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].

Financial Performance - Net income for the three months ended March 31, 2022, was $9,515 thousand, a decrease of 34.5% from $14,602 thousand in the same period of 2021[15]. - Basic earnings per share for Q1 2022 were $0.57, down from $0.83 in Q1 2021, a decrease of 31.1%[15]. - The company reported a total comprehensive income of $4,549 thousand for the three months ended March 31, 2022, compared to $13,870 thousand in the same period of 2021, a decline of 67.2%[18]. - The company declared common dividends of $0.27 per share in Q1 2022, totaling $4.541 million, compared to $4.428 million in Q1 2021[24]. - The company experienced an other comprehensive loss of $4,966,000 for the three months ended March 31, 2022, compared to a loss of $732,000 in the same period of 2021[111]. Asset and Equity Changes - Total assets increased to $3,244,127 thousand as of March 31, 2022, compared to $3,194,519 thousand as of December 31, 2021, reflecting a growth of 1.6%[11]. - The company’s total stockholders' equity decreased to $424,156 thousand as of March 31, 2022, from $427,775 thousand as of December 31, 2021, a decrease of 0.6%[13]. - Total cash and cash equivalents at the end of Q1 2022 were $457.306 million, down from $628.745 million at the end of Q1 2021, representing a decrease of 27.2%[24]. Loan and Deposit Activity - Total deposits rose to $2,782,944 thousand as of March 31, 2022, up from $2,729,391 thousand as of December 31, 2021, indicating an increase of 2.0%[11]. - Total loans held for investment increased to $2,244,296 thousand as of March 31, 2022, up from $2,165,569 thousand at December 31, 2021, representing a growth of approximately 3.64%[70]. - The company experienced a net decrease in loans of $78.716 million in Q1 2022, contrasting with an increase of $45.985 million in Q1 2021[24]. - The increase in noninterest-bearing deposits was $17.869 million in Q1 2022, compared to $51.781 million in Q1 2021[24]. Income and Expense Analysis - Total interest income decreased to $25,639,000, down 5.7% from $27,151,000 year-over-year[18]. - Net interest income after provision for loan losses decreased to $23,192 thousand for Q1 2022, down from $30,283 thousand in Q1 2021, representing a decline of 23.3%[15]. - Total noninterest expense for Q1 2022 was $19,986 thousand, an increase of 6.2% from $18,820 thousand in Q1 2021[15]. - Noninterest income increased to $9,194 thousand for the three months ended March 31, 2022, compared to $7,569 thousand in the same period of 2021, marking a growth of 21.5%[15]. Credit Losses and Provisions - The allowance for credit losses stood at $28,981 thousand as of March 31, 2022, compared to $27,858 thousand as of December 31, 2021, reflecting a slight increase of 4.0%[11]. - The provision for credit losses in Q1 2022 was $1.961 million, compared to a recovery of $4.001 million in Q1 2021[24]. - The Company recorded an additional allowance for credit losses (ACL) for loans of $13.11 million due to the adoption of ASU 2016-13[53]. Securities and Investments - As of March 31, 2022, the total amortized cost of available-for-sale debt securities was $274,580,000, with a fair value of $268,703,000, reflecting an unrealized loss of $6,049,000[59]. - The company reported no gross realized gains or losses from the sale of available-for-sale debt securities for March 31, 2022[66]. - The total fair value of available-for-sale debt securities as of March 31, 2022, was $268.70 million[59]. Loan Quality and Risk Assessment - The overall loan portfolio reflects a stable credit quality, with a significant portion rated as Pass, indicating acceptable credit quality and risk[72]. - The risk grading matrix indicates that $2,147,392 thousand of loans are rated as Pass, while $29,306 thousand are under Special Mention as of March 31, 2022[73]. - Substandard loans totaled $67,598 thousand, indicating potential weaknesses in repayment[73]. - The Company continues to monitor credit quality closely, with a focus on loans requiring above-average supervision[72]. Future Outlook and Strategic Initiatives - The company is focusing on market expansion and new product development strategies to enhance future growth prospects[78]. - The Company will consider upgrading modified loans back to pass status once the modification period has ended and timely payments resume[86].

Financial Performance - Annual net income for 2021 was $51.17 million, or $2.94 per diluted common share, representing a 45.54% increase in diluted earnings per share compared to 2020 [195]. - Net income for the year 2021 was $51,168,000, compared to $35,926,000 in 2020, reflecting a growth of 42.24% [295]. - Basic earnings per common share rose to $2.95 in 2021 from $2.02 in 2020, an increase of 46.02% [295]. - Total comprehensive income for 2021 was $51,545,000, compared to $35,509,000 in 2020, reflecting a growth of 45.24% [297]. - The company earned $51.17 million in 2021, offset by repurchasing 949,386 shares totaling $28.88 million and declaring dividends of $18.06 million [276]. Asset Management - As of December 31, 2021, the Company managed and administered $1.32 billion in combined assets through its Trust Division and First Community Wealth Management [165]. - Total assets increased to $3,194,519,000 in December 2021 from $3,011,136,000 in December 2020, representing a growth of 6.08% [292]. - Total assets increased to $3,134,828 thousand, reflecting growth in earning assets [200]. - Total liabilities grew to $2,766,744,000 in December 2021, up from $2,584,406,000 in December 2020, a rise of 7.03% [292]. Loan and Credit Quality - The allowance for credit losses increased by $13.11 million due to the adoption of ASU 2016-13 on January 1, 2021, but a reversal of provision for credit losses of $8.47 million occurred in 2021 [170]. - The allowance for credit losses to total loans was 1.29% as of December 31, 2021, compared to 1.20% for 2020, indicating strong credit quality metrics [195]. - The provision for credit/loan losses decreased by $21.14 million, or 166.87%, due to improved economic forecasts and strong credit quality metrics [211]. - The company modified a total of 4,066 loans for $475.82 million related to COVID-19 relief, which are not considered TDRs under the CARES Act [247]. - Nonperforming assets decreased by $1.33 million, or 5.42%, from December 31, 2020, primarily due to a $1.24 million decrease in nonaccrual loans [244]. Income and Expenses - Non-interest income increased by 14.98% to $34.30 million, attributed to increased customer activity in local economies [195]. - Noninterest expense decreased by $907 thousand, or 1.14%, primarily due to residual merger expenses recognized in the previous year [217]. - Income tax expense increased by $5.17 million, or 50.80%, primarily attributable to the increase in pre-tax net income [220]. - Net interest income decreased by $6.10 million, or 5.62%, due to a historically low interest rate environment [195]. Capital and Liquidity - The Company maintained capital ratios in excess of minimum standards under Basel III capital rules as of December 31, 2021 [175]. - The company continues to meet all capital adequacy requirements and is classified as well-capitalized under regulatory frameworks [175]. - The common equity Tier 1 ratio was 14.39% as of December 31, 2021, compared to 14.28% in 2020 [279]. - The total risk-based capital ratio was 15.65% as of December 31, 2021, up from 15.53% in 2020 [279]. - The company maintained a liquidity risk management policy to detect potential liquidity issues and protect stakeholders [269]. Shareholder Activities - The company repurchased 949,386 common shares, representing 5.62% of outstanding shares, for $28.88 million [195]. - Cash dividends per common share increased to $1.04 in 2021 from $1.00 in 2020, a growth of 4% [295]. - The total stockholders' equity increased by $1.05 million, or 0.24%, to $427.78 million as of December 31, 2021, from $426.73 million in 2020 [276]. Economic Impact and COVID-19 Response - As of December 31, 2021, current COVID-19 loan deferrals stood at $2.92 million, a decrease from $32.26 million as of December 31, 2020 [182]. - The Company modified 4,066 commercial and consumer loans totaling $475.82 million under the CARES Act provisions by December 31, 2021 [182]. - The SBA forgave $56.86 million, or 93.20%, of the company's first round Paycheck Protection Program loan balances through December 31, 2021 [195]. Investment and Securities - Total securities available for sale amounted to $76,273,000 as of December 31, 2021, a slight decrease from $81,958,000 in 2020, representing a decline of 7.5% [230]. - The fair value of total securities available for sale was $76,292,000 as of December 31, 2021, compared to $83,358,000 in 2020, a decrease of 8.5% [230]. - The total carrying value of long-term equity investments was $3.85 million as of December 31, 2021, down from $3.93 million as of December 31, 2020 [322].

Branch and Employee Information - As of September 30, 2021, First Community Bank operated 49 branches across Virginia, West Virginia, North Carolina, and Tennessee, with a total of 598 full-time equivalent employees[161]. Asset Management - The Trust Division and First Community Wealth Management Inc. managed and administered $1.27 billion in combined assets under various fee-based arrangements as fiduciary or agent as of September 30, 2021[164]. Credit Losses and Provisions - The allowance for credit losses increased by $13.11 million due to the uncertainty around the impact of COVID-19, but a reversal of provision for credit losses of $7.63 million occurred in the first nine months of 2021[178]. - The economic forecasts improved significantly in 2021, contributing to a reversal of provision for credit losses, but future economic conditions could lead to increased credit losses[178]. - The allowance for credit losses (ACL) for loans was $29.88 million, representing 1.39% of total loans, an increase of $5.68 million from $26.18 million prior to the adoption of ASU 2016-13[258]. - The company recorded an additional allowance for credit losses (ACL) for loans of $13.11 million as a result of adopting ASU 2016-13[55]. Financial Performance - Net income for Q3 2021 increased by $4.34 million to $12.61 million compared to Q3 2020, driven by a reversal of $1.39 million in allowance for credit losses[196]. - For the nine-month period ended September 30, 2021, net income increased by $16.24 million compared to the same period in 2020, largely due to a reversal of $7.63 million in allowance for credit losses[196]. - Diluted earnings per share for Q3 2021 increased by $0.26 to $0.73 compared to Q3 2020, and for the nine-month period, it increased by $0.95 to $2.32[196]. - Annualized return on average equity increased to 11.65% in Q3 2021 compared to 7.83% in Q3 2020, and for the first nine months, it increased to 12.70% compared to 7.76%[196]. - Annualized return on average assets increased to 1.59% in Q3 2021 compared to 1.11% in Q3 2020, while year-to-date annualized return on average assets increased to 1.74% compared to 1.14%[196]. Loan Modifications and Deferrals - The Company modified a total of 3,958 commercial and consumer loans totaling $472.43 million under the CARES Act, primarily consisting of short-term payment deferrals[188]. - As of September 30, 2021, current COVID-19 loan deferrals stood at $4.71 million, with potential for extensions under the CARES Act[188]. - As of September 30, 2021, total COVID-19 loan deferrals were $4.71 million, significantly down from $115.63 million at September 30, 2020[237]. Deposits and Liquidity - Total deposits increased by $127.60 million, or 5.01%, as of September 30, 2021, primarily due to increases in savings and interest-bearing demand deposits of $76.82 million (10.18%) and $52.46 million (8.77%) respectively[261]. - The Company maintains access to multiple sources of liquidity, although short-term funding rates have been volatile throughout the pandemic[183]. Noninterest Income and Expenses - Noninterest income increased by $1.08 million, or 14.17%, in Q3 2021 compared to Q3 2020, with service charges on deposits increasing by $349 thousand, or 10.74%[216]. - Noninterest expense decreased by $335 thousand, or 1.75%, in Q3 2021 compared to Q3 2020, largely due to prior year charges for early contract termination[219]. Tax and Regulatory Compliance - The effective tax rate increased to 23.23% in Q3 2021 from 22.00% in Q3 2020, with income tax expense rising by $1.48 million, or 63.64%[222]. - The Company and Bank met all capital adequacy requirements and were classified as well-capitalized under the regulatory framework as of September 30, 2021[182]. Shareholder Information - The Company repurchased 277,386 common shares for $8.46 million during the quarter, totaling 726,686 shares repurchased for $21.43 million year-to-date[196]. - Common dividends declared increased from $0.25 per share in Q3 2020 to $0.27 per share in Q3 2021, reflecting a growth of 8%[17]. Loan Portfolio and Quality - Total loans held for investment as of September 30, 2021, amounted to $2,152,103 thousand, a decrease from $2,186,632 thousand at December 31, 2020[73]. - Commercial loans represented 57.01% of total loans as of September 30, 2021, down from 58.76% at December 31, 2020[73]. - The total amount of loans under special mention was $57,306,000, which is a notable concern for the company's future performance[86]. - The company continues to monitor loan performance closely, with a focus on identifying loans that may not meet contractual terms[87]. COVID-19 Impact - The COVID-19 pandemic has resulted in changes in consumer spending behaviors, negatively impacting the demand for loans and other services offered by the Company[165]. - The Company continues to monitor customers in significantly impacted industries, including energy, hotel/lodging, and retail, which may take longer to recover[165].

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, 2021 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 March 2021 was $14,602, representing an increase of 85.5% compared to $7,872 in March 2020[14]. - Basic earnings per share (EPS) increased to $0.83 for basic shares, up from $0.44 in the same period last year[13]. - Net interest income for March 2021 was $26,282, a decrease of 5.1% from $27,682 in March 2020[13]. - Total interest income decreased to $27,151, down 8.3% from $29,509 year-over-year[13]. - Total noninterest income was $7,569, slightly up from $7,549 year-over-year[13]. - Total noninterest expense decreased to $18,820, down 13.5% from $21,664 in March 2020[13]. - Total comprehensive income for March 2021 was $13,870, an increase from $8,239 in March 2020[14]. - The effective tax rate increased to 23.28% in the first quarter of 2021 from 21.80% in the same quarter of 2020, with income tax expense rising by $2.24 million, or 101.82%[201]. Asset and Deposit Growth - Total assets increased to $3,140,066 thousand as of March 31, 2021, compared to $3,011,136 thousand as of December 31, 2020, reflecting a growth of approximately 4.3%[11]. - Total deposits rose to $2,673,100 thousand, up from $2,546,247 thousand, marking an increase of about 5%[11]. - Noninterest-bearing deposits increased to $824,576 thousand, up from $772,795 thousand, reflecting a growth of about 6.7%[11]. - Interest-bearing deposits also increased to $1,848,524 thousand from $1,773,452 thousand, showing an increase of approximately 4.2%[11]. - The company reported a total cash and cash equivalents of $628,745 thousand, up from $456,561 thousand, representing a significant increase of about 37.6%[11]. Loan Portfolio and Credit Quality - Loans held for investment, net, decreased to $2,112,077 thousand from $2,160,450 thousand, a decline of approximately 2.2%[11]. - The allowance for credit losses increased to $34,563 thousand, compared to $26,182 thousand, indicating a rise of about 32%[11]. - The provision for credit losses showed a recovery of $(4,001), compared to a provision of $3,500 in the previous year[13]. - The total amount of impaired loans with no related allowance was $39,225, with an unpaid principal balance of $45,306[88]. - Nonaccrual loans totaled $26,106, with a related allowance of $25,919 as of March 31, 2021[90]. - The company modified a total of 3,812 loans with principal balances of $466.59 million related to COVID-19 relief, primarily consisting of short-term payment deferrals[100]. - Total COVID-19 loan deferrals stood at $17.48 million as of March 31, 2021, reflecting the impact of the pandemic on borrower repayment capabilities[100]. Regulatory and Economic Environment - The company noted the impact of the COVID-19 pandemic on its operations and financial performance, highlighting ongoing risks and uncertainties[5]. - Forward-looking statements indicate potential challenges related to economic conditions, regulatory changes, and competition in the market[6]. - The Company continues to meet all capital adequacy requirements and is classified as well-capitalized under regulatory standards as of March 31, 2021[169]. Securities and Investments - As of March 31, 2021, the total amortized cost of available-for-sale debt securities was $87,061,000, with a fair value of $87,643,000, reflecting unrealized gains of $1,327,000 and unrealized losses of $745,000[61]. - The total depreciation in value of debt securities in an unrealized loss position represented 0.85% of the debt securities portfolio as of March 31, 2021, compared to 0.12% as of December 31, 2020[65]. - The company continues to monitor all securities with a high degree of scrutiny, indicating potential future evaluations for credit losses[67]. Shareholder Returns and Equity - Stockholders' equity slightly decreased to $425,999 thousand from $426,730 thousand, a reduction of approximately 0.2%[11]. - Common dividends declared were $0.25 per share, totaling $4,428 for the quarter[18]. - The balance of retained earnings increased to $241,889 as of March 31, 2021, up from $237,585 at the beginning of the year[18]. - The company repurchased 187,700 common shares for $4.99 million as part of a plan to buy back up to 2.4 million shares by January 2024[185].

Financial Performance - Net income for 2020 was $35.93 million, a decrease of 7.4% from $38.80 million in 2019[147]. - Basic earnings per common share decreased to $2.02 in 2020 from $2.47 in 2019, a decline of 18.2%[147]. - Net income for 2020 was $35,926,000, down from $38,802,000 in 2019, representing a decrease of 4.8%[272]. - Basic earnings per share for 2020 was $2.02, compared to $2.47 in 2019, a decline of 18.2%[270]. - Net income for the year ended December 31, 2020, was $35,926,000, a decrease of 7.2% from $38,802,000 in 2019[277]. Asset Growth - As of December 31, 2020, total assets increased to $3.01 billion, up from $2.80 billion in 2019, representing a growth of 7.5%[147]. - Total assets increased to $3,011,136 thousand in 2020, up from $2,798,847 thousand in 2019[268]. - Total deposits increased by $216.34 million, or 9.29%, as of December 31, 2020, compared to the previous year[238]. - Total deposits rose to $2,546,247 thousand in 2020, compared to $2,329,912 thousand in 2019, reflecting a growth of approximately 9.3%[268]. Loan Performance - The allowance for loan losses rose to $26.18 million in 2020, compared to $18.43 million in 2019, reflecting a significant increase due to expectations of future losses related to COVID-19[147][156]. - The total loans held for investment, net of unearned income and allowance, amounted to $2,160,450 thousand in 2020, compared to $2,096,035 thousand in 2019, a growth of 3.1%[215]. - The total non-covered loans held for investment increased to $2,176,952 thousand in 2020, compared to $2,101,599 thousand in 2019, reflecting a growth of 3.6%[215]. - The company modified 3,625 commercial and consumer loans totaling $458.17 million under the CARES Act, with current COVID-19 loan deferrals at $26.54 million for commercial loans and $5.72 million for consumer loans as of December 31, 2020[167]. Interest Income and Expenses - Net interest income for 2020 was $108.57 million, an increase of 21.4% from $89.45 million in 2019[147]. - Total interest income for 2020 was $114,036,000, an increase of 20.1% from $94,968,000 in 2019[270]. - Noninterest income decreased to $29,833,000 in 2020 from $33,677,000 in 2019, a decline of 11.5%[270]. - Total noninterest expense increased to $79,625,000 in 2020, compared to $69,763,000 in 2019, marking a rise of 14.1%[270]. Capital and Liquidity - The Company maintained a Common Equity Tier 1 ratio of 14.28%, consistent with the previous year[147]. - The company has not incurred additional material costs related to its remote working strategy during the COVID-19 pandemic and does not anticipate future material costs[165]. - The company maintains a strong financial position with high levels of capital and liquidity, which management believes will help endure the negative economic impacts of COVID-19[172]. - The company had unencumbered cash totaling $456.56 million as of December 31, 2020[245]. COVID-19 Impact - The company engaged an independent valuation specialist for goodwill impairment testing, resulting in no impairment as of October 31, 2020[178]. - The Company has implemented a board-approved pandemic business continuity plan and appointed a task force to address operational and financial risks posed by COVID-19[334]. - The Company continues to work with COVID-19 affected borrowers to defer loan payments, interest, and fees, in line with regulatory guidance[332]. - The estimated allowance for credit losses (ACL) under the current expected credit loss (CECL) model is approximately $39.29 million, with an estimated decline in stockholders' equity of about $5.87 million[340]. Shareholder Returns - The dividend payout ratio for 2020 was 49.5%, up from 38.82% in 2019[147]. - Cash dividends per common share increased to $1.00 in 2020 from $0.96 in 2019, an increase of 4.2%[270]. - The company repurchased 734,653 shares at an average price of $29.77 per share during 2020[274]. Risk Management - The company employs specific underwriting practices to mitigate credit risk, including analysis of borrowers' credit histories and financial statements[220]. - The allowance for loan losses is reviewed quarterly, with management believing it is adequate to absorb probable loan losses as of December 31, 2020[176]. - The company tracks credit quality indicators, including trends in risk ratings and levels of classified commercial loans[220].