8-K
FIRST COMMUNITY BANKSHARES INC /VA/ (FCBC)
| 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): February 04, 2020 | |||
| FIRST COMMUNITY BAN K SHARES, 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<br><br> <br>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)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock ($1.00 par value) | FCBC | NASDAQ Global Select |
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 February 04, 2020, First Community Bankshares, Inc. (the “Company”) announced by press release its earnings for the fourth quarter of 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 release dated February 04, 2020 |
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: | February 04, 2020 | By: | /s/ David D. Brown |
| David D. Brown | |||
| Chief Financial Officer |
ex_171216.htm
Exhibit 99.1
| NEWS RELEASE | |
|---|---|
| FOR IMMEDIATE RELEASE: | FOR MORE INFORMATION, CONTACT: |
| February 4, 2020 | David D. Brown |
| (276) 326-9000 |
First Community Ban k shares, Inc. Announces Fourth **** Q uarter **** and Full Year Results
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 ended December 31, 2019. The Company reported net income of $9.56 million, or $0.61 per diluted common share, for the quarter ended December 31, 2019, which was an increase of $0.04, or 7.02%, over the same quarter of 2018. For the full year, the Company earned $38.80 million, or $2.46 per diluted share, an increase of $2.46 million over 2018.
Additionally, the Company recently declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share, an increase of four cents $(0.04) over the same quarter last year. 2020 is the 35^th^ consecutive year of regular dividends to common shareholders.
Fourth **** Quarter and Full Year 201 9 Highlights
At the close of business on December 31, 2019, the Company closed the acquisition of Highlands Bankshares, Inc., headquartered in Abingdon, Virginia, with total assets of $563 million. The completion of the transaction increased total consolidated assets to $2.80 billion.
| ● | Income Statement |
|---|---|
| o | Diluted earnings per share increased $0.04 to $0.61 compared to the same quarter of 2018, an increase of 7.02%. |
| --- | --- |
| o | Compared to the same quarter last year, return on average assets for the quarter increased 0.08% to 1.71% and return on average equity for the quarter increased 0.07% to 11.08%. |
| --- | --- |
| o | Net interest margin decreased 29 basis points to 4.47% compared to the same quarter of 2018. |
| --- | --- |
| o | Diluted earnings per share for the full year of $2.46 was an increase of $0.28, or 12.84% over 2018. |
| --- | --- |
| o | Return on average assets for 2019 increased 0.19% to 1.75% and return on average equity for the year increased 0.90% to 11.54%. |
| --- | --- |
| o | The Company received $2.40 million from litigation settlements during the fourth quarter. Year to date, the Company has received $7.00 million. |
| --- | --- |
| o | The Company incurred $940 thousand in merger expenses related to the Highlands Bankshares, Inc. acquisition in the fourth quarter. |
| --- | --- |
| ● | Balance Sheet |
|---|---|
| o | Book value per common share increased $2.54 to $23.33, and tangible book value per common share increased $1.13 to a record $15.82, compared to December 31, 2018. |
| --- | --- |
| o | 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, due to a strong capital position, the Company’s current capital management plan aspires to return current earnings not needed to fund growth in core operations or other capital needs back to shareholders through regular cash dividends, stock repurchases, and special cash dividends when warranted. The Company earned approximately $38.80 million in 2019, from which it paid regular cash dividends of approximately $15.06 million. The Company also repurchased 487,400 common shares for approximately $16.36 million. Because the Company successfully leveraged capital with the Highlands acquisition, in addition to regular dividends and stock repurchases returning most current earnings to shareholders, the Board of Directors determined not to declare a special dividend related to 2019 earnings. As of December 31, 2019, the Company continues to significantly exceed regulatory “well capitalized” targets, as well as all capital targets of its capital management plan. |
| --- | --- |
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.
1
About First Community Ban k shares, 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 58 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of December 31, 2019. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.12 billion in combined assets as of December 31, 2019. The Company reported consolidated assets of $2.80 billion as of December 31, 2019. 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 | Twelve Months Ended | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Amounts in thousands, except share | December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | |||||||||||||||
| and per share data) | 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Interest income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest and fees on loans | $ | 21,837 | $ | 22,068 | $ | 22,721 | $ | 22,179 | $ | 23,938 | $ | 88,805 | $ | 91,671 | |||||||
| Interest on securities | 870 | 857 | 895 | 1,094 | 1,249 | 3,716 | 5,086 | ||||||||||||||
| Interest on deposits in banks | 663 | 680 | 766 | 338 | 194 | 2,447 | 1,537 | ||||||||||||||
| Total interest income | 23,370 | 23,605 | 24,382 | 23,611 | 25,381 | 94,968 | 98,294 | ||||||||||||||
| Interest expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest on deposits | 1,312 | 1,383 | 1,392 | 1,305 | 1,297 | 5,392 | 5,144 | ||||||||||||||
| Interest on borrowings | 1 | 1 | 1 | 120 | 205 | 123 | 2,305 | ||||||||||||||
| Total interest expense | 1,313 | 1,384 | 1,393 | 1,425 | 1,502 | 5,515 | 7,449 | ||||||||||||||
| Net interest income | 22,057 | 22,221 | 22,989 | 22,186 | 23,879 | 89,453 | 90,845 | ||||||||||||||
| Provision for loan losses | 91 | 675 | 1,585 | 1,220 | 908 | 3,571 | 2,393 | ||||||||||||||
| Net interest income after provision | 21,966 | 21,546 | 21,404 | 20,966 | 22,971 | 85,882 | 88,452 | ||||||||||||||
| Noninterest income | 9,314 | 7,634 | 8,649 | 8,080 | 6,297 | 33,677 | 26,443 | ||||||||||||||
| Noninterest expense | 18,883 | 17,444 | 16,651 | 16,785 | 17,366 | 69,763 | 69,773 | ||||||||||||||
| Income before income taxes | 12,397 | 11,736 | 13,402 | 12,261 | 11,902 | 49,796 | 45,122 | ||||||||||||||
| Income tax expense | 2,833 | 2,580 | 2,951 | 2,630 | 2,596 | 10,994 | 8,782 | ||||||||||||||
| Net income | $ | 9,564 | $ | 9,156 | $ | 10,451 | $ | 9,631 | $ | 9,306 | $ | 38,802 | $ | 36,340 | |||||||
| Earnings per common share | |||||||||||||||||||||
| Basic | $ | 0.61 | $ | 0.59 | $ | 0.67 | $ | 0.61 | $ | 0.57 | $ | 2.47 | $ | 2.19 | |||||||
| Diluted | 0.61 | 0.58 | 0.66 | 0.60 | 0.57 | 2.46 | 2.18 | ||||||||||||||
| Cash dividends per common share | |||||||||||||||||||||
| Regular | 0.25 | 0.25 | 0.25 | 0.21 | 0.21 | 0.96 | 1.26 | ||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||
| Basic | 15,611,093 | 15,603,992 | 15,712,204 | 15,839,424 | 16,201,148 | 15,690,812 | 16,587,504 | ||||||||||||||
| Diluted | 15,670,047 | 15,664,587 | 15,775,320 | 15,920,950 | 16,280,404 | 15,756,093 | 16,666,385 | ||||||||||||||
| Performance ratios | |||||||||||||||||||||
| Return on average assets | 1.71 | % | 1.65 | % | 1.89 | % | 1.75 | % | 1.63 | % | 1.75 | % | 1.56 | % | |||||||
| Return on average common equity | 11.08 | % | 10.80 | % | 12.57 | % | 11.77 | % | 11.01 | % | 11.54 | % | 10.64 | % | |||||||
| Return on average tangible common equity^(1)^ | 15.33 | % | 15.19 | % | 17.57 | % | 16.66 | % | 15.58 | % | 16.09 | % | 15.09 | % | |||||||
| (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 | Twelve Months Ended | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | ||||||||||||||||
| (Amounts in thousands, except per | 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| share data) | |||||||||||||||||||||
| Net income | $ | 9,564 | $ | 9,156 | $ | 10,451 | $ | 9,631 | $ | 9,306 | $ | 38,802 | $ | 36,340 | |||||||
| Non-GAAP adjustments: | |||||||||||||||||||||
| Net loss on sale of securities | - | - | 43 | - | - | 43 | 618 | ||||||||||||||
| Loss on extinguishment of debt | - | - | - | - | - | - | 1,096 | ||||||||||||||
| Goodwill impairment | - | - | - | - | - | - | 1,492 | ||||||||||||||
| Deferred tax asset revaluation | - | - | - | - | - | - | (1,669 | ) | |||||||||||||
| Merger, acquisition, and divestiture expense | 940 | 592 | - | - | - | 1,532 | - | ||||||||||||||
| Other items^(1)^ | (2,395 | ) | (900 | ) | (2,025 | ) | (1,675 | ) | 254 | (6,995 | ) | 421 | |||||||||
| Total adjustments | (1,455 | ) | (308 | ) | (1,982 | ) | (1,675 | ) | 254 | (5,420 | ) | 1,958 | |||||||||
| Tax effect | (331 | ) | (134 | ) | (550 | ) | (328 | ) | 61 | (1,343 | ) | 544 | |||||||||
| Adjusted earnings, non-GAAP | $ | 8,440 | $ | 8,982 | $ | 9,019 | $ | 8,284 | $ | 9,499 | $ | 34,725 | $ | 37,754 | |||||||
| Adjusted diluted earnings per common share, non-GAAP | $ | 0.54 | $ | 0.57 | $ | 0.57 | $ | 0.52 | $ | 0.58 | $ | 2.20 | $ | 2.27 | |||||||
| Performance ratios, non-GAAP | |||||||||||||||||||||
| Adjusted return on average assets | 1.51 | % | 1.62 | % | 1.63 | % | 1.51 | % | 1.67 | % | 1.57 | % | 1.62 | % | |||||||
| Adjusted return on average common equity | 9.78 | % | 10.59 | % | 10.84 | % | 10.12 | % | 11.23 | % | 10.33 | % | 11.05 | % | |||||||
| Adjusted return on average tangible common equity^(2)^ | 13.53 | % | 14.90 | % | 15.16 | % | 14.33 | % | 15.90 | % | 14.40 | % | 15.68 | % | |||||||
| (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, | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2019 | 2018 | |||||||||||||
| 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)^ | $ | 1,697,133 | $ | 21,876 | 5.11 | % | $ | 1,788,570 | $ | 23,976 | 5.32 | % | ||
| Securities available for sale | 116,950 | 1,020 | 3.46 | % | 162,330 | 1,329 | 3.26 | % | ||||||
| Securities held to maturity | - | - | - | 25,030 | 104 | 1.65 | % | |||||||
| Interest-bearing deposits | 159,904 | 663 | 1.64 | % | 33,736 | 194 | 2.28 | % | ||||||
| Total earning assets | 1,973,987 | 23,559 | 4.73 | % | 2,009,666 | 25,603 | 5.05 | % | ||||||
| Other assets | 249,300 | 249,056 | ||||||||||||
| Total assets | $ | 2,223,287 | $ | 2,258,722 | ||||||||||
| Liabilities and stockholders' equity | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest-bearing deposits | ||||||||||||||
| Demand deposits | $ | 462,834 | $ | 88 | 0.08 | % | $ | 458,458 | $ | 40 | 0.03 | % | ||
| Savings deposits | 507,645 | 234 | 0.18 | % | 494,868 | 132 | 0.10 | % | ||||||
| Time deposits | 393,424 | 989 | 1.00 | % | 450,770 | 1,125 | 0.99 | % | ||||||
| Total interest-bearing deposits | 1,363,903 | 1,311 | 0.38 | % | 1,404,096 | 1,297 | 0.37 | % | ||||||
| Borrowings | ||||||||||||||
| Retail repurchase agreements | 1,515 | - | - | 4,526 | 2 | 0.19 | % | |||||||
| Wholesale repurchase agreements | - | - | - | 25,000 | 203 | 3.22 | % | |||||||
| Total borrowings | 1,515 | - | - | 29,526 | 205 | 2.75 | % | |||||||
| Total interest-bearing liabilities | 1,365,418 | 1,311 | 0.38 | % | 1,433,622 | 1,502 | 0.42 | % | ||||||
| Noninterest-bearing demand deposits | 482,391 | 461,457 | ||||||||||||
| Other liabilities | 32,958 | 28,188 | ||||||||||||
| Total liabilities | 1,880,767 | 1,923,267 | ||||||||||||
| Stockholders' equity | 342,520 | 335,455 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 2,223,287 | $ | 2,258,722 | ||||||||||
| Net interest income, FTE^(1)^ | $ | 22,248 | $ | 24,101 | ||||||||||
| Net interest rate spread | 4.36 | % | 4.63 | % | ||||||||||
| Net interest margin, FTE^(1)^ | 4.47 | % | 4.76 | % | ||||||||||
| (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 $511 thousand and $2.13 million for the three months ended December 31, 2019 and 2018, respectively. |
4
| AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Twelve Months Ended December 31, | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2019 | 2018 | |||||||||||||
| 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)^ | $ | 1,722,419 | $ | 88,990 | 5.17 | % | $ | 1,795,391 | $ | 91,819 | 5.11 | % | ||
| Securities available for sale | 126,732 | 4,334 | 3.42 | % | 176,766 | 5,419 | 3.07 | % | ||||||
| Securities held to maturity | 3,045 | 45 | 1.48 | % | 25,081 | 418 | 1.67 | % | ||||||
| Interest-bearing deposits | 116,119 | 2,447 | 2.10 | % | 81,520 | 1,537 | 1.89 | % | ||||||
| Total earning assets | 1,968,315 | 95,816 | 4.87 | % | 2,078,758 | 99,193 | 4.77 | % | ||||||
| Other assets | 248,926 | 251,853 | ||||||||||||
| Total assets | $ | 2,217,241 | $ | 2,330,611 | ||||||||||
| Liabilities and stockholders' equity | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest-bearing deposits | ||||||||||||||
| Demand deposits | $ | 453,724 | $ | 281 | 0.06 | % | $ | 466,403 | $ | 246 | 0.05 | % | ||
| Savings deposits | 503,603 | 823 | 0.16 | % | 508,353 | 382 | 0.08 | % | ||||||
| Time deposits | 418,450 | 4,288 | 1.02 | % | 471,335 | 4,516 | 0.96 | % | ||||||
| Total interest-bearing deposits | 1,375,777 | 5,392 | 0.39 | % | 1,446,091 | 5,144 | 0.36 | % | ||||||
| Borrowings | ||||||||||||||
| Retail repurchase agreements | 2,471 | 3 | 0.14 | % | 4,010 | 5 | 0.12 | % | ||||||
| Wholesale repurchase agreements | 3,767 | 119 | 3.17 | % | 25,000 | 806 | 3.22 | % | ||||||
| FHLB advances and other borrowings | - | - | - | 36,849 | 1,494 | 4.05 | % | |||||||
| Total borrowings | 6,238 | 122 | 1.96 | % | 65,859 | 2,305 | 3.50 | % | ||||||
| Total interest-bearing liabilities | 1,382,015 | 5,514 | 0.40 | % | 1,511,950 | 7,449 | 0.49 | % | ||||||
| Noninterest-bearing demand deposits | 469,352 | 448,903 | ||||||||||||
| Other liabilities | 29,736 | 28,239 | ||||||||||||
| Total liabilities | 1,881,103 | 1,989,092 | ||||||||||||
| Stockholders' equity | 336,138 | 341,519 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 2,217,241 | $ | 2,330,611 | ||||||||||
| Net interest income, FTE^(1)^ | $ | 90,302 | $ | 91,744 | ||||||||||
| Net interest rate spread | 4.47 | % | 4.28 | % | ||||||||||
| Net interest margin, FTE^(1)^ | 4.59 | % | 4.41 | % | ||||||||||
| (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 $3.23 million and $6.39 million for the years ended December 31, 2019 and 2018, respectively. |
5
| CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE (Unaudited) | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | ||||||||||||||||
| (Amounts in thousands) | 2019 | 2019 | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Noninterest income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Wealth management | $ | 842 | $ | 952 | $ | 884 | $ | 745 | $ | 854 | $ | 3,423 | $ | 3,262 | |||||||
| Service charges on deposits | 3,702 | 3,785 | 3,699 | 3,408 | 3,850 | 14,594 | 14,733 | ||||||||||||||
| Other service charges and fees | 2,096 | 2,007 | 2,129 | 2,049 | 2,017 | 8,281 | 7,733 | ||||||||||||||
| Insurance commissions | - | - | - | - | - | - | 966 | ||||||||||||||
| Net loss on sale of securities | - | - | (43 | ) | - | - | (43 | ) | (618 | ) | |||||||||||
| Net FDIC indemnification asset amortization | (590 | ) | (719 | ) | (516 | ) | (552 | ) | (579 | ) | (2,377 | ) | (2,181 | ) | |||||||
| Other income | 2,395 | 900 | 2,025 | 1,675 | - | 6,995 | - | ||||||||||||||
| Other operating income | 869 | 709 | 471 | 755 | 155 | 2,804 | 2,548 | ||||||||||||||
| Total noninterest income | $ | 9,314 | $ | 7,634 | $ | 8,649 | $ | 8,080 | $ | 6,297 | $ | 33,677 | $ | 26,443 | |||||||
| Noninterest expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Salaries and employee benefits | $ | 9,495 | $ | 9,334 | $ | 9,153 | $ | 9,166 | $ | 9,273 | $ | 37,148 | $ | 36,690 | |||||||
| Occupancy expense | 1,057 | 1,042 | 1,082 | 1,153 | 1,134 | 4,334 | 4,542 | ||||||||||||||
| Furniture and equipment expense | 1,179 | 1,183 | 1,062 | 1,033 | 1,004 | 4,457 | 3,980 | ||||||||||||||
| Service fees | 721 | 1,053 | 1,231 | 1,030 | 1,047 | 4,448 | 3,860 | ||||||||||||||
| Advertising and public relations | 478 | 795 | 513 | 524 | 550 | 2,310 | 2,011 | ||||||||||||||
| Professional fees | 408 | 375 | 328 | 414 | 356 | 1,698 | 1,430 | ||||||||||||||
| Amortization of intangibles | 251 | 251 | 249 | 246 | 254 | 997 | 1,039 | ||||||||||||||
| FDIC premiums and assessments | - | - | 150 | 168 | 209 | 318 | 906 | ||||||||||||||
| Loss on extinguishment of debt | - | - | - | - | - | - | 1,096 | ||||||||||||||
| Merger, acquisition, and divestiture expense | 1,532 | 592 | - | - | - | 2,124 | - | ||||||||||||||
| Goodwill impairment | - | - | - | - | - | - | 1,492 | ||||||||||||||
| Other operating expense | 3,762 | 2,819 | 2,883 | 3,051 | 3,539 | 11,929 | 12,727 | ||||||||||||||
| Total noninterest expense | $ | 18,883 | $ | 17,444 | $ | 16,651 | $ | 16,785 | $ | 17,366 | $ | 69,763 | $ | 69,773 |
6
| CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Amounts in thousands, except per share data) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Assets | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Cash and cash equivalents | $ | 217,009 | $ | 182,458 | $ | 156,478 | $ | 148,546 | $ | 76,873 | |||||
| Debt securities available for sale | 169,574 | 115,537 | 119,076 | 132,597 | 153,116 | ||||||||||
| Debt securities held to maturity | - | - | - | - | 25,013 | ||||||||||
| Loans held for sale | 263 | - | - | - | - | ||||||||||
| Loans held for investment, net of unearned income | |||||||||||||||
| Noncovered | 2,101,599 | 1,679,958 | 1,705,408 | 1,719,905 | 1,756,269 | ||||||||||
| Covered | 12,861 | 14,158 | 15,520 | 17,475 | 18,815 | ||||||||||
| Allowance for loan losses | (18,425 | ) | (18,493 | ) | (18,540 | ) | (18,243 | ) | (18,267 | ) | |||||
| Loans held for investment, net | 2,096,035 | 1,675,623 | 1,702,388 | 1,719,137 | 1,756,817 | ||||||||||
| FDIC indemnification asset | 2,883 | 3,458 | 4,020 | 4,578 | 5,108 | ||||||||||
| Premises and equipment, net | 62,824 | 48,521 | 48,262 | 46,636 | 45,785 | ||||||||||
| Other real estate owned, noncovered | 3,969 | 2,528 | 3,810 | 3,903 | 3,806 | ||||||||||
| Other real estate owned, covered | - | - | 152 | 152 | 32 | ||||||||||
| Interest receivable | 5,094 | 4,842 | 5,317 | 5,227 | 5,481 | ||||||||||
| Goodwill | 129,565 | 92,744 | 92,744 | 92,744 | 92,744 | ||||||||||
| Other intangible assets | 8,519 | 4,280 | 4,532 | 4,780 | 5,026 | ||||||||||
| Other assets | 103,112 | 75,056 | 75,248 | 84,035 | 74,573 | ||||||||||
| Total assets | $ | 2,798,847 | $ | 2,205,047 | $ | 2,212,027 | $ | 2,242,335 | $ | 2,244,374 | |||||
| Liabilities | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Deposits | |||||||||||||||
| Noninterest-bearing | $ | 838,974 | $ | 472,478 | $ | 480,573 | $ | 479,299 | $ | 459,550 | |||||
| Interest-bearing | 1,490,938 | 1,364,374 | 1,367,465 | 1,399,138 | 1,396,200 | ||||||||||
| Total deposits | 2,329,912 | 1,836,852 | 1,848,038 | 1,878,437 | 1,855,750 | ||||||||||
| Securities sold under agreements to repurchase | 1,601 | 1,863 | 3,083 | 3,700 | 29,370 | ||||||||||
| FHLB borrowings | 40 | - | - | - | - | ||||||||||
| Interest, taxes, and other liabilities | 38,475 | 28,969 | 27,220 | 27,096 | 26,397 | ||||||||||
| Total liabilities | 2,370,028 | 1,867,684 | 1,878,341 | 1,909,233 | 1,911,517 | ||||||||||
| Stockholders' equity | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Common stock | 18,377 | 15,580 | 15,633 | 15,818 | 16,007 | ||||||||||
| Additional paid-in capital | 192,413 | 108,222 | 109,816 | 115,914 | 122,486 | ||||||||||
| Retained earnings | 219,535 | 213,866 | 208,618 | 202,103 | 195,793 | ||||||||||
| Accumulated other comprehensive loss | (1,506 | ) | (305 | ) | (381 | ) | (733 | ) | (1,429 | ) | |||||
| Total stockholders' equity | 428,819 | 337,363 | 333,686 | 333,102 | 332,857 | ||||||||||
| Total liabilities and stockholders' equity | $ | 2,798,847 | $ | 2,205,047 | $ | 2,212,027 | $ | 2,242,335 | $ | 2,244,374 | |||||
| Shares outstanding at period-end | 18,376,991 | 15,579,740 | 15,633,388 | 15,818,368 | 16,007,263 | ||||||||||
| Book value per common share | $ | 23.33 | $ | 21.65 | $ | 21.34 | $ | 21.06 | $ | 20.79 | |||||
| Tangible book value per common share^(1)^ | 15.82 | 15.43 | 15.12 | 14.89 | 14.69 | ||||||||||
| (1) | A non-GAAP financial measure defined as stockholders' equity less goodwill and other intangible assets, divided by shares outstanding | ||||||||||||||
| --- | --- |
7
| SELECTED CREDIT QUALITY INFORMATION (Unaudited) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Amounts in thousands) | 2019 | 2019 | 2019 | 2019 | 2018 | ||||||||||
| Allowance for Loan Losses | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Beginning balance | $ | 18,493 | $ | 18,540 | $ | 18,243 | $ | 18,267 | $ | 18,256 | |||||
| Provision for loan losses charged to operations | 91 | 675 | 1,585 | 1,220 | 908 | ||||||||||
| Charge-offs | (1,353 | ) | (964 | ) | (2,114 | ) | (1,622 | ) | (1,282 | ) | |||||
| Recoveries | 1,194 | 242 | 826 | 378 | 385 | ||||||||||
| Net charge-offs | (159 | ) | (722 | ) | (1,288 | ) | (1,244 | ) | (897 | ) | |||||
| Ending balance | $ | 18,425 | $ | 18,493 | $ | 18,540 | $ | 18,243 | $ | 18,267 | |||||
| Nonperforming Assets | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Non-covered nonperforming assets | |||||||||||||||
| Nonaccrual loans | $ | 16,113 | $ | 16,701 | $ | 16,368 | $ | 18,544 | $ | 19,583 | |||||
| Accruing loans past due 90 days or more | 144 | 107 | 37 | 156 | 58 | ||||||||||
| Troubled debt restructurings ("TDRs")^(1)^ | 720 | 668 | 821 | 835 | 161 | ||||||||||
| Total non-covered nonperforming loans | 16,977 | 17,476 | 17,226 | 19,535 | 19,802 | ||||||||||
| OREO | 3,969 | 2,528 | 3,810 | 3,903 | 3,806 | ||||||||||
| Total non-covered nonperforming assets | $ | 20,946 | $ | 20,004 | $ | 21,036 | $ | 23,438 | $ | 23,608 | |||||
| Covered nonperforming assets | |||||||||||||||
| Nonaccrual loans | $ | 244 | $ | 243 | $ | 203 | $ | 237 | $ | 322 | |||||
| Total covered nonperforming loans | 244 | 243 | 203 | 237 | 322 | ||||||||||
| OREO | - | - | 152 | 152 | 32 | ||||||||||
| Total covered nonperforming assets | $ | 244 | $ | 243 | $ | 355 | $ | 389 | $ | 354 | |||||
| Additional Information | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Performing TDRs^(2)^ | $ | 5,855 | $ | 5,635 | $ | 5,676 | $ | 5,654 | $ | 6,266 | |||||
| Total Accruing TDRs^(3)^ | 6,575 | 6,303 | 6,497 | 6,489 | 6,427 | ||||||||||
| Non-covered ratios | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Nonperforming loans to total loans | 0.81 | % | 1.04 | % | 1.01 | % | 1.14 | % | 1.13 | % | |||||
| Nonperforming assets to total assets | 0.75 | % | 0.91 | % | 0.96 | % | 1.05 | % | 1.06 | % | |||||
| Non-PCI allowance to nonperforming loans | 108.53 | % | 105.82 | % | 107.63 | % | 93.39 | % | 92.25 | % | |||||
| Non-PCI allowance to total loans | 0.88 | % | 1.10 | % | 1.09 | % | 1.06 | % | 1.04 | % | |||||
| Annualized net charge-offs to average loans | 0.04 | % | 0.17 | % | 0.30 | % | 0.29 | % | 0.20 | % | |||||
| Total ratios | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Nonperforming loans to total loans | 0.81 | % | 1.05 | % | 1.01 | % | 1.14 | % | 1.13 | % | |||||
| Nonperforming assets to total assets | 0.76 | % | 0.92 | % | 0.97 | % | 1.06 | % | 1.07 | % | |||||
| Allowance for loan losses to nonperforming loans | 106.99 | % | 104.37 | % | 106.37 | % | 92.27 | % | 90.77 | % | |||||
| Allowance for loan losses to total loans | 0.87 | % | 1.09 | % | 1.08 | % | 1.05 | % | 1.03 | % | |||||
| Annualized net charge-offs to average loans | 0.04 | % | 0.17 | % | 0.30 | % | 0.29 | % | 0.20 | % | |||||
| (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