FORM 10-Q General Information This section provides general information about the Form 10-Q filing and the registrant's details [Registrant Information](index=1&type=section&id=Registrant%20Information) Registrant details include accelerated filer status, NASDAQ listing, and 18.31 million common shares outstanding as of July 25, 2025 - First Community Bankshares, Inc. is an **accelerated filer** and has filed all required reports during the preceding 12 months[5](index=5&type=chunk)[6](index=6&type=chunk) Common Stock Registration Details | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :---------------------------------------- | | Common Stock ($1.00 par value) | FCBC | NASDAQ Global Select | - As of July 25, 2025, **18,314,905 shares** of common stock, $1.00 par value, were outstanding[7](index=7&type=chunk) INDEX This section provides an overview of the report's structure, detailing its main parts and their respective contents [Report Structure](index=2&type=section&id=Report%20Structure) The report outlines its structure, dividing content into Part I (Financial Information) and Part II (Other Information) - The report is structured into two main parts: **Part I for Financial Information** and **Part II for Other Information**[10](index=10&type=chunk) - Part I includes Condensed Consolidated Financial Statements, Management's Discussion and Analysis, Quantitative and Qualitative Disclosures About Market Risk, and Controls and Procedures[10](index=10&type=chunk) - Part II covers Legal Proceedings, Risk Factors, Unregistered Sales of Equity Securities and Use of Proceeds, Defaults Upon Senior Securities, Mine Safety Disclosures, Other Information, and Exhibits[10](index=10&type=chunk) CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This section cautions that forward-looking statements are not guarantees and involve risks that could cause actual results to differ [Forward-Looking Statements and Risk Factors](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns that forward-looking statements are not guarantees, detailing various economic, regulatory, technological, and acquisition risks - Forward-looking statements are not guarantees of future performance and involve **risks, uncertainties, and assumptions** that are difficult to predict[12](index=12&type=chunk) - Key factors that could cause financial performance to differ materially include: inflation, interest rate, market and monetary fluctuations - The strength of the U.S. economy and local economies, including tariffs or changes in trade policies - The effects of, and changes in, trade, monetary, and fiscal policies and laws, including Federal Reserve System interest rate policies - Impact of changes in financial services laws and regulations, including taxes, banking, securities, and insurance - Technological changes and the cost/effects of cyber incidents or security breaches - The effect of acquisitions, including failure to achieve expected revenue growth and/or expense savings - Unanticipated regulatory or judicial proceedings and changes in consumer spending/saving habits[15](index=15&type=chunk) - The Company cautions against undue reliance on forward-looking information and does not intend to update these statements to reflect changes[13](index=13&type=chunk) PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income, equity changes, cash flows, and explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the Company's financial position at June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Amounts in thousands) | | June 30, 2025 | December 31, 2024 | | :------------------------------------- | :------------ | :---------------- | | **Assets** | | | | Total cash and cash equivalents | $395,057 | $377,454 | | Debt securities available-for-sale, at fair value | $132,535 | $169,849 | | Loans held for investment, net | $2,320,257 | $2,381,264 | | Total assets | $3,181,014 | $3,261,216 | | **Liabilities** | | | | Total deposits | $2,635,364 | $2,691,247 | | Total liabilities | $2,678,185 | $2,734,824 | | **Stockholders' equity** | | | | Total stockholders' equity | $502,829 | $526,392 | | Total liabilities and stockholders' equity | $3,181,014 | $3,261,216 | - Total assets decreased by **$80.20 million** from December 31, 2024, primarily due to decreases in loans and available-for-sale debt securities[17](index=17&type=chunk)[141](index=141&type=chunk) - Total stockholders' equity decreased by **$23.56 million**, or **4.48%**, from December 31, 2024, mainly due to a special cash dividend payment[17](index=17&type=chunk)[141](index=141&type=chunk)[166](index=166&type=chunk) [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents the Company's unaudited consolidated results of operations for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Income (Amounts in thousands, except share and per share data) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $35,388 | $36,789 | $70,557 | $72,818 | | Total interest expense | $4,731 | $4,877 | $9,602 | $9,277 | | Net interest income | $30,657 | $31,912 | $60,955 | $63,541 | | (Recovery of) provision for credit losses | $(285) | $144 | $36 | $1,155 | | Total noninterest income | $10,340 | $9,342 | $20,569 | $18,601 | | Total noninterest expense | $25,455 | $24,897 | $50,399 | $48,283 | | Net income | $12,246 | $12,686 | $24,064 | $25,531 | | Basic earnings per common share | $0.67 | $0.69 | $1.31 | $1.39 | | Diluted earnings per common share | $0.67 | $0.71 | $1.31 | $1.42 | - Net income for Q2 2025 decreased by **$440 thousand (3.47%)** YoY to **$12.25 million**[20](index=20&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Net income for H1 2025 decreased by **$1.47 million (5.75%)** YoY to **$24.06 million**[20](index=20&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Basic EPS for Q2 2025 decreased by **$0.02 (2.90%)** YoY to **$0.67**[20](index=20&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Basic EPS for H1 2025 decreased by **$0.08 (5.76%)** YoY to **$1.31**[20](index=20&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the Company's unaudited consolidated comprehensive income for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Income (Amounts in thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $12,246 | $12,686 | $24,064 | $25,531 | | Other comprehensive gain (loss), net of tax | $358 | $(515) | $2,024 | $(1,463) | | Total comprehensive income | $12,604 | $12,171 | $26,088 | $24,068 | - Total comprehensive income for Q2 2025 increased to **$12.60 million** from **$12.17 million** in Q2 2024, driven by a net other comprehensive gain[22](index=22&type=chunk) - For the six months ended June

Exhibit 99.1 NEWS RELEASE FOR IMMEDIATE RELEASE: FOR MORE INFORMATION, CONTACT: July 22, 2025 David D. Brown (276) 326-9000 First Community Bankshares, Inc. Announces Second Quarter 2025 Results and Quarterly Cash 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, 2025. The Company reported net income of $12.25 million, or ...

Core Viewpoint - First Community Bankshares, Inc. reported its financial results for the second quarter of 2025, showing a net income of $12.25 million, a decrease of 3.47% compared to the same quarter in 2024, and a net income of $24.06 million for the first half of 2025, down 5.75% year-over-year [1][6]. Financial Performance - The company declared a quarterly cash dividend of $0.31 per common share, marking the 40th consecutive year of regular dividends and the 15th consecutive year of dividend increases [2]. - Noninterest income increased by approximately $998 thousand, or 10.68%, compared to the same quarter of 2024, primarily due to a rise in service charges on deposits [6]. - Noninterest expense rose by $558 thousand, or 2.24%, compared to the same period in 2024, driven by increases in salaries and benefits [6]. Asset Quality and Balance Sheet - Consolidated assets totaled $3.18 billion as of June 30, 2025, with loans decreasing by $62.81 million, or 2.60%, from December 31, 2024 [6][26]. - Total non-performing assets were $19.17 million as of June 30, 2025, down from $20.67 million at the end of 2024 [6]. - The allowance for credit losses to total loans was 1.40% at June 30, 2025, compared to 1.44% at December 31, 2024 [6]. Awards and Recognition - The company received the 2024 Raymond James Community Bankers Cup, recognizing its superior financial performance among the top 10% of community banks in the U.S. [3]. Stockholder Information - The company repurchased 50,338 common shares during the second quarter of 2025 at a cost of $1.85 million, with no shares repurchased in the first quarter of 2025 [6]. - Book value per share at June 30, 2025, was $27.46, a decrease of $1.27 from year-end 2024, primarily due to a special cash dividend payment [6].

Core Viewpoint - First Community Bankshares, Inc. is set to acquire Hometown Bancshares, Inc. in a strategic merger aimed at expanding its presence in West Virginia and enhancing its service offerings [1][2][4]. Company Overview - First Community Bankshares, Inc. is headquartered in Bluefield, Virginia, and operates through its subsidiary, First Community Bank, which has 52 branch locations across Virginia, West Virginia, North Carolina, and Tennessee. As of March 31, 2025, it reported consolidated assets of $3.2 billion [7]. - Hometown Bancshares, Inc. is based in Middlebourne, West Virginia, and offers banking services through its subsidiary, Union Bank, which operates eight locations and had total assets of approximately $402 million as of June 30, 2025 [9]. Merger Details - The merger agreement stipulates that Hometown will merge into First Community, with First Community as the surviving entity. Each share of Hometown common stock will convert into 11.706 shares of First Community common stock, valuing the transaction at approximately $41.5 million based on a share price of $40.33 as of July 18, 2025 [4][5]. - Upon completion, First Community is expected to have total consolidated assets of approximately $3.6 billion and operate 60 branch locations across four states [1][4]. Strategic Rationale - The merger aligns with First Community's strategy to grow low-cost core deposits and expand its market presence in the Parkersburg-Marietta-Vienna MSA. The partnership is seen as a natural extension into West Virginia markets similar to those where First Community has previously succeeded [2][3]. - First Community aims to enhance its service offerings by providing Trust and Wealth Management services, which are currently not available through Union Bank [3]. Financial Implications - The transaction is expected to be minimally dilutive to tangible book value per share and to provide high-single digit accretion to earnings per share [4]. - The merger has received unanimous approval from both companies' Boards of Directors and is subject to customary closing conditions, including shareholder approval and regulatory approvals, with an expected completion in the first quarter of 2026 [5].

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's analysis of financial condition and operations [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and detailed notes on accounting policies and financial instrument specifics [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | March 31, 2025 | December 31, 2024 | Change (QoQ) | % Change (QoQ) | |:-----------------------------------|---------------:|------------------:|-------------:|---------------:| | Total assets | $3,225,773 | $3,261,216 | $(35,443) | -1.09% | | Total liabilities | $2,729,356 | $2,734,824 | $(5,468) | -0.20% | | Total stockholders' equity | $496,417 | $526,392 | $(29,975) | -5.69% | | Loans held for investment, net | $2,348,915 | $2,381,264 | $(32,349) | -1.36% | | Debt securities available-for-sale | $129,659 | $169,849 | $(40,190) | -23.66% | | Total deposits | $2,684,477 | $2,691,247 | $(6,770) | -0.25% | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents the Company's financial performance, detailing revenues, expenses, and net income over the period Condensed Consolidated Statements of Income Highlights (Amounts in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | % Change (YoY) | |:-----------------------------------|----------------------------------:|----------------------------------:|-------------:|---------------:| | Total interest income | $35,169 | $36,029 | $(860) | -2.39% | | Total interest expense | $4,871 | $4,400 | $471 | 10.70% | | Net interest income | $30,298 | $31,629 | $(1,331) | -4.21% | | Provision for credit losses | $321 | $1,011 | $(690) | -68.25% | | Total noninterest income | $10,229 | $9,259 | $970 | 10.48% | | Total noninterest expense | $24,944 | $23,386 | $1,558 | 6.66% | | Income before income taxes | $15,262 | $16,491 | $(1,229) | -7.45% | | Income tax expense | $3,444 | $3,646 | $(202) | -5.54% | | Net income | $11,818 | $12,845 | $(1,027) | -8.00% | | Basic earnings per common share | $0.64 | $0.70 | $(0.06) | -8.57% | | Diluted earnings per common share | $0.64 | $0.71 | $(0.07) | -9.86% | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the Company's comprehensive income, including net income and other comprehensive gains or losses Condensed Consolidated Statements of Comprehensive Income Highlights (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | |:---------------------------------------------------|----------------------------------:|----------------------------------:|-------------:| | Net income | $11,818 | $12,845 | $(1,027) | | Net unrealized gains (losses) on AFS debt securities | $2,108 | $(1,198) | $3,306 | | Other comprehensive gain (loss), net of tax | $1,666 | $(948) | $2,614 | | Total comprehensive income | $13,484 | $11,897 | $1,587 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, reflecting net income, comprehensive income, and dividend distributions Key Changes in Stockholders' Equity (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:-----------------------------------|----------------------------------:|----------------------------------:| | Net income | $11,818 | $12,845 | | Other comprehensive income (loss) | $1,666 | $(948) | | Common dividends declared | $(43,579) | $(5,358) | | Common stock options exercised | $120 | - | | Repurchase of common shares | - | $(2,973) | | Balance March 31 | $496,417 | $506,944 | - The decrease in stockholders' equity for Q1 2025 was primarily due to the payment of a **special cash dividend of $2.07 per share**, totaling approximately **$37.93 million**, in addition to the regular cash dividend of **$0.31 per share**[18](index=18&type=chunk)[146](index=146&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the Company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | |:-----------------------------------|----------------------------------:|----------------------------------:|-------------:| | Net cash provided by operating activities | $13,211 | $16,932 | $(3,721) | | Net cash provided by investing activities | $74,244 | $164,107 | $(89,863) | | Net cash used in financing activities | $(50,227) | $(48,554) | $(1,673) | | Net increase in cash and cash equivalents | $37,228 | $132,485 | $(95,257) | | Cash and cash equivalents at end of period | $414,682 | $248,905 | $165,777 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Basis of Presentation](index=10&type=section&id=Note%201.%20Basis%20of%20Presentation) This note outlines the company's general information, principles of consolidation, adherence to U.S. GAAP for interim financial information, use of estimates, and significant accounting policies. It also details the adoption and expected impact of recent accounting standards, noting no material impact from ASU No. 2023-07 and ASU 2023-09, and no expected material impact from ASU No. 2024-03 - First Community Bankshares, Inc. operates as a financial holding company, providing banking products and services through its wholly-owned subsidiary, First Community Bank, and wealth management services through its Trust Division and First Community Wealth Management[21](index=21&type=chunk) - The Company operates in one business segment: Community Banking, encompassing commercial and consumer banking, lending, and wealth management[22](index=22&type=chunk) - Recent accounting standards, ASU No. 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), adopted in late 2023, had **no material impact** on the Company's financial statements. ASU No. 2024-03 (Expense Disaggregation Disclosures), effective December 31, 2027, is also not expected to have a **material impact**[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2. Debt Securities](index=11&type=section&id=Note%202.%20Debt%20Securities) This note provides a detailed breakdown of available-for-sale debt securities, including their amortized cost, fair value, and unrealized gains and losses. It also categorizes these securities by contractual maturity and analyzes those in a continuous unrealized loss position, confirming no credit losses were deemed necessary as of March 31, 2025 Available-for-Sale Debt Securities (Amounts in thousands) | Metric | March 31, 2025 | December 31, 2024 | |:-----------------------------------|---------------:|------------------:| | Amortized Cost | $142,389 | $184,687 | | Fair Value | $129,659 | $169,849 | | Gross Unrealized Gains | $56 | $12 | | Gross Unrealized Losses | $(12,786) | $(14,850) | - As of March 31, 2025, **98 individual debt securities** were in an unrealized loss position, representing **9.86%** of the portfolio's depreciation. Management does not believe a credit loss provision is necessary as these securities continue to perform as scheduled and there is no intent or likelihood of selling them prior to recovery[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 3. Loans](index=13&type=section&id=Note%203.%20Loans) This note details the Company's loan portfolio, categorized into commercial, consumer real estate, and consumer and other loans, presenting their amortized cost basis and percentage distribution as of March 31, 2025, and December 31, 2024 Loans Held for Investment, Net of Unearned Income (Amounts in thousands) | Loan Segment | March 31, 2025 Amount | March 31, 2025 Percent | December 31, 2024 Amount | December 31, 2024 Percent | |:-----------------------------------|----------------------:|-----------------------:|-------------------------:|--------------------------:| | Commercial loans | $1,568,650 | 65.84% | $1,581,492 | 65.46% | | Consumer real estate loans | $732,530 | 30.74% | $745,024 | 30.84% | | Consumer and other loans | $81,519 | 3.42% | $89,573 | 3.71% | | **Total loans held for investment** | **$2,382,699** | **100.00%** | **$2,416,089** | **100.00%** | [Note 4. Credit Quality](index=14&type=section&id=Note%204.%20Credit%20Quality) This note outlines the Company's loan risk grading matrix (Pass, Special Mention, Substandard, Doubtful, Loss) and presents the credit quality of the loan portfolio. It also details nonaccrual loans, aging of past due loans, collateral-dependent assets, and loan modifications made to borrowers experiencing financial difficulty, including their financial effects and performance Loan Portfolio by Credit Quality (March 31, 2025, Amounts in thousands) | Credit Quality | Commercial Loans | Consumer Real Estate Loans | Consumer and Other Loans | Total Loans | |:---------------|-----------------:|---------------------------:|-------------------------:|------------:| | Pass | $1,568,650 | $732,530 | $81,519 | $2,313,288 | | Special Mention| $21,554 | $2,132 | - | $21,554 | | Substandard | $47,857 | $23,238 | $1,612 | $47,857 | | Doubtful | - | - | - | - | | Loss | - | - | - | - | | **Total** | **$1,568,650** | **$732,530** | **$81,519** | **$2,382,699** | Nonaccrual Loans by Loan Class (Amounts in thousands) | Loan Class | March 31, 2025 | December 31, 2024 | |:-----------------------------------|---------------:|------------------:| | Commercial loans | $8,954 | $7,809 | | Consumer real estate loans | $9,937 | $10,261 | | Consumer and other loans | $1,080 | $1,099 | | **Total nonaccrual loans** | **$19,974** | **$19,869** | Collateral Dependent Loans (Amounts in thousands) | Type of Collateral | March 31, 2025 Balance | March 31, 2025 Coverage % | December 31, 2024 Balance | December 31, 2024 Coverage % | |:-------------------|-----------------------:|--------------------------:|--------------------------:|-----------------------------:| | Commercial Real Estate | $1,156 | 169.14% | - | - | | Other | - | - | $531 | 121.57% | | **Total** | **$1,156** | **169.14%** | **$531** | **121.57%** | - The Company made loan modifications to borrowers experiencing financial difficulty, totaling **$1,025 thousand** for payment delays, **$203 thousand** for term extensions, **$803 thousand** for term extension and rate reduction, and **$93 thousand** for interest rate reduction as of March 31, 2025[52](index=52&type=chunk) [Note 5. Allowance for Credit Losses](index=28&type=section&id=Note%205.%20Allowance%20for%20Credit%20Losses) This note details the changes in the allowance for credit losses (ACL) for loans and loan commitments, including provisions, charge-offs, and recoveries, segmented by commercial, consumer real estate, and consumer and other loans for the three months ended March 31, 2025, and 2024 Allowance for Credit Losses (ACL) Changes (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:---------------------------------------------------|----------------------------------:|----------------------------------:| | Balance at beginning of quarter (loans) | $34,825 | $36,189 | | Provision for credit losses (loans) | $350 | $1,011 | | Net recoveries (charge-offs) | $(1,391) | $(1,739) | | Allowance for credit losses - loans (ending balance) | $33,784 | $35,461 | | Total allowance for credit losses (ending balance) | $34,096 | $36,207 | [Note 6. Deposits](index=29&type=section&id=Note%206.%20Deposits) This note presents the composition of deposits, distinguishing between noninterest-bearing demand deposits and various categories of interest-bearing deposits as of March 31, 2025, and December 31, 2024 Deposit Components (Amounts in thousands) | Deposit Type | March 31, 2025 | December 31, 2024 | |:-----------------------------------|---------------:|------------------:| | Noninterest-bearing demand deposits | $893,794 | $883,499 | | Interest-bearing demand deposits | $654,738 | $675,522 | | Money market accounts | $330,327 | $338,527 | | Savings deposits | $570,661 | $553,158 | | Certificates of deposit | $158,735 | $162,139 | | Individual retirement accounts | $76,222 | $78,402 | | **Total deposits** | **$2,684,477** | **$2,691,247** | [Note 7. Borrowings](index=30&type=section&id=Note%207.%20Borrowings) This note details the Company's borrowings, primarily retail repurchase agreements, and discloses the unused borrowing capacity with the FHLB as of March 31, 2025 Borrowings (Amounts in thousands) | Borrowing Type | March 31, 2025 Balance | March 31, 2025 Weighted Average Rate | December 31, 2024 Balance | December 31, 2024 Weighted Average Rate | |:---------------|-----------------------:|-------------------------------------:|--------------------------:|-------------------------------------:| | Retail repurchase agreements | $908 | 0.06% | $906 | 0.05% | - The Company had unused borrowing capacity with the FHLB totaling **$330.83 million** as of March 31, 2025, secured by **$453.54 million** in qualifying loans[61](index=61&type=chunk) [Note 8. Derivative Instruments and Hedging Activities](index=30&type=section&id=Note%208.%20Derivative%20Instruments%20and%20Hedging%20Activities) This note describes the Company's use of interest rate swap contracts as fair value hedging instruments to manage interest rate risk, presenting their notional amounts, fair values, and the effect on the consolidated statements of income Derivative Instruments (Amounts in thousands) | Metric | March 31, 2025 Notional Amount | March 31, 2025 Fair Value Assets | December 31, 2024 Notional Amount | December 31, 2024 Fair Value Assets | |:-------------------|---------------------------------:|---------------------------------:|---------------------------------:|---------------------------------:| | Interest rate swaps | $2,892 | $84 | $3,109 | $116 | Effect of Derivative Activity on Income (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:-----------------------------------|----------------------------------:|----------------------------------:| | Interest rate swaps (income) expense | $(16) | $(27) | [Note 9. Employee Benefit Plans](index=31&type=section&id=Note%209.%20Employee%20Benefit%20Plans) This note provides information on the Company's nonqualified defined benefit plans (SERP and Director Plan) for key management and directors, detailing the components of net periodic pension cost Net Periodic Pension Cost (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:-------------------|----------------------------------:|----------------------------------:| | Interest cost | $95 | $104 | | Amortization of losses | $5 | $9 | | **Net periodic cost** | **$100** | **$113** | [Note 10. Earnings per Share](index=31&type=section&id=Note%2010.%20Earnings%20per%20Share) This note presents the calculation of basic and diluted earnings per common share, including the weighted average shares outstanding and the dilutive effect of potential common shares Earnings Per Common Share (Amounts in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:-----------------------------------|----------------------------------:|----------------------------------:| | Net income | $11,818 | $12,845 | | Basic earnings per common share | $0.64 | $0.70 | | Diluted earnings per common share | $0.64 | $0.71 | | Weighted average shares outstanding, basic | 18,324,760 | 18,476,128 | | Weighted average shares outstanding, diluted | 18,451,321 | 18,545,910 | [Note 11. Accumulated Other Comprehensive Income (Loss)](index=32&type=section&id=Note%2011.%20Accumulated%20Other%20Comprehensive%20Income%20%28Loss%29) This note details the changes in accumulated other comprehensive income (loss) (AOCI), net of tax, by component, specifically unrealized losses on available-for-sale securities and employee benefit plans, and presents reclassifications out of AOCI Changes in Accumulated Other Comprehensive Income (Loss) (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:---------------------------------------------------|----------------------------------:|----------------------------------:| | Beginning balance | $(11,171) | $(10,951) | | Other comprehensive income (loss), net | $1,666 | $(948) | | **Ending balance** | **$(9,505)** | **$(11,899)** | Reclassifications Out of AOCI, Net of Tax (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:-----------------------------------|----------------------------------:|----------------------------------:| | Employee benefit plans | $4 | $7 | [Note 12. Fair Value](index=33&type=section&id=Note%2012.%20Fair%20Value) This note defines fair value and its hierarchy (Level 1, 2, 3 inputs), describes the valuation methodologies for financial instruments measured at fair value on both a recurring and nonrecurring basis, and provides quantitative information for Level 3 fair value measurements - The Company categorizes fair value measurements into a three-level hierarchy: Level 1 (observable, unadjusted quoted prices in active markets), Level 2 (inputs other than Level 1 quoted prices that are directly or indirectly observable), and Level 3 (unobservable inputs requiring significant judgment)[69](index=69&type=chunk)[70](index=70&type=chunk) Financial Assets and Liabilities Recorded at Fair Value on a Recurring Basis (March 31, 2025, Amounts in thousands) | Asset/Liability | Total Fair Value | Level 1 | Level 2 | Level 3 | |:-----------------------------------|-----------------:|--------:|--------:|--------:| | Available-for-sale debt securities | $129,659 | - | $129,659| - | | Equity securities | $55 | - | $55 | - | | Fair value loans | $2,808 | - | - | $2,808 | | Derivative assets | $84 | - | $84 | - | | Deferred compensation assets | $9,255 | $9,255 | - | - | | Deferred compensation liabilities | $10,761 | $10,761 | - | - | Assets Measured at Fair Value on a Nonrecurring Basis (Amounts in thousands) | Asset | March 31, 2025 Fair Value | December 31, 2024 Fair Value | |:-----------------------------------|--------------------------:|--------------------------:| | Collateral dependent assets with specific reserves | $1,156 | $531 | | OREO | $298 | $521 | [Note 13. Litigation, Commitments, and Contingencies](index=39&type=section&id=Note%2013.%20Litigation,%20Commitments,%20and%20Contingencies) This note discloses the Company's involvement in legal actions and off-balance sheet financial instruments, including commitments to extend credit and standby letters of credit, and states that the resolution of legal matters is not expected to have a material adverse effect - The Company is a defendant in legal actions in the normal course of business, but believes their resolution will not have a **material adverse effect** on its financial position, results of operations, or cash flows[86](index=86&type=chunk)[160](index=160&type=chunk) Off-Balance Sheet Financial Instruments (Amounts in thousands) | Instrument | March 31, 2025 | December 31, 2024 | |:-----------------------------------|---------------:|------------------:| | Commitments to extend credit | $247,031 | $252,225 | | Standby letters of credit and financial guarantees | $125,586 | $125,561 | | **Total off-balance sheet risk** | **$372,617** | **$377,786** | [Note 14. Segment Information](index=39&type=section&id=Note%2014.%20Segment%20Information) This note confirms that the Company operates in a single reportable segment, Community Banking, which encompasses all its operations including commercial and consumer banking, lending activities, and wealth management - The Company has one reportable segment: Community Banking, which includes commercial and consumer banking, lending activities, and wealth management[91](index=91&type=chunk)[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition, changes in financial condition, and results of operations for the three months ended March 31, 2025, compared to the same period in 2024, including an executive overview, critical accounting estimates, performance highlights, and detailed analysis of key financial components [Executive Overview](index=42&type=section&id=Executive%20Overview) This section provides an overview of the Company's operations, branch network, employee count, and primary sources of earnings - First Community Bankshares, Inc. is a financial holding company operating **53 branches** across Virginia, West Virginia, North Carolina, and Tennessee, with **583 full-time equivalent employees** as of March 31, 2025[97](index=97&type=chunk) - The primary source of earnings is net interest income, supplemented by fees for services, commissions, and deposit service charges. The Trust Division and First Community Wealth Management managed **$1.62 billion** in combined assets under management and administration as of March 31, 2025[97](index=97&type=chunk)[98](index=98&type=chunk) [Critical Accounting Estimates](index=42&type=section&id=Critical%20Accounting%20Estimates) This section highlights the significant management estimates and assumptions required for preparing consolidated financial statements - The preparation of consolidated financial statements requires significant management estimates and assumptions, particularly for fair value measurements, impairment write-downs, and valuation reserves, which can materially impact financial condition and operating performance[99](index=99&type=chunk) [Performance Overview](index=43&type=section&id=Performance%20Overview) This section summarizes key financial performance indicators, including net income, asset and liability changes, and asset quality metrics Key Performance Indicators (Three Months Ended March 31) | Metric | 2025 | 2024 | Change (YoY) | % Change (YoY) | |:-----------------------------------|-------:|-------:|-------------:|---------------:| | Net income (in thousands) | $11,818| $12,845| $(1,027) | -8.00% | | Basic EPS | $0.64 | $0.70 | $(0.06) | -8.57% | | Diluted EPS | $0.64 | $0.71 | $(0.07) | -9.86% | | Return on average assets | 1.49% | 1.60% | -0.11% | -6.88% | | Return on average common equity | 9.49% | 10.18% | -0.69% | -6.78% | - Consolidated assets totaled **$3.23 billion** at March 31, 2025. Loans decreased by **$33.39 million (1.38%)** and securities available-for-sale decreased by **$40.19 million (23.66%)** from December 31, 2024[104](index=104&type=chunk) - Deposits decreased by **$6.77 million (0.25%)**, primarily due to declining higher-rate time deposits. Stockholder equity decreased by **$29.98 million (5.69%)** due to a special cash dividend payment in Q1 2025[104](index=104&type=chunk) - Non-performing loans to total loans increased to **0.85%** in Q1 2025. Net charge-offs were **$1.39 million (0.24% of annualized average loans)**, compared to **$1.74 million (0.27%)** in Q1 2024. The allowance for credit losses to total loans was **1.42%** at March 31, 2025[104](index=104&type=chunk) [Net Interest Income Analysis](index=44&type=section&id=Net%20Interest%20Income%20Analysis) This section analyzes net interest income and margin, detailing the factors influencing changes in interest revenue and expense Net Interest Income and Margin (FTE Basis, Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | % Change (YoY) | |:-----------------------------------|----------------------------------:|----------------------------------:|-------------:|---------------:| | Net interest income, FTE | $30,409 | $31,748 | $(1,339) | -4.22% | | Net interest rate spread, FTE | 3.94% | 4.10% | -0.16% | -3.90% | | Net interest margin, FTE | 4.34% | 4.47% | -0.13% | -2.91% | - The decrease in net interest income and margin was primarily due to a decrease in interest income from lower average balances in the loan (**$154.04 million** decrease) and available-for-sale securities (**$89.74 million** decrease) portfolios, coupled with an increase in interest expense driven by higher yields on time deposits[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Provision for Credit Losses](index=47&type=section&id=Provision%20for%20Credit%20Losses) This section details the provision for credit losses, including amounts allocated for loans and loan commitments Provision for Credit Losses (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | |:-----------------------------------|----------------------------------:|----------------------------------:|-------------:| | Provision for credit losses for loans | $350 | $1,011 | $(661) | | Recovery of provision for loan commitments | $(29) | - | $(29) | | **Total provision for credit losses** | **$321** | **$1,011** | **$(690)** | [Noninterest Income](index=47&type=section&id=Noninterest%20Income) This section analyzes the components of noninterest income, including wealth management fees and service charges Noninterest Income Components (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | % Change (YoY) | |:-----------------------------------|----------------------------------:|----------------------------------:|-------------:|---------------:| | Wealth management | $1,162 | $1,099 | $63 | 5.73% | | Service charges on deposits | $3,836 | $3,310 | $526 | 15.89% | | Other service charges and fees | $3,340 | $3,450 | $(110) | -3.19% | | Other operating income | $1,891 | $1,400 | $491 | 35.07% | | **Total noninterest income** | **$10,229** | **$9,259** | **$970** | **10.48%** | - Noninterest income increased by **$970 thousand**, or **10.48%**, primarily driven by a **15.89%** increase in service charges on deposits and a **35.07%** increase in other operating income[114](index=114&type=chunk) [Noninterest Expense](index=48&type=section&id=Noninterest%20Expense) This section details the components of noninterest expense, including salaries, occupancy, and advertising costs Noninterest Expense Components (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | % Change (YoY) | |:-----------------------------------|----------------------------------:|----------------------------------:|-------------:|---------------:| | Salaries and employee benefits | $13,335 | $12,581 | $754 | 5.99% | | Occupancy expense | $1,576 | $1,378 | $198 | 14.37% | | Advertising and public relations | $1,055 | $796 | $259 | 32.54% | | Other operating expense | $3,661 | $3,366 | $295 | 8.76% | | **Total noninterest expense** | **$24,944** | **$23,386** | **$1,558** | **6.66%** | - Total noninterest expense increased by **$1.56 million**, or **6.66%**, primarily due to increases in salaries and employee benefits (**$754 thousand**), other operating expense (**$295 thousand**), and advertising and public relations (**$259 thousand**)[116](index=116&type=chunk) [Income Tax Expense](index=48&type=section&id=Income%20Tax%20Expense) This section presents the Company's income tax expense and effective tax rate for the reporting periods Income Tax Expense (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | % Change (YoY) | |:-------------------|----------------------------------:|----------------------------------:|-------------:|---------------:| | Income tax expense | $3,444 | $3,646 | $(202) | -5.54% | | Effective tax rate | 22.57% | 22.11% | 0.46% | 2.08% | [Non-GAAP Financial Measures](index=48&type=section&id=Non-GAAP%20Financial%20Measures) This section provides reconciliations and explanations for non-GAAP financial measures, specifically net interest income on a fully taxable equivalent basis - The Company uses net interest income on a fully taxable equivalent (FTE) basis as a non-GAAP financial measure to provide better comparability between taxable and tax-exempt amounts, adjusting for tax benefits using a **21% federal statutory income tax rate**[119](index=119&type=chunk) Net Interest Income and Margin Reconciliation (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:-----------------------------------|----------------------------------:|----------------------------------:| | Net interest income, GAAP | $30,298 | $31,629 | | FTE adjustment | $111 | $119 | | Net interest income, FTE | $30,409 | $31,748 | | Net interest margin, GAAP | 4.33% | 4.44% | | FTE adjustment | 0.02% | 0.03% | | Net interest margin, FTE | 4.34% | 4.47% | [Financial Condition](index=49&type=section&id=Financial%20Condition) This section provides a detailed analysis of the Company's balance sheet components and overall financial health - Total assets decreased by **$35.44 million (1.09%)** from December 31, 2024, primarily due to decreases in loans and available-for-sale securities. Total liabilities decreased by **$5.47 million (0.20%)**, mainly from a decrease in deposits[122](index=122&type=chunk) [Investment Securities](index=49&type=section&id=Investment%20Securities) The investment securities portfolio is managed for interest income, liquidity, and collateral. Available-for-sale debt securities decreased significantly due to maturities and calls, though new purchases partially offset this. Management continues to evaluate securities for impairment, with no credit losses deemed necessary as of March 31, 2025 - Available-for-sale debt securities decreased by **$40.19 million (23.66%)** from December 31, 2024, driven by **$81.39 million** in maturities and calls, partially offset by **$38.75 million** in purchases[124](index=124&type=chunk) - The market value of debt securities available-for-sale as a percentage of amortized cost was **91.06%** at March 31, 2025, down from **91.97%** at December 31, 2024[124](index=124&type=chunk) - Management evaluates securities for impairment quarterly; as of March 31, 2025, all debt securities in an unrealized loss position continue to perform as scheduled, and **no provision for credit losses** was deemed necessary[125](index=125&type=chunk) [Loans Held for Investment](index=49&type=section&id=Loans%20Held%20for%20Investment) The loan portfolio, a primary source of interest income, decreased by $33.39 million (1.38%) from December 31, 2024. This was mainly due to decreases in commercial loans (non-farm, non-residential, multi-family, single family non-owner occupied) and consumer real estate loans (single family owner occupied), partially offset by an increase in commercial and industrial loans Loans Held for Investment, Net of Unearned Income (Amounts in thousands) | Loan Segment | March 31, 2025 | December 31, 2024 | March 31, 2024 | |:-----------------------------------|---------------:|------------------:|---------------:| | Commercial loans | $1,568,650 | $1,581,492 | $1,626,818 | | Consumer real estate loans | $732,530 | $745,024 | $780,839 | | Consumer and other loans | $81,519 | $89,573 | $112,176 | | **Total loans held for investment** | **$2,382,699** | **$2,416,089** | **$2,519,833** | - Total loans decreased by **$33.39 million (1.38%)** from December 31, 2024. Commercial loans decreased by **$12.84 million**, and consumer real estate loans decreased by **$12.49 million**[127](index=127&type=chunk) [Risk Elements](index=50&type=section&id=Risk%20Elements) The Company mitigates credit risk through underwriting practices and ongoing monitoring. Nonperforming assets decreased slightly, with nonaccrual loans increasing and OREO decreasing. Delinquent loans also saw a decrease, with nonaccrual loans primarily attributed to single family owner occupied, non-farm non-residential, and commercial and industrial categories Nonperforming Assets (Amounts in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | |:-----------------------------------|---------------:|------------------:|---------------:| | Nonaccrual loans | $19,974 | $19,869 | $19,617 | | Accruing loans past due 90 days or more | $117 | $149 | $30 | | Total nonperforming loans | $20,091 | $20,018 | $19,647 | | OREO | $298 | $521 | $374 | | **Total nonperforming assets** | **$20,389** | **$20,539** | **$20,021** | Asset Quality Ratios | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | |:-----------------------------------|---------------:|------------------:|---------------:| | Nonperforming loans to total loans | 0.84% | 0.83% | 0.78% | | Nonperforming assets to total assets | 0.63% | 0.63% | 0.62% | | Allowance for credit losses to nonperforming loans | 168.15% | 173.97% | 180.49% | | Allowance for credit losses to total loans | 1.42% | 1.44% | 1.41% | - Delinquent loans (30+ days past due and nonaccrual) totaled **$33.49 million** as of March 31, 2025, a decrease of **$4.06 million (10.81%)** from December 31, 2024[131](index=131&type=chunk) Changes in Other Real Estate Owned (OREO) (Amounts in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |:-----------------------------------|----------------------------------:|----------------------------------:| | Beginning balance January 1 | $521 | $192 | | Disposals | $(223) | $(41) | | **Ending balance** | **$298** | **$374** | [Allowance for Credit Losses](index=52&type=section&id=Allowance%20for%20Credit%20Losses) The Allowance for Credit Losses (ACL) for loans was $33.78 million (1.42% of total loans) as of March 31, 2025, a decrease of $1.04 million from December 31, 2024. This decrease reflects a $350 thousand provision offset by $1.39 million in net charge-offs. The Company also maintains an allowance for unfunded commitments - The ACL for loans was **$33.78 million (1.42% of total loans)** at March 31, 2025, decreasing by **$1.04 million** from December 31, 2024, due to a **$350 thousand** provision offset by **$1.39 million** in net charge-offs[139](index=139&type=chunk) - An allowance for unfunded commitments of **$312 thousand** was recorded at March 31, 2025, with a recovery of provision for credit losses of **$29 thousand** during the first three months of 2025[140](index=140&type=chunk) [Deposits](index=53&type=section&id=Deposits) Total deposits decreased by $6.77 million (0.25%) from December 31, 2024. This was primarily due to decreases in interest-bearing demand and time deposits, partially offset by increases in noninterest-bearing demand and savings deposits - Total deposits decreased by **$6.77 million (0.25%)** from December 31, 2024. Interest-bearing demand deposits decreased by **$20.78 million (3.08%)** and time deposits decreased by **$5.58 million (2.32%)**[141](index=141&type=chunk) - These decreases were partially offset by an increase in noninterest-bearing demand deposits of **$10.30 million (1.17%)** and savings deposits of **$9.3 million (1.04%)**[141](index=141&type=chunk) [Borrowings](index=53&type=section&id=Borrowings) Total borrowings, specifically retail repurchase agreements, saw a minor decrease of $2 thousand (0.22%) compared to December 31, 2024 - Total borrowings in the form of retail repurchase agreements decreased by **$2 thousand (0.22%)** from December 31, 2024[142](index=142&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's liquidity management strategies and capital adequacy, including regulatory requirements [Liquidity](index=53&type=section&id=Liquidity) The Company manages liquidity through an overall balance sheet approach and a Liquidity Plan, relying on dividends from the Bank, cash, investment securities, and lines of credit. As of March 31, 2025, it maintained substantial unencumbered cash, unused FHLB borrowing capacity, and available lines from correspondent banks - The Company's primary source of liquidity is dividends from the Bank, supplemented by cash, investment securities, and borrowings. It maintains a Liquidity Plan to manage liquidity risk[143](index=143&type=chunk)[144](index=144&type=chunk) Available Liquidity Sources (March 31, 2025, Amounts in thousands) | Source | Amount | |:-----------------------------------|---------:| | Unencumbered cash | $414,682 | | Unused FHLB borrowing capacity | $330,830 | | Available credit from FRB Discount Window | $5,820 | | Available lines from correspondent banks | $100,000 | | Unpledged available-for-sale securities | $104,220 | | **Total** | **$955,552** | [Capital Resources](index=54&type=section&id=Capital%20Resources) Total stockholders' equity decreased by $29.98 million (5.69%) to $496.42 million at March 31, 2025, primarily due to a special cash dividend of $2.07 per share ($37.93 million total) and regular cash dividends, partially offset by net income - Total stockholders' equity decreased by **$29.98 million (5.69%)** to **$496.42 million** at March 31, 2025, primarily due to a **special cash dividend of $2.07 per share ($37.93 million total)** and regular cash dividends (**$5.65 million**), partially offset by **$11.82 million** in net income[146](index=146&type=chunk) - Book value per share decreased to **$27.09** at March 31, 2025, from **$28.73** at year-end 2024, mainly due to the special cash dividend[146](index=146&type=chunk) [Capital Adequacy Requirements](index=54&type=section&id=Capital%20Adequacy%20Requirements) The Company and its Bank continue to meet all Basel III capital adequacy requirements and are classified as well-capitalized. While the Company's risk-based capital ratios decreased due to capital level reduction from the special dividend, the Bank's ratios increased due to a decrease in risk-weighted assets Capital Ratios | Ratio | Company (March 31, 2025) | Bank (March 31, 2025) | Company (December 31, 2024) | Bank (December 31, 2024) | |:---------------------------|-------------------------:|----------------------:|----------------------------:|-------------------------:| | Common equity Tier 1 ratio | 15.56% | 14.03% | 16.75% | 13.89% | | Tier 1 risk-based capital ratio | 15.56% | 14.03% | 16.75% | 13.89% | | Total risk-based capital ratio | 16.81% | 15.28% | 18.00% | 15.15% | | Tier 1 leverage ratio | 11.37% | 10.37% | 12.25% | 10.32% | - The Company and Bank continue to meet all capital adequacy requirements and are classified as **well-capitalized** under regulatory frameworks[147](index=147&type=chunk) [Off-Balance Sheet Arrangements](index=55&type=section&id=Off-Balance%20Sheet%20Arrangements) The Company extends contractual commitments with off-balance sheet risk to meet customer financing needs, including commitments to extend credit and standby letters of credit, with credit loss exposure equal to the contractual amount Off-Balance Sheet Arrangements (Amounts in thousands) | Arrangement | March 31, 2025 | December 31, 2024 | |:-----------------------------------|---------------:|------------------:| | Commitments to extend credit | $247,031 | $252,225 | | Standby letters of credit and financial guarantees | $125,586 | $125,561 | | **Total off-balance sheet risk** | **$372,617** | **$377,786** | [Market Risk and Interest Rate Sensitivity](index=55&type=section&id=Market%20Risk%20and%20Interest%20Rate%20Sensitivity) The Company manages market risk, particularly interest rate risk, through its Asset/Liability Management Committee (ALCO) by reviewing asset and liability mixes and using simulation models to project net interest income and economic value of equity under various interest rate scenarios - The Company's profitability is largely dependent on net interest income, which is subject to interest rate risk due to differing repricing times of assets and liabilities[150](index=150&type=chunk) Sensitivity of Net Interest Income to Rate Shocks (12-month period, Dollars in thousands) | Increase (Decrease) in Basis Points | March 31, 2025 Change in Net Interest Income | March 31, 2025 Percent Change | December 31, 2024 Change in Net Interest Income | December 31, 2024 Percent Change | |:------------------------------------|---------------------------------------------:|-------------------------------:|---------------------------------------------:|-------------------------------:| | 200 | $2,795 | 2.2% | $2,997 | 2.4% | | 100 | $1,405 | 1.1% | $1,505 | 1.2% | | (100) | $(553) | (0.4)% | $(2,883) | -2.3% | | (200) | $(1,221) | (1.0)% | $(6,325) | -5.0% | [Inflation and Changing Prices](index=55&type=section&id=Inflation%20and%20Changing%20Prices) The Company acknowledges that inflation, driven by government spending, labor shortages, and supply chain issues, primarily impacts operating costs. However, management believes interest rates have a greater influence on financial performance than inflation - Inflation primarily affects the Company through increased operating costs, but management believes interest rates have a greater impact on financial performance than inflation[153](index=153&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section incorporates by reference the detailed disclosures regarding market risk and interest rate sensitivity provided in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" - The information required for quantitative and qualitative disclosures about market risk is incorporated by reference from the "Market Risk and Interest Rate Sensitivity" section in Item 2 of this Quarterly Report on Form 10-Q[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the Company's disclosure controls and procedures, concluding their effectiveness as of March 31, 2025, and confirms no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=57&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section presents the conclusion of the CEO and CFO regarding the effectiveness of the Company's disclosure controls and procedures - The CEO and CFO concluded that the Company's disclosure controls and procedures were **effective** as of March 31, 2025, ensuring timely and accurate reporting of required information[156](index=156&type=chunk)[157](index=157&type=chunk) [Changes in Internal Control over Financial Reporting](index=57&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section confirms that no material changes occurred in internal control over financial reporting during the quarter - There were **no changes** in the Company's internal control over financial reporting during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[159](index=159&type=chunk) [PART II. OTHER INFORMATION](index=57&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various legal actions in the normal course of business but believes that the resolution of these matters will not have a material adverse effect on its financial position, results of operations, or cash flows - The Company is a defendant in various legal actions and asserted claims in the normal course of business, but their resolution is not expected to have a **material adverse effect** on financial position, results of operations, or cash flows[160](index=160&type=chunk) [Item 1A. Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and confirms that there have been no material changes to these risk factors during the current reporting period - There have been **no material changes** to the risk factors included in Part I, Item 1A, "Risk Factors," of the Company's Annual Report on Form 10-K for the year ended December 31, 2024[161](index=161&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that the Company did not repurchase any common shares during the first quarter of 2025, and provides information on the remaining shares authorized for repurchase under its existing plan - The Company did **not repurchase any common shares** during the first quarter of 2025[162](index=162&type=chunk) Common Stock Repurchase Plan | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs | |:--------------------|---------------------------------:|-----------------------------:|-----------------------------------------------------------------------------:| | January 1-31, 2025 | - | $- | 2,245,206 | | February 1-28, 2025 | - | $- | 2,245,206 | | March 1-31, 2025 | - | $- | 2,245,206 | | **Total** | **-** | **$-** | **2,245,206** | [Item 3. Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - There were **no defaults** upon senior securities[163](index=163&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures to report - There are **no mine safety disclosures**[164](index=164&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) This section confirms no changes to procedures for recommending director nominees and no Rule 10b5-1 trading arrangements adopted or terminated by directors or executive officers during the quarter - No changes were made to the procedures by which security holders may recommend nominees to the Company's board of directors[165](index=165&type=chunk) - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[166](index=166&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of exhibits filed with the Form 10-Q, including various agreements, corporate documents, equity compensation plans, and certifications, along with interactive data files - The exhibits include corporate documents (Articles of Incorporation, Bylaws), various stock option and compensation plans, employment agreements, and interactive data files (iXBRL) for the financial statements[169](index=169&type=chunk)[171](index=171&type=chunk)[173](index=173&type=chunk) [Signatures](index=61&type=section&id=Signatures) This section contains the official signatures of the Registrant, First Community Bankshares, Inc., by its Chief Executive Officer and Chief Financial Officer, certifying the filing of the report - The report is duly signed by William P. Stafford, II, Chief Executive Officer, and David D. Brown, Chief Financial Officer, on behalf of First Community Bankshares, Inc. on May 2, 2025[175](index=175&type=chunk)

[Executive Summary](index=1&type=section&id=Executive%20Summary) First Community Bankshares, Inc. reported Q1 2025 net income of **$11.82 million** ($0.64 diluted EPS) and declared a **$0.31** quarterly dividend, maintaining its 40-year payout history Q1 2025 Key Financial Metrics | Metric | Q1 2025 (Millions) | | :----- | :----------------- | | Net Income | $11.82 | | Diluted EPS | $0.64 | - The Company declared a quarterly cash dividend of **$0.31 per common share**, payable on May 23, 2025, to shareholders of record on May 9, 2025. This marks the **40th consecutive year** of regular dividends to common shareholders[3](index=3&type=chunk) [First Quarter 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) Q1 2025 highlights include a **4.34%** net interest margin, **10.48%** noninterest income growth, **0.85%** non-performing loans, and total assets of **$3.23 billion** Q1 2025 Income Statement Highlights (in thousands, except as noted) | Metric | Q1 2025 | Q1 2024 | Change (YoY) | | :-------------------------------- | :------ | :------ | :----------- | | Net Interest Margin | 4.34% | 4.47% | -13 bps | | Yield on Earning Assets | 5.04% | 5.09% | -5 bps | | Interest Income (decrease) | | | -$867k | | Noninterest Income (increase) | | | +$970k (10.48%) | | Noninterest Expense (increase) | | | +$1.56M (6.66%) | | Salaries and Benefits (increase) | | | +$754k (5.99%) | Q1 2025 Profitability Ratios | Metric | Q1 2025 | Q1 2024 | | :-------------------------- | :------ | :------ | | Annualized Return on Average Assets (ROA) | 1.49% | 1.60% | | Annualized Return on Average Common Equity (ROE) | 9.49% | 10.18% | Q1 2025 Balance Sheet and Asset Quality Highlights (vs. Dec 31, 2024) (in millions/billions, except as noted) | Metric | March 31, 2025 | Dec 31, 2024 | Change | | :-------------------------------- | :------------- | :----------- | :----- | | Consolidated Assets | $3.23 billion | $3.26 billion | -$33.39M | | Loans | $2.38 billion | $2.42 billion | -1.38% | | Securities Available for Sale | $129.66 million | $169.85 million | -23.66% | | Deposits | $2.68 billion | $2.69 billion | -0.25% | | Stockholder Equity | $496.42 million | $526.39 million | -5.69% | | Cash and Cash Equivalents | $414.68 million | $377.45 million | +9.86% | | Non-performing loans to total loans | 0.85% | 0.83% | +0.02% | | Net Charge-offs | $1.39 million | $1.48 million | -6.08% | | Allowance for Credit Losses to Total Loans | 1.42% | 1.44% | -0.02% | | Book Value per Share | $27.09 | $28.73 | -$1.64 | | Common Shares Repurchased | 0 | 0 | 0 | [Non-GAAP Financial Measures](index=2&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP measures, including tangible book value and adjusted earnings, provide supplemental insights into financial performance, with reconciliations available - The Company uses non-GAAP financial measures like **'tangible book value per common share,' 'return on average tangible common equity,' 'adjusted earnings,'** and **'adjusted diluted earnings per share'** to aid financial and operational decision-making, evaluate trends, and compare results with other institutions[7](index=7&type=chunk) - These non-GAAP measures are supplemental to, not a substitute for, GAAP measures and may not be comparable to those reported by other financial institutions. Reconciliations to comparable GAAP measures are provided in the press release tables[7](index=7&type=chunk) [Company Overview](index=2&type=section&id=About%20First%20Community%20Bankshares%2C%20Inc.) First Community Bankshares, Inc. operates **53** branches across four states, managing **$1.62 billion** in wealth assets and **$3.23 billion** in consolidated assets - First Community Bankshares, Inc. is a financial holding company based in Bluefield, Virginia, providing banking products and services through its subsidiary, First Community Bank[8](index=8&type=chunk) - As of March 31, 2025, First Community Bank operated **53 branch locations** in Virginia, West Virginia, North Carolina, and Tennessee[8](index=8&type=chunk) Company Financial and Operational Snapshot (March 31, 2025) (in billions) | Metric | Value | | :-------------------------------- | :------------ | | Wealth Management Assets Managed | $1.62 billion | | Consolidated Assets | $3.23 billion | [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements, subject to various risks and uncertainties, with actual results potentially differing materially; the Company does not commit to updates - The news release includes forward-looking statements based on current expectations, which involve risks, uncertainties, and assumptions that could cause actual results to differ materially[9](index=9&type=chunk) - Key risks include changes in market conditions, challenges in managing asset/liability levels, credit and interest rate risk, expense growth, banking laws, competition, and geopolitical events. The Company does not commit to updating these statements[9](index=9&type=chunk) [Condensed Consolidated Financial Statements](index=3&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements, including income, balance sheet, and credit quality data for Q1 2025 and comparative periods [Condensed Consolidated Statements of Income](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(Unaudited)) This section details unaudited condensed consolidated statements of income, presenting key financial performance metrics for Q1 2025 and Q1 2024 Condensed Consolidated Statements of Income (Three Months Ended March 31) (Amounts in thousands) | (Amounts in thousands) | 2025 | 2024 | | :--------------------- | :------ | :------ | | Total interest income | $35,169 | $36,029 | | Total interest expense | $4,871 | $4,400 | | Net interest income | $30,298 | $31,629 | | Provision for credit losses | $321 | $1,011 | | Noninterest income | $10,229 | $9,259 | | Noninterest expense | $24,944 | $23,386 | | Income before income taxes | $15,262 | $16,491 | | Income tax expense | $3,444 | $3,646 | | Net income | $11,818 | $12,845 | Earnings and Dividends Per Common Share (Three Months Ended March 31) | Metric | 2025 | 2024 | | :-------------------------- | :---- | :---- | | Basic EPS | $0.64 | $0.70 | | Diluted EPS | $0.64 | $0.71 | | Regular Cash Dividends per Share | $0.31 | $0.29 | | Special Cash Dividend per Share | $2.07 | - | Performance Ratios (Three Months Ended March 31) | Metric | 2025 | 2024 | | :-------------------------------- | :------ | :------ | | Return on average assets | 1.49% | 1.60% | | Return on average common equity | 9.49% | 10.18% | | Return on average tangible common equity | 13.79% | 14.82% | [Condensed Consolidated Quarterly Noninterest Income and Expense](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20QUARTERLY%20NONINTEREST%20INCOME%20AND%20EXPENSE%20(Unaudited)) This section breaks down unaudited noninterest income and expense items for Q1 2025 and Q1 2024, highlighting specific revenue streams and operational costs Noninterest Income (Three Months Ended March 31) (Amounts in thousands) | (Amounts in thousands) | 2025 | 2024 | | :--------------------- | :------ | :------ | | Wealth management | $1,162 | $1,099 | | Service charges on deposits | $3,836 | $3,310 | | Other service charges and fees | $3,340 | $3,450 | | Other operating income | $1,891 | $1,400 | | Total noninterest income | $10,229 | $9,259 | Noninterest Expense (Three Months Ended March 31) (Amounts in thousands) | (Amounts in thousands) | 2025 | 2024 | | :--------------------- | :------ | :------ | | Salaries and employee benefits | $13,335 | $12,581 | | Occupancy expense | $1,576 | $1,378 | | Furniture and equipment expense | $1,575 | $1,545 | | Service fees | $2,484 | $2,449 | | Advertising and public relations | $1,055 | $796 | | Professional fees | $372 | $372 | | Amortization of intangibles | $524 | $530 | | FDIC premiums and assessments | $362 | $369 | | Other operating expense | $3,661 | $3,366 | | Total noninterest expense | $24,944 | $23,386 | [Reconciliation of GAAP Net Income to Non-GAAP Adjusted Earnings](index=5&type=section&id=RECONCILIATION%20OF%20GAAP%20NET%20INCOME%20TO%20NON-GAAP%20ADJUSTED%20EARNINGS%20(Unaudited)) This section reconciles GAAP net income to non-GAAP adjusted earnings and presents adjusted performance ratios, offering a clearer view of underlying financial performance Reconciliation of GAAP Net Income to Non-GAAP Adjusted Earnings (Three Months Ended March 31) (Amounts in thousands) | (Amounts in thousands) | 2025 | 2024 | | :--------------------- | :------ | :------ | | Adjusted Net Income for diluted EPS | $11,818 | $12,845 | | Total adjustments | - | - | | Tax effect | - | - | | Adjusted earnings, non-GAAP | $11,818 | $12,845 | | Adjusted diluted EPS, non-GAAP | $0.64 | $0.69 | Non-GAAP Adjusted Performance Ratios (Three Months Ended March 31) | Metric | 2025 | 2024 | | :-------------------------------- | :------ | :------ | | Adjusted return on average assets | 1.49% | 1.60% | | Adjusted return on average common equity | 9.49% | 10.18% | | Adjusted return on average tangible common equity | 13.79% | 14.82% | [Average Balance Sheets and Net Interest Income Analysis](index=6&type=section&id=AVERAGE%20BALANCE%20SHEETS%20AND%20NET%20INTEREST%20INCOME%20ANALYSIS%20(Unaudited)) This section analyzes average balance sheets and net interest income, detailing earning assets, interest-bearing liabilities, and their yields/rates for Q1 2025 and Q1 2024 Average Earning Assets and Yields (Three Months Ended March 31) (Amounts in thousands) | (Amounts in thousands) | 2025 Average Balance | 2025 Interest | 2025 Yield/Rate | 2024 Average Balance | 2024 Interest | 2024 Yield/Rate | | :--------------------- | :------------------- | :------------ | :-------------- | :------------------- | :------------ | :-------------- | | Loans | $2,395,068 | $30,757 | 5.21% | $2,549,107 | $33,500 | 5.29% | | Securities available for sale | $149,266 | $1,261 | 3.43% | $239,010 | $1,731 | 2.91% | | Interest-bearing deposits | $295,939 | $3,262 | 4.47% | $66,483 | $916 | 5.54% | | Total earning assets | $2,840,273 | $35,280 | 5.04% | $2,854,600 | $36,147 | 5.09% | Average Interest-Bearing Liabilities and Rates (Three Months Ended March 31) (Amounts in thousands) | (Amounts in thousands) | 2025 Average Balance | 2025 Interest | 2025 Yield/Rate | 2024 Average Balance | 2024 Interest | 2024 Yield/Rate | | :--------------------- | :------------------- | :------------ | :-------------- | :------------------- | :------------ | :-------------- | | Demand deposits | $658,651 | $180 | 0.11% | $665,875 | $162 | 0.10% | | Savings deposits | $891,148 | $3,311 | 1.51% | $866,084 | $3,412 | 1.58% | | Time deposits | $238,254 | $1,380 | 2.35% | $249,974 | $790 | 1.27% | | Total interest-bearing deposits | $1,788,053 | $4,871 | 1.10% | $1,781,933 | $4,364 | 0.98% | | Total borrowings | $1,071 | - | 0.06% | $3,654 | $35 | 3.85% | | Total interest-bearing liabilities | $1,789,124 | $4,871 | 1.10% | $1,785,587 | $4,399 | 0.99% | Net Interest Income and Margin (Three Months Ended March 31) | Metric | 2025 | 2024 | | :------------------ | :------ | :------ | | Net interest income, FTE | $30,409 | $31,748 | | Net interest rate spread | 3.94% | 4.10% | | Net interest margin, FTE | 4.34% | 4.47% | [Condensed Consolidated Quarterly Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20QUARTERLY%20BALANCE%20SHEETS%20(Unaudited)) This section presents unaudited condensed consolidated quarterly balance sheets, outlining key assets, liabilities, and equity positions for Q1 2025 and comparative periods Key Balance Sheet Assets (Period-End) (Amounts in thousands) | (Amounts in thousands) | March 31, 2025 | Dec 31, 2024 | March 31, 2024 | | :--------------------- | :------------- | :----------- | :------------- | | Cash and cash equivalents | $414,682 | $377,454 | $248,905 | | Debt securities available for sale | $129,659 | $169,849 | $166,247 | | Loans held for investment, net | $2,348,915 | $2,381,264 | $2,484,372 | | Goodwill | $143,946 | $143,946 | $143,946 | | Total assets | $3,225,773 | $3,261,216 | $3,235,981 | Key Balance Sheet Liabilities and Equity (Period-End) (Amounts in thousands) | (Amounts in thousands) | March 31, 2025 | Dec 31, 2024 | March 31, 2024 | | :--------------------- | :------------- | :----------- | :------------- | | Noninterest-bearing deposits | $893,794 | $883,499 | $902,396 | | Interest-bearing deposits | $1,790,683 | $1,807,748 | $1,779,819 | | Total deposits | $2,684,477 | $2,691,247 | $2,682,215 | | Total liabilities | $2,729,356 | $2,734,824 | $2,729,037 | | Total stockholders' equity | $496,417 | $526,392 | $506,944 | Book Value Per Common Share (Period-End) | Metric | March 31, 2025 | Dec 31, 2024 | March 31, 2024 | | :-------------------------- | :------------- | :----------- | :------------- | | Book value per common share | $27.09 | $28.73 | $27.53 | | Tangible book value per common share | $18.55 | $20.16 | $18.92 | [Selected Credit Quality Information](index=8&type=section&id=SELECTED%20CREDIT%20QUALITY%20INFORMATION%20(Unaudited)) This section provides selected unaudited credit quality information, including allowance for credit losses, nonperforming assets, and key asset quality ratios for Q1 2025 and comparative periods Allowance for Credit Losses (Period-End) (Amounts in thousands) | (Amounts in thousands) | March 31, 2025 | Dec 31, 2024 | March 31, 2024 | | :--------------------- | :------------- | :----------- | :------------- | | Allowance for credit losses - loans | $33,784 | $34,825 | $35,461 | | Allowance for credit losses - loan commitments | $312 | $341 | $746 | | Ending balance | $34,096 | $35,166 | $36,207 | Nonperforming Assets (Period-End) (Amounts in thousands) | (Amounts in thousands) | March 31, 2025 | Dec 31, 2024 | March 31, 2024 | | :--------------------- | :------------- | :----------- | :------------- | | Nonaccrual loans | $19,974 | $19,869 | $19,617 | | Accruing loans past due 90 days or more | $117 | $149 | $30 | | Modified loans past due 90 days or more | $125 | $135 | - | | Total nonperforming loans | $20,216 | $20,153 | $19,647 | | OREO | $298 | $521 | $374 | | Total nonperforming assets | $20,514 | $20,674 | $20,021 | Asset Quality Ratios (Period-End) | Metric | March 31, 2025 | Dec 31, 2024 | March 31, 2024 | | :-------------------------------- | :------------- | :----------- | :------------- | | Nonperforming loans to total loans | 0.85% | 0.83% | 0.78% | | Nonperforming assets to total assets | 0.64% | 0.63% | 0.62% | | Allowance for credit losses to nonperforming loans | 167.12% | 172.80% | 180.49% | | Allowance for credit losses to total loans | 1.42% | 1.44% | 1.41% | | Annualized net charge-offs (recoveries) to average loans | 0.24% | 0.24% | 0.27% |

Core Points - First Community Bankshares, Inc. reported a net income of $11.82 million, or $0.64 per diluted common share, for the quarter ended March 31, 2025 [1][10][12] - The company declared a quarterly cash dividend of $0.31 per common share, marking the 40th consecutive year of regular dividends [2][12] - Consolidated assets totaled $3.23 billion as of March 31, 2025 [1][8] Income Statement Highlights - Net interest income for the first quarter of 2025 was $30.30 million, a decrease from $31.33 million in the same period of 2024 [12] - Noninterest income increased by approximately $970 thousand, or 10.48%, compared to the same quarter of 2024, primarily due to an increase in service charges on deposits [6][15] - Noninterest expense rose by $1.56 million, or 6.66%, compared to the same period in 2024, mainly due to increased salaries and benefits [6][15] Balance Sheet and Asset Quality - Total loans decreased by $33.39 million, or 1.38%, from December 31, 2024, while securities available for sale decreased by $40.19 million, or 23.66% [6][19] - Deposits decreased by $6.77 million, or 0.25%, largely due to declining higher-rate time deposits [6][19] - Non-performing loans to total loans increased to 0.85% compared to the same quarter of 2024 [6][22] Non-GAAP Financial Measures - The company reported a tangible book value per common share of $27.09, a decrease of $1.64 from year-end 2024 [6][21] - Annualized return on average assets (ROA) was 1.49% for the first quarter of 2025, down from 1.60% for the same period of 2024 [6][12] - Annualized return on average common equity (ROE) was 9.49% for the first quarter of 2025, compared to 10.18% for the same period of 2024 [6][12]

Financial Performance - Net income for 2024 was $51.60 million, an increase of 7.46% compared to $48.02 million in 2023[152]. - Basic earnings per common share rose to $2.81 in 2024, up 5.24% from $2.67 in 2023[152]. - Annual net income was $51.60 million, or $2.80 per diluted common share, an increase of $3.58 million, or 7.46%, compared to 2023[154]. - Annualized return on average assets (ROA) was 1.60% for 2024, compared to 1.48% for 2023; annualized return on average common equity (ROE) was 10.03% for 2024, compared to 10.02% for 2023[154]. - Net income for 2023 was $51,604,000, a 5.5% increase from $48,020,000 in 2022[231]. - Earnings per common share (basic) for 2023 was $2.81, compared to $2.67 in 2022, reflecting a 5.2% increase[228]. Income and Expenses - Net interest income for 2024 totaled $126.47 million, a decrease of 0.95% from $127.68 million in 2023[152]. - Non-interest income increased by 5.17% to $39.47 million in 2024, compared to $37.53 million in 2023[152]. - Non-interest expense increased by 1.46% to $96.66 million in 2024, compared to $95.27 million in 2023[152]. - Total noninterest expense increased to $96,567,000 in 2023, up from $95,177,000 in 2022, representing a 1.5% rise[228]. - The provision for credit losses decreased to $3,597 thousand in 2023 from $7,985 thousand in 2022, a reduction of approximately 55%[237]. Credit Losses and Allowances - Provision for credit losses decreased by 54.95% to $3.60 million in 2024, down from $7.99 million in 2023[152]. - The allowance for credit losses to total loans was 1.44% at December 31, 2024, compared to 1.41% for the same period of 2023[154]. - The allowance for credit losses (ACL) is reviewed quarterly to ensure it is sufficient to absorb expected credit losses, with significant estimates and assumptions involved[267]. - The ACL is calculated using collectively evaluated and individually evaluated loans, reflecting management's best estimate of expected credit losses[269]. Asset and Loan Portfolio - Total assets decreased by $7.33 million, or 0.22%, to $3.26 billion as of December 31, 2024, with loans decreasing by $156.21 million, or 6.07%[176]. - Total loans held for investment decreased by $156.21 million, or 6.07%, as of December 31, 2024, compared to December 31, 2023[181]. - Loans held for investment decreased to $2.416 billion in 2024 from $2.572 billion in 2023, indicating a contraction in the loan portfolio[225]. - The total loans portfolio was $2.42 billion as of December 31, 2024[183]. - Commercial loans represented 65.46% of total loans as of December 31, 2024, compared to 64.59% in 2023[334]. Capital and Equity - Total stockholders' equity increased by $23.10 million, or 4.59%, to $526.39 million as of December 31, 2024, primarily due to earnings of $51.60 million offset by dividends of $22.02 million[213]. - The common equity Tier 1 ratio improved to 16.75% as of December 31, 2024, compared to 14.69% in 2023, indicating strong capital adequacy[214]. - The total risk-based capital ratio rose to 18.00% in 2024 from 15.94% in 2023, reflecting enhanced capital strength[214]. Acquisitions and Goodwill - The acquisition of Surrey Bancorp added $466.25 million in total assets and resulted in $14.38 million in goodwill[140]. - Goodwill recognized from the Surrey acquisition amounted to $14.38 million, with core deposit intangibles totaling $12.70 million[311]. - The Company incurred $2.99 million in merger expenses related to the Surrey transaction, with $2.39 million recorded in the first nine months of 2023[310]. Market and Securities - The fair value of available-for-sale debt securities as of December 31, 2024, was $169.85 million, with an amortized cost of $184.69 million[320]. - There were 103 individual debt securities in an unrealized loss position as of December 31, 2024, representing 8.74% of the debt securities portfolio[323]. - The total amortized cost of available-for-sale U.S. Treasury securities was $55.76 million, with no credit losses attributed to them as of December 31, 2024[326]. Liquidity and Cash Flow - As of December 31, 2024, the company's cash reserves totaled $3.95 million and short-term investment securities amounted to $55.77 million, providing adequate working capital for the next twelve months[210]. - The net loss on the sale of OREO properties was $28 thousand in 2024, compared to $84 thousand in 2023 and $453 thousand in 2022[193]. - Cash and cash equivalents at the end of the period increased significantly to $377,454 thousand from $116,420 thousand in 2022, marking a rise of 224%[237].

Financial Performance - Net income for Q4 2024 was $13.04 million, a 10.65% increase from Q4 2023, while annual net income reached $51.60 million, up 7.46% year-over-year[6]. - Net income for Q4 2024 reached $13,040,000, compared to $13,033,000 in Q3 2024 and $11,784,000 in Q4 2023, reflecting a year-over-year increase of 10.7%[14]. - Adjusted net income for diluted earnings per share for Q4 2024 was $13,040,000, compared to $12,314,000 in Q4 2023, representing a 5.9% increase[17]. - The company reported a total of $52,345,000 in adjusted earnings for the year ended December 31, 2024, compared to $54,741,000 in 2023, marking a decrease of 4.4%[17]. Dividends and Shareholder Returns - The company declared a quarterly cash dividend of $0.31 per share and a special cash dividend of $2.07 per share, marking the 40th consecutive year of regular dividends[3][4]. - Cash dividends per common share for the year were $1.20, an increase from $1.16 in the previous year[14]. - The company plans to return excess earnings to shareholders through regular cash dividends and stock repurchases as part of its capital management strategy[5]. - The company repurchased 257,294 common shares during 2024 at a total cost of $8.72 million[9]. Asset and Liability Management - Total consolidated assets were $3.26 billion as of December 31, 2024, with a significant increase in cash and cash equivalents by 224.22% to $261.03 million[9][11]. - Total liabilities for the year ended December 31, 2024, were $2,718,938,000, with stockholders' equity of $514,385,000[23]. - Total assets increased to $3,261,216 thousand as of December 31, 2024, compared to $3,268,545 thousand a year earlier, reflecting a decrease of 0.2%[25]. - Total deposits rose to $2,691,247 thousand, up from $2,722,325 thousand a year ago, representing a decrease of 1.1%[25]. Loan and Credit Quality - Loans decreased by $156.21 million, or 6.07%, and securities available for sale decreased by $111.12 million, or 39.55%, compared to December 31, 2023[9]. - Non-performing loans to total loans increased to 0.83% compared to the same quarter of 2023, with net charge-offs of $1.48 million for Q4 2024[9]. - The allowance for credit losses to total loans was 1.44% at December 31, 2024, up from 1.41% at the end of 2023[13]. - The allowance for credit losses on loans was $34,825 thousand at the end of December 2024, down from $36,189 thousand a year earlier, a reduction of 3.8%[27]. - Nonperforming loans increased slightly to $20,153 thousand from $19,460 thousand year-over-year, an increase of 3.5%[27]. - The ratio of nonperforming loans to total loans was 0.83% as of December 31, 2024, compared to 0.76% a year earlier, indicating a deterioration in asset quality[27]. - The annualized net charge-offs to average loans was 0.24% for the quarter, compared to 0.14% a year earlier, indicating a rise in charge-off rates[27]. - The company reported a total allowance for credit losses to nonperforming loans ratio of 172.80% as of December 31, 2024, down from 185.97% a year earlier, suggesting a decrease in coverage for nonperforming loans[27]. Income and Expense Management - Total interest income for Q4 2024 was $36,432,000, a slight decrease from $36,892,000 in Q3 2024, but an increase from $36,002,000 in Q4 2023[14]. - Noninterest income totaled $10,337,000 in Q4 2024, slightly down from $10,452,000 in Q3 2024, but up from $9,342,000 in Q4 2023[15]. - Total noninterest expense for Q4 2024 was $24,107,000, compared to $24,177,000 in Q3 2024 and $26,780,000 in Q4 2023, indicating improved cost management[16]. - The provision for credit losses in Q4 2024 was $1,082,000, a decrease from $1,360,000 in Q3 2024 and significantly lower than $1,029,000 in Q4 2023[14]. - The company incurred litigation expenses of $1,800,000 in Q4 2024, which impacted the overall adjusted earnings[17]. Shareholder Equity and Book Value - Book value per share increased to $28.73, reflecting a $1.53 increase from year-end 2023[13]. - The book value per common share increased to $28.73 from $27.20 year-over-year, reflecting a growth of 5.6%[25]. - The total stockholders' equity rose to $526,392 thousand, up from $503,294 thousand a year earlier, an increase of 4.6%[25]. Interest Rates and Margins - The net interest rate spread for Q4 2024 was 3.94%, slightly down from 4.09% in Q4 2023[20]. - The average balance of interest-bearing deposits for Q4 2024 was $1,792,818,000, with a total interest expense of $5,098,000, resulting in an interest rate of 1.13%[20]. - The company’s net interest income after provision for credit losses was $30,251,000 in Q4 2024, slightly down from $30,234,000 in Q3 2024 but up from $31,034,000 in Q4 2023[14]. - Total earning assets for Q4 2024 were $2,866,703,000, with a net interest income of $31,443,000, resulting in a net interest margin of 4.36%[20]. - The average balance of loans for the year ended December 31, 2024, was $2,481,215,000, generating interest income of $130,196,000 at a yield of 5.25%[23].

Core Viewpoint - First Community Bankshares, Inc. reported a net income of $13.04 million for Q4 2024, marking a 10.65% increase from the same quarter in 2023, and a total net income of $51.60 million for the year, up 7.46% from 2023 [1][6]. Financial Performance - The company declared a quarterly cash dividend of $0.31 per common share and a special cash dividend of $2.07 per common share, marking the 40th consecutive year of regular dividends [2][3]. - Net interest income decreased by $730 thousand compared to Q4 2023, primarily due to increased rates on interest-bearing deposits [6]. - Noninterest income decreased by approximately $125 thousand, or 1.19%, compared to the same quarter in 2023 [6]. - Noninterest expense decreased by $2.67 million, or 9.98%, compared to the same period in 2023, largely due to a litigation expense recorded in Q4 2023 [6]. Capital Management - The company has maintained a strong capital base, returning earnings not needed for growth through regular cash dividends and stock repurchases [3]. - Over the last four years, the company earned approximately $197.45 million, paying regular dividends of $79.68 million and repurchasing shares for $81.95 million [3]. - The Board of Directors confirmed sufficient surplus capital to support anticipated growth opportunities after the special dividend payment of approximately $37.92 million [3]. Asset Quality - Consolidated assets totaled $3.26 billion as of December 31, 2024, with loans decreasing by $156.21 million, or 6.07%, from December 31, 2023 [6][12]. - Non-performing loans to total loans increased to 0.83% compared to the same quarter in 2023, with net charge-offs for Q4 2024 at $1.48 million, or 0.24% of annualized average loans [6]. - The allowance for credit losses to total loans was 1.44% at December 31, 2024, compared to 1.41% at December 31, 2023 [12]. Stock Performance - The book value per share at December 31, 2024, was $28.73, an increase of $1.53 from year-end 2023 [12][23]. - The company did not repurchase any common shares during Q4 2024 but repurchased 257,294 common shares during 2024 at a total cost of $8.72 million [6].