GlobeNewswire Inc | Jan 26, 2021 04:30PM EST

January 26, 2021

BLUEFIELD, Va., Jan. 26, 2021 (GLOBE NEWSWIRE) -- 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 11th consecutive year of regular dividend increases and the 36th 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 Companys 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

-- GeneralThe Company booked $63.56 million of new residential mortgage loans during the fourth quarter and the pipeline remains strong at $38.15 million on January 25, 2021.As of December 31, 2020, $3.94 million, or 6.46%, of the Companys Paycheck Protection Program loan balances had been forgiven by the SBA.As of December 31, 2020, current commercial and consumer COVID-19 loan deferrals stood 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 StatementReturn 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 SheetInterest-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 Companys common stock is listed on the NASDAQ Global Select Market under the trading symbol, FCBC. Additional investor information is available on the Companys 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 Companys 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 inthousands,except share 2020 2020 2020 2020 2019 2020 2019 and per sharedata)Interest income Interest and fees on $ 28,101 $ 27,297 $ 26,991 $ 28,058 $ 21,837 $ 110,447 $ 88,805 loans Interest on 549 609 713 918 870 2,789 3,716 securities Interest on deposits in 96 89 82 533 663 800 2,447 banksTotal interest 28,746 27,995 27,786 29,509 23,370 114,036 94,968 incomeInterest expense Interest on 1,029 1,161 1,445 1,825 1,312 5,460 5,392 deposits Interest on - - 2 2 1 4 123 borrowingsTotal interest 1,029 1,161 1,447 1,827 1,313 5,464 5,515 expenseNet interest 27,717 26,834 26,339 27,682 22,057 108,572 89,453 incomeProvision for 634 4,703 3,831 3,500 91 12,668 3,571 loan lossesNet interestincome after 27,083 22,131 22,508 24,182 21,966 95,904 85,882 provisionNoninterest 7,733 7,638 6,913 7,549 9,314 29,833 33,677 incomeNoninterest 19,877 19,171 18,913 21,664 18,883 79,625 69,763 expenseIncome before 14,939 10,598 10,508 10,067 12,397 46,112 49,796 income taxesIncome tax 3,389 2,332 2,270 2,195 2,833 10,186 10,994 expenseNet 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 dividendsper common share Regular 0.25 0.25 0.25 0.25 0.25 1.00 0.96 Weightedaverage 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 1.54 % 1.11 % 1.15 % 1.16 % 1.71 % 1.24 % 1.75 % assets Return on average 10.82 % 7.83 % 7.97 % 7.49 % 11.08 % 8.54 % 11.54 % common equity Return on average tangible 15.96 % 11.62 % 11.91 % 11.12 % 15.33 % 12.68 % 16.09 % common equity^(1) (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 June 30, March 31, December 31, December 31, 30,(Amounts in 2020 2020 2020 2020 2019 2020 2019 thousands)Noninterest income Wealth $ 810 $ 909 $ 854 $ 844 $ 842 $ 3,417 $ 3,423 management Service charges 3,478 3,250 2,560 3,731 3,702 13,019 14,594 on deposits Other service charges and 2,737 2,748 2,617 2,231 2,096 10,333 8,281 fees Net gain (loss) on sale of - - - 385 - 385 (43 ) securities Net FDIC indemnification (338 ) (383 ) (483 ) (486 ) (590 ) (1,690 ) (2,377 ) asset amortization Other income - - - - 2,395 - 6,995 Other operating 1,046 1,114 1,365 844 869 4,369 2,804 incomeTotal noninterest $ 7,733 $ 7,638 $ 6,913 $ 7,549 $ 9,314 $ 29,833 $ 33,677 incomeNoninterest expense Salaries and employee $ 11,119 $ 10,485 $ 11,015 $ 11,386 $ 9,495 $ 44,005 $ 37,148 benefits Occupancy 1,225 1,228 1,275 1,315 1,057 5,043 4,334 expense Furniture and equipment 1,446 1,412 1,316 1,384 1,179 5,558 4,457 expense Service fees 1,232 1,581 1,329 1,523 721 5,665 4,448 Advertising and public 534 430 475 512 478 1,951 2,310 relations Professional 276 408 307 233 408 1,224 1,698 fees Amortization of 364 365 360 361 251 1,450 997 intangibles FDIC premiums 202 191 33 - - 426 318 and assessments Merger, acquisition, - - - 1,893 1,532 1,893 2,124 and divestiture expense Other operating 3,479 3,071 2,803 3,057 3,762 12,410 11,929 expenseTotal noninterest $ 19,877 $ 19,171 $ 18,913 $ 21,664 $ 18,883 $ 79,625 $ 69,763 expense



RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited) Three Months Ended Twelve Months Ended December 31, September June 30, March 31, December 31, December 31, 30, 2020 2020 2020 2020 2019 2020 2019 (Amounts inthousands, except pershare data)Net income $ 11,550 $ 8,266 $ 8,238 $ 7,872 $ 9,564 $ 35,926 $ 38,802 Adjustments: Net (gain) loss on sale - - - (385 ) - (385 ) 43 of securities Merger, acquisition, and - - - 1,893 1,532 1,893 2,124 divestiture expense Other items^ - - - - (2,395 ) - (6,995 ) (1)Total - - - 1,508 (863 ) 1,508 (4,828 ) adjustmentsTax effect - - - 354 (331 ) 354 (1,343 ) Adjustedearnings, $ 11,550 $ 8,266 $ 8,238 $ 9,026 $ 9,032 $ 37,080 $ 35,317 non-GAAP Adjusteddiluted earnings percommon share, non-GAAP $ 0.65 $ 0.47 $ 0.46 $ 0.50 $ 0.58 $ 2.08 $ 2.24 Performanceratios, non-GAAP Adjusted return on 1.54 % 1.11 % 1.15 % 1.33 % 1.61 % 1.28 % 1.59 % average assets Adjusted return on average 10.82 % 7.83 % 7.97 % 8.59 % 10.46 % 8.81 % 10.51 % common equity Adjusted return on average tangible common equity^ 15.96 % 11.62 % 11.91 % 12.75 % 14.48 % 13.08 % 14.65 % (2) (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 Average Average Yield/ Yield/(Amounts in thousands) Balance Interest^ Rate^ Balance Interest^ Rate^ (1) (1) (1) (1)Assets Earning assets Loans^(2)(3) $ 2,188,069 $ 28,143 5.12 % $ 1,697,133 $ 21,876 5.11 % Securities 87,592 640 2.91 % 116,950 1,020 3.46 % available for sale Interest-bearing 375,088 99 0.11 % 159,904 663 1.64 % depositsTotal 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' equityInterest-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 1,762,383 1,029 0.23 % 1,366,199 1,311 0.38 % depositsBorrowings Retail repurchase 925 - 1 0.14 % 1,515 - 0.00 % agreements FHLB advances - - - - - - and other borrowingsTotal borrowings 925 1 0.14 % 1,515 - 0.00 % Total interest-bearing 1,763,308 1,030 0.23 % 1,367,714 1,311 0.38 % liabilitiesNoninterest-bearing 763,412 480,096 demand depositsOther liabilities 37,305 32,957 Total liabilities 2,564,025 1,880,767 Stockholders' equity 424,630 342,520 Total liabilities and $ 2,988,655 $ 2,223,287 stockholders' equityNet interest income, FTE^ $ 27,852 $ 22,248 (1)Net interest rate spread 4.10 % 4.36 % Net interest margin, FTE^ 4.18 % 4.47 % (1) (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 accountingaccretion 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 Average Average Yield/ Yield/(Amounts in thousands) Balance Interest^ Rate^ Balance Interest^ Rate^ (1) (1) (1) (1)Assets Earning assets Loans^(2)(3) $ 2,142,637 $ 110,619 5.16 % $ 1,722,419 $ 88,990 5.17 % Securities 105,005 3,259 3.10 % 126,732 4,334 3.42 % available for sale Securities held to - - - 3,045 45 1.48 % maturity Interest-bearing 296,495 805 0.27 % 116,119 2,447 2.10 % depositsTotal 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' equityInterest-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 1,724,865 5,460 0.32 % 1,376,355 5,392 0.39 % depositsBorrowings Retail repurchase 1,145 - 3 0.28 % 2,471 4 0.14 % agreements Wholesale repurchase - - - 3,767 119 3.17 % agreements FHLB advances 36 1 2.23 % - - - and other borrowingsTotal borrowings 1,181 4 0.34 % 6,238 123 1.96 % Total interest-bearing 1,726,046 5,464 0.32 % 1,382,593 5,515 0.40 % liabilitiesNoninterest-bearing 707,623 468,774 demand depositsOther liabilities 37,826 29,736 Total liabilities 2,471,495 1,881,103 Stockholders' equity 420,792 336,138 Total liabilities and $ 2,892,287 $ 2,217,241 stockholders' equityNet interest income, FTE $ 109,219 $ 90,301 ^(1)Net interest rate spread 4.19 % 4.47 % Net interest margin, FTE 4.29 % 4.59 % ^(1) (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 accountingaccretion 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, 2020 2020 2020 2020 2019 except per share data)Assets Cash and cash $ 456,561 $ 375,664 $ 421,492 $ 241,613 $ 217,009 equivalentsDebt securities 83,358 90,972 98,367 107,753 169,574 available for saleLoans 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 (26,182 ) (27,277 ) (23,758 ) (21,137 ) (18,425 ) lossesLoans held for 2,160,450 2,167,718 2,113,059 2,075,588 2,096,035 investment, netFDIC indemnification 1,223 1,598 1,943 2,433 2,883 assetPremises and 57,700 60,488 62,658 63,319 62,824 equipment, netOther real estate 2,083 2,103 2,181 2,502 3,969 owned, noncoveredInterest receivable 9,052 9,151 8,380 6,117 6,677 Goodwill 129,565 129,565 129,565 129,565 129,565 Other intangible 7,069 7,433 7,798 8,159 8,519 assetsOther 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 underagreements to 964 956 1,100 1,348 1,601 repurchaseFHLB and other - - - 1,000 - borrowingsInterest, taxes, and 37,195 34,816 34,290 36,593 38,515 other liabilitiesTotal 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 173,345 172,980 172,601 172,231 192,413 capitalRetained earnings 237,585 230,464 226,627 222,814 219,535 Accumulated other (1,923 ) (1,244 ) (1,108 ) (1,139 ) (1,506 ) comprehensive lossTotal stockholders' 426,730 419,917 415,830 411,606 428,819 equityTotal liabilities and $ 3,011,136 $ 2,947,928 $ 2,949,066 $ 2,738,961 $ 2,798,847 stockholders' equity Shares outstanding at 17,722,507 17,716,522 17,709,569 17,700,140 18,376,991 period-endBook value per common $ 24.08 $ 23.70 $ 23.48 $ 23.25 $ 23.33 shareTangible book value 16.37 15.97 15.72 15.47 15.82 per common share^(1) (1) A non-GAAP financial measure defined as stockholders' equity less goodwilland other intangible assets, divided by shares outstanding

SELECTED CREDIT QUALITY INFORMATION (Unaudited) December 31, September June 30, March31, December 31, 30,(Amounts in 2020 2020 2020 2020 2019 thousands)Allowance for Loan LossesBeginning $ 27,277 $ 23,758 $ 21,137 $ 18,425 $ 18,493 balanceProvision forloan losses 634 4,703 3,831 3,500 91 charged tooperationsCharge-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 AssetsNon-coverednonperforming assetsNonaccrual $ 21,706 $ 24,423 $ 24,471 $ 20,263 $ 16,113 loansAccruing loanspast due 90 295 43 284 329 144 days or moreTroubled debtrestructurings 187 456 598 623 720 ("TDRs")^(1)Totalnon-covered 22,188 24,922 25,353 21,215 16,977 nonperformingloansOREO 2,083 2,103 2,181 2,502 3,969 Totalnon-covered $ 24,271 $ 27,025 $ 27,534 $ 23,717 $ 20,946 nonperformingassets Coverednonperforming assetsNonaccrual $ 297 $ 333 $ 299 $ 145 $ 244 loansTotal coverednonperforming 297 333 299 145 244 loansOREO - - - - - Total coverednonperforming $ 297 $ 333 $ 299 $ 145 $ 244 assets Additional InformationPerforming TDRs $ 10,061 $ 10,480 $ 10,822 $ 8,429 $ 5,855 ^(2)Total Accruing 10,248 10,936 11,420 9,052 6,575 TDRs^(3) Non-covered ratiosNonperformingloans to total 1.02 % 1.14 % 1.19 % 1.02 % 0.81 %loansNonperformingassets to total 0.81 % 0.92 % 0.94 % 0.87 % 0.75 %assetsNon-PCIallowance to 118.00 % 109.45 % 93.71 % 99.63 % 108.53 %nonperformingloansNon-PCIallowance to 1.20 % 1.25 % 1.12 % 1.01 % 0.88 %total loansAnnualized netcharge-offs to 0.26 % 0.22 % 0.23 % 0.15 % 0.04 %average loans Total ratios Nonperformingloans to total 1.03 % 1.15 % 1.20 % 1.02 % 0.81 %loansNonperformingassets to total 0.82 % 0.93 % 0.94 % 0.87 % 0.76 %assetsAllowance forloan losses to 116.44 % 108.01 % 92.62 % 98.96 % 106.99 %nonperformingloansAllowance forloan losses to 1.20 % 1.24 % 1.11 % 1.01 % 0.87 %total loansAnnualized netcharge-offs to 0.26 % 0.22 % 0.23 % 0.15 % 0.04 %average loans (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

FOR MORE INFORMATION, CONTACT:David D. Brown(276) 326-9000