First Community Bankshares (FCBC) risk factors, FY2024 10-K

Other

1. 01The CRO, Derek Bonnett, has been employed by the Corporation since 2016, having served as the Director of Internal Audit until being named the Chief Risk Officer in 2021. He has over fourteen (14) years of experience providing risk management advice, insight, and assurance to financial institutions
2. 02We repurchased 257,294 shares of our common stock in 2024, 768,079 shares of our common stock in 2023, and 706,117 shares in 2022
3. 03100.00 80.28 116.66 109.92 105.37 120.02
4. 04Management’s Discussion and Analysis of Financial Condition and Results of Operations
5. 05Critical Accounting Policies
6. 06Allowance for Credit Losses or "ACL"
7. 07Non-GAAP Financial Measures
8. 08Annual net income of $51.60 million, or $2.80 per diluted common share, was an increase of $3.58 million, or 7.46%, compared to 2023
9. 09Annualized return on average assets ("ROA") was 1.60% for the twelve months of 2024 compared to 1.48% for the same period of 2023. Annualized return on average common equity ("ROE") was 10.03% for the twelve months of 2024 compared to 10.02% for the same period of 2023
10. 1010.03 % 10.02 % 11.04 % 0.01 % 0.10 % (1.02 )% (9.24 )%
11. 11Interest on loans include non-cash purchase accounting accretion of $2.90 million in 2024, $2.74 million in 2023, and $2.62 million in 2022
12. 122,211 7,698 (935 ) 8,974 8,719 24,855 (10,724 ) 22,850
13. 13Retail repurchase agreements
14. 14FTE basis based on the federal statutory rate of 21%
15. 15Provision for Credit Losses
16. 16Net gain on sale of securities
17. 17$ 39,390 $ 37,452 $ 37,182 $ 1,938 5.17 % $ 270 0.73 %
18. 18$ 96,567 $ 95,177 $ 83,116 $ 1,390 1.46 % $ 12,061 14.51 %
19. 19There were no holdings of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of our total consolidated shareholders’ equity as of December 31, 2024 or 2023
20. 20Loans Held for Investment
21. 21Owner occupied construction
22. 22Modified loans past due 90 days or more (2)
23. 23Total accruing TDRs exclude nonaccrual TDRs of $1.32 million, $2.52 million, $2.34 million, and for the three years ended December 31, 2022. They were included in nonaccrual loans as reported prior to the adoption of ASU 2022-02
24. 24Allowance for Credit Losses (ACL)
25. 25Non-farm, non-residential
26. 26$ (5,366 ) $ 2,481,215 -0.22 % $ (4,813 ) $ 2,538,361 -0.19 % $ (3,873 ) $ 2,298,503 -0.17 %
27. 27Capital Adequacy Requirements
28. 284.0% Tier 1 capital to average consolidated assets (“Tier 1 leverage ratio”)
29. 29Market Risk and Interest Rate Sensitivity
30. 30(6,325 ) -5.0 % (9,527 ) -7.5 %
31. 31Net loss on sale of securities
32. 32Other comprehensive income, before tax
33. 33Reclassification adjustment for net loss recognized in net income
34. 34Balance December 31, 2022
35. 35Common dividends declared -- $1.16 per share
36. 36Balance December 31, 2023
37. 37Common dividends declared -- $1.20 per share
38. 38Balance December 31, 2024
39. 39Loss on sale of securities
40. 40Proceeds from sale of available for sale securities
41. 41Net cash provided by (used in) acquisitions and divestitures
42. 42Repayments of FHLB and other borrowings, net
43. 43Loans originated to finance other real estate
44. 44Common stock issued in acquisition
45. 45Principles of Consolidation
46. 46NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
47. 47Level 3 – Unobservable inputs with little or no market activity that require the Company to use reasonable inputs and assumptions
48. 48Cash and Cash Equivalents
49. 49Bank Owned Life Insurance
50. 50Securities Sold Under Agreements to Repurchase
51. 51Equity-Based Compensation
52. 52Service charges on deposits and other service charges and fees
53. 53Standards Not Yet Adopted
54. 54Note 2. Acquisitions and Divestitures
55. 55$ 56,106 $ 15,264 $ 71,370
56. 56(a) Adjustment reflects the fair value adjustment based on the Company's evaluation of the acquired investment portfolio
57. 57$ 295,045 $ 29 $ (14,113 ) $ 280,961
58. 58After five years through ten years
59. 59$ 25,329 $ (45 ) $ 239,992 $ (14,068 ) $ 265,321 $ (14,113 )
60. 60Mortgage-backed Agency securities
61. 61Pass -- This grade is assigned to loans with acceptable credit quality and risk. The Company further segments this grade based on borrower characteristics that include capital strength, earnings stability, liquidity, leverage, and industry conditions
62. 62Substandard -- This grade is assigned to loans that have well defined weaknesses that may make payment default, or principal exposure, possible. These loans will likely be dependent on collateral liquidation, secondary repayment sources, or events outside the normal course of business to meet repayment terms
63. 63$ 531 $ 645 121.57 % $ 1,173 $ 825 70.33 %
64. 64Single Family Non Owner Occupied
65. 6522,447 9,814 4,674 36,935
66. 66Amortization expense for other intangible assets was $2.13 million in 2024, $1.73 million in 2023, and $1.45 million in 2022
67. 67$ 906 0.05 % $ 1,119 0.06 %
68. 68Note 11. Derivative Instruments and Hedging Activities
69. 69$ 3,109 $ 116 $ — $ 3,557 $ 136 $ —
70. 70Amortization of prior service cost
71. 71Deferred Compensation Plan
72. 72Employee Stock Ownership and Savings Plan
73. 73Equity-Based Compensation Plans
74. 74130,640 $ 30.79 5.49 $ 1,417
75. 75Restricted Stock and Stock Unit Awards
76. 76Note 13. Other Operating Income and Expense
77. 7714,898 22.68 % 14,382 23.21 % 14,065 23.38 %
78. 78$ 14,090 21.44 % $ 13,954 22.51 % $ 13,495 22.43 %
79. 79Federal net operating loss carryforward
80. 80Note 15. Accumulated Other Comprehensive Income
81. 81$ (11,722 ) $ 551 $ (11,171 )
82. 82Reclassified out of AOCI, before tax
83. 83Reclassified out of AOCI, net of tax
84. 84Assets and Liabilities Reported at Fair Value on a Recurring Basis
85. 85Changes in Level 3 Fair Value Measurements
86. 86Assets Measured at Fair Value on a Nonrecurring Basis
87. 87Quantitative Information about Level 3 Fair Value Measurements
88. 88Appraisals may be adjusted by management for customized discounting criteria, estimated sales costs, and proprietary qualitative adjustments
89. 89Note 17. Earnings per Share
90. 90Note 18. Related Party Transactions
91. 91Changes related to the composition of the Company's directors, executive officers, and related insiders
92. 92Commitments and Contingencies
93. 93Note 20. Regulatory Requirements and Restrictions
94. 94Note 21. Segment Information
95. 95Based on the business activities and information reviewed by the chief operating decision maker, the Company has one reportable segment - Community Banking
96. 96Note 22. Parent Company Financial Information
97. 97Dividends in excess of undistributed net income of subsidiaries
98. 98Note 23. Quarterly Financial Data (Unaudited)
99. 99Independent Member Crowe Global
100. 100Opinions on the Financial Statements and Internal Control over Financial Reporting
101. 101Definition and Limitations of Internal Control Over Financial Reporting
102. 102Allowance and Provision for Credit Losses on Loans – Discounted Cash Flow
103. 103The Company’s evaluation of the relevance and reliability of data used in the discounted cash flow model of the ACL calculation
104. 104Opinion on the Financial Statements
105. 105Evaluation of Disclosure Controls and Procedures
106. 106Changes in Internal Control over Financial Reporting
107. 107Management's Report on Internal Controls over Financial Reporting
108. 108There have been no material changes to the procedures by which shareholders may recommend nominees to our Board of Directors since the disclosure in our Proxy Statement filed with the SEC on March 11, 2024
109. 109Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
110. 110Certain Relationships and Related Transactions, and Director Independence
111. 111Principal Accounting Fees and Services
112. 11210.9.6** Amendment #5 to the First Community Bankshares, Inc. and Affiliates Executive Retention Plan, incorporated by reference to Exhibit 10.9.6 of the Annual Report on Form 10-K for the period ended December 31, 2021, filed on March 3, 2022
113. 11310.12.3** Amendment #3 to the First Community Bankshares, Inc. Supplemental Directors Retirement Plan, as amended and restated, incorporated by reference to Exhibit 10.12.3 of the Annual Report on Form 10-K for the period ended December 31, 2021, filed on March 3, 2022
114. 114Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
115. 115(Principal Financial Officer and Principal Accounting Officer)