First Community Bancshares (FCBC) came out with quarterly earnings of $0.71 per share, beating the Zacks Consensus Estimate of $0.60 per share. This compares to earnings of $0.72 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 18.33%. A quarter ago, it was expected that this holding company for First Community Bank would post earnings of $0.67 per share when it actually produced earnings of $0.79, delivering a surprise of 17.9 ...

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [First Quarter 2024 Performance Overview](index=1&type=section&id=First%20Quarter%202024%20Performance%20Overview) First Community Bankshares, Inc. reported a net income of $12.85 million, or $0.71 per diluted common share, for the first quarter ended March 31, 2024, marking a 9.02% increase from the same period in 2023 First Quarter 2024 Performance Overview | Metric | Q1 2024 (Millions) | Q1 2023 (Millions) | YoY Change (%) | | :------------------- | :------------------ | :------------------ | :------------- | | Net Income | $12.85 | $11.78 | 9.02% | | Diluted EPS | $0.71 | $0.72 | -1.39% | [Quarterly Cash Dividend](index=1&type=section&id=Quarterly%20Cash%20Dividend) The Company declared a quarterly cash dividend of $0.29 per common share, payable on or about May 24, 2024, to shareholders of record on May 10, 2024, marking the 39th consecutive year of regular dividends - Quarterly cash dividend declared: **$0.29 per common share**[3](index=3&type=chunk) - Dividend payable on or about May 24, 2024, to shareholders of record on May 10, 2024[3](index=3&type=chunk) - This marks the **39th consecutive year** of regular dividends to common shareholders[3](index=3&type=chunk) [First Quarter 2024 Key Highlights](index=1&type=section&id=First%20Quarter%202024%20Key%20Highlights) The first quarter of 2024 saw significant improvements in net interest income and margin, driven by higher interest rates and loan growth, partially offset by increased noninterest expenses, while asset quality metrics showed slight increases in non-performing loans but stable allowance for credit losses [Income Statement Highlights](index=1&type=section&id=Income%20Statement%20Highlights) - Net interest income increased **$2.22 million** compared to Q1 2023, driven by improved net interest margin due to higher benchmark interest rates[6](index=6&type=chunk) Net Interest Margin and Yield on Earning Assets | Metric | Q1 2024 | Q1 2023 | YoY Change (bps) | | :---------------------- | :------ | :------ | :--------------- | | Net Interest Margin | 4.47% | 4.35% | +12 | | Yield on Earning Assets | 5.09% | 4.47% | +62 | - Interest and fees on loans increased **$5.79 million** from Q1 2023, attributed to both increased yield and average balance, including approximately **$239.08 million** in loans from the Surrey Bancorp acquisition on April 21, 2023[6](index=6&type=chunk) - Noninterest income increased approximately **$676 thousand (7.88%)** YoY, primarily driven by increased interchange income[6](index=6&type=chunk) - Noninterest expense increased **$2.57 million (12.36%)** YoY, mainly due to salaries and employee benefits, service fees, and other operating expenses, largely attributable to the addition of Surrey branches and staff[6](index=6&type=chunk) Annualized Returns | Metric | Q1 2024 | Q1 2023 | YoY Change (bps) | | :----------------------------------- | :------ | :------ | :--------------- | | Annualized Return on Average Assets | 1.60% | 1.55% | +5 | | Annualized Return on Average Equity | 10.18% | 11.15% | -97 | [Balance Sheet and Asset Quality Highlights](index=1&type=section&id=Balance%20Sheet%20and%20Asset%20Quality%20Highlights) - Consolidated assets totaled **$3.24 billion** at March 31, 2024[6](index=6&type=chunk)[8](index=8&type=chunk) - Securities available for sale decreased **$114.71 million (40.83%)** from December 31, 2023, primarily due to the maturity of **$115.75 million** in U.S. Treasury Notes[6](index=6&type=chunk) - Loans decreased **$52.47 million (2.04%)** and deposits decreased **$40.11 million (1.47%)** from December 31, 2023[6](index=6&type=chunk) - Cash and cash equivalents increased **$132.49 million (113.80%)** from December 31, 2023, mainly due to an increase in federal funds sold[6](index=6&type=chunk) - The Company repurchased **89,396 common shares** for **$2.97 million** during Q1 2024[6](index=6&type=chunk) Asset Quality Ratios | Metric | Q1 2024 | Q1 2023 | YoY Change (bps) | | :----------------------------------- | :------ | :------ | :--------------- | | Non-performing loans to total loans | 0.78% | 0.65% | +13 | | Net charge-offs (annualized average) | 0.27% | 0.29% | -2 | Key Balance Sheet Ratios | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :----------------------------------- | :----------- | :----------- | :----------- | | Allowance for credit losses to total loans | 1.41% | 1.41% | 1.29% | | Book value per share | $27.53 | $27.20 | $26.58 | [Company Information & Disclosures](index=2&type=section&id=Company%20Information%20%26%20Disclosures) [About First Community Bankshares, Inc.](index=2&type=section&id=About%20First%20Community%20Bankshares%2C%20Inc.) First Community Bankshares, Inc. is a financial holding company operating through its subsidiary, First Community Bank, with 53 branch locations across Virginia, West Virginia, North Carolina, and Tennessee, also offering wealth management services, managing and administering $1.55 billion in combined assets - Headquartered in Bluefield, Virginia, operating through First Community Bank[8](index=8&type=chunk) - Operates **53 branch banking locations** in Virginia, West Virginia, North Carolina, and Tennessee[8](index=8&type=chunk) - Wealth management and investment advice services managed and administered **$1.55 billion** in combined assets as of March 31, 2024[8](index=8&type=chunk) - Consolidated assets totaled **$3.24 billion** as of March 31, 2024[8](index=8&type=chunk) [Non-GAAP Financial Measures Disclosure](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20Disclosure) The Company utilizes various non-GAAP financial measures, such as 'tangible book value per common share' and 'adjusted earnings,' to provide additional insights into its financial and operational performance, which are supplemental to GAAP and reconciled in attached tables - Non-GAAP measures include tangible book value per common share, return on average tangible common equity, adjusted earnings, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average common equity, adjusted return on average tangible common equity, and FTE basis measures[7](index=7&type=chunk) - These measures are used for financial and operational decision making, evaluating trends, and comparing financial results[7](index=7&type=chunk) - Reconciliations to comparable GAAP measures are provided in the press release tables, emphasizing that non-GAAP measures are supplemental and not a substitute for GAAP[7](index=7&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This news release contains forward-looking statements based on current expectations, which are subject to various risks, uncertainties, and assumptions, where actual results may differ materially due to factors such as market conditions, regulatory changes, and credit risk, and the Company does not undertake to update these statements - Forward-looking statements are based on current expectations and involve risks, uncertainties, and assumptions[9](index=9&type=chunk) - Risks include changes in market conditions, timely development of products, managing asset/liability levels, credit and interest rate risk, expense growth, banking laws, competition, and geopolitical events[9](index=9&type=chunk) - The Company does not undertake to update forward-looking statements to reflect circumstances or events occurring after their initial release[9](index=9&type=chunk) [Unaudited Financial Statements](index=3&type=section&id=Unaudited%20Financial%20Statements) [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The condensed consolidated statements of income provide a quarterly overview of the Company's financial performance, highlighting trends in interest income, interest expense, net interest income, provision for credit losses, noninterest income and expense, and ultimately net income and earnings per share Condensed Consolidated Statements of Income | Metric (in thousands) | March 31, 2024 | March 31, 2023 | | :-------------------- | :------------- | :------------- | | Total interest income | $36,029 | $30,189 | | Total interest expense | $4,400 | $777 | | Net interest income | $31,629 | $29,412 | | Provision for credit losses | $1,011 | $1,742 | | Noninterest income | $9,259 | $8,583 | | Noninterest expense | $23,386 | $20,813 | | Net income | $12,845 | $11,782 | | Diluted EPS | $0.71 | $0.72 | | Return on average assets | 1.60% | 1.55% | | Return on average common equity | 10.18% | 11.15% | | Return on average tangible common equity | 14.82% | 16.19% | [Condensed Consolidated Quarterly Noninterest Income and Expense](index=3&type=section&id=Condensed%20Consolidated%20Quarterly%20Noninterest%20Income%20and%20Expense) This section details the quarterly breakdown of noninterest income and expense categories, showing contributions from wealth management, service charges, and other operating income, alongside major expense items like salaries, occupancy, and service fees Condensed Consolidated Quarterly Noninterest Income and Expense | Metric (in thousands) | March 31, 2024 | March 31, 2023 | | :-------------------- | :------------- | :------------- | | **Noninterest income** | | | | Wealth management | $1,099 | $1,017 | | Service charges on deposits | $3,310 | $3,159 | | Other service charges and fees | $3,450 | $3,082 | | Other operating income | $1,400 | $1,318 | | Total noninterest income | $9,259 | $8,583 | | **Noninterest expense** | | | | Salaries and employee benefits | $12,581 | $11,595 | | Occupancy expense | $1,378 | $1,168 | | Furniture and equipment expense | $1,545 | $1,401 | | Service fees | $2,449 | $2,019 | | Other operating expense | $3,366 | $2,727 | | Total noninterest expense | $23,386 | $20,813 | [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) This reconciliation provides a clear bridge between GAAP net income and various non-GAAP adjusted earnings metrics, accounting for specific non-recurring or non-operational items to offer a more normalized view of performance Reconciliation of GAAP Net Income to Non-GAAP Adjusted Earnings | Metric (in thousands) | March 31, 2024 | March 31, 2023 | | :-------------------- | :------------- | :------------- | | Adjusted Net Income for diluted EPS | $13,085 | $11,802 | | Total adjustments | $- | $372 | | Tax effect | $- | $10 | | Adjusted earnings, non-GAAP | $13,085 | $12,163 | | Adjusted diluted EPS, non-GAAP | $0.71 | $0.75 | | Adjusted return on average assets | 1.63% | 1.60% | | Adjusted return on average common equity | 10.37% | 11.51% | | Adjusted return on average tangible common equity | 15.10% | 16.72% | [Average Balance Sheets and Net Interest Income Analysis](index=6&type=section&id=Average%20Balance%20Sheets%20and%20Net%20Interest%20Income%20Analysis) This analysis presents average balance sheet figures and a detailed breakdown of interest income and expense, providing insights into the Company's net interest margin and rate spread on a fully taxable equivalent (FTE) basis Average Balance Sheets and Net Interest Income Analysis | Metric (in thousands) | March 31, 2024 | March 31, 2023 | | :-------------------- | :------------- | :------------- | | **Average Earning Assets** | | | | Loans | $2,549,107 | $2,393,759 | | Securities available for sale | $239,010 | $316,734 | | Interest-bearing deposits | $66,483 | $40,993 | | Total earning assets | $2,854,600 | $2,751,486 | | **Average Interest-Bearing Liabilities** | | | | Total interest-bearing deposits | $1,781,933 | $1,765,075 | | Total borrowings | $3,654 | $6,805 | | Total interest-bearing liabilities | $1,785,587 | $1,771,880 | | Net interest income, FTE | $31,748 | $29,526 | | Net interest rate spread | 4.10% | 4.29% | | Net interest margin, FTE | 4.47% | 4.35% | [Condensed Consolidated Quarterly Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Quarterly%20Balance%20Sheets) The condensed consolidated quarterly balance sheets provide a snapshot of the Company's financial position at the end of each quarter, detailing assets, liabilities, and stockholders' equity, including key per-share metrics Condensed Consolidated Quarterly Balance Sheets | Metric (in thousands) | March 31, 2024 | March 31, 2023 | | :-------------------- | :------------- | :------------- | | Cash and cash equivalents | $248,905 | $92,385 | | Debt securities available for sale, at fair value | $166,247 | $308,269 | | Loans held for investment, net | $2,484,372 | $2,358,108 | | Total assets | $3,235,981 | $3,051,672 | | Total deposits | $2,682,215 | $2,584,624 | | Total liabilities | $2,729,037 | $2,619,941 | | Total stockholders' equity | $506,944 | $431,731 | | Book value per common share | $27.53 | $26.58 | | Tangible book value per common share | $18.92 | $18.36 | [Selected Credit Quality Information](index=8&type=section&id=Selected%20Credit%20Quality%20Information) This section provides critical insights into the Company's credit quality, including the allowance for credit losses, nonperforming assets, and key ratios that assess the health of its loan portfolio Selected Credit Quality Information | Metric (in thousands) | March 31, 2024 | March 31, 2023 | | :-------------------- | :------------- | :------------- | | **Allowance for Credit Losses** | | | | Balance at beginning of period | $36,935 | $31,752 | | Provision for credit losses | $1,011 | $1,742 | | Net (charge-offs) recoveries | $(1,739) | $(1,741) | | Ending balance | $36,207 | $31,753 | | **Nonperforming Assets** | | | | Nonaccrual loans | $19,617 | $15,557 | | OREO | $374 | $481 | | Total nonperforming assets | $20,021 | $16,061 | | **Asset Quality Ratios** | | | | Nonperforming loans to total loans | 0.78% | 0.65% | | Nonperforming assets to total assets | 0.62% | 0.53% | | Allowance for credit losses to nonperforming loans | 180.49% | 197.62% | | Allowance for credit losses to total loans | 1.41% | 1.29% | | Annualized net charge-offs (recoveries) to average loans | 0.27% | 0.29% |

BLUEFIELD, Va., April 23, 2024 (GLOBE NEWSWIRE) -- 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 March 31, 2024. The Company reported net income of $12.85 million, or $0.71 per diluted common share, for the quarter ended March 31, 2024.    The Company also declared a quarterly cash dividend to common shareholders of twenty-nine cents $0.29 per common share. T ...

Branch Operations - As of December 31, 2023, First Community Bankshares operated 53 branches across Virginia, West Virginia, North Carolina, and Tennessee[139] Financial Performance - The company reported net income of $48.02 million for 2023, reflecting a 2.91% increase from $46.66 million in 2022[152] - Annual net income for 2023 was $48.02 million, an increase of $1.36 million, or 2.91%, compared to 2022[154] - Net interest income for 2023 was $127.68 million, an increase of 15.02 million or 13.33% compared to $112.66 million in 2022[152] - Net interest income increased by $15.02 million, or 13.33%, driven by higher benchmark interest rates and improved net interest margin[158] - Noninterest income increased by $270 thousand, or 0.73%, in 2023, primarily due to a $1.34 million increase in other service charges and fees[166] - Total revenues for the year ended December 31, 2023, are projected to be $165.14 million, compared to $170.21 million for the year ended December 31, 2022[324] - The effective tax rate slightly increased to 22.51% in 2023 from 22.43% in 2022, with income tax expense rising by $459 thousand, or 3.40%[172] - Net income for 2023 was $48,020,000, a 2.9% increase from $46,662,000 in 2022[230] Asset Management - The Trust Division and First Community Wealth Management managed $1.49 billion in assets as of December 31, 2023[140] - Total assets increased by $132.97 million, or 4.24%, to $3.27 billion as of December 31, 2023, largely due to the acquisition of Surrey Bancorp[174] - Total assets increased to $3,268.55 million as of December 31, 2023, from $3,135.57 million in 2022[224] - Total loans held for investment increased by $172.10 million, or 7.17%, to $2.57 billion as of December 31, 2023, primarily due to the Surrey acquisition[179] - The loan portfolio increased by $172.10 million, or 7.17%, from December 31, 2022, while excluding the Surrey transaction, it decreased by approximately $66.98 million, or 2.79%[154] Acquisition Details - The acquisition of Surrey Bancorp on April 21, 2023, involved total assets of $466.25 million and resulted in $14.38 million in goodwill[141] - The company acquired Surrey Bancorp on April 21, 2023, adding approximately $239.08 million in loans and increasing total assets to $3.39 billion[154] - The merger with Surrey Bancorp was finalized on April 21, 2023, with a total purchase price of $71.37 million, converting each share of Surrey common stock into 0.7159 shares of the Company's common stock[313] - The Company recognized $14.38 million in goodwill from the Surrey acquisition, with core deposit intangibles valued at $12.70 million[315] - The total assets acquired from Surrey amounted to $466.96 million, with total liabilities of $410.85 million[318] Credit Losses and Provisions - The provision for credit losses increased by $1.41 million in 2023, primarily due to a $1.61 million provision related to the acquisition of the Surrey loan portfolio[152] - The allowance for credit losses (ACL) was $36.19 million, or 1.41% of total loans, as of December 31, 2023, reflecting an increase of $5.63 million from $30.56 million at the end of 2022[198] - The provision for credit losses was $7,985,000 in 2023, compared to $6,572,000 in 2022, indicating an increase in expected credit losses[236] - The allowance for credit losses to total loans was 1.41% at December 31, 2023, compared to 1.27% for the same period of 2022[154] - The company recorded a provision for credit losses of $7.99 million for the year ended December 31, 2023, which included a day two provision of $1.61 million for Surrey loans[198] Loan and Deposit Trends - Deposits increased by $43.51 million, or 1.62%, from year-end 2022, but decreased approximately $360.13 million, or 13.44%, excluding the Surrey transaction[154] - Total deposits increased to $2,722.33 million as of December 31, 2023, compared to $2,678.82 million in 2022[224] - The company experienced deposit attrition related to the Surrey merger totaling $70.77 million, with the largest losses in interest-bearing demand accounts[202] - Delinquent loans totaled $33.93 million as of December 31, 2023, an increase of $4.25 million, or 14.32%, from $29.68 million as of December 31, 2022[190] Shareholder Information - The company repurchased 768,079 common shares during 2023 for a total cost of $23.04 million[154] - Book value per share at December 31, 2023, was $27.20, an increase of $1.19 from year-end 2022[154] - Cash dividends per common share increased to $1.16 in 2023, compared to $1.12 in 2022[227] - The Company paid $21,089,000 in common stock dividends in 2023, up from $18,515,000 in 2022[236] Risk Management - The company’s allowance for credit losses (ACL) is sensitive to unemployment rate forecasts, with a projected range of 4.0% to 4.3% for December 31, 2023[145] - The liquidity risk management policy includes ongoing monitoring of credit-sensitive liabilities and sources of liquidity to address potential funding crises[207] - The Company maintains a net book balance threshold of $500,000 for individually-evaluated loans, which are generally on nonaccrual status[260] Securities and Investments - The fair value of available-for-sale debt securities as of December 31, 2023, was $280.96 million, with unrealized losses of $14.11 million[326] - The total amortized cost of available-for-sale municipal securities was $19.53 million, with the majority rated AA or higher, and no credit losses reported[334] - The total amortized cost of available-for-sale corporate notes was $28.57 million, with no credit losses attributed to these securities[335] - The total amortized cost of available-for-sale mortgage-backed Agency securities was $94.55 million, with guarantees of full and timely payments by the issuing agencies[336] Miscellaneous - The Company completed the sale of its Emporia Branch for $1.50 million, with total deposits of $61.05 million acquired by Benchmark Community Bank[312] - The Company incurred $2.99 million in merger expenses related to the Surrey transaction, primarily for data conversion and legal fees[314] - The Company uses derivative instruments to hedge against risks related to price or interest rate movements, with changes in fair value recognized in earnings[293]

Financial Performance - Net income for Q3 2023 was $14.64 million, a 9.66% increase from $13.35 million in Q3 2022, primarily driven by a significant increase in net interest income [150]. - Net income for the first nine months of 2023 increased by $2.16 million compared to the same period in 2022, primarily due to a $13.58 million increase in net interest income [152]. - Total stockholders' equity rose by $73.68 million, or 17.46%, to $495.67 million as of September 30, 2023, largely driven by the acquisition of Surrey Bancorp and net income of $36.24 million [207]. Net Interest Income - Net interest income rose by $4.01 million compared to Q3 2022, with a net interest margin of 4.51%, an increase of 50 basis points year-over-year [150]. - Net interest income for Q3 2023 increased by $4.01 million, or 13.65%, compared to Q3 2022, with a net interest margin on a FTE basis rising by 50 basis points to 4.51% [161]. - For the nine months ended September 30, 2023, net interest income increased by $13.58 million, or 16.55%, with a net interest margin on a FTE basis increasing by 67 basis points to 4.45% [164]. Loan and Deposit Growth - The loan portfolio increased by $193.28 million, or 8.05%, from December 31, 2022, while deposits increased by $67.32 million, or 2.51% [150]. - Total deposits increased by $67.32 million, or 2.51%, to $2.75 billion as of September 30, 2023, primarily due to the acquisition of Surrey Bancorp, which added $403.64 million in deposits [201]. - Average loans increased by $270.29 million, with the yield on loans rising by 61 basis points, resulting in a tax-effected increase in interest on loans of $7.09 million compared to the same quarter in 2022 [161]. Credit Quality - Non-performing loans to total loans remained stable at 0.71%, with net charge-offs of $1.46 million, or 0.22% of annualized average loans for Q3 2023 [150]. - The allowance for credit losses to total loans was 1.39% as of September 30, 2023, compared to 1.38% in the previous quarter [150]. - The total amount of nonperforming assets as of September 30, 2023, was $18.67 million, an increase of $1.27 million, or 7.29%, from December 31, 2022 [188]. Expenses and Liabilities - Total noninterest expense increased by $1.77 million, or 8.36%, in Q3 2023, driven by higher service fees and salaries due to the addition of Surrey branches [171]. - Total liabilities increased by $74.97 million, or 2.76%, as of September 30, 2023, reflecting the impact of the Surrey Bancorp acquisition [179]. - Average interest-bearing liabilities decreased by $100.39 million, or 5.25%, primarily due to a decrease in deposits [166]. Capital and Liquidity - The common equity Tier 1 ratio improved to 14.64% as of September 30, 2023, up from 13.37% at December 31, 2022, indicating a stronger capital position [208]. - The company had unencumbered cash of $113.40 million and unused borrowing capacity from the FHLB of $382.39 million as of September 30, 2023, indicating strong liquidity [206]. - The company continues to meet all capital adequacy requirements and is classified as well-capitalized under the regulatory framework for prompt corrective action [208]. Acquisitions and Mergers - The Company experienced a $3.80 million increase in the provision for credit losses, partly due to the acquisition of Surrey Bancorp [152]. - The company recorded merger expenses of $2.39 million in 2023 related to the Surrey Bancorp acquisition [172]. - Total assets increased by $148.65 million, or 4.74%, as of September 30, 2023, primarily due to the acquisition of Surrey Bancorp [179].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-19297 FIRST COMMUNITY BANKSHARES, INC. (Exact name of registrant as specified in its charter) Virginia 55-0694814 (State or other jurisdiction of incorpora ...

Financial Performance - Net income for the first quarter of 2023 was $11.78 million, a 23.83% increase from $9.52 million in the same quarter of 2022[134]. - Net interest income increased by $4.26 million to $29.41 million for the first three months of 2023, compared to $25.15 million for the same period in 2022[135]. - The annualized return on average assets was 1.55% for Q1 2023, up from 1.20% in Q1 2022, while the return on average common equity rose to 11.15% from 8.98%[135]. - The net interest margin for Q1 2023 was 4.35%, an increase of 80 basis points from 3.55% in Q1 2022[135]. - Noninterest income decreased by $611 thousand, or 6.65%, primarily due to a $394 thousand gain from the sale of bank-owned property reported in the previous year[145]. - Total noninterest expense increased by $827 thousand, or 4.14%, driven by a $516 thousand increase in service fees and $379 thousand in merger expenses related to the Surrey Bancorp acquisition[146]. - The effective tax rate increased to 23.69% in Q1 2023 from 23.27% in Q1 2022, with income tax expense rising by $773 thousand, or 26.79%[148]. - Total stockholders' equity increased by $9.75 million, or 2.31%, to $431.73 million as of March 31, 2023, driven by net income of $11.78 million and other comprehensive income of $2.49 million[181]. Loan and Asset Management - The Company's loan portfolio decreased by $11.3 million, or 0.47%, from year-end 2022, with the largest decreases in consumer non-real estate loans[135]. - Non-performing loans to total loans remained low at 0.65%, continuing a declining trend over the past four quarters[135]. - The allowance for credit losses to total loans was 1.29% as of March 31, 2023[135]. - Average loans increased by $193.76 million, with a yield increase of 14 basis points, resulting in a tax-effected increase in interest on loans of $3.00 million compared to 2022[141]. - Total loans held for investment as of March 31, 2023, decreased by $11.30 million, or 0.47%, compared to December 31, 2022, primarily due to declines in consumer real estate and consumer loans[157]. - Delinquent loans totaled $26.66 million as of March 31, 2023, a decrease of $3.02 million, or 10.18%, compared to $29.68 million at year-end 2022[164]. - Nonperforming assets decreased by $1.34 million, or 7.69%, from December 31, 2022, with nonaccrual loans increasing by $349 thousand, or 2.29%[163]. - Total consumer real estate loans decreased to $811.24 million, or 33.96% of total loans, from $820.55 million, or 34.19%, at year-end 2022[157]. - The commercial loans segment increased to $1.44 billion, or 60.28% of total loans, up from $1.43 billion, or 59.72%, at December 31, 2022[157]. Deposits and Liabilities - Average interest-bearing liabilities decreased by $137.52 million, or 7.20%, primarily due to a decrease in deposits, including a 21.82% drop in time deposits[143]. - As of March 31, 2023, total deposits decreased by $94.19 million, or 3.52%, compared to December 31, 2022, primarily due to a decrease in demand deposits by $48.87 million, or 5.60%[175]. - The average loan to deposit ratio increased to 91.96% from 80.19% in the same quarter of 2022[142]. Credit Losses and Risk Management - Provision for credit losses for loans was recorded at $1.97 million in Q1 2023, slightly up from $1.96 million in Q1 2022[144]. - The allowance for credit losses (ACL) as of March 31, 2023, was $30.79 million, or 1.29% of total loans, reflecting a decrease of $233 thousand from December 31, 2022[173]. - The Company recorded a recovery for credit losses on unfunded commitments of $232 thousand in Q1 2023, compared to a provision of $97 thousand in the same period of 2022[174]. - The liquidity risk management policy includes ongoing monitoring of potentially credit-sensitive liabilities and sources of liquidity to address funding crises[177]. Market and Operational Changes - The sensitivity of net interest income to a 200 basis point increase in interest rates would result in a decrease of $1.166 million, or 1.0%, as of March 31, 2023[187]. - The Company has developed a LIBOR transition plan in anticipation of the discontinuation of LIBOR settings after June 30, 2023, to manage potential impacts on its financial operations[191]. - As of March 31, 2023, the Company did not repurchase any common shares during the first quarter due to the acquisition of Surrey Bancorp, but anticipates resuming share repurchases soon[181].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 000-19297 FIRST COMMUNITY BANKSHARES, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Vir ...

Financial Performance - Net income for the third quarter of 2022 was $13.35 million, an increase of $743 thousand or 5.89% compared to $12.61 million in the same quarter of 2021[156] - Basic earnings per common share for the third quarter were $0.82, a 12.33% increase from $0.73 in the same quarter of 2021[157] - Net income for the three months ended September 30, 2022, was $13,351 thousand, compared to $12,608 thousand for the same period in 2021, marking a growth of 5.9%[14] - For the nine months ended September 30, 2022, net income was $34,079,000, down from $40,613,000 in the same period of 2021, indicating a decline of 16.1%[15] Interest Income and Margin - Net interest margin for the third quarter was 4.01%, a 45 basis point increase from 3.56% reported in the third quarter of 2021[156] - Net interest income for the three months ended September 30, 2022, was $29,458 thousand, an increase from $25,252 thousand in the same period of 2021, reflecting a growth of 8.7%[162] - The average yield on total earning assets for the three months ended September 30, 2022, was 4.07%, compared to 3.65% for the same period in 2021, indicating an increase of 11.5%[162] - The net interest margin, FTE, for the three months ended September 30, 2022, was 4.01%, up from 3.56% in the same period of 2021, reflecting an increase of 12.6%[162] Loan Portfolio and Growth - The Company's loan portfolio increased by $197.16 million, reflecting an annualized growth rate of 12.17% during the first nine months of 2022[156] - Average loans increased by $184.95 million, or 8.60%, due to strong demand across all categories[168] - Total loans as of September 30, 2022, increased by $197.16 million, or 9.10%, compared to December 31, 2021, with the largest increase of $158.29 million in the commercial loan segment[195] - Total loans held for investment increased to $2,362,733 thousand, up from $2,165,569 thousand, representing an increase of 9.1%[73] Credit Losses and Provisions - The provision for credit losses for the third quarter was $685 thousand, an increase of $2.08 million compared to a recovery of $1.39 million in the same quarter of 2021[158] - The allowance for credit losses (ACL) for loans was $29.39 million, representing 1.24% of total loans, an increase of $1.53 million from $27.86 million at December 31, 2021[211] - The provision for credit losses was $3,156,000, compared to a recovery of $7,625,000 in the prior year, indicating a significant shift in credit quality assessment[25] - The allowance for credit losses related to TDRs increased to $29,388,000 as of September 30, 2022, from $29,749,000 at the end of the previous period[96] Deposits and Funding - Total deposits sold to Benchmark as part of the Emporia Branch Sale totaled $61.05 million[156] - Total deposits decreased slightly from $2,729,391 thousand as of December 31, 2021, to $2,710,221 thousand as of September 30, 2022, a decline of about 0.7%[10] - Total deposits decreased by $19.17 million, or 0.70%, to $2.73 billion as of September 30, 2022, primarily due to the divestment of $61.05 million in deposits from the Emporia Branch Sale[213] - Noninterest-bearing demand deposits increased to $878,423 thousand from $842,783 thousand year-over-year[98] Noninterest Income and Expenses - Noninterest income increased by $1.23 million, or 14.11%, driven by a $1.66 million gain from the sale of the Emporia Branch[176] - Noninterest expense increased by $2.31 million, or 12.26%, in Q3 2022 compared to Q3 2021, primarily due to a $1.44 million increase in salaries and employee benefits, which rose by 13.48%[179] - Total noninterest expense rose to $21,145 thousand for the three months ended September 30, 2022, up from $18,836 thousand in the same period of 2021, indicating an increase of 17.3%[14] - Service fees increased by $1.32 million, or 30.22%, primarily due to higher core processing expenses during the first nine months of 2022[180] Asset Quality and Performance - Nonperforming assets decreased by $5.91 million, or 25.45%, from December 31, 2021, primarily due to a $5.47 million decrease in nonaccrual loans[200] - Nonaccrual loans as of September 30, 2022, totaled $15.30 million, down from $20.77 million as of December 31, 2021, representing a decrease of 26.31%[199] - Delinquent loans totaled $27.41 million as of September 30, 2022, a decrease of $5.70 million, or 17.21%, compared to $33.10 million as of December 31, 2021[201] - The allowance for credit losses to nonperforming loans ratio was 175.29% as of September 30, 2022, compared to 125.36% as of December 31, 2021[199] Capital and Equity - Stockholders' equity decreased slightly to $420,476 thousand as of September 30, 2022, from $429,261 thousand in the prior year, a decline of 2.0%[162] - Total stockholders' equity decreased by $15.52 million, or 3.63%, to $412.26 million as of September 30, 2022, due to net income of $34.08 million offset by other comprehensive loss and stock repurchases[219] - The common equity Tier 1 ratio was 13.09% as of September 30, 2022, meeting all capital adequacy requirements under Basel III[223] - The company repurchased 235,400 common shares for $7.38 million during the third quarter of 2022[156] Market and Economic Conditions - The yield on earning assets increased by 42 basis points, or 11.51%, due to a 300 basis points increase in the fed funds rate throughout 2022[168] - The decline in the market value of debt securities available for sale from December 31, 2021, is primarily attributable to the increasing rate environment throughout 2022[66] - The effective tax rate increased to 23.54% in Q3 2022 from 23.23% in Q3 2021, with income tax expense rising by $295 thousand, or 7.73%[182] - The company has developed a LIBOR transition plan in anticipation of the potential discontinuance of LIBOR in 2023[233]

Financial Performance - Net income for the six months ended June 30, 2022, was $20,728 thousand, a decrease of 26.0% from $28,005 thousand for the same period in 2021[15]. - Net income for the three months ended June 30, 2022, was $11,213,000, a decrease of 16.3% compared to $13,403,000 for the same period in 2021[16]. - Total comprehensive income for the three months ended June 30, 2022, was $6,065,000, down from $13,493,000 in the prior year, reflecting a decline of 55.0%[16]. - Basic earnings per common share for the three months ended June 30, 2022, was $0.67, down from $0.77 for the same period in 2021, representing a decline of 12.9%[15]. - Diluted earnings per common share for the three months ended June 30, 2022, was also $0.67, compared to $0.76 in the same period of 2021, reflecting a decrease of 11.8%[15]. Assets and Liabilities - Total assets increased to $3,258,377 thousand as of June 30, 2022, compared to $3,194,519 thousand as of December 31, 2021, reflecting a growth of approximately 2.0%[11]. - Total liabilities increased to $2,840,331 thousand as of June 30, 2022, from $2,766,744 thousand as of December 31, 2021, representing a growth of about 2.7%[11]. - Total stockholders' equity as of June 30, 2022, was $418,046,000, down from $427,534,000 a year earlier[24]. - The allowance for credit losses increased to $29,749 thousand as of June 30, 2022, from $28,981 thousand at the end of the previous quarter, representing a rise of 2.6%[95]. Income and Expenses - Net interest income for the three months ended June 30, 2022, was $27,547 thousand, up from $25,814 thousand for the same period in 2021, representing an increase of about 6.7%[15]. - Noninterest income for the six months ended June 30, 2022, was $18,048 thousand, compared to $16,366 thousand for the same period in 2021, marking a growth of about 10.3%[15]. - Salaries and employee benefits for the six months ended June 30, 2022, increased to $23,189 thousand, compared to $21,100 thousand for the same period in 2021, an increase of approximately 9.9%[15]. - The provision for credit losses for the three months ended June 30, 2022, was $510 thousand, compared to a recovery of $(2,230) thousand for the same period in 2021[15]. Loans and Credit Quality - Total loans held for investment increased to $2,299,798 thousand as of June 30, 2022, up from $2,165,569 thousand at December 31, 2021, representing a growth of 6.19%[73]. - The risk grading matrix indicates that as of June 30, 2022, total loans classified as "Pass" amounted to $2,216,264 thousand, while "Special Mention" loans were $24,268 thousand[76]. - The company plans to continue monitoring credit quality closely, with a focus on loans that may require special attention due to economic conditions[75]. - The company reported a total of $2,216,264,000 in pass loans, down from $2,216,264,000 in the previous year[80]. Securities and Investments - The company reported a net unrealized loss on available-for-sale debt securities of $(6,550,000) for the three months ended June 30, 2022, compared to a gain of $17,000 in the same period last year[16]. - As of June 30, 2022, the total amortized cost of available-for-sale debt securities was $300.195 million, with a fair value of $287.767 million, indicating a total unrealized loss of $12.492 million[64]. - The total fair value of U.S. Treasury Notes was $134.243 million as of June 30, 2022, with unrealized losses of $2.176 million[64]. - The company continues to monitor all securities with a high degree of scrutiny, with no gross realized gains or losses from the sale of available-for-sale debt securities for the three and six months ended June 30, 2022[68]. Cash Flow and Capital Management - Net cash provided by operating activities increased to $28,200,000 from $19,709,000, reflecting a 43.3% increase[26]. - Cash and cash equivalents at the end of the period were $398,242,000, down from $618,738,000 at the end of the previous year[26]. - The company repurchased common shares at an average price of $28.03 per share during the second quarter of 2022, resulting in a total repurchase of $(7,948,000)[20]. - The company issued common stock to its 401(k) plan, resulting in an increase of $289,000 in paid-in capital during the six months ended June 30, 2022[23]. Regulatory and Accounting Changes - The Company adopted ASU 2016-13 on January 1, 2021, resulting in a cumulative-effect adjustment to retained earnings of $5.87 million[33]. - The Company does not anticipate a material impact from other recent accounting standards issued by the FASB[59]. - The Company has no plans to early adopt ASU 2022-02, which provides guidance for troubled debt restructuring, effective January 1, 2023[60]. - The Company adopted ASU 2019-12, which simplifies the accounting for income taxes, effective January 1, 2021, with no material effect on financial statements[58].