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): July 28 , 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 July 28, 2020, First Community Bankshares, Inc. (the “Company”) announced by press release its earnings for the second quarter of 2020. A copy of the press release is attached hereto as Exhibit 99.1.
Item 8.01 Other Events.
On July 28, 2020, the Company announced by press release its quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share, payable on or about August 21, 2020, to shareholders of record on August 7, 2020. 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 July 28, 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: | July 28, 2020 | By: | /s/ David D. Brown |
| David D. Brown | |||
| Chief Financial Officer |
ex_195449.htm
Exhibit 99.1
| NEWS RELEASE | |
|---|---|
| FOR IMMEDIATE RELEASE: | FOR MORE INFORMATION, CONTACT: |
| July 28, 2020 | David D. Brown |
| (276) 326-9000 |
First Community Ban k shares, Inc. Announces Second **** Q uarter **** 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 ended June 30, 2020. The Company reported net income of $8.24 million, or $0.46 per diluted common share, for the quarter ended June 30, 2020, which was a decrease of $0.20, or 30.30%, over the same quarter of 2019. Net income was $16.11 million, or $0.90 per diluted common share, for the six months ended June 30, 2020, which represents a 29.13% decrease in per share diluted earnings compared to the same period of 2019.
Additionally, today the Company declared a quarterly cash dividend to common shareholders of twenty-five cents ($0.25) per common share. The quarterly dividend is payable to common shareholders of record on August 7, 2020, and is expected to be paid on or about August 21, 2020. The current year is the 35^th^ consecutive year of regular dividends to common shareholders.
Second **** Quarter 2020 and Current Highlights
| ● | Pandemic and General |
|---|---|
| o | The Company’s social distancing practices at its branches and corporate offices continue today. Remote working environments remain in place for approximately 60% of the Company’s back office workforce. |
| --- | --- |
| o | The Company implemented a pay differential for employees working at branch and back-office locations which ended May 31, 2020. As a result of the pay differential and other COVID-19 related expenses, the Company incurred approximately $612 thousand in additional expenses for the quarter. |
| --- | --- |
| o | In order to aid its affected customers, the Company modified or deferred payments on 1,277 commercial loans totaling $340.00 million in principal balances and 1,820 retail loans totaling $96.11 million in principal balances. |
| --- | --- |
| o | Through June 30, 2020, the Company processed 758 loans with original principal balances totaling $60.23 million through the SBA’s Paycheck Protection Program. |
| --- | --- |
| o | As a result of the low interest rate environment, the Company’s pipeline for mortgage loans grew to approximately $99.75 million at June 30, 2020, and stood at $101.39 million at July 24, 2020. |
| --- | --- |
| ● | Income Statement |
|---|---|
| o | Second quarter earnings reflect a loan loss provision of $3.83 million, an increase of $2.25 million over second quarter of 2019, to recognize the impact of the coronavirus slowdown. Coupled with the provision in the first quarter of 2020, the second quarter provision had the cumulative effect of increasing loan loss reserve $5.33 million. |
| --- | --- |
| o | Despite the significant increase in loan loss provision, return on average assets remained strong at 1.15% for both the second quarter and the six month period. The significant increase in loan loss provision over previous quarterly provisions reduced return on average assets for the quarter by 0.24%. |
| --- | --- |
| o | Net interest margin decreased 50 basis points to 4.22% compared to the same quarter of 2019. Net interest margin decreased 20 basis points to 4.46% for the six months compared to the same period of 2019. Both period decreases are reflective of the current historic low interest rate environment. |
| --- | --- |
| o | Pandemic shutdowns and stay-at-home orders had a significant negative impact on deposit service charges. |
| --- | --- |
| ● | Balance Sheet |
|---|---|
| o | As of June 30, 2020, the Company continues to significantly exceed regulatory “well capitalized” targets, as well as all capital targets of its capital management plan. The Company completed its previous share repurchase authorization in the first quarter of 2020, prior to the onset of the current coronavirus pandemic, which completed a strategic objective of acquiring 6.6 million shares, returning over $149 million in surplus capital to shareholders. In light of the uncertain economic forecast, the Company has temporarily delayed consideration of a new share repurchase authorization to preserve and further accumulate surplus capital. |
| --- | --- |
| o | Total deposits have grown $167.93 million, or 7.21%, during 2020 with $125.03 million of the increase coming in interest free categories. |
| --- | --- |
1
Non-GAAP Financial Measures
In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this news release include “tangible book value per common share,” “return on average tangible common equity,” “adjusted earnings,” “adjusted diluted earnings per share,” “adjusted return on average assets,” “adjusted return on average common equity,” “adjusted return on average tangible common equity,” and certain financial measures presented on a fully taxable equivalent (“FTE”) basis. FTE basis is calculated using the federal statutory income tax rate of 21%. While the Company believes certain non-GAAP financial measures enhance the understanding of its business and performance, they are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions.
About First Community 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 June 30, 2020. First Community Bank offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed and administered $1.10 billion in combined assets as of June 30, 2020. The Company reported consolidated assets of $2.95 billion as of June 30, 2020. 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 | Six Months Ended | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | ||||||||||||||||
| (Amounts in thousands, except share and per share data) | 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2019 | ||||||||||||||
| Interest income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest and fees on loans | $ | 26,991 | $ | 28,058 | $ | 21,837 | $ | 22,068 | $ | 22,721 | $ | 55,049 | $ | 44,900 | |||||||
| Interest on securities | 713 | 918 | 870 | 857 | 895 | 1,631 | 1,989 | ||||||||||||||
| Interest on deposits in banks | 82 | 533 | 663 | 680 | 766 | 615 | 1,104 | ||||||||||||||
| Total interest income | 27,786 | 29,509 | 23,370 | 23,605 | 24,382 | 57,295 | 47,993 | ||||||||||||||
| Interest expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest on deposits | 1,445 | 1,825 | 1,312 | 1,383 | 1,392 | 3,270 | 2,697 | ||||||||||||||
| Interest on borrowings | 2 | 2 | 1 | 1 | 1 | 4 | 121 | ||||||||||||||
| Total interest expense | 1,447 | 1,827 | 1,313 | 1,384 | 1,393 | 3,274 | 2,818 | ||||||||||||||
| Net interest income | 26,339 | 27,682 | 22,057 | 22,221 | 22,989 | 54,021 | 45,175 | ||||||||||||||
| Provision for loan losses | 3,831 | 3,500 | 91 | 675 | 1,585 | 7,331 | 2,805 | ||||||||||||||
| Net interest income after provision | 22,508 | 24,182 | 21,966 | 21,546 | 21,404 | 46,690 | 42,370 | ||||||||||||||
| Noninterest income | 6,913 | 7,549 | 9,314 | 7,634 | 8,649 | 14,462 | 16,729 | ||||||||||||||
| Noninterest expense | 18,913 | 21,664 | 18,883 | 17,444 | 16,651 | 40,577 | 33,436 | ||||||||||||||
| Income before income taxes | 10,508 | 10,067 | 12,397 | 11,736 | 13,402 | 20,575 | 25,663 | ||||||||||||||
| Income tax expense | 2,270 | 2,195 | 2,833 | 2,580 | 2,951 | 4,465 | 5,581 | ||||||||||||||
| Net income | $ | 8,238 | $ | 7,872 | $ | 9,564 | $ | 9,156 | $ | 10,451 | $ | 16,110 | $ | 20,082 | |||||||
| Earnings per common share | |||||||||||||||||||||
| Basic | $ | 0.47 | $ | 0.44 | $ | 0.61 | $ | 0.59 | $ | 0.67 | $ | 0.90 | $ | 1.27 | |||||||
| Diluted | 0.46 | 0.44 | 0.61 | 0.58 | 0.66 | 0.90 | 1.27 | ||||||||||||||
| Cash dividends per common share | |||||||||||||||||||||
| Regular | 0.25 | 0.25 | 0.25 | 0.25 | 0.25 | 0.50 | 0.46 | ||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||
| Basic | 17,701,853 | 17,998,994 | 15,611,093 | 15,603,992 | 15,712,204 | 17,850,423 | 15,775,462 | ||||||||||||||
| Diluted | 17,728,300 | 18,050,071 | 15,670,047 | 15,664,587 | 15,775,320 | 17,888,325 | 15,847,498 | ||||||||||||||
| Performance ratios | |||||||||||||||||||||
| Return on average assets | 1.15 | % | 1.16 | % | 1.71 | % | 1.65 | % | 1.89 | % | 1.15 | % | 1.82 | % | |||||||
| Return on average common equity | 7.97 | % | 7.49 | % | 11.08 | % | 10.80 | % | 12.57 | % | 7.73 | % | 12.17 | % | |||||||
| Return on average tangible common equity^(1)^ | 11.91 | % | 11.12 | % | 15.33 | % | 15.19 | % | 17.57 | % | 11.51 | % | 17.04 | % | |||||||
| (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 | Six Months Ended | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2019 | |||||||||||||||
| (Amounts in thousands, except per share data) | |||||||||||||||||||||
| Net income | $ | 8,238 | $ | 7,872 | $ | 9,564 | $ | 9,156 | $ | 10,451 | $ | 16,110 | $ | 20,082 | |||||||
| Adjustments: | |||||||||||||||||||||
| Net (gain) loss on sale of securities | - | (385 | ) | - | - | 43 | (385 | ) | 43 | ||||||||||||
| Merger, acquisition, and divestiture expense | - | 1,893 | 1,532 | 592 | - | 1,893 | - | ||||||||||||||
| Other items^(1)^ | - | - | (2,395 | ) | (900 | ) | (2,025 | ) | - | (3,700 | ) | ||||||||||
| Total adjustments | - | 1,508 | (863 | ) | (308 | ) | (1,982 | ) | 1,508 | (3,657 | ) | ||||||||||
| Tax effect | - | 354 | (331 | ) | (134 | ) | (550 | ) | 354 | (878 | ) | ||||||||||
| Adjusted earnings, non-GAAP | $ | 8,238 | $ | 9,026 | $ | 9,032 | $ | 8,982 | $ | 9,019 | $ | 17,264 | $ | 17,303 | |||||||
| Adjusted diluted earnings per common share, non-GAAP | $ | 0.46 | $ | 0.50 | $ | 0.58 | $ | 0.57 | $ | 0.57 | $ | 0.97 | $ | 1.09 | |||||||
| Performance ratios, non-GAAP | |||||||||||||||||||||
| Adjusted return on average assets | 1.15 | % | 1.33 | % | 1.61 | % | 1.62 | % | 1.63 | % | 1.24 | % | 1.57 | % | |||||||
| Adjusted return on average common equity | 7.97 | % | 8.59 | % | 10.46 | % | 10.59 | % | 10.84 | % | 8.28 | % | 10.48 | % | |||||||
| Adjusted return on average tangible common equity^(2)^ | 11.91 | % | 12.75 | % | 14.48 | % | 14.90 | % | 15.16 | % | 12.33 | % | 14.68 | % | |||||||
| (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 June 30, | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | |||||||||||||
| 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)^ | $ | 2,129,513 | $ | 27,040 | 5.11 | % | $ | 1,721,392 | $ | 22,772 | 5.31 | % | ||
| Securities available for sale | 103,378 | 839 | 3.26 | % | 126,153 | 1,068 | 3.41 | % | ||||||
| Interest-bearing deposits | 293,791 | 81 | 0.11 | % | 125,759 | 766 | 2.44 | % | ||||||
| Total earning assets | 2,526,682 | 27,960 | 4.45 | % | 1,973,304 | 24,606 | 5.00 | % | ||||||
| Other assets | 356,913 | 248,270 | ||||||||||||
| Total assets | $ | 2,883,595 | $ | 2,221,574 | ||||||||||
| Liabilities and stockholders' equity | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest-bearing deposits | ||||||||||||||
| Demand deposits | $ | 547,445 | $ | 98 | 0.07 | % | $ | 454,246 | $ | 77 | 0.07 | % | ||
| Savings deposits | 707,298 | 240 | 0.14 | % | 504,854 | 192 | 0.15 | % | ||||||
| Time deposits | 465,212 | 1,107 | 0.96 | % | 429,469 | 1,123 | 1.05 | % | ||||||
| Total interest-bearing deposits | 1,719,955 | 1,445 | 0.34 | % | 1,388,569 | 1,392 | 0.40 | % | ||||||
| Borrowings | ||||||||||||||
| Retail repurchase agreements | 1,244 | 1 | 0.14 | % | 3,024 | 1 | 0.13 | % | ||||||
| FHLB advances and other borrowings | - | - | - | - | - | - | ||||||||
| Total borrowings | 1,244 | 1 | 0.32 | % | 3,024 | 1 | 0.13 | % | ||||||
| Total interest-bearing liabilities | 1,721,199 | 1,446 | 0.34 | % | 1,391,593 | 1,393 | 0.40 | % | ||||||
| Noninterest-bearing demand deposits | 711,174 | 468,782 | ||||||||||||
| Other liabilities | 35,467 | 27,604 | ||||||||||||
| Total liabilities | 2,467,840 | 1,887,979 | ||||||||||||
| Stockholders' equity | 415,755 | 333,595 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 2,883,595 | $ | 2,221,574 | ||||||||||
| Net interest income, FTE^(1)^ | $ | 26,514 | $ | 23,213 | ||||||||||
| Net interest rate spread | 4.11 | % | 4.60 | % | ||||||||||
| Net interest margin, FTE^(1)^ | 4.22 | % | 4.72 | % | ||||||||||
| (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 $1.50 million and $1.39 million for the three months ended June 30, 2020 and 2019, respectively. |
4
| AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Six Months Ended June 30, | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | |||||||||||||
| 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)^ | $ | 2,105,323 | $ | 55,145 | 5.27 | % | $ | 1,743,141 | $ | 45,008 | 5.21 | % | ||
| Securities available for sale | 119,744 | 1,899 | 3.19 | % | 135,914 | 2,299 | 3.41 | % | ||||||
| Securities held to maturity | - | - | - | 6,140 | 45 | 1.48 | % | |||||||
| Interest-bearing deposits | 228,636 | 616 | 0.53 | % | 90,423 | 1,104 | 2.46 | % | ||||||
| Total earning assets | 2,453,703 | 57,660 | 4.73 | % | 1,975,618 | 48,456 | 4.95 | % | ||||||
| Other assets | 355,280 | 248,118 | ||||||||||||
| Total assets | $ | 2,808,983 | $ | 2,223,736 | ||||||||||
| Liabilities and stockholders' equity | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest-bearing deposits | ||||||||||||||
| Demand deposits | $ | 525,024 | $ | 188 | 0.07 | % | $ | 450,655 | $ | 114 | 0.05 | % | ||
| Savings deposits | 693,477 | 654 | 0.19 | % | 503,075 | 367 | 0.15 | % | ||||||
| Time deposits | 475,149 | 2,429 | 1.03 | % | 433,936 | 2,216 | 1.03 | % | ||||||
| Total interest-bearing deposits | 1,693,650 | 3,271 | 0.39 | % | 1,387,666 | 2,697 | 0.39 | % | ||||||
| Borrowings | ||||||||||||||
| Retail repurchase agreements | 1,346 | 3 | 0.39 | % | 3,141 | 2 | 0.13 | % | ||||||
| Wholesale repurchase agreements | - | - | - | 7,597 | 119 | 3.16 | % | |||||||
| FHLB advances and other borrowings | 72 | 1 | 2.23 | % | - | - | - | |||||||
| Total borrowings | 1,418 | 4 | 0.57 | % | 10,738 | 121 | 2.27 | % | ||||||
| Total interest-bearing liabilities | 1,695,068 | 3,275 | 0.39 | % | 1,398,404 | 2,818 | 0.41 | % | ||||||
| Noninterest-bearing demand deposits | 655,906 | 464,299 | ||||||||||||
| Other liabilities | 38,820 | 28,245 | ||||||||||||
| Total liabilities | 2,389,794 | 1,890,948 | ||||||||||||
| Stockholders' equity | 419,189 | 332,788 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 2,808,983 | $ | 2,223,736 | ||||||||||
| Net interest income, FTE^(1)^ | $ | 54,385 | $ | 45,638 | ||||||||||
| Net interest rate spread | 4.34 | % | 4.54 | % | ||||||||||
| Net interest margin, FTE^(1)^ | 4.46 | % | 4.66 | % | ||||||||||
| (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 $3.46 million and $2.15 million for the six months ended June 30, 2020 and 2019, respectively. |
5
| CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE (Unaudited) | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30, | March 31, | December 31, | September 30, | June 30, | June 30, | ||||||||||||||||
| (Amounts in thousands) | 2020 | 2020 | 2019 | 2019 | 2019 | 2020 | 2019 | ||||||||||||||
| Noninterest income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Wealth management | $ | 854 | $ | 844 | $ | 842 | $ | 952 | $ | 884 | $ | 1,698 | $ | 1,629 | |||||||
| Service charges on deposits | 2,560 | 3,731 | 3,702 | 3,785 | 3,699 | 6,291 | 7,107 | ||||||||||||||
| Other service charges and fees | 2,617 | 2,231 | 2,096 | 2,007 | 2,129 | 4,848 | 4,178 | ||||||||||||||
| Net gain (loss) on sale of securities | - | 385 | - | - | (43 | ) | 385 | (43 | ) | ||||||||||||
| Net FDIC indemnification asset amortization | (483 | ) | (486 | ) | (590 | ) | (719 | ) | (516 | ) | (969 | ) | (1,068 | ) | |||||||
| Other income | - | - | 2,395 | 900 | 2,025 | - | 3,700 | ||||||||||||||
| Other operating income | 1,365 | 844 | 869 | 709 | 471 | 2,209 | 1,226 | ||||||||||||||
| Total noninterest income | $ | 6,913 | $ | 7,549 | $ | 9,314 | $ | 7,634 | $ | 8,649 | $ | 14,462 | $ | 16,729 | |||||||
| Noninterest expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Salaries and employee benefits | $ | 11,015 | $ | 11,386 | $ | 9,495 | $ | 9,334 | $ | 9,153 | $ | 22,401 | $ | 18,319 | |||||||
| Occupancy expense | 1,275 | 1,315 | 1,057 | 1,042 | 1,082 | 2,590 | 2,235 | ||||||||||||||
| Furniture and equipment expense | 1,316 | 1,384 | 1,179 | 1,183 | 1,062 | 2,700 | 2,095 | ||||||||||||||
| Service fees | 1,329 | 1,523 | 721 | 1,053 | 1,231 | 2,852 | 2,261 | ||||||||||||||
| Advertising and public relations | 475 | 512 | 478 | 795 | 513 | 987 | 1,037 | ||||||||||||||
| Professional fees | 307 | 233 | 408 | 375 | 328 | 540 | 742 | ||||||||||||||
| Amortization of intangibles | 360 | 361 | 251 | 251 | 249 | 721 | 495 | ||||||||||||||
| FDIC premiums and assessments | 33 | - | - | - | 150 | 33 | 318 | ||||||||||||||
| Merger, acquisition, and divestiture expense | - | 1,893 | 1,532 | 592 | - | 1,893 | - | ||||||||||||||
| Other operating expense | 2,803 | 3,057 | 3,762 | 2,819 | 2,883 | 5,860 | 5,934 | ||||||||||||||
| Total noninterest expense | $ | 18,913 | $ | 21,664 | $ | 18,883 | $ | 17,444 | $ | 16,651 | $ | 40,577 | $ | 33,436 |
6
| CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Amounts in thousands, except per share data) | 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||
| Assets | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Cash and cash equivalents | $ | 421,492 | $ | 241,613 | $ | 217,009 | $ | 182,458 | $ | 156,478 | |||||
| Debt securities available for sale | 98,367 | 107,753 | 169,574 | 115,537 | 119,076 | ||||||||||
| Loans held for sale | - | - | 263 | - | - | ||||||||||
| Loans held for investment, net of unearned income | |||||||||||||||
| Noncovered | 2,125,560 | 2,084,610 | 2,101,599 | 1,679,958 | 1,705,408 | ||||||||||
| Covered | 11,257 | 12,115 | 12,861 | 14,158 | 15,520 | ||||||||||
| Allowance for loan losses | (23,758 | ) | (21,137 | ) | (18,425 | ) | (18,493 | ) | (18,540 | ) | |||||
| Loans held for investment, net | 2,113,059 | 2,075,588 | 2,096,035 | 1,675,623 | 1,702,388 | ||||||||||
| FDIC indemnification asset | 1,943 | 2,433 | 2,883 | 3,458 | 4,020 | ||||||||||
| Premises and equipment, net | 62,658 | 63,319 | 62,824 | 48,521 | 48,262 | ||||||||||
| Other real estate owned, noncovered | 2,181 | 2,502 | 3,969 | 2,528 | 3,810 | ||||||||||
| Other real estate owned, covered | - | - | - | - | 152 | ||||||||||
| Interest receivable | 8,380 | 6,117 | 6,677 | 4,842 | 5,317 | ||||||||||
| Goodwill | 129,565 | 129,565 | 129,565 | 92,744 | 92,744 | ||||||||||
| Other intangible assets | 7,798 | 8,159 | 8,519 | 4,280 | 4,532 | ||||||||||
| Other assets | 103,623 | 101,912 | 101,529 | 75,056 | 75,248 | ||||||||||
| Total assets | $ | 2,949,066 | $ | 2,738,961 | $ | 2,798,847 | $ | 2,205,047 | $ | 2,212,027 | |||||
| Liabilities | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Deposits | |||||||||||||||
| Noninterest-bearing | $ | 752,899 | $ | 620,292 | $ | 627,868 | $ | 472,478 | $ | 480,573 | |||||
| Interest-bearing | 1,744,947 | 1,668,122 | 1,702,044 | 1,364,374 | 1,367,465 | ||||||||||
| Total deposits | 2,497,846 | 2,288,414 | 2,329,912 | 1,836,852 | 1,848,038 | ||||||||||
| Securities sold under agreements to repurchase | 1,100 | 1,348 | 1,601 | 1,863 | 3,083 | ||||||||||
| FHLB and other borrowings | - | 1,000 | - | - | - | ||||||||||
| Interest, taxes, and other liabilities | 34,290 | 36,593 | 38,515 | 28,969 | 27,220 | ||||||||||
| Total liabilities | 2,533,236 | 2,327,355 | 2,370,028 | 1,867,684 | 1,878,341 | ||||||||||
| Stockholders' equity | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Common stock | 17,710 | 17,700 | 18,377 | 15,580 | 15,633 | ||||||||||
| Additional paid-in capital | 172,601 | 172,231 | 192,413 | 108,222 | 109,816 | ||||||||||
| Retained earnings | 226,627 | 222,814 | 219,535 | 213,866 | 208,618 | ||||||||||
| Accumulated other comprehensive loss | (1,108 | ) | (1,139 | ) | (1,506 | ) | (305 | ) | (381 | ) | |||||
| Total stockholders' equity | 415,830 | 411,606 | 428,819 | 337,363 | 333,686 | ||||||||||
| Total liabilities and stockholders' equity | $ | 2,949,066 | $ | 2,738,961 | $ | 2,798,847 | $ | 2,205,047 | $ | 2,212,027 | |||||
| Shares outstanding at period-end | 17,709,569 | 17,700,140 | 18,376,991 | 15,579,740 | 15,633,388 | ||||||||||
| Book value per common share | $ | 23.48 | $ | 23.25 | $ | 23.33 | $ | 21.65 | $ | 21.34 | |||||
| Tangible book value per common share^(1)^ | 15.72 | 15.47 | 15.82 | 15.43 | 15.12 | ||||||||||
| (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) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March31, | December 31, | September 30, | June 30, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Amounts in thousands) | 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||
| Allowance for Loan Losses | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Beginning balance | $ | 21,137 | $ | 18,425 | $ | 18,493 | $ | 18,540 | $ | 18,243 | |||||
| Provision for loan losses charged to operations | 3,831 | 3,500 | 91 | 675 | 1,585 | ||||||||||
| Charge-offs | (1,672 | ) | (1,194 | ) | (1,353 | ) | (964 | ) | (2,114 | ) | |||||
| Recoveries | 462 | 406 | 1,194 | 242 | 826 | ||||||||||
| Net charge-offs | (1,210 | ) | (788 | ) | (159 | ) | (722 | ) | (1,288 | ) | |||||
| Ending balance | $ | 23,758 | $ | 21,137 | $ | 18,425 | $ | 18,493 | $ | 18,540 | |||||
| Nonperforming Assets | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Non-covered nonperforming assets | |||||||||||||||
| Nonaccrual loans | $ | 24,471 | $ | 20,263 | $ | 16,113 | $ | 16,701 | $ | 16,368 | |||||
| Accruing loans past due 90 days or more | 284 | 329 | 144 | 107 | 37 | ||||||||||
| Troubled debt restructurings ("TDRs")^(1)^ | 598 | 623 | 720 | 668 | 821 | ||||||||||
| Total non-covered nonperforming loans | 23,353 | 21,215 | 16,977 | 17,476 | 17,226 | ||||||||||
| OREO | 2,181 | 2,502 | 3,969 | 2,528 | 3,810 | ||||||||||
| Total non-covered nonperforming assets | $ | 27,534 | $ | 23,717 | $ | 20,946 | $ | 20,004 | $ | 21,036 | |||||
| Covered nonperforming assets | |||||||||||||||
| Nonaccrual loans | $ | 299 | $ | 145 | $ | 244 | $ | 243 | $ | 203 | |||||
| Total covered nonperforming loans | 299 | 145 | 244 | 243 | 203 | ||||||||||
| OREO | - | - | - | - | 152 | ||||||||||
| Total covered nonperforming assets | $ | 299 | $ | 145 | $ | 244 | $ | 243 | $ | 355 | |||||
| Additional Information | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Performing TDRs^(2)^ | $ | 10,822 | $ | 8,429 | $ | 5,855 | $ | 5,635 | $ | 5,676 | |||||
| Total Accruing TDRs^(3)^ | 11,420 | 9,052 | 6,575 | 6,303 | 6,497 | ||||||||||
| Non-covered ratios | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Nonperforming loans to total loans | 1.19 | % | 1.02 | % | 0.81 | % | 1.04 | % | 1.01 | % | |||||
| Nonperforming assets to total assets | 0.94 | % | 0.87 | % | 0.75 | % | 0.91 | % | 0.96 | % | |||||
| Non-PCI allowance to nonperforming loans | 93.71 | % | 99.63 | % | 108.53 | % | 105.82 | % | 107.63 | % | |||||
| Non-PCI allowance to total loans | 1.12 | % | 1.01 | % | 0.88 | % | 1.10 | % | 1.09 | % | |||||
| Annualized net charge-offs to average loans | 0.23 | % | 0.15 | % | 0.04 | % | 0.17 | % | 0.30 | % | |||||
| Total ratios | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Nonperforming loans to total loans | 1.20 | % | 1.02 | % | 0.81 | % | 1.05 | % | 1.01 | % | |||||
| Nonperforming assets to total assets | 0.94 | % | 0.87 | % | 0.76 | % | 0.92 | % | 0.97 | % | |||||
| Allowance for loan losses to nonperforming loans | 92.62 | % | 98.96 | % | 106.99 | % | 104.37 | % | 106.37 | % | |||||
| Allowance for loan losses to total loans | 1.11 | % | 1.01 | % | 0.87 | % | 1.09 | % | 1.08 | % | |||||
| Annualized net charge-offs to average loans | 0.23 | % | 0.15 | % | 0.04 | % | 0.17 | % | 0.30 | % | |||||
| (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