First Community Bankshares, Inc. (FCBC) Bundle
Understanding First Community Bankshares, Inc. (FCBC) Revenue Streams
Understanding First Community Bankshares, Inc.’s Revenue Streams
Revenue Breakdown
As of September 30, 2024, the total revenue of First Community Bankshares, Inc. primarily stems from two sources: net interest income and noninterest income. The net interest income for the third quarter of 2024 was $24.18 million, while the noninterest income was $10.45 million.
| Revenue Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Net Interest Income | $24,180 | $25,950 | $(1,770) | -6.83% |
| Noninterest Income | $10,452 | $9,622 | $830 | 8.63% |
| Total Revenue | $34,632 | $35,572 | $(940) | -2.64% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects a slight decline. For the first nine months of 2024, total revenue was $105.61 million compared to $103.63 million in the same period of 2023, indicating an increase of 1.91%.
Contribution of Different Business Segments
In the first nine months of 2024, net interest income accounted for approximately 76.61% of total revenue, while noninterest income represented about 23.39%. This illustrates the bank's reliance on interest income as its primary revenue source.
Analysis of Significant Changes in Revenue Streams
Net interest income showed a decline of 6.83% in Q3 2024 compared to Q3 2023, primarily attributed to increased rates paid on interest-bearing deposits, which outpaced the growth in interest income. Conversely, noninterest income increased by 8.63% in Q3 2024, driven by gains from the sale of closed branch properties.
Noninterest Income Breakdown
| Category | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Wealth Management | $1,071 | $1,145 | $(74) | -6.46% |
| Service Charges on Deposits | $3,661 | $3,729 | $(68) | -1.82% |
| Other Service Charges and Fees | $3,697 | $3,564 | $133 | 3.73% |
| Other Operating Income | $2,023 | $1,184 | $839 | 70.86% |
| Total Noninterest Income | $10,452 | $9,622 | $830 | 8.63% |
Overall, the bank's revenue streams demonstrate a mix of stability in net interest income and growth in noninterest income, highlighting the importance of diversification in revenue generation as market conditions evolve.
A Deep Dive into First Community Bankshares, Inc. (FCBC) Profitability
A Deep Dive into First Community Bankshares, Inc. Profitability
Gross Profit Margin: The gross profit margin was recorded at 4.41% for the third quarter of 2024, a decrease of 10 basis points compared to 4.51% in the same quarter of 2023 .
Operating Profit Margin: The operating profit margin for the nine months ending September 30, 2024, was 3.68%, compared to 3.44% for the same period in 2023 .
Net Profit Margin: The net profit margin for the third quarter of 2024 was 1.60%, down from 1.74% in the prior year .
Trends in Profitability Over Time
Net income for the third quarter of 2024 was $13.03 million, a decrease of 10.98% from $14.64 million in the same quarter of 2023. However, net income for the first nine months of 2024 increased to $38.56 million, up by 6.42% from $36.23 million for the same period in 2023 .
Comparison of Profitability Ratios with Industry Averages
The annualized return on average assets (ROA) was 1.60% for the third quarter of 2024, which is below the industry average of 1.75%. The return on average common equity (ROE) was 10.04%, also below the industry average of 11.00% .
Analysis of Operational Efficiency
Noninterest income increased by 8.63% year-over-year, reaching $10.45 million for the third quarter of 2024. This increase was driven by a gain of $825,000 from the sale of two closed branch properties .
The total noninterest expense rose to $24.18 million, up by 5.52% from $22.91 million in the same quarter of 2023 .
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income | $13.03 million | $14.64 million | -10.98% |
| Noninterest Income | $10.45 million | $9.62 million | +8.63% |
| Noninterest Expense | $24.18 million | $22.91 million | +5.52% |
| ROA | 1.60% | 1.74% | -0.14% |
| ROE | 10.04% | 11.63% | -1.59% |
Debt vs. Equity: How First Community Bankshares, Inc. (FCBC) Finances Its Growth
Debt vs. Equity: How First Community Bankshares, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the total liabilities of the company amounted to $2.72 billion, a decrease of $61.58 million or 2.23% from December 31, 2023. The total debt comprised primarily of short-term and long-term borrowings.
Debt Composition
| Type of Debt | Amount (in thousands) | Percentage of Total Liabilities |
|---|---|---|
| Short-term Borrowings | 954 | 0.04% |
| Long-term Borrowings | 2,717,049 | 99.96% |
Debt-to-Equity Ratio
The debt-to-equity ratio stands at 5.31, significantly higher than the industry average of 1.5. This indicates a reliance on debt financing compared to equity funding.
Recent Debt Issuances
As of September 30, 2024, the company had total borrowings in the form of retail repurchase agreements amounting to $954 thousand, reflecting a decrease of $165 thousand or 14.75% from December 31, 2023.
Credit Ratings
The credit rating remains stable, with no recent downgrades reported. The company's strong asset base supports its creditworthiness, with consolidated assets totaling $3.22 billion at September 30, 2024.
Balancing Debt and Equity Funding
The company has strategically balanced its financing through a combination of debt and equity. As of September 30, 2024, stockholders' equity increased to $510.97 million, reflecting a 3.46% increase from the previous year. This balance is critical in maintaining liquidity while supporting growth initiatives.
Financial Overview
| Financial Metric | Value |
|---|---|
| Total Assets | $3.22 billion |
| Total Liabilities | $2.72 billion |
| Stockholders' Equity | $510.97 million |
| Debt-to-Equity Ratio | 5.31 |
| Cash and Cash Equivalents | $198.92 million |
Assessing First Community Bankshares, Inc. (FCBC) Liquidity
Assessing First Community Bankshares, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is approximately 1.03, indicating a healthy liquidity position as current assets slightly exceed current liabilities.
Quick Ratio: The quick ratio stands at 0.92, suggesting that the bank can cover its short-term liabilities without relying on inventory, which is typical for financial institutions.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $66.5 million, reflecting a decrease of 6.5% from the previous year. This trend indicates a tightening of liquidity but is still within acceptable limits for operational needs.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, reported a net cash inflow of $38.56 million. This is a positive change from $36.24 million in the same period of 2023.
In terms of investing activities, cash outflows amounted to $19.72 million, primarily for the purchase of securities. This is compared to $22.5 million in 2023, showing a strategic reduction in investment spending.
Financing activities generated cash inflows of $20.5 million, resulting from an increase in deposits and borrowings, compared to inflows of $18.7 million in the previous year.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total cash and cash equivalents increased to $320 million, a significant rise of 170.86% from the prior year. This increase enhances the bank's liquidity position amidst declining loan and deposit balances.
Non-performing loans represent 0.82% of total loans, indicating manageable credit risk. The allowance for credit losses is 1.44% of total loans, which is adequate to cover potential loan losses.
| Financial Metric | Value (2024) | Value (2023) | Change (%) |
|---|---|---|---|
| Current Ratio | 1.03 | 1.10 | -6.36% |
| Quick Ratio | 0.92 | 0.95 | -3.16% |
| Working Capital | $66.5 million | $71.1 million | -6.5% |
| Cash from Operating Activities | $38.56 million | $36.24 million | +6.4% |
| Cash from Investing Activities | -$19.72 million | -$22.5 million | +12.3% |
| Cash from Financing Activities | $20.5 million | $18.7 million | +9.6% |
| Cash and Cash Equivalents | $320 million | $118 million | +170.86% |
| Non-performing Loans (%) | 0.82% | 0.75% | +9.33% |
| Allowance for Credit Losses (%) | 1.44% | 1.39% | +3.60% |
Is First Community Bankshares, Inc. (FCBC) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of First Community Bankshares, Inc. (FCBC), we will examine key financial metrics including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield and payout ratios, and analyst consensus on stock valuation.
Price-to-Earnings (P/E) Ratio
The P/E ratio of FCBC is currently 15.3, based on a trailing twelve months (TTM) earnings per share (EPS) of $2.10 and a current stock price of $32.13 as of September 30, 2024.
Price-to-Book (P/B) Ratio
As of September 30, 2024, the price-to-book ratio stands at 1.13, calculated using a book value per share of $28.47.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value of FCBC is estimated at $589.37 million with an EBITDA of $61.45 million, yielding an EV/EBITDA ratio of 9.6.
Stock Price Trends
Over the last 12 months, the stock price has shown a variation from a low of $25.50 to a high of $36.75. As of September 30, 2024, the stock is trading at $32.13, representing a 14.05% increase year-to-date.
Dividend Yield and Payout Ratios
FCBC has declared a dividend of $0.31 per share for the third quarter of 2024, resulting in a dividend yield of 3.92% based on the current stock price. The payout ratio stands at 14.76% of earnings, indicating a sustainable dividend policy.
Analyst Consensus
Current analyst ratings suggest a consensus of Hold for FCBC, with a majority of analysts indicating that the stock is fairly valued based on its current metrics.
| Metric | Value |
|---|---|
| P/E Ratio | 15.3 |
| P/B Ratio | 1.13 |
| EV/EBITDA Ratio | 9.6 |
| 52-Week Low | $25.50 |
| 52-Week High | $36.75 |
| Current Stock Price | $32.13 |
| Dividend per Share | $0.31 |
| Dividend Yield | 3.92% |
| Payout Ratio | 14.76% |
| Analyst Consensus | Hold |
Key Risks Facing First Community Bankshares, Inc. (FCBC)
Key Risks Facing First Community Bankshares, Inc.
First Community Bankshares, Inc. faces a variety of internal and external risks that could impact its financial health. Understanding these risks is crucial for investors.
Industry Competition
The banking industry is highly competitive, with numerous institutions vying for market share. This competition can lead to pressure on interest margins and a decrease in overall profitability. As of September 30, 2024, the net interest margin was 4.46%, a slight decrease from 4.45% in the same period of 2023.
Regulatory Changes
Changes in regulatory requirements can significantly affect operational costs and compliance burdens. The bank maintains a liquidity risk management policy to navigate potential regulatory changes. As of September 30, 2024, total consolidated assets were $3.22 billion.
Market Conditions
Economic fluctuations, including interest rate changes, can impact loan demand and credit quality. As of September 30, 2024, loans decreased by $128.19 million or 4.98% compared to December 31, 2023.
Operational Risks
Operational risks, including system failures or fraud, could impact financial performance. The bank has implemented various internal controls to mitigate these risks. Non-performing loans to total loans increased to 0.82% as of September 30, 2024.
Financial Risks
Financial risks include credit risk, liquidity risk, and interest rate risk. The allowance for credit losses to total loans was 1.44% at September 30, 2024, compared to 1.41% at December 31, 2023.
Strategic Risks
Strategic decisions, including mergers and acquisitions, carry risks that could impact shareholder value. The bank reported a decrease in provision for credit losses of $4.44 million for the nine months ending September 30, 2024, indicating improved credit quality.
Mitigation Strategies
The bank employs various strategies to mitigate these risks, including a robust risk management framework and regular assessments of credit quality and liquidity. The provision for credit losses for loans was $2.82 million for the first nine months of 2024.
| Risk Type | Description | Current Metrics |
|---|---|---|
| Industry Competition | Pressure on interest margins | Net interest margin: 4.46% |
| Regulatory Changes | Compliance costs and burdens | Total assets: $3.22 billion |
| Market Conditions | Impact on loan demand | Loans decreased: $128.19 million |
| Operational Risks | System failures or fraud | Non-performing loans: 0.82% |
| Financial Risks | Credit and liquidity risks | Allowance for credit losses: 1.44% |
| Strategic Risks | Mergers and acquisitions | Provision for credit losses: $2.82 million |
Future Growth Prospects for First Community Bankshares, Inc. (FCBC)
Future Growth Prospects for First Community Bankshares, Inc.
Analysis of Key Growth Drivers
The growth opportunities for First Community Bankshares, Inc. (FCBC) are shaped by several key drivers including product innovations, market expansions, and strategic acquisitions. The company has been focusing on enhancing its product offerings, particularly in digital banking services to cater to the growing demand for online and mobile banking solutions.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, analysts project a revenue growth rate of approximately 3.45%, driven by a combination of increased lending activities and a rise in noninterest income. Earnings estimates for 2024 suggest an EPS of $2.10, reflecting a 3.45% increase compared to the previous year.
Strategic Initiatives or Partnerships
FCBC has initiated several strategic partnerships aimed at enhancing its service offerings. These include collaborations with fintech companies to improve digital payment solutions and streamline customer experiences. The bank's focus on expanding its wealth management services is anticipated to contribute to a projected increase in noninterest income by 7.64% for the nine months ending September 30, 2024.
Competitive Advantages
FCBC's competitive advantages include a robust capital position and a diverse loan portfolio. As of September 30, 2024, total consolidated assets were $3.22 billion, with total stockholders' equity increasing to $520.69 million. The company reported a return on average assets (ROA) of 1.60% and a return on average common equity (ROE) of 10.04% for the third quarter of 2024, positioning it favorably against competitors in the market.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Income (thousands) | $13,033 | $14,640 | -10.98% |
| Total Assets (billions) | $3.22 | $3.27 | -1.35% |
| Total Deposits (billions) | $2.66 | $2.72 | -2.32% |
| Book Value per Share | $28.47 | $27.20 | 4.67% |
Overall, the strategic focus on expanding its digital presence and enhancing customer service through partnerships is expected to drive future growth for the company, supported by a solid financial foundation and competitive positioning in the market.
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Resources:
- First Community Bankshares, Inc. (FCBC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Community Bankshares, Inc. (FCBC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View First Community Bankshares, Inc. (FCBC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.