GlobeNewswire Inc | Apr 27, 2021 04:00PM EDT

April 27, 2021

BLUEFIELD, Va., April 27, 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 March 31, 2021. The Company reported record quarterly net income of $14.60 million, or $0.82 per diluted common share, for the quarter ended March 31, 2021, which was an increase of $0.38 per diluted common share, or 86.36%, over the same quarter of 2020.

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 May 7, 2021, and is expected to be paid on or about May 21, 2021. 2021 is the 36th consecutive year of regular dividends to common shareholders.

First Quarter 2021 and Current Highlights

General

-- Net income for the quarter increased $6.73 million to $14.60 million compared to the same quarter of 2020. The large increase includes the reversal of $4.00 million in allowance for credit losses due to improved economic forecasts from those seen at year-end 2020. -- Effective January 1, 2021, the Company adopted CECL and recorded an additional allowance for credit loss for loans of $13.11 million, deferred tax assets of $1.81 million, an additional reserve for unfunded commitments of $509 thousand, and an adjustment to retained earnings of $5.87 million. -- On January 26, 2021, the Board of Directors approved a new plan to repurchase, on the open market at prevailing prices, up to 2.4 million shares of the Companys common stock through January 26, 2024. During the quarter, the Company repurchased 187,700 common shares for $4.99 million.

Income Statement

-- Diluted earnings per share increased $0.38 to $0.82 compared to the same quarter of 2020. -- Due to expected growth in the U.S. GDP, improving jobless rates, and other economic indicators, as well as strong asset quality metrics, the Company released a substantial amount of allowance for credit losses for the quarter resulting in a reversal of $4.00 million in the provision for credit losses; a significant improvement from the $3.50 million loan loss provision recorded in the first quarter of 2020 at the onset of the COVID-19 pandemic. -- Return on average assets increased to 1.94% compared to 1.16% from the same quarter of 2020; return on average equity increased to 13.94% compared to 7.49% from the same quarter of 2020 as well.

Balance Sheet and Asset Quality

-- Net charge-offs for the first quarter of 2021 were $725 thousand and the allowance for credit losses remains very strong at 1.61% of total loans. -- As of March 31, 2021, total COVID-19 loan deferrals stood at $17.48 million, down significantly from the peak of $436.11 at June 30, 2020. -- The SBA had forgiven $32.73 million, or 53.58%, of the Companys first round Paycheck Protection Program loan balances through March 31, 2021. Current PPP loan balances at March 31, 2021, which include second round originations, were $50.75 million. -- Book value per share at March 31, 2021, was $24.22, an increase of $0.14 from year-end 2020.

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 March 31, 2021. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.23 billion in combined assets as of March 31, 2021. The Company reported consolidated assets of $3.14 billion as of March 31, 2021. 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.

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

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, December 31, September 30, June 30, March 31,(Amounts inthousands, except 2021 2020 2020 2020 2020 share and pershare data)Interest income Interest and $ 26,540 $ 28,101 $ 27,297 $ 26,991 $ 28,058 fees on loans Interest on 495 549 609 713 918 securities Interest on deposits in 116 96 89 82 533 banksTotal interest 27,151 28,746 27,995 27,786 29,509 incomeInterest expense Interest on 869 1,029 1,161 1,445 1,825 deposits Interest on - - - 2 2 borrowingsTotal interest 869 1,029 1,161 1,447 1,827 expenseNet interest 26,282 27,717 26,834 26,339 27,682 income(Recovery of)provision for (4,001 ) 634 4,703 3,831 3,500 credit lossesNet interestincome after 30,283 27,083 22,131 22,508 24,182 provisionNoninterest 7,569 7,733 7,638 6,913 7,549 incomeNoninterest 18,820 19,877 19,171 18,913 21,664 expenseIncome before 19,032 14,939 10,598 10,508 10,067 income taxesIncome tax 4,430 3,389 2,332 2,270 2,195 expenseNet income $ 14,602 $ 11,550 $ 8,266 $ 8,238 $ 7,872 Earnings per common share Basic $ 0.83 $ 0.65 $ 0.47 $ 0.47 $ 0.44 Diluted 0.82 0.65 0.47 0.46 0.44 Cash dividends per common share Regular 0.25 0.25 0.25 0.25 0.25 Weighted averageshares outstanding Basic 17,669,937 17,717,356 17,710,283 17,701,853 17,998,994 Diluted 17,729,185 17,751,805 17,732,428 17,728,300 18,050,071 Performance ratios Return on 1.94 % 1.54 % 1.11 % 1.15 % 1.16 % average assets Return on average common 13.94 % 10.82 % 7.83 % 7.97 % 7.49 % equity Return on average tangible 20.54 % 15.96 % 11.62 % 11.91 % 11.12 % common equity^ (1) ^(1) A non-GAAP financial measure defined as net income divided by averagestockholders' equity less average goodwill and other intangible assets

CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE (Unaudited) Three Months Ended March 31, December 31, September June 30, March 31, 30,(Amounts in 2021 2020 2020 2020 2020 thousands)Noninterest income Wealth $ 881 $ 810 $ 909 $ 854 $ 844 management Service charges 3,031 3,478 3,250 2,560 3,731 on deposits Other service charges and 3,022 2,737 2,748 2,617 2,231 fees Net gain on sale of - - - - 385 securities Net FDIC indemnification (280 ) (338 ) (383 ) (483 ) (486 ) asset amortization Other operating 915 1,046 1,114 1,365 844 incomeTotal noninterest $ 7,569 $ 7,733 $ 7,638 $ 6,913 $ 7,549 incomeNoninterest expense Salaries and employee $ 10,884 $ 11,119 $ 10,485 $ 11,015 $ 11,386 benefits Occupancy 1,275 1,225 1,228 1,275 1,315 expense Furniture and equipment 1,367 1,446 1,412 1,316 1,384 expense Service fees 1,335 1,232 1,581 1,329 1,523 Advertising and public 335 534 430 475 512 relations Professional 466 276 408 307 233 fees Amortization of 357 364 365 360 361 intangibles FDIC premiums 199 202 191 33 - and assessments Merger, acquisition, - - - - 1,893 and divestiture expense Other operating 2,602 3,479 3,071 2,803 3,057 expenseTotal noninterest $ 18,820 $ 19,877 $ 19,171 $ 18,913 $ 21,664 expense

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited) Three Months Ended March 31, December 31, September June 30, March 31, 30, 2021 2020 2020 2020 2020 (Amounts inthousands, except per sharedata)Net income $ 14,602 $ 11,550 $ 8,266 $ 8,238 $ 7,872 Non-GAAP adjustments: Net (gain) loss on sale - - - - (385 ) of securities Merger, acquisition, and - - - - 1,893 divestiture expenseTotal - - - - 1,508 adjustmentsTax effect - - - - 354 Adjustedearnings, $ 14,602 $ 11,550 $ 8,266 $ 8,238 $ 9,026 non-GAAP Adjusted dilutedearnings per common share, non-GAAP $ 0.82 $ 0.65 $ 0.47 $ 0.46 $ 0.50 Performance ratios, non-GAAP Adjusted return on 1.94 % 1.54 % 1.11 % 1.15 % 1.33 % average assets Adjusted return on 13.94 % 10.82 % 7.83 % 7.97 % 8.59 % average common equity Adjusted return on average tangible common equity^ 20.54 % 15.96 % 11.62 % 11.91 % 12.75 % (2) ^(1) A non-GAAP financial measure defined as adjusted earnings divided byaverage stockholders' equity less average goodwill and other intangible assets

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) Three Months Ended March 31, 2021 2020 Average Average Average Average Yield/ Yield/(Amounts in Balance Interest^ Rate^ Balance Interest^ Rate^thousands) (1) (1) (1) (1)Assets Earning assets Loans^(2)(3) $ 2,165,054 $ 26,582 4.98% $ 2,081,132 $ 28,105 5.43% Securities available for 83,634 573 2.78% 136,109 1,060 3.14% sale Interest-bearing 468,067 118 0.10% 163,483 535 1.31% depositsTotal earning assets 2,716,755 27,273 4.07% 2,380,724 29,700 5.02%Other assets 331,483 353,647 Total assets $ 3,048,238 $ 2,734,371 Liabilities and stockholders' equityInterest-bearing deposits Demand deposits $ 613,003 $ 39 0.03% $ 502,603 $ 90 0.07% Savings deposits 778,430 91 0.05% 679,656 414 0.24% Time deposits 412,986 739 0.73% 485,085 1,322 1.10%Totalinterest-bearing 1,804,419 869 0.19% 1,667,344 1,826 0.44%depositsBorrowings Retail repurchase 1,234 - N/M 1,459 2 0.56% agreements FHLB advances - - - 134 1 N/M and other borrowingsTotal borrowings 1,234 - - 1,593 3 0.65%Totalinterest-bearing 1,805,653 869 0.19% 1,668,937 1,829 0.44%liabilitiesNoninterest-bearing 777,876 600,636 demand depositsOther liabilities 39,926 42,174 Total liabilities 2,623,455 2,311,747 Stockholders' equity 424,783 422,624 Total liabilitiesand stockholders' $ 3,048,238 $ 2,734,371 equityNet interest income, $ 26,404 $ 27,871 FTE^(1)Net interest rate 3.88% 4.58%spreadNet interest margin, 3.94% 4.71%FTE^(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 relatedinterest income is recorded during the period of nonaccrual.^(3) Interest on loans includes non-cash and accelerated purchase accountingaccretion of $1.18 million and $1.95 million for the three months ended March31, 2021 and 2020, respectively.

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) March 31, December 31, September 30, June 30, March 31,(Amounts in thousands, 2021 2020 2020 2020 2020 except per share data)Assets Cash and cash $ 628,745 $ 456,561 $ 375,664 $ 421,492 $ 241,613 equivalentsDebt securities 87,643 83,358 90,972 98,367 107,753 available for saleLoans held for investment, net of unearned income Noncovered 2,137,599 2,176,952 2,184,251 2,125,560 2,084,610 Covered 9,041 9,680 10,744 11,257 12,115 Allowance for credit (34,563 ) (26,182 ) (27,277 ) (23,758 ) (21,137 ) /loan lossesLoans held for 2,112,077 2,160,450 2,167,718 2,113,059 2,075,588 investment, netFDIC indemnification 946 1,223 1,598 1,943 2,433 assetPremises and equipment, 57,371 57,700 60,488 62,658 63,319 netOther real estate 1,740 2,083 2,103 2,181 2,502 owned, noncoveredInterest receivable 8,724 9,052 9,151 8,380 6,117 Goodwill 129,565 129,565 129,565 129,565 129,565 Other intangible assets 6,712 7,069 7,433 7,798 8,159 Other assets 106,543 104,075 103,236 103,623 101,912 Total assets $ 3,140,066 $ 3,011,136 $ 2,947,928 $ 2,949,066 $ 2,738,961 Liabilities Deposits Noninterest-bearing $ 824,576 $ 772,795 $ 750,277 $ 752,899 $ 620,292 Interest-bearing 1,848,524 1,773,452 1,741,962 1,744,947 1,668,122 Total deposits 2,673,100 2,546,247 2,492,239 2,497,846 2,288,414 Securities sold underagreements to 1,519 964 956 1,100 1,348 repurchaseFHLB and other - - - - 1,000 borrowingsInterest, taxes, and 39,448 37,195 34,816 34,290 36,593 other liabilitiesTotal liabilities 2,714,067 2,584,406 2,528,011 2,533,236 2,327,355 Stockholders' equity Common stock 17,592 17,723 17,717 17,710 17,700 Additional paid-in 169,173 173,345 172,980 172,601 172,231 capitalRetained earnings 241,889 237,585 230,464 226,627 222,814 Accumulated other (2,655 ) (1,923 ) (1,244 ) (1,108 ) (1,139 )comprehensive lossTotal stockholders' 425,999 426,730 419,917 415,830 411,606 equityTotal liabilities and $ 3,140,066 $ 3,011,136 $ 2,947,928 $ 2,949,066 $ 2,738,961 stockholders' equity Shares outstanding at 17,592,009 17,722,507 17,716,522 17,709,569 17,700,140 period-endBook value per common $ 24.22 $ 24.08 $ 23.70 $ 23.48 $ 23.25 shareTangible book value per 16.47 16.37 15.97 15.72 15.47 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) March31, December 31, September 30, June 30, March 31,(Amounts in 2021 2020 2020 2020 2020 thousands)Allowance for Loan LossesBeginning balance $ 26,182 $ 27,277 $ 23,758 $ 21,137 $ 18,425 Cumulative effect ofadoption of ASU 13,107 - - - - 2016-13(Recovery of) provision forcredit/loanlosses charged to (4,001 ) 634 4,703 3,831 3,500 operationsCharge-offs (1,730 ) (2,194 ) (1,563 ) (1,672 ) (1,194 )Recoveries 1,005 465 379 462 406 Net charge-offs (725 ) (1,729 ) (1,184 ) (1,210 ) (788 )Ending balance $ 34,563 $ 26,182 $ 27,277 $ 23,758 $ 21,137 Nonperforming Assets Non-covered nonperforming assetsNonaccrual loans $ 25,747 $ 21,706 $ 24,423 $ 24,471 $ 20,263 Accruing loans past 171 295 43 284 329 due 90 days or moreTroubled debtrestructurings 308 187 456 598 623 ("TDRs")^(1)Total non-covered 26,226 22,188 24,922 25,353 21,215 nonperforming loansOREO 1,740 2,083 2,103 2,181 2,502 Total non-covered $ 27,966 $ 24,271 $ 27,025 $ 27,534 $ 23,717 nonperforming assets Covered nonperforming assetsNonaccrual loans $ 359 $ 297 $ 333 $ 299 $ 145 Total covered 359 297 333 299 145 nonperforming loansTotal covered $ 359 $ 297 $ 333 $ 299 $ 145 nonperforming assets Additional InformationPerforming TDRs^(2) $ 8,719 $ 10,061 $ 10,480 $ 10,822 $ 8,429 Total Accruing TDRs^ 9,027 10,248 10,936 11,420 9,052 (3) Asset Quality Ratios Nonperforming loans 1.24 % 1.03 % 1.15 % 1.20 % 1.02 %to total loansNonperforming assets 0.90 % 0.82 % 0.93 % 0.94 % 0.87 %to total assetsAllowance forcredit/loanlosses to 130.01 % 116.44 % 108.01 % 92.62 % 98.96 %nonperformingloansAllowance for credit/loan losses to 1.61 % 1.20 % 1.24 % 1.11 % 1.01 %total loansAnnualized netcharge-offs to 0.14 % 0.26 % 0.22 % 0.23 % 0.15 %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