First Community Bancshares, Inc. announces fourth quarter and full year 2017 results and quarterly dividend

Staff Report

BLUEFIELD, Va. — First Community Bancshares, Inc. (NASDAQ: FCBC) ( reported its unaudited results of operations and other financial information for the quarter and year ended Dec. 31, 2017. The company reported net income of $1.21 million, or $0.07 per diluted common share for the quarter ended Dec. 31, 2017, and $21.49 million, or $1.26 per diluted common share for the year ended Dec. 31, 2017.

On Dec. 22, 2017, the Tax Cuts and Jobs Act (the “Tax Reform Act”), was enacted into law. The Tax Reform Act reduces the federal tax rate for corporations from 35% to 21%, effective Jan. 1, 2018, and changes, or limits, certain tax deductions. As a result of the new law, generally accepted accounting principles in the United States (“GAAP”) require the immediate revaluation of deferred tax assets to a value reflective of the lower corporate tax rate. During the fourth quarter of 2017, the company recorded a one-time estimated revaluation adjustment of about $6.55 million to reduce its net deferred tax asset, which increased the provision for income taxes.

Excluding the impact of the non-cash revaluation, fourth quarter earnings were $7.77 million, or $0.45 per diluted share, an increase of $1.36 million, or 21.25%, over fourth quarter 2016. Full year earnings exclusive of the revaluation were $28.04 million, an increase of $2.91 million, or 11.59%, over 2016 earnings. Adjusted return on assets and equity were 1.18% and 8.02%, respectively, both significant increases over the prior year.

The company also announced that the Board of Directors declared a quarterly cash dividend to common shareholders of 18 cents ($0.18) per common share. The quarterly dividend is payable to common shareholders of record on Feb. 2, 2018, and is expected to be paid on or about Feb. 16, 2018. The current year marks the 33rd consecutive year of regular cash dividends paid to stockholders.

Fourth Quarter 2017 Highlights

• Income Statement

* Net income totaled $1.21 million, or $0.07 per diluted common share for the fourth quarter of 2017.
* Excluding the impact of the one-time deferred tax asset revaluation, earnings increased $1.36 million, or 21.25% to $7.77 million and diluted earnings per share increased $0.07 to $0.45 compared to the same quarter of 2016.

* The non-GAAP efficiency ratio improved to 57.04% compared to 61.58% in the same quarter of 2016.

* Net interest margin increased 18 basis points to 4.17%, and normalized net interest margin increased 12 basis points to 3.95% compared to the same quarter of 2016.

• Balance Sheet

* Net charge-offs decreased $2.10 million, or 59.23%, to $1.44 million for the year ended Dec. 31, 2017, compared to the same period of 2016.

* Book value per common share increased $0.68 to $20.63 compared to Dec. 31, 2016.

* Tangible book value per common share increased $0.75 to $14.64 compared to Dec. 31, 2016.

* The company and its subsidiary bank both significantly exceed regulatory “well capitalized” targets as of Dec. 31, 2017.

Non-GAAP Financial Measures

The company prepares its financial statements in accordance with GAAP. This press release also refers to certain non-GAAP financial measures that the company believes provide investors with important information, when used in conjunction with results presented in accordance with GAAP, regarding its operational performance. The company’s non-GAAP financial measures presented in this release include core earnings, the efficiency ratio, tangible book value per common share, average tangible common equity, and normalized net interest margin. Management believes that core earnings provide the company and investors a valuable tool to evaluate the company’s financial results. Management believes that the efficiency ratio provides important information about the company’s operating expense control and efficiency of operations. Management also believes this ratio focuses attention on the core operating performance of the Company over time and is highly useful in comparing period-to-period operating performance of core business operations. The efficiency ratio used by the company may not be comparable to efficiency ratios reported by other financial institutions. The reconciliations of these measures to GAAP measures are provided within this news release.

About First Community Bancshares, Inc.

First Community Bancshares, Inc., a financial holding company headquartered in Bluefield, 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 Dec. 31, 2017. First Community Bank provides insurance services through First Community Insurance Services, which operates eight in-branch locations in Virginia and West Virginia and offers wealth management and investment advice through its Trust Division and First Community Wealth Management, which collectively managed $957 million in combined assets as of Dec. 31, 2017. The company reported consolidated assets of $2.39 billion as of Dec. 31, 2017. 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

Staff Report