8-K: First Community Bankshares Reports Third Quarter 2024 Results and Declares Dividend

First Community Bankshares announced its third quarter 2024 results, including a net income of $13.03 million and a quarterly cash dividend of $0.31 per share.

Summary

• First Community Bankshares reported a net income of $13.03 million, or $0.71 per diluted share, for the third quarter of 2024.
• The net income for the first nine months of 2024 was $38.56 million, or $2.09 per diluted share.
• A quarterly cash dividend of $0.31 per common share was declared, payable on or about November 22, 2024, to shareholders of record on November 8, 2024.
• This marks the 39th consecutive year of regular dividends to common shareholders.
• Net interest income decreased by $1.75 million compared to the same quarter in 2023, primarily due to increased rates on interest-bearing deposits.
• The net interest margin was 4.41%, a decrease of 10 basis points from the same quarter in 2023.
• Noninterest income increased by approximately $830 thousand, or 8.63%, compared to the same quarter of 2023, including a gain of $825 thousand from the sale of two closed branch properties.
• Noninterest expense increased by $1.26 million, or 5.52%.
• Loans decreased by $128.19 million, or 4.98%, from December 31, 2023.
• Securities available for sale decreased by $114.29 million, or 40.68%, from December 31, 2023.
• Deposits decreased by $63.07 million, or 2.32%.
• The company repurchased 12,854 common shares during the third quarter of 2024 at a total cost of $469 thousand.
• Non-performing loans to total loans increased to 0.82% compared to the same quarter of 2023.
• The allowance for credit losses to total loans was 1.44% at September 30, 2024.
• Book value per share at September 30, 2024, was $28.47, an increase of $1.27 from year-end 2023.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to decreased net income and net interest margin, offset by a consistent dividend and increased book value per share. The impact of Hurricane Helene adds uncertainty.

Positives

• The company achieved a net income of $13.03 million for the quarter.
• The company declared a consistent quarterly cash dividend of $0.31 per share, marking 39 consecutive years of regular dividends.
• Noninterest income increased by 8.63% due to gains from the sale of closed branch properties.
• Book value per share increased by $1.27 from year-end 2023, reaching $28.47.
• The company repurchased 12,854 common shares during the quarter.

Negatives

• Net income for the third quarter of 2024 decreased by $1.61 million, or 10.98%, compared to the same quarter of 2023.
• Net interest income decreased by $1.75 million compared to the same quarter in 2023.
• The net interest margin decreased by 10 basis points compared to the same quarter of 2023.
• Noninterest expense increased by $1.26 million, or 5.52%.
• Loans decreased by $128.19 million from December 31, 2023.
• Securities available for sale decreased by $114.29 million from December 31, 2023.
• Deposits decreased by $63.07 million.
• Non-performing loans to total loans increased to 0.82% compared to the same quarter of 2023.

Risks

• The company faces risks related to changes in business or market conditions.
• There are risks associated with managing asset/liability levels, credit risk, and interest rate risk.
• The company faces the challenge of keeping expense growth at modest levels while increasing revenues.
• The company is monitoring the impact of Hurricane Helene on borrowers and asset quality.
• The company is exposed to risks from natural disasters, extreme weather events, military conflict, terrorism or other geopolitical events.

Future Outlook

The company will continue to monitor the situation related to Hurricane Helene and its impact on asset quality. 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.

Management Comments

• The company is working with borrowers and customers affected by Hurricane Helene, including providing payment relief.
• The company will continue to monitor the situation over the coming weeks as it relates to asset quality.

Industry Context

The results reflect the challenges faced by regional banks in a rising interest rate environment, where deposit costs increase, impacting net interest margins. The company's focus on managing asset quality and providing support to affected customers is consistent with industry best practices during times of economic uncertainty and natural disasters.

Comparison to Industry Standards

• The decrease in net interest margin by 10 basis points is a common trend among regional banks facing increased deposit costs, however, the company's margin of 4.41% is still relatively strong compared to some peers.
• The increase in non-performing loans to 0.82% is a metric that will be closely watched, as it is slightly higher than some of the best performing banks in the sector, but is still within an acceptable range.
• The company's return on average assets (ROA) of 1.60% is a solid performance, but is slightly lower than the 1.74% reported for the same period in 2023, indicating some pressure on profitability.
• The company's return on average common equity (ROE) of 10.04% is also a good result, but is lower than the 11.63% reported for the same period in 2023, reflecting the impact of increased expenses and lower net interest income.
• The company's return on average tangible common equity (ROTCE) of 14.46% is a strong result, but is lower than the 17.11% reported for the same period in 2023, indicating some pressure on profitability.

Stakeholder Impact

• Shareholders will receive a quarterly cash dividend of $0.31 per share.
• Borrowers affected by Hurricane Helene will receive payment relief.
• Employees may be impacted by the company's efforts to manage expenses and adapt to changing market conditions.

Next Steps

• The company will continue to monitor the impact of Hurricane Helene on borrowers and asset quality.
• The company will pay the declared quarterly cash dividend on or about November 22, 2024.

Key Dates

Keywords

bank, financial results, earnings, dividend, net income, interest income, noninterest income, loans, deposits, asset quality, share repurchase