GlobeNewswire Inc | Jan 26, 2022 04:00PM EST

January 26, 2022

BLUEFIELD, Va., Jan. 26, 2022 (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 year and quarter ended December 31, 2021. Annual net income for 2021 was a record $51.17 million, or $2.94 per diluted common share. The Company reported net income of $10.56 million, or $0.62 per diluted common share, for the quarter ended December 31, 2021.

The Company also declared a quarterly cash dividend to common shareholders of twenty-seven cents ($0.27) per common share, which is an increase of 8.00% over the same quarter last year. The quarterly dividend is payable to common shareholders of record on February 11, 2022, and is expected to be paid on or about February 25, 2022. 2022 is the 37th consecutive year of regular dividends to common shareholders.

Fourth Quarter 2021 and Current Highlights

Income Statement

-- Annual net income for 2021 of $51.17 million, or $2.94 per diluted common share, was an increase of $15.24 million over 2020 and represents a 45.54% increase in diluted earnings per share compared to 2020. A reversal of $8.47 million in the allowance for credit losses in 2021 accounts for a large portion of the increase in net income. The decreases in credit loss provisioning are primarily due to significantly improved economic forecasts and GDP growth in the current year, as well as strong credit quality metrics, versus prior year provisioning driven by the pandemic. The increase was offset by a decrease in net interest income of $6.10 million, or 5.62%, driven by the current historically low interest rate environment, as well as a $3.33 million decrease in accretion on acquired loans. -- Net income for the fourth quarter of 2021 decreased $995 thousand to $10.56 million, or $0.62 per diluted common share, compared to the same quarter of 2020. The decrease was primarily driven by a decrease in net interest income of $2.49 million, or 8.97%, due to the current historically low interest rate environment, as well as a $1.67 million decrease in accretion on acquired loans. The decrease in net interest income was offset by the reversal of $846 thousand in allowance for credit losses for the fourth quarter. -- 2021 year-to-date return on average common equity increased to 11.96% compared to 8.54% in 2020. Annualized fourth quarter-to-date return on average common equity decreased to 9.77% compared to 10.82% over the same quarter of 2020. -- 2021 year-to-date return on average assets increased to 1.63% compared to 1.24% for 2020. Annualized quarter-to-date return on average assets decreased to 1.32% compared to 1.54% over the same quarter of 2020. -- Year-to-date non-interest income increased 14.98% to $34.30 million, over last year. Non-interest income for the fourth quarter of 2021 increased $1.48 million, or 19.16%, compared to the same quarter of the prior year. Both increases are largely attributable to increases in other service charges due to the more vibrant state of local economies with increased customer activity compared with last year.

Balance Sheet and Asset Quality

-- Year-to-date, the Company has repurchased 949,386 common shares, or 5.36% of outstanding, for $28.88 million. -- During the fourth quarter, the Company repurchased 222,700 common shares for $7.45 million. -- Net charge-offs for the fourth quarter of 2021 were $1.17 million, or 0.22% of annualized average loans, compared to net charge-offs of $1.73 million, or 0.26% of annualized average loans, for the same period in 2020. Non-performing loans to total loans remained a very low 1.03%. -- The allowance for credit losses to total loans remains very strong at 1.29% of total loans. -- The SBA had forgiven $56.86 million, or 93.20%, of the Companys first round Paycheck Protection Program (PPP) loan balances through December 31, 2021. Current PPP loan balances at December 31, 2021, which include second round originations, were $20.64 million. -- Book value per share at December 31, 2021, was $25.34, an increase of $1.26 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 49 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of December 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 $1.32 billion in combined assets as of December 31, 2021. The Company reported consolidated assets of $3.19 billion as of December 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.

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 2021 2021 2021 2021 2020 2021 2020 share andper sharedata)Interest incomeInterestand fees on $ 25,236 $ 25,119 $ 25,937 $ 26,540 $ 28,101 $ 102,832 $ 110,447 loansInterest on 362 445 435 495 549 1,737 2,789 securitiesInterest ondeposits in 234 225 166 116 96 741 800 banksTotalinterest 25,832 25,789 26,538 27,151 28,746 105,310 114,036 incomeInterest expenseInterest on 600 642 724 869 1,029 2,835 5,460 depositsInterest on - 1 - - - 1 4 borrowingsTotalinterest 600 643 724 869 1,029 2,836 5,464 expenseNetinterest 25,232 25,146 25,814 26,282 27,717 102,474 108,572 income(Recoveryof)provision (846 ) (1,394 ) (2,230 ) (4,001 ) 634 (8,471 ) 12,668 for creditlossesNetinterestincome 26,078 26,540 28,044 30,283 27,083 110,945 95,904 afterprovisionNoninterest 9,215 8,720 8,797 7,569 7,733 34,301 29,833 incomeNoninterest 21,701 18,836 19,361 18,820 19,877 78,718 79,625 expenseIncomebefore 13,592 16,424 17,480 19,032 14,939 66,528 46,112 incometaxesIncome tax 3,037 3,816 4,077 4,430 3,389 15,360 10,186 expenseNet income $ 10,555 $ 12,608 $ 13,403 $ 14,602 $ 11,550 $ 51,168 $ 35,926 Earningsper common shareBasic $ 0.62 $ 0.73 $ 0.77 $ 0.83 $ 0.65 $ 2.95 $ 2.02 Diluted 0.62 0.73 0.76 0.82 0.65 2.94 2.02 Cashdividends per commonshareRegular 0.27 0.27 0.25 0.25 0.25 1.04 1.00 Weightedaverage sharesoutstandingBasic 16,974,005 17,221,244 17,486,182 17,669,937 17,717,356 17,335,615 17,781,748 Diluted 17,038,980 17,279,576 17,536,144 17,729,185 17,751,805 17,402,936 17,815,380 Performance ratiosReturn onaverage 1.32 % 1.59 % 1.70 % 1.94 % 1.54 % 1.63 % 1.24 %assetsReturn onaverage 9.77 % 11.65 % 12.55 % 13.94 % 10.82 % 11.96 % 8.54 %commonequityReturn onaveragetangible 14.28 % 17.04 % 18.40 % 20.54 % 15.96 % 17.53 % 12.68 %commonequity^(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 Twelve Months Ended December 31, September June 30, March 31, December 31, December 31, 30,(Amounts in 2021 2021 2021 2021 2020 2021 2020 thousands)Noninterest incomeWealth $ 940 $ 974 $ 1,058 $ 881 $ 810 $ 3,853 $ 3,417 managementService charges 3,718 3,599 3,098 3,031 3,478 13,446 13,019 on depositsOther servicecharges and 3,091 3,143 3,166 3,022 2,737 12,422 10,333 feesNet gain onsale of - - - - - - 385 securitiesNet FDICindemnification - - (946 ) (280 ) (338 ) (1,226 ) (1,690 )assetamortizationOther operating 1,466 1,004 2,421 915 1,046 5,806 4,369 incomeTotalnoninterest $ 9,215 $ 8,720 $ 8,797 $ 7,569 $ 7,733 $ 34,301 $ 29,833 incomeNoninterest expenseSalaries andemployee $ 12,493 $ 10,646 $ 10,216 $ 10,884 $ 11,119 $ 44,239 $ 44,005 benefitsOccupancy 1,368 1,155 1,115 1,275 1,225 4,913 5,043 expenseFurniture andequipment 1,418 1,385 1,457 1,367 1,446 5,627 5,558 expenseService fees 1,946 1,530 1,513 1,335 1,232 6,324 5,665 Advertising andpublic 589 536 616 335 534 2,076 1,951 relationsProfessional 455 313 290 466 276 1,524 1,224 feesAmortization of 364 365 360 357 364 1,446 1,450 intangiblesFDIC premiums 213 216 204 199 202 832 426 and assessmentsMerger,acquisition, - - - - - - 1,893 and divestitureexpenseOther operating 2,855 2,690 3,590 2,602 3,479 11,737 12,410 expenseTotalnoninterest $ 21,701 $ 18,836 $ 19,361 $ 18,820 $ 19,877 $ 78,718 $ 79,625 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, 2021 2021 2021 2021 2020 2021 2020 (Amounts inthousands, except pershare data)Net income $ 10,555 $ 12,608 $ 13,403 $ 14,602 $ 11,550 $ 51,168 $ 35,926 Non-GAAP adjustments:Net (gain)loss on sale - - - - - - (385 )ofsecuritiesMerger,acquisition,and - - - - - - 1,893 divestitureexpenseTotal - - - - - - 1,508 adjustmentsTax effect - - - - - - 354 Adjustedearnings, $ 10,555 $ 12,608 $ 13,403 $ 14,602 $ 11,550 $ 51,168 $ 37,080 non-GAAP Adjusteddilutedearnings per $ 0.62 $ 0.73 $ 0.76 $ 0.82 $ 0.65 $ 2.94 $ 2.08 commonshare,non-GAAPPerformanceratios, non-GAAPAdjustedreturn on 1.32 % 1.59 % 1.70 % 1.94 % 1.54 % 1.63 % 1.28 %averageassetsAdjustedreturn onaverage 9.77 % 11.65 % 12.55 % 13.94 % 10.82 % 11.96 % 8.81 %commonequityAdjustedreturn onaverage 14.28 % 17.04 % 18.40 % 20.54 % 15.96 % 17.53 % 13.08 %tangiblecommonequity^(1) (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 December 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) $ 2,163,613 $ 25,274 4.63 % $ 2,188,069 $ 28,143 5.12 %Securities 76,556 418 2.17 % 87,592 640 2.91 %available for saleInterest-bearing 613,377 237 0.15 % 375,088 99 0.11 %depositsTotal earning 2,853,546 25,929 3.60 % 2,650,749 28,882 4.33 %assetsOther assets 328,866 337,906 Total assets $ 3,182,412 $ 2,988,655 Liabilities andstockholders' equityInterest-bearing depositsDemand deposits $ 668,335 $ 28 0.02 % $ 594,222 $ 50 0.03 %Savings deposits 843,501 64 0.03 % 739,312 112 0.06 %Time deposits 362,869 509 0.56 % 428,849 867 0.80 %Totalinterest-bearing 1,874,705 601 0.13 % 1,762,383 1,029 0.23 %depositsBorrowings Retail repurchase 1,236 - N/M 925 1 0.14 %agreementsTotal borrowings 1,236 - N/M 925 1 0.14 %Totalinterest-bearing 1,875,941 601 0.13 % 1,763,308 1,030 0.23 %liabilitiesNoninterest-bearing 838,920 763,412 demand depositsOther liabilities 38,986 37,305 Total liabilities 2,753,847 2,564,025 Stockholders' 428,565 424,630 equityTotal liabilitiesand stockholders' $ 3,182,412 $ 2,988,655 equityNet interest $ 25,328 $ 27,852 income, FTE^(1)Net interest rate 3.47 % 4.10 %spreadNet interest 3.52 % 4.18 %margin, 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 $1.10 million and $2.77 million for the three months endedDecember 31, 2021 and 2020, respectively.

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) Twelve Months Ended December 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) $ 2,153,099 $ 102,996 4.78 % $ 2,142,637 $ 110,619 5.16 %Securities 81,049 2,008 2.48 % 105,005 3,259 3.10 %available for saleInterest-bearing 570,040 745 0.13 % 296,495 805 0.27 %depositsTotal earning 2,804,188 105,749 3.77 % 2,544,137 114,683 4.51 %assetsOther assets 330,640 348,150 Total assets $ 3,134,828 $ 2,892,287 Liabilities andstockholders' equityInterest-bearing depositsDemand deposits $ 646,999 $ 127 0.02 % $ 556,279 $ 311 0.06 %Savings deposits 816,845 281 0.03 % 711,831 902 0.13 %Time deposits 387,249 2,427 0.63 % 456,755 4,247 0.93 %Totalinterest-bearing 1,851,093 2,835 0.15 % 1,724,865 5,460 0.32 %depositsBorrowings Retail repurchase 1,194 1 0.07 % 1,145 3 0.28 %agreementsFHLB advances and - - - 36 1 2.23 %other borrowingsTotal borrowings 1,194 1 0.07 % 1,181 4 0.34 %Totalinterest-bearing 1,852,287 2,836 0.15 % 1,726,046 5,464 0.32 %liabilitiesNoninterest-bearing 816,638 707,623 demand depositsOther liabilities 38,151 37,826 Total liabilities 2,707,076 2,471,495 Stockholders' 427,752 420,792 equityTotal liabilitiesand stockholders' $ 3,134,828 $ 2,892,287 equityNet interest $ 102,913 $ 109,219 income, FTE^(1)Net interest rate 3.62 % 4.19 %spreadNet interest 3.67 % 4.29 %margin, 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 $4.66 million and $7.99 million for the twelve months endedDecember 31, 2021 and 2020, respectively.

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) December 31, September 30, June 30, March 31, December 31,(Amounts inthousands, except 2021 2021 2021 2021 2020 per share data)Assets Cash and cash $ 677,439 $ 635,007 $ 618,738 $ 628,745 $ 456,561 equivalentsDebt securities 76,292 77,440 79,842 87,643 83,358 available for saleLoans held forinvestment, net ofunearned income(includes coveredloans of $0, 2,165,569 2,152,103 2,153,731 2,146,640 2,186,632 $9,041, $9,680,$10,744, and$11,257, for thestated periods,respectively) ^(1)Allowance for (27,858 ) (29,877 ) (31,857 ) (34,563 ) (26,182 )credit losses ^(2)Loans held for 2,137,711 2,122,226 2,121,874 2,112,077 2,160,450 investment, netFDICindemnification - - - 946 1,223 assetPremises and 52,284 52,842 53,560 57,371 57,700 equipment, netOther real estate 1,015 1,240 1,324 1,740 2,083 ownedInterest receivable 7,900 8,146 8,480 8,724 9,052 Goodwill 129,565 129,565 129,565 129,565 129,565 Other intangible 5,622 5,987 6,352 6,712 7,069 assetsOther assets 106,691 107,258 109,548 106,543 104,075 Total assets $ 3,194,519 $ 3,139,711 $ 3,129,283 $ 3,140,066 $ 3,011,136 Liabilities Deposits Noninterest-bearing $ 842,783 $ 820,147 $ 819,138 $ 824,576 $ 772,795 Interest-bearing 1,886,608 1,853,699 1,846,556 1,848,524 1,773,452 Total deposits 2,729,391 2,673,846 2,665,694 2,673,100 2,546,247 Securities soldunder agreements to 1,536 1,106 994 1,519 964 repurchaseInterest, taxes,and other 35,817 37,395 35,061 39,448 37,195 liabilitiesTotal liabilities 2,766,744 2,712,347 2,701,749 2,714,067 2,584,406 Stockholders' equityCommon stock 16,878 17,071 17,335 17,592 17,723 Additional paid-in 147,619 154,086 161,853 169,173 173,345 capitalRetained earnings 264,824 258,860 250,911 241,889 237,585 Accumulated other (1,546 ) (2,653 ) (2,565 ) (2,655 ) (1,923 )comprehensive lossTotal stockholders' 427,775 427,364 427,534 425,999 426,730 equityTotal liabilitiesand stockholders' $ 3,194,519 $ 3,139,711 $ 3,129,283 $ 3,140,066 $ 3,011,136 equity Shares outstanding 16,878,220 17,071,052 17,334,547 17,592,009 17,722,507 at period-endBook value per $ 25.34 $ 25.03 $ 24.66 $ 24.22 $ 24.08 common shareTangible book valueper common share^ 17.34 17.09 16.82 16.47 16.37 (3) (1) No covered loans for December 2021 and September 2021. FDIC Loss Shareagreement terminated in September 2021.(2) Effective January 1, 2021, the Company adopted the current expected creditloss methodology ("CECL"); prior to January 1, 2021, theCompany utilized theincurred credit loss methodology.(3) 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, March 31, December 31, 30,(Amounts in 2021 2021 2021 2021 2020 thousands)Allowance forCredit Losses ^(1)Beginning $ 29,877 $ 31,857 $ 34,563 $ 26,182 $ 27,277 balanceCumulativeeffect of - - - 13,107 - adoption ofASU 2016-13(Recovery of)provision forcredit/loan (846 ) (1,394 ) (2,230 ) (4,001 ) 634 losses chargedto operationsCharge-offs (1,887 ) (1,255 ) (1,902 ) (1,730 ) (2,194 )Recoveries 714 669 1,426 1,005 465 Net (1,173 ) (586 ) (476 ) (725 ) (1,729 )charge-offsEnding balance $ 27,858 $ 29,877 $ 31,857 $ 34,563 $ 26,182 Nonperforming AssetsNonaccrual $ 20,768 $ 22,070 $ 24,085 $ 26,106 $ 22,003 loansAccruing loanspast due 90 87 5 327 171 295 days or moreTroubled debtrestructurings 1,367 359 133 308 187 ("TDRs")^(2)Totalnonperforming 22,222 22,434 24,545 26,585 22,485 loansOREO 1,015 1,240 1,324 1,740 2,083 Totalnonperforming $ 23,237 $ 23,674 $ 25,869 $ 28,325 $ 24,568 assets Additional InformationTotal Accruing $ 8,652 $ 8,185 $ 8,309 $ 9,027 $ 10,248 TDRs^(3) Asset Quality RatiosNonperformingloans to total 1.03 % 1.04 % 1.14 % 1.24 % 1.03 %loansNonperformingassets to 0.73 % 0.75 % 0.83 % 0.90 % 0.82 %total assetsAllowance forcredit/loanlosses to 125.36 % 133.18 % 129.79 % 130.01 % 116.44 %nonperformingloansAllowance forcredit/loan 1.29 % 1.39 % 1.48 % 1.61 % 1.20 %losses tototal loansAnnualized netcharge-offs to 0.22 % 0.11 % 0.09 % 0.14 % 0.26 %average loans (1) Effective January 1, 2021, the Company adopted the current expected creditloss methodology ("CECL"); prior to January 1, 2021, theCompany utilized theincurred credit loss methodology.(2) Accruing TDRs restructured within the past six months or nonperforming(3) Accruing total TDRs

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