%			1.55	%
Return on average common equity			10.18	%			9.39	%			11.63	%			8.04	%			11.15	%
Return on average tangible common equity(1)			14.82	%			13.82	%			17.11	%			11.65	%			16.19	%

 

____________

(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
		March 31,				December 31,				September 30,				June 30,				March 31,
(Amounts in thousands)		2024				2023				2023				2023				2023
Noninterest income
Wealth management		$	1,099			$	1,052			$	1,145			$	965			$	1,017
Service charges on deposits			3,310				3,637				3,729				3,471				3,159
Other service charges and fees			3,450				3,541				3,564				3,460				3,082
(Loss) gain on sale of securities			-				-				-				(28	)			7
Other operating income			1,400				2,232				1,184				917				1,318
Total noninterest income		$	9,259			$	10,462			$	9,622			$	8,785			$	8,583
Noninterest expense
Salaries and employee benefits		$	12,581			$	12,933			$	12,673			$	12,686			$	11,595
Occupancy expense			1,378				1,252				1,271				1,276				1,168
Furniture and equipment expense			1,545				1,489				1,480				1,508				1,401
Service fees			2,449				2,255				2,350				2,284				2,019
Advertising and public relations			796				843				968				846				643
Professional fees			372				787				172				281				327
Amortization of intangibles			530				536				536				425				234
FDIC premiums and assessments			369				376				392				423				320
Merger expense			-				-				-				2,014				379
Litigation expense			-				3,000				-				-				-
Other operating expense			3,366				3,309				3,071				2,928				2,727
Total noninterest expense		$	23,386			$	26,780			$	22,913			$	24,671			$	20,813

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)
		Three Months Ended
		March 31,				December 31,				September 30,				June 30,				March 31,
(Amounts in thousands, except per share data)		2024				2023				2023				2023				2023
Adjusted Net Income for diluted earnings per share		$	13,085			$	12,314			$	14,855			$	10,149			$	11,802
Non-GAAP adjustments:
Loss (gain) on sale of securities			-				-				-				28				(7	)
Merger expense			-				-				-				2,014				379
Day 2 provision for allowance for credit losses - Surrey			-				-				-				1,614				-
Litigation expense			-				3,000				-				-				-
Other items(1)			-				-				(204	)			-				-
Total adjustments			-				3,000				(204	)			3,656				372
Tax effect			-				720				(49	)			522				10
Adjusted earnings, non-GAAP		$	13,085			$	14,594			$	14,700			$	13,283			$	12,163
Adjusted diluted earnings per common share, non-GAAP		$	0.71			$	0.79			$	0.78			$	0.72			$	0.75
Performance ratios, non-GAAP
Adjusted return on average assets			1.63	%			1.77	%			1.75	%			1.60	%			1.60	%
Adjusted return on average common equity			10.37	%			11.63	%			11.68	%			10.88	%			11.51	%
Adjusted return on average tangible common equity (2)			15.10	%			17.11	%			17.18	%			15.77	%			16.72	%

____________

(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 March 31,
		2024												2023
		Average								AverageYield/				Average								AverageYield/
(Amounts in thousands)		Balance				Interest(1)				Rate(1)				Balance				Interest(1)				Rate(1)
Assets
Earning assets
Loans(2)(3)		$	2,549,107			$	33,500				5.29	%		$	2,393,759			$	27,698				4.69	%
Securities available for sale			239,010				1,731				2.91	%			316,734				2,140				2.74	%
Interest-bearing deposits			66,483				916				5.54	%			40,993				465				4.60	%
Total earning assets			2,854,600				36,147				5.09	%			2,751,486				30,303				4.47	%
Other assets			373,614												322,789
Total assets		$	3,228,214											$	3,074,275
Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits		$	665,875			$	162				0.10	%		$	666,447			$	26				0.02	%
Savings deposits			866,084				3,412				1.58	%			827,414				484				0.24	%
Time deposits			249,974				790				1.27	%			271,214				208				0.31	%
Total interest-bearing deposits			1,781,933				4,364				0.98	%			1,765,075				718				0.16	%
Borrowings
Federal funds purchased			2,527				35				5.52	%			4,719				58				5.07	%
Retail repurchase agreements			1,127				-				0.05	%			2,086				1				0.06	%
Total borrowings			3,654				35				3.85	%			6,805				59				0.07	%
Total interest-bearing liabilities			1,785,587				4,399				0.99	%			1,771,880				777				0.18	%
Noninterest-bearing demand deposits			886,947												838,041
Other liabilities			48,298												35,669
Total liabilities			2,720,832												2,645,590
Stockholders' equity			507,382												428,685
Total liabilities and stockholders' equity		$	3,228,214											$	3,074,275
Net interest income, FTE(1)						$	31,748											$	29,526
Net interest rate spread											4.10	%											4.29	%
Net interest margin, FTE(1)											4.47	%											4.35	%

____________

(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 $781 thousand and $193 thousand for the three months ended March 31, 2024 and 2023, respectively.

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)
		March 31,				December 31,				September 30,				June 30,				March 31,
(Amounts in thousands, except per share data)		2024				2023				2023				2023				2023
Assets
Cash and cash equivalents		$	248,905			$	116,420			$	113,397			$	152,660			$	92,385
Debt securities available for sale, at fair value			166,247				280,961				275,332				314,373				308,269
Loans held for investment, net of unearned income			2,519,833				2,572,298				2,593,472				2,621,073				2,388,897
Allowance for credit losses			(35,461	)			(36,189	)			(36,031	)			(36,177	)			(30,789	)
Loans held for investment, net			2,484,372				2,536,109				2,557,441				2,584,896				2,358,108
Premises and equipment, net			51,333				50,680				51,205				53,546				47,407
Other real estate owned			374				192				243				339				481
Interest receivable			10,719				10,881				10,428				10,185				8,646
Goodwill			143,946				143,946				143,946				143,946				129,565
Other intangible assets			14,615				15,145				15,681				16,217				3,942
Other assets			115,470				114,854				116,552				115,275				102,869
Total assets		$	3,235,981			$	3,269,188			$	3,284,225			$	3,391,437			$	3,051,672
Liabilities
Deposits
Noninterest-bearing		$	902,396			$	931,920			$	944,301			$	974,995			$	823,297
Interest-bearing			1,779,819				1,790,405				1,801,835				1,877,683				1,761,327
Total deposits			2,682,215				2,722,325				2,746,136				2,852,678				2,584,624
Securities sold under agreements to repurchase			1,006				1,119				1,029				1,348				1,866
Interest, taxes, and other liabilities			45,816				42,450				41,393				38,691				33,451
Total liabilities			2,729,037				2,765,894				2,788,558				2,892,717				2,619,941
Stockholders' equity
Common stock			18,413				18,502				18,671				18,969				16,243
Additional paid-in capital			173,041				175,841				180,951				189,917				128,666
Retained earnings			327,389				319,902				313,489				304,295				300,047
Accumulated other comprehensive loss			(11,899	)			(10,951	)			(17,444	)			(14,461	)			(13,225	)
Total stockholders' equity			506,944				503,294				495,667				498,720				431,731
Total liabilities and stockholders' equity		$	3,235,981			$	3,269,188			$	3,284,225			$	3,391,437			$	3,051,672
Shares outstanding at period-end			18,413,088				18,502,396				18,671,470				18,969,281				16,243,551
Book value per common share		$	27.53			$	27.20			$	26.55			$	26.29			$	26.58
Tangible book value per common share(1)			18.92				18.60				18.00				17.85				18.36

____________

(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)
		March 31,				December 31,				September 30,				June 30,				March 31,
(Amounts in thousands)		2024				2023				2023				2023				2023
Allowance for Credit Losses
Balance at beginning of period:
Allowance for credit losses - loans		$	36,189			$	36,031			$	36,177			$	30,789			$	30,556
Allowance for credit losses - loan commitments			746				758				964				964				1,196
Total allowance for credit losses beginning of period			36,935				36,789				37,141				31,753				31,752
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			1,011				1,041				1,315				4,105				1,974
(Recovery of) provision for credit losses - loan commitments			-				(12	)			(206	)			-				(232	)
Total provision for credit losses - loans and loan commitments			1,011				1,029				1,109				4,105				1,742
Charge-offs			(2,448	)			(2,105	)			(2,157	)			(1,993	)			(2,570	)
Recoveries			709				1,222				696				1,265				829
Net (charge-offs) recoveries			(1,739	)			(883	)			(1,461	)			(728	)			(1,741	)
Balance at end 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
Ending balance		$	36,207			$	36,935			$	36,789			$	37,141			$	31,753
Nonperforming Assets
Nonaccrual loans		$	19,617			$	19,356			$	18,366			$	18,628			$	15,557
Accruing loans past due 90 days or more			30				104				59				-				23
Modified loans past due 90 days or more			-				-				-				-				-
Total nonperforming loans			19,647				19,460				18,425				18,628				15,580
OREO			374				192				243				339				481
Total nonperforming assets		$	20,021			$	19,652			$	18,668			$	18,967			$	16,061
Additional Information
Total modified loans		$	2,177			$	1,873			$	1,674			$	642			$	429
Asset Quality Ratios
Nonperforming loans to total loans			0.78	%			0.76	%			0.71	%			0.71	%			0.65	%
Nonperforming assets to total assets			0.62	%			0.60	%			0.57	%			0.56	%			0.53	%
Allowance for credit losses to nonperforming loans			180.49	%			185.97	%			195.55	%			194.21	%			197.62	%
Allowance for credit losses to total loans			1.41	%			1.41	%			1.39	%			1.38	%			1.29	%
Annualized net charge-offs (recoveries) to average loans			0.27	%			0.14	%			0.22	%			0.11	%			0.29	%

FOR MORE INFORMATION, CONTACT:

David D. Brown

(276) 326-9000