First Community Bankshares, Inc. Announces Third Quarter 2024 Results and Quarterly Cash Dividend

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 September 30, 2024. The Company reported net income of $13.03 million, or $0.71 per diluted common share, for the quarter ended September 30, 2024. Net income for the nine months ended September 30, 2024, was $38.56 million or $2.09 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 November 8, 2024, and is expected to be paid on or about November 22, 2024. This marks the 39th consecutive year of regular dividends to common shareholders.

The Company is working with borrowers and customers in North Carolina, Tennessee, Virginia, and southern West Virginia affected by the devastating floods, power outages, and water shortages from Hurricane Helene. This includes payment relief for affected borrowers. We will continue to monitor the situation over the coming weeks as it relates to asset quality.

Third Quarter 2024 Highlights

Income Statement

Net income of $13.03 million for the third quarter of 2024, was a decrease of $1.61 million, or 10.98%, from the same quarter of 2023. Net income of $38.56 million for the first nine months of 2024, was an increase of $2.33 million, or 6.42%, from the same period of 2023.
Net interest income decreased $1.75 million compared to the same quarter in 2023, primarily due to increases in rates paid on interest-bearing deposits.
Net interest margin of 4.41% was a decrease of 10 basis points over the same quarter of 2023. The yield on earning assets increased 26 basis points from the same period of 2023 and is attributable to an increase in interest income resulting from an increase in yield. While there was an increase in yield for both loans and securities available for sale; the average balances decreased. The average balance for interest-bearing deposits with banks increased $219.59 million over the same period of 2023; however, there was no change in the yield from the same period of 2023. The yield on interest-bearing liabilities increased 58 basis points when compared with the same period of 2023 and is primarily attributable to increased rates on interest-bearing deposit liabilities.
Noninterest income increased approximately $830 thousand, or 8.63%, when compared to the same quarter of 2023. Noninterest income for the third quarter of 2024 included a gain of $825 thousand from the sale of two closed branch properties; noninterest income for the same period of 2023 included a gain of $204 thousand for the sale of a closed branch property. Noninterest expense increased $1.26 million, or 5.52%.
Annualized return on average assets ("ROA") was 1.60% for the third quarter and 1.60% for the first nine months of 2024 compared to 1.74% and 1.49% for the same periods, respectively, of 2023. Annualized return on average common equity ("ROE") was 10.04% for the third quarter and 10.08% for the first nine months of 2024 compared to 11.63% and 10.25% for the same periods, respectively, of 2023. Annualized return on average tangible common equity ("ROTCE") was 14.46% for the third quarter and 14.61% for the first nine months of 2024 compared to 17.11% and 14.94% for the same periods, respectively, of 2023.

Balance Sheet and Asset Quality

Consolidated assets totaled $3.22 billion at September 30, 2024.
Loans decreased $128.19 million, or 4.98%, from December 31, 2023. Securities available for sale decreased $114.29 million, or 40.68%, from December 31, 2023. Deposits decreased $63.07 million, or 2.32%. The net effect of these balance sheet changes resulted in an increase in cash and cash equivalents of $198.92 million, or 170.86%.
The Company repurchased 12,854 common shares during the third quarter of 2024 at a total cost of $469 thousand. The Company repurchased 257,294 common shares during the first nine months of 2024 at a total cost of $8.72 million.
Non-performing loans to total loans increased to 0.82% when compared with the same quarter of 2023. The Company experienced net charge-offs for the third quarter of 2024 of $1.13 million, or 0.18% of annualized average loans, compared to net charge-offs of $1.46 million, or 0.22%, of annualized average loans for the same period in 2023.
The allowance for credit losses to total loans was 1.44% at September 30, 2024, compared to 1.41% at December 31, 2023, and 1.39% for September 30, 2023.
Book value per share at September 30, 2024, was $ 28.47, an increase of $1.27 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 September 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 $1.64 billion in combined assets as of September 30, 2024. The Company reported consolidated assets of $3.22 billion as of September 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)
(Amounts in thousands, except share and per share data)
	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,
	2024			2024			2024			2023			2023			2024			2023
Interest income
Interest and fees on loans	$	32,120		$	32,696		$	33,418		$	33,676		$	33,496		$	98,234		$	93,051
Interest on securities		1,070			1,211			1,698			1,888			1,912			3,979			6,068
Interest on deposits in banks		3,702			2,882			913			438			697			7,497			2,044
Total interest income		36,892			36,789			36,029			36,002			36,105			109,710			101,163
Interest expense
Interest on deposits		5,298			4,877			4,365			3,935			2,758			14,540			5,406
Interest on borrowings		-			-			35			4			-			35			136
Total interest expense		5,298			4,877			4,400			3,939			2,758			14,575			5,542
Net interest income		31,594			31,912			31,629			32,063			33,347			95,135			95,621
Provision for credit losses		1,360			144			1,011			1,029			1,109			2,515			6,956
Net interest income after provision		30,234			31,768			30,618			31,034			32,238			92,620			88,665
Noninterest income		10,452			9,342			9,259			10,462			9,622			29,053			26,990
Noninterest expense		24,177			24,897			23,386			26,780			22,913			72,460			68,397
Income before income taxes		16,509			16,213			16,491			14,716			18,947			49,213			47,258
Income tax expense		3,476			3,527			3,646			2,932			4,307			10,649			11,022
Net income	$	13,033		$	12,686		$	12,845		$	11,784		$	14,640		$	38,564		$	36,236


Earnings per common share
Basic	$	0.71		$	0.69		$	0.70		$	0.64		$	0.78		$	2.10		$	2.03
Diluted	$	0.71		$	0.71		$	0.71		$	0.66		$	0.79		$	2.09		$	2.06
Cash dividends per common share
Regular		0.31			0.29			0.29			0.29			0.29			0.89			0.87
Weighted average shares outstanding
Basic		18,279,612			18,343,958			18,476,128			18,530,114			18,786,032			18,366,249			17,816,505
Diluted		18,371,907			18,409,876			18,545,910			18,575,226			18,831,836			18,432,023			17,857,494
Performance ratios
Return on average assets		1.60	%		1.58	%		1.60	%		1.43	%		1.74	%		1.60	%		1.49	%
Return on average common equity		10.04	%		10.02	%		10.18	%		9.39	%		11.63	%		10.08	%		10.25	%
Return on average tangible common equity(1)		14.46	%		14.54	%		14.82	%		13.82	%		17.11	%		14.61	%		14.94	%

____________
(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)

(Amounts in thousands)	Three Months Ended										Nine Months Ended
	September 30,		June 30,		March 31,		December 31,		September 30,		September 30,
	2024		2024		2024		2023		2023		2024		2023
Noninterest income
Wealth management	$	1,071	$	1,064	$	1,099	$	1,052	$	1,145	$	3,234	$	3,127
Service charges on deposits		3,661		3,428		3,310		3,637		3,729		10,399		10,359
Other service charges and fees		3,697		3,670		3,450		3,541		3,564		10,817		10,106
(Loss) gain on sale of securities		-		-		-		-		-		-		(21	)
Other operating income		2,023		1,180		1,400		2,232		1,184		4,603		3,419
Total noninterest income	$	10,452	$	9,342	$	9,259	$	10,462	$	9,622	$	29,053	$	26,990
Noninterest expense
Salaries and employee benefits	$	13,129	$	12,491	$	12,581	$	12,933	$	12,673	$	38,201	$	36,954
Occupancy expense		1,270		1,309		1,378		1,252		1,271		3,957		3,715
Furniture and equipment expense		1,574		1,687		1,545		1,489		1,480		4,806		4,389
Service fees		2,461		2,427		2,449		2,255		2,350		7,337		6,653
Advertising and public relations		967		933		796		843		968		2,696		2,457
Professional fees		221		330		372		787		172		923		780
Amortization of intangibles		536		530		530		536		536		1,596		1,195
FDIC premiums and assessments		365		364		369		376		392		1,098		1,135
Merger expense		-		-		-		-		-		-		2,393
Litigation expense		-		1,800		-		3,000		-		1,800		-
Other operating expense		3,654		3,026		3,366		3,309		3,071		10,046		8,726
Total noninterest expense	$	24,177	$	24,897	$	23,386	$	26,780	$	22,913	$	72,460	$	68,397


RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)

(Amounts in thousands, except per share data)	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,
	2024			2024			2024			2023			2023			2024			2023
Adjusted Net Income for diluted earnings per share	$	13,033		$	12,686		$	12,845		$	12,314		$	14,855		$	38,564		$	36,828
Non-GAAP adjustments:
Loss (gain) on sale of securities		-			-			-			-			-			-			21
Merger expense		-			-			-			-			-			-			2,393
Day 2 provision for allowance for credit losses - Surrey		-			-			-			-			-			-			1,614
Litigation expense		-			1,800			-			3,000			-			1,800			-
Other items(1)		(825	)		-			-			-			(204	)		(825	)		-
Total adjustments		(825	)		1,800			-			3,000			(204	)		975			4,028
Tax effect		(198	)		432			-			720			(49	)		234			532
Adjusted earnings, non-GAAP	$	12,406		$	14,054		$	12,845		$	14,594		$	14,700		$	39,305		$	40,324

Adjusted diluted earnings per common share, non-GAAP	$	0.68		$	0.76		$	0.69		$	0.79		$	0.78		$	2.13		$	2.26
Performance ratios, non-GAAP
Adjusted return on average assets		1.53	%		1.75	%		1.60	%		1.77	%		1.75	%		1.63	%		1.66	%
Adjusted return on average common equity		9.56	%		11.10	%		10.18	%		11.63	%		11.68	%		10.27	%		11.40	%
Adjusted return on average tangible common equity (2)		13.77	%		16.11	%		14.82	%		17.11	%		17.18	%		14.89	%		16.62	%

____________
(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 September 30,
	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)	$	2,455,807	$	32,201		5.22	%	$	2,604,885	$	33,566		5.11	%
Securities available for sale		133,654		1,099		3.27	%		284,659		1,952		2.72	%
Interest-bearing deposits		270,440		3,701		5.44	%		50,855		697		5.44	%
Total earning assets		2,859,901		37,001		5.15	%		2,940,399		36,215		4.89	%
Other assets		371,358							393,001
Total assets	$	3,231,259						$	3,333,400

Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	656,780	$	234		0.14	%	$	699,066	$	165		0.09	%
Savings deposits		886,766		3,735		1.68	%		862,121		1,941		0.89	%
Time deposits		245,020		1,329		2.16	%		263,940		652		0.98	%
Total interest-bearing deposits		1,788,566		5,298		1.18	%		1,825,127		2,758		0.60	%
Borrowings
Retail repurchase agreements		1,054		-		0.05	%		1,254		-		N/M
Total borrowings		1,054		-		0.05	%		1,254		-		N/M
Total interest-bearing liabilities		1,789,620		5,298		1.18	%		1,826,381		2,758		0.60	%
Noninterest-bearing demand deposits		877,472							964,093
Other liabilities		47,892							43,574
Total liabilities		2,714,984							2,834,048
Stockholders' equity		516,275							499,352
Total liabilities and stockholders' equity	$	3,231,259						$	3,333,400
Net interest income, FTE(1)			$	31,703						$	33,457
Net interest rate spread						3.97	%						4.29	%
Net interest margin, FTE(1)						4.41	%						4.51	%

____________
(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 $592 thousand and $874 thousand for the three months ended September 30, 2024 and 2023, respectively.


AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

	Nine Months Ended September 30,
	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)	$	2,501,209	$	98,479		5.26	%	$	2,523,814	$	93,261		4.94	%
Securities available for sale		172,331		4,073		3.16	%		306,435		6,191		2.70	%
Interest-bearing deposits		182,773		7,499		5.48	%		51,759		2,047		5.29	%
Total earning assets		2,856,313		110,051		5.15	%		2,882,008		101,499		4.71	%
Other assets		372,663							366,243
Total assets	$	3,228,976						$	3,248,251

Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	662,433	$	570		0.11	%	$	682,820	$	225		0.04	%
Savings deposits		875,797		10,730		1.64	%		850,411		3,731		0.59	%
Time deposits		247,088		3,240		1.75	%		272,435		1,450		0.71	%
Total interest-bearing deposits		1,785,318		14,540		1.09	%		1,805,666		5,406		0.40	%
Borrowings
Federal funds purchased		839		35		5.52	%		3,532		135		5.11	%
Retail repurchase agreements		1,061		-		0.05	%		1,674		1		0.06	%
Total borrowings		1,900		35		2.46	%		5,206		136		3.49	%
Total interest-bearing liabilities		1,787,218		14,575		1.09	%		1,810,872		5,542		0.41	%
Noninterest-bearing demand deposits		883,013							924,591
Other liabilities		47,772							40,014
Total liabilities		2,718,003							2,775,477
Stockholders' equity		510,973							472,774
Total liabilities and stockholders' equity	$	3,228,976						$	3,248,251
Net interest income, FTE(1)			$	95,476						$	95,957
Net interest rate spread						4.06	%						4.30	%
Net interest margin, FTE(1)						4.46	%						4.45	%

____________
(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 $2.04 million and $1.95 million for the nine months ended September 30, 2024 and 2023, respectively.


CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

	September 30,			June 30,			March 31,			December 31,			September 30,
(Amounts in thousands, except per share data)	2024			2024			2024			2023			2023
Assets
Cash and cash equivalents	$	315,338		$	329,877		$	248,905		$	116,420		$	113,397
Debt securities available for sale, at fair value		166,669			129,686			166,247			280,961			275,332
Loans held for investment, net of unearned income		2,444,113			2,473,268			2,519,833			2,572,298			2,593,472
Allowance for credit losses		(35,118	)		(34,885	)		(35,461	)		(36,189	)		(36,031	)
Loans held for investment, net		2,408,995			2,438,383			2,484,372			2,536,109			2,557,441
Premises and equipment, net		49,654			50,528			51,333			50,680			51,205
Other real estate owned		346			100			374			192			243
Interest receivable		9,883			9,984			10,719			10,881			10,428
Goodwill		143,946			143,946			143,946			143,946			143,946
Other intangible assets		13,550			14,085			14,615			15,145			15,681
Other assets		115,980			116,230			115,470			114,211			116,552
Total assets	$	3,224,361		$	3,232,819		$	3,235,981		$	3,268,545		$	3,284,225

Liabilities
Deposits
Noninterest-bearing	$	869,723		$	889,462		$	902,396		$	931,920		$	944,301
Interest-bearing		1,789,530			1,787,810			1,779,819			1,790,405			1,801,835
Total deposits		2,659,253			2,677,272			2,682,215			2,722,325			2,746,136
Securities sold under agreements to repurchase		954			894			1,006			1,119			1,029
Interest, taxes, and other liabilities		43,460			45,769			45,816			41,807			41,393
Total liabilities		2,703,667			2,723,935			2,729,037			2,765,251			2,788,558

Stockholders' equity
Common stock		18,291			18,270			18,413			18,502			18,671
Additional paid-in capital		168,691			168,272			173,041			175,841			180,951
Retained earnings		342,121			334,756			327,389			319,902			313,489
Accumulated other comprehensive loss		(8,409	)		(12,414	)		(11,899	)		(10,951	)		(17,444	)
Total stockholders' equity		520,694			508,884			506,944			503,294			495,667
Total liabilities and stockholders' equity	$	3,224,361		$	3,232,819		$	3,235,981		$	3,268,545		$	3,284,225

Shares outstanding at period-end		18,290,938			18,270,273			18,413,088			18,502,396			18,671,470
Book value per common share	$	28.47		$	27.85		$	27.53		$	27.20		$	26.55
Tangible book value per common share(1)		19.86			19.20			18.92			18.60			18.00

____________
(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)

	September 30,			June 30,			March 31,			December 31,			September 30,
(Amounts in thousands)	2024			2024			2024			2023			2023
Allowance for Credit Losses
Balance at beginning 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
Total allowance for credit losses beginning of period		35,326			36,207			36,935			36,789			37,141
Adjustments to beginning balance:
Allowance for credit losses - loans - Surrey acquisition for purchased credit deteriorated loans		-			-			-			-			-
Allowance for credit losses - loan commitments		-			-			-			-			-
Net Adjustments		-			-			-			-			-
Provision for credit losses:
Provision for credit losses - loans		1,360			449			1,011			1,041			1,315
(Recovery of) provision for credit losses - loan commitments		-			(305	)		-			(12	)		(206	)
Total provision for credit losses - loans and loan commitments		1,360			144			1,011			1,029			1,109
Charge-offs		(1,799	)		(1,599	)		(2,448	)		(2,105	)		(2,157	)
Recoveries		672			574			709			1,222			696
Net (charge-offs) recoveries		(1,127	)		(1,025	)		(1,739	)		(883	)		(1,461	)
Balance at end of period:
Allowance for credit losses - loans		35,118			34,885			35,461			36,189			36,031
Allowance for credit losses - loan commitments		441			441			746			746			758
Ending balance	$	35,559		$	35,326		$	36,207		$	36,935		$	36,789

Nonperforming Assets
Nonaccrual loans	$	19,754		$	19,815		$	19,617		$	19,356		$	18,366
Accruing loans past due 90 days or more		176			19			30			104			59
Modified loans past due 90 days or more		-			-			-			-			-
Total nonperforming loans		19,930			19,834			19,647			19,460			18,425
OREO		346			100			374			192			243
Total nonperforming assets	$	20,276		$	19,934		$	20,021		$	19,652		$	18,668


Additional Information
Total modified loans	$	2,320		$	2,290		$	2,177		$	1,873		$	1,674

Asset Quality Ratios
Nonperforming loans to total loans		0.82	%		0.80	%		0.78	%		0.76	%		0.71	%
Nonperforming assets to total assets		0.63	%		0.62	%		0.62	%		0.60	%		0.57	%
Allowance for credit losses to nonperforming loans		176.21	%		175.88	%		180.49	%		185.97	%		195.55	%
Allowance for credit losses to total loans		1.44	%		1.41	%		1.41	%		1.41	%		1.39	%
Annualized net charge-offs (recoveries) to average loans		0.18	%		0.16	%		0.27	%		0.14	%		0.22	%