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Section 1: 8-K (FORM 8-K)

fcbc20190123_8k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported): January 23, 2019

 

 

 

FIRST COMMUNITY BANKSHARES, INC.

 

(Exact name of registrant as specified in its charter)

 

 

Virginia

 

000-19297

 

55-0694814

(State or other jurisdiction

 

(Commission

 

(IRS Employer

of incorporation)

 

File Number)

 

Identification No.)

 

 

P.O. Box 989

Bluefield, Virginia

 

24605-0989

(Address of principal executive offices)

 

(Zip Code)

 

 

Registrant’s telephone number, including area code: (276) 326-9000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[   ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[   ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[   ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[   ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On January 23, 2019, First Community Bankshares, Inc. (the “Company”) announced by press release its earnings for the fourth quarter and full year of 2018. A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 8.01 Other Events.  

 

On January 23, 2019, the Company announced by press release its quarterly cash dividend to common shareholders of twenty-one cents ($0.21) per common share, payable on February 15, 2019, to shareholders of record on February 1, 2019. A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 9.01 Financial Statements and Exhibits.

 

(d)

The following exhibit is included with this report:

 

Exhibit No.

 

Exhibit Description

 

 

 

99.1

 

Earnings and dividend press release dated January 23, 2019

 

 

Forward-Looking Statements 

 

This Current Report on Form 8-K contains 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 Company’s Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the most recent year ended. 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.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

FIRST COMMUNITY BANKSHARES, INC.

     

Date:

January 23, 2019

 

By:

/s/ David D. Brown

     
   

David D. Brown

   

Chief Financial Officer

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

ex_133285.htm

Exhibit 99.1

 

 

 

NEWS RELEASE

FOR IMMEDIATE RELEASE:

 

FOR MORE INFORMATION, CONTACT:

January 23, 2019

 

David D. Brown

   

(276) 326-9000

 

First Community Bankshares, Inc. Announces Record Fourth Quarter and Record Full Year Results

and Quarterly Dividend

 

Bluefield, Virginia – 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 and year ended December 31, 2018. The Company reported net income of $9.31 million, or $0.57 per diluted common share, for the quarter ended December 31, 2018, which was an increase of $8.09 million from the same period of 2017. The Company also reported $36.34 million, or $2.18 per diluted common share, for the year ended December 31, 2018, which was an increase of $14.86 million from 2017. The fourth quarter and full year both constitute net income records for the respective periods.

 

The Company also announced today that the Board of Directors declared a quarterly cash dividend to common shareholders of twenty-one cents ($0.21) per common share. The quarterly dividend is payable to common shareholders of record on February 1, 2019, and is expected to be paid on or about February 15, 2019. The current year marks the 34th consecutive year of regular cash dividends paid to shareholders.

 

The Company’s capital management plan and philosophy require maintenance of a strong capital base from which to grow and serve customers. As reported in early 2018, absent other needs, the Company’s capital management plan aspires to return current earnings not needed to fund growth in core operations back to shareholders through regular cash dividends and stock repurchases. The Company earned approximately $36.34 million in 2018, from which it paid regular cash dividends of approximately $12.96 million. The Company also repurchased 1,060,312 common shares for approximately $34.41 million. Since regular dividends and stock repurchases returned all current earnings to shareholders, the Board of Directors determined not to declare a special dividend related to 2018 earnings. As of December 31, 2018, the Company continues to significantly exceed regulatory “well capitalized” targets, as well as all capital targets of its capital management plan.

 

Fourth Quarter 2018 Highlights

 

General

 

o

On October 1, 2018, the Company completed the sale of its remaining insurance agency assets to Bankers Insurance, LLC of Glen Allen, Virginia (“BI”) in exchange for an equity interest in BI.

 

o

On October 2, 2018, the Company completed its Plan of Reincorporation and Merger, the sole purpose of which was to change the Company’s state of incorporation from Nevada to Virginia.

 

Income Statement

 

o

Net income increased $8.09 million to $9.31 million compared to the same quarter of 2017. The large increase reflects the deferred tax asset revaluation charge taken in the fourth quarter of 2017. Non-GAAP adjusted earnings increased $1.82 million to $9.50 million compared to the same quarter of 2017.

 

o

Diluted earnings per share increased $0.50 to $0.57 compared to the same quarter of 2017. Again, the large increase reflects the deferred tax asset revaluation charge taken in the fourth quarter of 2017. Non-GAAP adjusted diluted earnings per share increased $0.13 to $0.58 compared to the same quarter of 2017.

 

o

Return on average assets (“ROAA”) for the quarter increased to 1.63%, the highest reported quarterly ROAA for the Company in 15 years. Return on average equity for the quarter increased to 11.01%.

 

o

Net interest margin increased 63 basis points to 4.80% compared to the same quarter of 2017.

 

1

 

 

Balance Sheet

 

o

Book value per common share increased $0.16 to $20.79, and tangible book value per common share increased $0.05 to $14.69, compared to December 31, 2017.

 

o

The Company repurchased 390,296 common shares for $13.12 million during the quarter and 1,060,312 common shares for $34.41 million during the year ended December 31, 2018.

 

o

The Company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of December 31, 2018.

 

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% for periods after January 1, 2018, and 35% for periods prior to January 1, 2018.  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 44 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of December 31, 2018. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $975 million in combined assets as of December 31, 2018. The Company reported consolidated assets of $2.24 billion as of December 31, 2018. 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; 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.

 

2

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

   

Three Months Ended

   

Year Ended

 
   

December 31,

   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

December 31,

 

(Amounts in thousands, except share and per share data)

 

2018

   

2018

   

2018

   

2018

   

2017

   

2018

   

2017

 

Interest income

                                                       

Interest and fees on loans

  $ 23,938     $ 22,556     $ 22,422     $ 22,755     $ 22,314     $ 91,671     $ 89,749  

Interest on securities

    1,249       1,372       1,361       1,104       1,095       5,086       4,551  

Interest on deposits in banks

    194       358       514       471       353       1,537       1,008  

Total interest income

    25,381       24,286       24,297       24,330       23,762       98,294       95,308  

Interest expense

                                                       

Interest on deposits

    1,297       1,269       1,327       1,251       1,313       5,144       4,987  

Interest on borrowings

    205       692       708       700       716       2,305       3,103  

Total interest expense

    1,502       1,961       2,035       1,951       2,029       7,449       8,090  

Net interest income

    23,879       22,325       22,262       22,379       21,733       90,845       87,218  

Provision for loan losses

    908       495       495       495       615       2,393       2,771  

Net interest income after provision

    22,971       21,830       21,767       21,884       21,118       88,452       84,447  

Noninterest income

    6,297       6,519       6,959       6,668       7,498       26,443       24,568  

Noninterest expense

    17,366       18,131       17,160       17,116       16,683       69,773       66,902  

Income before income taxes

    11,902       10,218       11,566       11,436       11,933       45,122       42,113  

Income tax expense

    2,596       1,118       2,500       2,568       10,720       8,782       20,628  

Net income

  $ 9,306     $ 9,100     $ 9,066     $ 8,868     $ 1,213     $ 36,340     $ 21,485  
                                                         

Earnings per common share

                                                       

Basic

  $ 0.57     $ 0.55     $ 0.54     $ 0.52     $ 0.07     $ 2.19     $ 1.26  

Diluted

    0.57       0.55       0.54       0.52       0.07       2.18       1.26  

Cash dividends per common share

                                                       

Regular

    0.21       0.21       0.18       0.18       0.18       0.78       0.68  

Special

    -       -       -       0.48       -       0.48       -  

Weighted average shares outstanding

                                                       

Basic

    16,201,148       16,512,823       16,689,398       16,955,758       16,992,519       16,587,504       17,002,116  

Diluted

    16,280,404       16,612,416       16,788,615       17,047,638       17,083,949       16,666,385       17,077,842  

Performance ratios

                                                       

Return on average assets

    1.63 %     1.55 %     1.53 %     1.52 %     0.20 %     1.56 %     0.91 %

Return on average common equity

    11.01 %     10.59 %     10.68 %     10.30 %     1.35 %     10.64 %     6.14 %

Return on average tangible common equity(1)

    15.58 %     15.06 %     15.21 %     14.53 %     1.89 %     15.09 %     8.69 %

(1)

A non-GAAP financial measure defined as net income divided by average stockholders' equity less average goodwill and other intangible assets

 

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

 

   

Three Months Ended

   

Year Ended

 
   

December 31,

   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

December 31,

 
   

2018

   

2018

   

2018

   

2018

   

2017

   

2018

   

2017

 

(Amounts in thousands, except per share data)

                                                       

Net income

  $ 9,306     $ 9,100     $ 9,066     $ 8,868     $ 1,213     $ 36,340     $ 21,485  

Non-GAAP adjustments:

                                                       

Net loss on sale of securities

    -       618       -       -       4       618       661  

Loss on extinguishment of debt

    -       1,096       -       -       -       1,096       -  

Goodwill impairment

    -       1,492       -       -       -       1,492       -  

Deferred tax asset revaluation

    -       (1,669 )     -       -       6,552       (1,669 )     6,552  

Other items(1)

    254       -       297       (130 )     (140 )     421       (298 )

Total adjustments

    254       1,537       297       (130 )     6,416       1,958       6,915  

Tax effect

    61       411       96       (24 )     (50 )     544       301  

Adjusted earnings, non-GAAP

  $ 9,499     $ 10,226     $ 9,267     $ 8,762     $ 7,679     $ 37,754     $ 28,099  
                                                         

Adjusted diluted earnings per common share, non-GAAP

  $ 0.58     $ 0.62     $ 0.55     $ 0.51     $ 0.45     $ 2.27     $ 1.65  

Performance ratios, non-GAAP

                                                       

Adjusted return on average assets

    1.67 %     1.74 %     1.57 %     1.50 %     1.28 %     1.62 %     1.19 %

Adjusted return on average common equity

    11.23 %     11.90 %     10.91 %     10.17 %     8.56 %     11.05 %     8.04 %

Adjusted return on average tangible common equity(2)

    15.90 %     16.93 %     15.55 %     14.36 %     11.99 %     15.68 %     11.36 %

(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

 

3

 

 

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

 

   

Three Months Ended December 31,

 
   

2018

   

2017

 
   

Average

           

Average Yield/

   

Average

           

Average Yield/

 

(Amounts in thousands)

 

Balance

   

Interest(1)

   

Rate(1)

   

Balance

   

Interest(1)

   

Rate(1)

 

Assets

                                               

Earning assets

                                               

Loans(2)(3)

  $ 1,788,570     $ 24,017       5.33 %   $ 1,822,583     $ 22,387       4.87 %

Securities available for sale

    162,330       1,518       3.71 %     171,288       1,383       3.20 %

Securities held to maturity

    25,030       104       1.65 %     25,165       105       1.66 %

Interest-bearing deposits

    33,736       194       2.28 %     95,174       353       1.47 %

Total earning assets

    2,009,666       25,833       5.10 %     2,114,210       24,228       4.55 %

Other assets

    249,056                       256,591                  

Total assets

  $ 2,258,722                     $ 2,370,801                  
                                                 

Liabilities and stockholders' equity

                                               

Interest-bearing deposits

                                               

Demand deposits

  $ 458,458     $ 40       0.03 %   $ 451,024     $ 62       0.05 %

Savings deposits

    494,868       132       0.11 %     512,156       83       0.06 %

Time deposits

    450,770       1,125       0.99 %     502,515       1,168       0.92 %

Total interest-bearing deposits

    1,404,096       1,297       0.37 %     1,465,695       1,313       0.36 %

Borrowings

                                               

Retail repurchase agreements

    4,526       2       0.18 %     5,470       1       0.07 %

Wholesale repurchase agreements

    25,000       203       3.22 %     25,000       204       3.24 %

FHLB advances and other borrowings

    -       -       -       50,000       511       4.05 %

Total borrowings

    29,526       205       2.75 %     80,470       716       3.53 %

Total interest-bearing liabilities

    1,433,622       1,502       0.42 %     1,546,165       2,029       0.52 %

Noninterest-bearing demand deposits

    461,457                       446,487                  

Other liabilities

    28,188                       22,103                  

Total liabilities

    1,923,267                       2,014,755                  

Stockholders' equity

    335,455                       356,046                  

Total liabilities and stockholders' equity

  $ 2,258,722                     $ 2,370,801                  

Net interest income, FTE(1)

          $ 24,331                     $ 22,199          

Net interest rate spread

                    4.68 %                     4.03 %

Net interest margin, FTE(1)

                    4.80 %                     4.17 %

(1)

Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21% for periods after January 1, 2018, and 35% for periods prior to January 1, 2018.

(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 include non-cash purchase accounting accretion of $2.13 million and $1.16 million for the three months ended December 31, 2018 and 2017, respectively.

 

4

 

 

AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

 

   

Year Ended December 31,

 
   

2018

   

2017

 
   

Average

           

Average Yield/

   

Average

           

Average Yield/

 

(Amounts in thousands)

 

Balance

   

Interest(1)

   

Rate(1)

   

Balance

   

Interest(1)

   

Rate(1)

 

Assets

                                               

Earning assets

                                               

Loans(2)(3)

  $ 1,795,391     $ 91,971       5.12 %   $ 1,837,092     $ 90,032       4.90 %

Securities available for sale

    176,766       6,190       3.50 %     164,489       5,695       3.46 %

Securities held to maturity

    25,081       418       1.67 %     32,954       487       1.48 %

Interest-bearing deposits

    81,520       1,537       1.89 %     73,405       1,008       1.37 %

Total earning assets

    2,078,758       100,116       4.82 %     2,107,940       97,222       4.61 %

Other assets

    251,853                       262,381                  

Total assets

  $ 2,330,611                     $ 2,370,321                  
                                                 

Liabilities and stockholders' equity

                                               

Interest-bearing deposits

                                               

Demand deposits

  $ 466,403     $ 246       0.05 %   $ 401,092     $ 224       0.06 %

Savings deposits

    508,353       382       0.08 %     520,430       336       0.06 %

Time deposits

    471,335       4,516       0.96 %     510,411       4,427       0.87 %

Total interest-bearing deposits

    1,446,091       5,144       0.36 %     1,431,933       4,987       0.35 %

Borrowings

                                               

Federal funds purchased

    -       -       -       1       -       -  

Retail repurchase agreements

    4,010       5       0.12 %     47,716       32       0.07 %

Wholesale repurchase agreements

    25,000       806       3.22 %     25,000       806       3.22 %

FHLB advances and other borrowings

    36,849       1,494       4.05 %     55,502       2,265       4.08 %

Total borrowings

    65,859       2,305       3.50 %     128,219       3,103       2.42 %

Total interest-bearing liabilities

    1,511,950       7,449       0.49 %     1,560,152       8,090       0.52 %

Noninterest-bearing demand deposits

    448,903                       438,513                  

Other liabilities

    28,239                       21,955                  

Total liabilities

    1,989,092                       2,020,620                  

Stockholders' equity

    341,519                       349,701                  

Total liabilities and stockholders' equity

  $ 2,330,611                     $ 2,370,321                  

Net interest income, FTE(1)

          $ 92,667                     $ 89,132          

Net interest rate spread

                    4.33 %                     4.09 %

Net interest margin, FTE(1)

                    4.46 %                     4.23 %

(1)

Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21% for periods after January 1, 2018, and 35% for periods prior to January 1, 2018.

(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 include non-cash purchase accounting accretion of $6.39 million and $5.42 million for the year ended December 31, 2018 and 2017, respectively.

 

5

 

 

CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE  (Unaudited)

 

   

Three Months Ended

   

Year Ended

 
   

December 31,

   

September 30,

   

June 30,

   

March 31,

   

December 31,

   

December 31,

 

(Amounts in thousands)

 

2018

   

2018

   

2018

   

2018

   

2017

   

2018

   

2017

 

Noninterest income

                                                       

Wealth management

  $ 854     $ 791     $ 823     $ 794     $ 811     $ 3,262     $ 3,150  

Service charges on deposits

    3,850       3,803       3,612       3,468       3,725       14,733       13,803  

Other service charges and fees

    2,017       1,925       1,934       1,857       1,788       7,733       6,944  

Insurance commissions

    -       299       338       329       343       966       1,347  

Net loss on sale of securities

    -       (618 )     -       -       (4 )     (618 )     (661 )

Net FDIC indemnification asset amortization

    (579 )     (645 )     (575 )     (382 )     (331 )     (2,181 )     (3,517 )

Other operating income

    155       964       827       602       1,166       2,548       3,502  

Total noninterest income

  $ 6,297     $ 6,519     $ 6,959     $ 6,668     $ 7,498     $ 26,443     $ 24,568  

Noninterest expense

                                                       

Salaries and employee benefits

  $ 9,273     $ 8,983     $ 8,993     $ 9,441     $ 9,003     $ 36,690     $ 35,774  

Occupancy expense

    1,134       1,075       1,083       1,250       1,104       4,542       4,775  

Furniture and equipment expense

    1,004       985       945       1,046       1,114       3,980       4,425  

Service fees

    1,047       1,134       851       828       703       3,860       3,348  

Advertising and public relations

    550       478       461       522       506       2,011       2,206  

Professional fees

    356       337       430       307       589       1,430       2,567  

Amortization of intangibles

    254       261       263       261       266       1,039       1,056  

FDIC premiums and assessments

    209       234       252       211       212       906       910  

Loss on extinguishment of debt

    -       1,096       -       -       -       1,096       -  

Goodwill impairment

    -       1,492       -       -       -       1,492       -  

Other operating expense

    3,539       2,056       3,882       3,250       3,186       12,727       11,841  

Total noninterest expense

  $ 17,366     $ 18,131     $ 17,160     $ 17,116     $ 16,683     $ 69,773     $ 66,902  

 

6

 

 

CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)

 

   

December 31,

   

September 30,

   

June 30,

   

March 31,

   

December 31,

 

(Amounts in thousands, except per share data)

 

2018

   

2018

   

2018

   

2018

   

2017

 

Assets

                                       

Cash and cash equivalents

  $ 76,873     $ 73,679     $ 107,957     $ 205,140     $ 157,951  

Debt securities available for sale

    153,116       163,593       196,425       164,192       165,580  

Debt securities held to maturity

    25,013       25,047       25,082       25,115       25,149  

Loans held for investment, net of unearned income

                                       

Noncovered

    1,756,269       1,770,426       1,776,112       1,767,703       1,789,236  

Covered

    18,815       20,483       22,919       25,406       27,948  

Allowance for loan losses

    (18,267 )     (18,256 )     (19,583 )     (19,500 )     (19,276 )

Loans held for investment, net

    1,756,817       1,772,653       1,779,448       1,773,609       1,797,908  

FDIC indemnification asset

    5,108       5,653       6,390       6,884       7,161  

Premises and equipment, net

    45,785       45,537       45,547       46,415       48,126  

Other real estate owned, noncovered

    3,806       4,754       4,805       4,620       2,409  

Other real estate owned, covered

    32       44       44       70       105  

Interest receivable

    5,481       5,374       5,580       5,155       5,778  

Goodwill

    92,744       94,287       95,779       95,779       95,779  

Other intangible assets

    5,026       5,366       5,628       5,891       6,151  

Other assets

    74,573       73,701       75,435       95,437       76,363  

Total assets

  $ 2,244,374     $ 2,269,688     $ 2,348,120     $ 2,428,307     $ 2,388,460  
                                         

Liabilities

                                       

Deposits

                                       

Noninterest-bearing

  $ 459,550     $ 463,945     $ 462,851     $ 460,478     $ 454,143  

Interest-bearing

    1,396,200       1,411,906       1,441,887       1,520,141       1,475,748  

Total deposits

    1,855,750       1,875,851       1,904,738       1,980,619       1,929,891  

Securities sold under agreements to repurchase

    29,370       30,151       27,869       29,115       30,086  

FHLB borrowings

    -       -       50,000       50,000       50,000  

Interest, taxes, and other liabilities

    26,397       25,284       26,392       26,536       27,769  

Total liabilities

    1,911,517       1,931,286       2,008,999       2,086,270       2,037,746  
                                         

Stockholders' equity

                                       

Common stock(2)

    16,007       21,382       21,382       21,382       21,382  

Additional paid-in capital(2)

    122,486       229,182       228,949       228,774       228,750  

Retained earnings

    195,793       189,902       184,279       178,227       180,543  

Treasury stock, at cost(2)

    -       (99,247 )     (92,904 )     (83,865 )     (79,121 )

Accumulated other comprehensive loss

    (1,429 )     (2,817 )     (2,585 )     (2,481 )     (840 )

Total stockholders' equity

    332,857       338,402       339,121       342,037       350,714  

Total liabilities and stockholders' equity

  $ 2,244,374     $ 2,269,688     $ 2,348,120     $ 2,428,307     $ 2,388,460  
                                         

Shares outstanding at period-end

    16,007,263       16,390,502       16,574,347       16,847,452       16,998,226  

Book value per common share

  $ 20.79     $ 20.65     $ 20.46     $ 20.30     $ 20.63  

Tangible book value per common share(1)

    14.69       14.57       14.34       14.27       14.64  

(1)

A non-GAAP financial measure defined as stockholders' equity less goodwill and other intangible assets, divided by shares outstanding

(2)

In accordance with the Company's reincorporation from Nevada to Virginia on October 2, 2018, treasury stock is not recognized.

 

7

 

 

SELECTED CREDIT QUALITY INFORMATION (Unaudited)

 

   

December 31,

   

September 30,

   

June 30,

   

March 31,

   

December 31,

 

(Amounts in thousands)

 

2018

   

2018

   

2018

   

2018

   

2017

 

Allowance for Loan Losses

                                       

Beginning balance

  $ 18,256     $ 19,583     $ 19,500     $ 19,276     $ 19,206  

Provision for loan losses charged to operations

    908       495       495       495       615  

Charge-offs

    (1,282 )     (2,177 )     (750 )     (698 )     (967 )

Recoveries

    385       355       338       427       422  

Net charge-offs

    (897 )     (1,822 )     (412 )     (271 )     (545 )

Ending balance

  $ 18,267     $ 18,256     $ 19,583     $ 19,500     $ 19,276  
                                         

Nonperforming Assets

                                       

Non-covered nonperforming assets

                                       

Nonaccrual loans

  $ 19,583     $ 20,542     $ 21,467     $ 21,650     $ 18,997  

Accruing loans past due 90 days or more

    58       46       -       27       1  

Troubled debt restructurings ("TDRs")(1)

    161       189       133       77       120  

Total non-covered nonperforming loans

    19,802       20,777       21,600       21,754       19,118  

OREO

    3,806       4,754       4,805       4,620       2,409  

Total non-covered nonperforming assets

  $ 23,608     $ 25,531     $ 26,405     $ 26,374     $ 21,527  
                                         

Covered nonperforming assets

                                       

Nonaccrual loans

  $ 322     $ 330     $ 509     $ 596     $ 342  

Total covered nonperforming loans

    322       330       509       596       342  

OREO

    32       44       44       70       105  

Total covered nonperforming assets

  $ 354     $ 374     $ 553     $ 666     $ 447  
                                         

Additional Information

                                       

Performing TDRs(2)

  $ 6,266     $ 6,953     $ 6,847     $ 7,220     $ 7,614  

Total TDRs(3)

    6,427       7,142       6,980       7,297       7,734  
                                         

Non-covered ratios

                                       

Nonperforming loans to total loans

    1.13 %     1.17 %     1.22 %     1.23 %     1.07 %

Nonperforming assets to total assets

    1.06 %     1.14 %     1.14 %     1.10 %     0.91 %

Non-PCI allowance to nonperforming loans

    92.25 %     87.87 %     90.66 %     89.64 %     100.83 %

Non-PCI allowance to total loans

    1.04 %     1.03 %     1.10 %     1.10 %     1.08 %

Annualized net charge-offs to average loans

    0.20 %     0.41 %     0.09 %     0.06 %     0.12 %
                                         

Total ratios

                                       

Nonperforming loans to total loans

    1.13 %     1.18 %     1.23 %     1.25 %     1.07 %

Nonperforming assets to total assets

    1.07 %     1.14 %     1.15 %     1.11 %     0.92 %

Allowance for loan losses to nonperforming loans

    90.77 %     86.49 %     88.57 %     87.25 %     99.05 %

Allowance for loan losses to total loans

    1.03 %     1.02 %     1.09 %     1.09 %     1.06 %

Annualized net charge-offs to average loans

    0.20 %     0.40 %     0.09 %     0.06 %     0.12 %

(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 

 

8

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