FCBC 10-K & 10-Q changes, risk factors and insider trading
First Community Bankshares Inc. · Nasdaq · State Commercial Banks · CIK 859070 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Increasing fraud risk could adversely affect our business, financial condition, and reputation.”
New heading “We may face new operational, compliance, reputational and legal risks due to the development and use of artificial intelligence.”
Largest changes
“The Company, the Bank and many of its third-party services providers currently use and may increasingly develop or incorporate artificial intelligence ("AI") technology in our operations, processes, products, or services. The development and use of AI present a number of opportunities for the Company, as we as risks that are difficult to predict and may evolve rapidly. …”see in full comparison
“We may face new operational, compliance, reputational and legal risks due to the development and use of artificial intelligence.”see in full comparison
“Economic conditions in the Company's market footprint, including West Virginia, Virginia, North Carolina and Tennessee, as well as in the broader U.S. economy, may be slow or uneven and are subject to significant uncertainty. Adverse changes in economic conditions, including inflationary pressures, fluctuations in interest rates, energy price volatility, changes in fiscal and monetary policy, or weakened consumer and business confidence, could negatively affect consumer and business spending, borrowing, and repayment capacity. …”see in full comparison
“In addition, technology and other changes have made it possible for non-banks to offer products and services traditionally provided by banks. In particular, the activity of fintechs/wealthtechs has grown significantly over recent years and is expected to continue to grow. Some fintechs/wealthtechs are not subject to the same regulation as we are, which may allow them to be more competitive. …”see in full comparison
“Increasing fraud risk could adversely affect our business, financial condition, and reputation.”see in full comparison
“Regulatory expectations, supervisory guidance and legal standards related to AI and emerging technologies are evolving and may vary across jurisdictions. New or changing laws, regulations or supervisory interpretations could require us to modify or limit its use of AI technologies, increase compliance and governance costs, or subject the Company to additional examination, reporting, or liability risks. …”see in full comparison
Full comparison: every changed paragraph (11)
Economic conditions in the Company's market footprint, including West Virginia, Virginia, North Carolina and Tennessee, as well as in the broader U.S. economy, may be slow or uneven and are subject to significant uncertainty. Adverse changes in economic conditions, including inflationary pressures, fluctuations in interest rates, energy price volatility, changes in fiscal and monetary policy, or weakened consumer and business confidence, could negatively affect consumer and business spending, borrowing, and repayment capacity. Such conditions could result in reduced demand for loans and other financial services, deterioration in credit quality, declines in collateral values, and increased delinquencies and charge-offs. There can be no assurance that economic conditions will strengthen or remain stable, and any deterioration could materially and adversely affect the Company's business, financial condition, and results of operations.
In recent years, economic growth and business activity across a wide range of industries has been slow and uneven. There are continuing concerns related to the level of U.S. government debt, fiscal actions that may be taken to address that debt, energy price volatility, global economic conditions, and significant uncertainty with respect to domestic and international fiscal and monetary policy. Economic and inflationary pressure on consumers and uncertainty about continuing economic improvement may result in changes in consumer and business spending, borrowing, and savings habits. There can be no assurance that these conditions will improve or that these conditions will not worsen. Such conditions could adversely affect the credit quality of the Bank’s loans and the Company’s business, financial condition, and results of operations.
Changes in the fair value of our investment securities may reduce stockholders’ equity and net income.equity.
Increasing fraud risk could adversely affect our business, financial condition, and reputation.
The Company, the Bank and its customers are exposed to an increasing risk of fraud, including cyber fraud, identity theft, account takeover, and other fraudulent activities. The sophistication and frequency of these schemes continue to grow, driven by advances in technology and the proliferation of digital banking channels. Fraudulent activity can result in financial losses for us or our customers, increased operational costs, and potential legal exposure. Although the Company has enhanced security measures, including authentication protocols, transaction monitoring, and fraud detection systems, these controls may not be sufficient to prevent all fraudulent activity. Criminals continuously adapt their methods to circumvent existing safeguards, and emerging technologies such as artificial intelligence may further enhance their ability to perpetrate fraud.
Significant fraud-related losses could negatively impact our earnings, capital, and liquidity. In addition, fraud incidents may harm our reputation, erode customer trust, and lead to regulatory scrutiny or enforcement actions. Failure to effectively manage and mitigate fraud risk could have a material adverse effect on our business, financial condition, and results of operations.
We may face new operational, compliance, reputational and legal risks due to the development and use of artificial intelligence.
The Company, the Bank and many of its third-party services providers currently use and may increasingly develop or incorporate artificial intelligence ("AI") technology in our operations, processes, products, or services. The development and use of AI present a number of opportunities for the Company, as we as risks that are difficult to predict and may evolve rapidly. AI could significantly disrupt the business models, investment strategies, operational processes, and markets in which we operate and subject us to increased competition, which could have a material adverse effect on our business, financial condition and results of operations. Some of our competitors may be more successful than us in the development and implementation of new technologies, including services and platforms based on AI, to address investor demands or improve operations. If we are unable to adequately advance our capabilities in these areas or do so at a slower pace than others in our industry, we may be at a disadvantage. The use of AI may also include the input of sensitive personal information, trade secrets, and other protected data by both us and third parties and could result in the exposure of such information.
Regulatory expectations, supervisory guidance and legal standards related to AI and emerging technologies are evolving and may vary across jurisdictions. New or changing laws, regulations or supervisory interpretations could require us to modify or limit its use of AI technologies, increase compliance and governance costs, or subject the Company to additional examination, reporting, or liability risks. In addition, public perception of AI use, including concerns regarding transparency, fairness, data usage and accountability, could results in reputational harm if our use of such technologies is perceived negatively.
In addition, technology and other changes have made it possible for non-banks to offer products and services traditionally provided by banks. In particular, the activity of fintechs/wealthtechs has grown significantly over recent years and is expected to continue to grow. Some fintechs/wealthtechs are not subject to the same regulation as we are, which may allow them to be more competitive. Fintechs/wealthtechs have and may continue to offer bank or bank-like products and a number of such organizations have applied for bank or industrial loan charters while others have partnered with existing banks to allow them to offer deposit products to their customers. Increased competition from fintechs/wealthtechs and the growth of digital banking may also lead to pricing pressures as competitors offer more low-fee and no-fee products.
General market fluctuations; industry factors; political conditions; and general economic conditions and events, such as economic slowdowns, changes in trade policy, recessions, interest rate changes, or credit loss trends, could also cause our common stock price to decrease regardless of operating results.
Management's Discussion & Analysis (MD&A)
New heading “2024 Compared to 2023.”
Largest changes
“2023 Compared to 2022. Pre-tax income increased $1.82 million compared to 2022. The increase was primarily attributable to an increase in net interest income of $15.02 million. Net interest income totaled $127.68 million compared to $112.66 million in 2022. The increase in net interest income was offset by an increase in the provision for credit losses of $1.41 million and an increase in noninterest expense of $12.06 million. The increase in provision for credit losses was primarily due to $1.61 million recorded for the day two provision for the acquisition of the Surrey loan portfolio. …”see in full comparison
“2023 Compared to 2022. Non interest expense increased $12.06 million, or 14.51%, compared to 2022. The Company recorded $3.00 million in estimated litigation expenses in the fourth quarter of 2023. Other increases occurred in salaries and employee benefits of $2.70 million, or 5.73%, other operating expense of $1.56 million, or 14.89%, service fees of $1.30 million or 17.12%, and advertising and public relations of $891 thousand, or 36.99%. In addition, the Company recorded merger expenses of $2.39 million in 2023 related to the Surrey Bancorp acquisition. …”see in full comparison
“On April 21, 2023, the Company completed the acquisition of Surrey Bancorp. Total assets of $466.25 million were acquired in the transaction. In addition the Company issued 2.99 million common shares in the transaction. The purchase transaction created $14.38 million in goodwill and $12.7 million in other intangible assets. The Company completed the sale of its Emporia, Virginia branch to Benchmark Community Bank on September 16, 2022, which resulted in a gain of $1.66 million. …”see in full comparison
see in full comparisonAtAs of December 31,2024,2025, the Federal Open Market Committee set the benchmark federal funds rate at a range of4.25%3.50% -4.50%3.75% basis points. The following table presents the sensitivity of net interest income from immediate and sustained rate shocks in various interest rate scenarios over a twelve-month period for the periods indicated.In the downward rate shock presented, benchmark interest rates were assumed at levels with floors near 0%. The following table presents the sensitivity of net interest income from immediate and sustained rate shocks in various interest rate scenarios over a twelve-month period for the periods indicated.
“2023 Compared to 2022. The provision charged to operations increased $1.41 million compared to the prior year. The provision expense of $7.99 million was comprised of $8.44 million related to provision expense for loans and a recovery of provision of $450 thousand for unfunded loan commitments. Provision for credit losses for loans of $8.44 million was recorded compared to the provision of $6.57 million recorded in 2022. …”see in full comparison
Full comparison: every changed paragraph (36)
On January 23, 2026, the Company completed its previously announced merger (the “Merger”) with Hometown Bancshares, Inc. a West Virginia corporation headquartered in Middlebourne, West Virginia (“Hometown”), pursuant to an Agreement and Plan of Merger (the “Agreement”) dated July 19, 2025, by and between the company and Hometown. At the Effective Time, Hometown merged with and into the Company, with the Company as the surviving corporation in the Merger. For additional information, see Note 24, “Subsequent Events,” to the Consolidated Financial Statements in Item 8, of this report.
On April 21, 2023, the Company completed the acquisition of Surrey Bancorp. Total assets of $466.25 million were acquired in the transaction. In addition the Company issued 2.99 million common shares in the transaction. The purchase transaction created $14.38 million in goodwill and $12.7 million in other intangible assets. The Company completed the sale of its Emporia, Virginia branch to Benchmark Community Bank on September 16, 2022, which resulted in a gain of $1.66 million. For additional information, see Note 2, “Acquisitions and Divestitures,” to the Consolidated Financial Statements in Item 8 of this report.
The Company uses a number of economic variables to estimate the allowance for credit losses, with the most significant driver being a forecast of the national unemployment rate. In the
December 31, 2024,2025, estimate, the Company assumed an unemployment forecast of
4.3%,approximately 4.5%, compared to the range of
4.0% to 4.3% utilized in the
December 31, 2023,2024, estimate. Based on a sensitivity analysis as of
December 31, 2024,2025, an increase of 1% in the unemployment forecast would result in an increase in the allowance for credit losses of approximately 9.00%.9.3%
Goodwill
Goodwill is tested for impairment annually, on October 31st, with additional reviews performed quarterly or more frequently if events or circumstances indicate there may be impairment. We have one reporting unit, Community Banking. If we elect to perform a qualitative assessment, we evaluate factors such as macroeconomic conditions, industry and market considerations, overall financial performance, changes in stock price, and progress towards stated objectives in determining if it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, a quantitative test is performed; otherwise, no further testing is required. The quantitative test consists of comparing the fair value of our reporting unit to its carrying amount, including goodwill. If the fair value of our reporting unit is greater than its book value, no goodwill impairment exists. If the carrying amount of our reporting unit is greater than its calculated fair value, a goodwill impairment charge is recognized for the difference. We performed a quantitative assessment for the annual test on October 31, 2024,2025, which resulted in no goodwill impairment. For additional information, see Note 8, “Goodwill and Other Intangible Assets,” to the Consolidated Financial Statements in Item 8 of this report.
During the last week of September 2024, Hurricane Helene made landfall in Florida’s panhandle, resulting in widespread flooding and washing out of towns and roadways. Hurricane Helene had a significant impact on western North Carolina. Millions have lost access to critical services like water and sewer, electricity, and telecommunications. Thousands of miles of roads and bridges were damaged. The hurricane resulted in property damage to our customers, the closing or disruption of many businesses and damage to infrastructure in communities that we serve. Our branch in Banner Elk, North Carolina was temporarily closed due to lack of power and water, but it is now open to the public. We continue to evaluate the impact of Hurricane Helen on our customers and the Bank’s loans. Based on our assessment to date, we do not expect the losses related to Hurricane Helene to have a material impact on the Bank’s financial condition or results of operations.
2025 Compared to 2024. Pre-tax income declined $2.57 million, or 3.91%, compared to 2024. The decline was primarily driven by a $7.74 million increase in noninterest expense and a $1.86 million reduction in net interest income. These pressures were partially offset by a $3.52 million decrease in the provision for credit losses and a $3.50 million increase in noninterest income. The increase of noninterest expense was largely attributable to higher salaries and employee benefits of $4.73 million, along with a $2.91 million in merger-related costs associated with the Hometown acquisition. The lower provision for credit losses reflected a smaller loan portfolio and continued favorable credit performance. Growth in noninterest income was primarily due to a $3.39 million increase in service charges on deposits and other service fees.
2023 Compared to 2022. Pre-tax income increased $1.82 million compared to 2022. The increase was primarily attributable to an increase in net interest income of $15.02 million. Net interest income totaled $127.68 million compared to $112.66 million in 2022. The increase in net interest income was offset by an increase in the provision for credit losses of $1.41 million and an increase in noninterest expense of $12.06 million. The increase in provision for credit losses was primarily due to $1.61 million recorded for the day two provision for the acquisition of the Surrey loan portfolio. The increase in noninterest expense included a $3.00 million accrual for estimated litigation expenses, an increase in salaries and benefits costs of $2.70 million, and an increase of $1.80 million in merger expenses. Both the merger expense and the increase in salaries and benefits were primarily due to the acquisition of Surrey Bancorp.
2025 Compared to 2024. Net interest income represented 74.40% of total net interest and noninterest income in 2025, compared to 76.25% in 2024. The 1.85 percentage-point decline reflects a $1.85 million, or 1.47%, decrease in net interest income and a $3.50 million, or 8.88%, increase in noninterest income. On an FTE basis, net interest income decreased $1.86 million, or 1.46%. Net interest margin and net interest spread experienced modest changes year over year. Net interest margin declined 2 basis points to 4.42%, while net interest spread increased 1 basis point to 4.04%.
Average earning assets decreased $27.32 million, or 0.96%, due to decreases in both the average balance of loans of $127.67 million, or 5.15%, and the average balance of securities available-for-sale of $31.80 million, or 18.59%. These decreases were offset by an increase in interest-bearing deposits with banks of $132.15 million, or 63.96%. The yield on earning assets decreased 8 basis points, or 1.56%, due to an asset balance shift from higher-yielding loans to lower-yielding interest-bearing deposit accounts held with banks. In addition, non-cash accretion decreased $813 thousand in 2025 to $2.08 million, compared to a 2024 balance of $2.90 million. The impact of non-cash purchase accounting accretion income on the FTE net interest margin was 8 basis points for 2025 compared to 10 basis points in 2024. The average loan to deposit ratio declined to 88.81% in 2025, compared to 92.93% in 2024.
Average interest-bearing liabilities, which consist of interest-bearing deposits and borrowings, decreased $10.16 million, or 0.57%, primarily due to a decrease in interest-bearing deposits of $9.69 million, or 0.54%. Interest-bearing demand deposits decreased $1.77 million, or 0.27%, and time deposits decreased $25.49 million, or 10.36%. These decreases were offset by an increase in savings deposits of $17.58 million or 2.00%. The yield on interest-bearings liabilities decreased 9 basis points, or 8.18%, primarily due to an average balance shift from higher rate time deposits to lower rate savings deposits.
2024 Compared to 2023.
2024 Compared to 2023. Net interest income comprised 76.25% of total net interest and noninterest income in 2024 compared to 77.32% in 2023. Net interest income decreased $1.22$
1.22 million, or 0.95%.0.95
%. On a FTE basis net interest income decreased $1.22 million, or 0.95%. There was no change in the FTE net interest margin; the FTE net interest spread decreased
22
basis points. The decrease was primarily driven by an increase in interest expense due to increases in rates paid on interest-bearing deposits.
2023 Compared to 2022. Net interest income comprised 77.32% of total net interest and noninterest income in 2023 compared to 75.19% in 2022. Net interest income increased $15.02 million, or 13.33%, and increased $15.02 million, or 13.28%, on a FTE basis. The FTE net interest margin increased 52 basis points and the FTE net interest spread increased 36 basis points. The increase was primarily driven by increases in both average balances and rates for loans and securities available for sale. The average balance for loans increased $239.86 million, while the yield increased 44 basis points resulting in a tax effected increase in interest on loans of $22.19 million compared to 2022. The average balance for securities available for sale increased $42.17 million and the yield increased 31 basis points resulting in a tax effected increase to interest on securities available for sale of $1.94 million compared to 2022.
Average earning assets decreased $2.16 million, or 0.07%, primarily due to a decrease in interest-bearing deposits with banks of $284.18 million, or 85.91%. This decrease was offset by an increase in average loans and average securities available for sale as noted above. The yield on earning assets increased 79 basis points, or 19.85%, primarily due to significant increase in benchmark rates as compared to the same period of 2022. The average loan to deposit ratio increased to 93.04% from 83.58% in 2022. Non-cash accretion increased $125 thousand, or 4.77% to $2.74 million. The impact of non-cash purchase accounting accretion income on the FTE net interest margin was 9 basis points for both 2023 and 2022.
Average interest-bearing liabilities, which consist of interest-bearing deposits and borrowings, decreased $81.94 million, or 4.34%, primarily due to a decrease in deposits. Time deposits decreased $54.20 million, or 16.82%, and savings deposits decreased $32.77 million, or 3.72%. Interest-bearing demand deposits increased $3.03 million or 0.44%. The yield on interest-bearings liabilities increased 43 basis points and is primarily due to increases in benchmark rates throughout 2022 and 2023.
2025 Compared to 2024. The provision charged to operations decreased $3.52 million compared to 2024. The provision expense of $72 thousand was comprised of $58 thousand related to provision expense for loans and $14 thousand related to provision expense for unfunded loan commitments. Provision for credit losses for loans of $58 thousand was recorded compared to the provision of $4.00 million recorded in 2024. The decrease in provision is due a loan portfolio balance decline of $101.33 million from 2024 to 2025, along with continued strong credit performance. As noted, a $14 thousand provision for loan commitments was recorded in 2025 compared to $405 thousand recovery of provision recorded in 2024.
2023 Compared to 2022. The provision charged to operations increased $1.41 million compared to the prior year. The provision expense of $7.99 million was comprised of $8.44 million related to provision expense for loans and a recovery of provision of $450 thousand for unfunded loan commitments. Provision for credit losses for loans of $8.44 million was recorded compared to the provision of $6.57 million recorded in 2022. The increase in provision is commensurate with changes in economic forecasts and growth in the loan portfolio associated with the acquisition of Surrey Bancorp on April 21, 2023. $1.61 million of the provision is attributable to day two provision for the Surrey portfolio. As noted above, a recovery of provision for loan commitments was recorded in 2023 of $450 thousand and was recorded in provision for credit losses. A provision expense of $518 thousand was recorded for unfunded loan commitments in 2022 and was recorded in other operating expense.
2025 Compared to 2024. Noninterest income comprised 25.60% of total net interest and noninterest income in 2025 compared to 23.75% in 2024, with noninterest income increasing $3.50 million, or 8.88%, in 2025. The 2025 increase is driven mostly by a $3.39 million increase in service charges on deposits and other service charges and fees. The increase is primarily attributable to increases in non-sufficient funds fees of $2.45 million and interchange income of $854 thousand.
2023 Compared to 2022. Noninterest income comprised 22.68% of total net interest and noninterest income in 2023 compared to 24.81% in 2022. Noninterest income increased $270 thousand, or 0.73%. The increase was primarily the result of an increase in other service charges and fees of $1.34 million, or 10.88%. The increase in other services charges was primarily driven by an increase in interchange income. Wealth management income increased $324 thousand, or 8.40%. These increases to noninterest income were offset by the 2022 gain recorded for the divestiture of the Emporia, Virginia branch of $1.66 million.
2025 Compared to 2024. Non interest expense increased $7.74 million, or 8.01%, in 2025 compared to 2024. The increase is attributed mostly to increases in salaries and employee benefits of $4.73 million, merger expense of $2.91 million and other operating expense of $1.00 million. The increase in salaries and employee benefits is driven by a $1.27 million increase in salary expense and a $3.24 million increase in incentive compensation. The increase in merger expense is related to the Hometown acquisition.
2023 Compared to 2022. Non interest expense increased $12.06 million, or 14.51%, compared to 2022. The Company recorded $3.00 million in estimated litigation expenses in the fourth quarter of 2023. Other increases occurred in salaries and employee benefits of $2.70 million, or 5.73%, other operating expense of $1.56 million, or 14.89%, service fees of $1.30 million or 17.12%, and advertising and public relations of $891 thousand, or 36.99%. In addition, the Company recorded merger expenses of $2.39 million in 2023 related to the Surrey Bancorp acquisition. The related cost for the addition of Surrey branches and staff was a primary driver in the increase to noninterest expense.
2025 Compared to 2024. Income tax expense increased $241 thousand, or 1.71%, due primarily to an increase in pre-tax income. The effective tax rate increased to 22.70% in 2025 compared to 21.45% in 2024.
2023 Compared to 2022. Income tax expense increased $459 thousand, or 3.40% and was primarily due to the increase in pre-tax income. The effective tax rate increased slightly to 22.51% in 2023 compared to 22.43% in 2022.
Total assets as of December 31, 2024,2025, decreased $7.33$1.57 million, or 0.22%,0.05%, to $3.26 billionbillion. fromThe $3.27decrease billionis asattributable mostly to a decline in loans of December 31, 2023. Loans decreased $156.21$101.33 million, or 6.07%4.19%, whileand a decline in securities available for sale decreasedof $111.11$37.16 million, or 39.55%.21.88%, which is offset by an increase in cash and cash equivalents of $134.79 million, or 35.71%. Total liabilities decreasedincreased $30.43$24.27 million, or 1.10%,0.89%, and is primarily attributable to aan decreaseincrease in depositsinterest, taxes and other liabilities of $31.08$29.88 million. Stockholders' equity increaseddecreased $23.10$25.84 million, or 4.59%.4.91%. The increaseequity decrease is primarily dueattributable to earningstwo offset byspecial dividends paid.being declared in 2025, in the amount of $3.07 per common share.
Our investment securities are used to generate interest income through the deployment of excess funds, to fund loan demand or deposit liquidation, to pledge as collateral where required, and to make selective investments for Community Reinvestment Act purposes. The composition of our investment portfolio changes from time to time as we consider our liquidity needs, interest rate expectations, asset/liability management strategies, and capital requirements. Available-for-sale debt securities as of December 31, 2024,2025, decreased $111.11$37.16 million, or 39.55%,21.88%, compared to December 31, 2023.2024. The decrease was primarily due to $221.34the sale of $136.71 million in maturities, prepayments, and calls in securities available for sale. The decrease wassale; offset by purchases of $109.98$93.76 million. The market value of debt securities available for sale as a percentage of amortized cost was 92.95% as of December 31, 2025, compared to 91.97% as of December 31, 2024, compared to 95.23% as of December 31, 2023.2024. There were no held-to-maturity debt securities as of December 31, 2024,2025, or 2023.2024.
We seek to mitigate credit risk by following specific underwriting practices and by ongoing monitoring of our loan portfolio. Our underwriting practices include the analysis of borrowers’ prior credit histories, financial statements, tax returns, and cash flow projections; valuation of collateral based on independent appraisers’ reports; and verification of liquid assets. We believe our underwriting criteria are appropriate for the various loan types we offer; however, losses may occur that exceed the reserves established in our allowance for loan losses. The Company has a loan review function independent of credit administration that performs a risk-based review of a sample of loans and loan relationships in the Company's commercial portfolio,portfolio and conducts analytical review of credit quality on the Company's non-commercial portfolios.
Nonperforming assets as of December 31, 2024,2025, increaseddecreased $1.02$6.39 million, or 5.20%,31.09%, from December 31, 2023,2024, with the largest increasesdecreases attributable to an increase in nonaccrual loans of $513$5.93 thousand,million, or 2.65%29.84%, and OREO of $329$521 thousand, or 171.35%.thousand. As of December 31, 2024,2025, nonaccrual loans were largely attributed to single family owner occupied (46.25%),$8.26 million, or 59.22%, non-farm, non-residential real estate (14.17%),$1.27 million, or 9.13%, and commercial and industrial loans (12.54%).$1.32 million, or 9.45%. Certain loans included in the nonaccrual category have been written down to estimated realizable value or assigned specific reserves in the allowance for credit losses based on management's estimate of loss at ultimate resolution.
Delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, totaled $27.85 million as of December 31, 2025, a decrease of $9.70 million, or 25.83%, compared to $37.55 million as of December 31, 2024, a increase of $3.62 million, or 10.67%, compared to $33.93 million as of December 31, 2023.2024. Delinquent loans as a percent of total loans totaleddecreased in 2025 to 1.20%, compared to 1.49% asin 2024. The delinquent loans consist of December 31, 2024, which includes past due loansloans, 0.73%or 0.60%, of total loans, and nonaccrual loansloans, 0.82%,or compared to 1.32% as0.60%, of Decembertotal 31, 2023.loans.
OREO,OREO whichproperty is carried at the lesser of estimated net realizable value or cost,cost. consisted of 7 properties with an average holding period of 4 months asAs of December 31, 2024.2025, no OREO property was held by the Company. The net loss on the sale of OREO was $193 thousand in 2025, $28 thousand in 2024, and $84 thousand in 2023, and $453 thousand in 2022.2023. The following table presents the changes in OREO during the periods indicated:
With the adoption of ASU 2016-13 effective January 1, 2021, the Company changed its method for calculating it allowance for loan losses from an incurred loss method to a life of loan method. See Note 1 – "Basis of Presentation and Significant Accounting Policies" for further details. As of December 31, 2024,2025, the balance of the ACL for loans was $34.83$30.76 million, or 1.44%1.33% of total loans. The ACL at December 31, 2024,2025, decreased $1.36$4.06 million from the balance of $36.19$34.83 million recorded December 31, 2023.2024. This decrease included a provision of $4.00$58 millionthousand and net charge-offs for the twelve months of $5.37$4.12 million.
At December 31, 2024,2025, the Company also had an allowance for unfunded commitments of $341$355 thousand compared to $746$341 thousand in 2023.2024. The allowance for unfunded commitments is recorded in Other Liabilities on the balance sheet. During 2024,2025, there was a recovery of provision for credit losses on unfunded commitments of $405$14 thousand. The provision for credit losses on unfunded commitments is recorded in provision expense on the Statement of Income.
Total deposits as of December 31, 2024,2025, decreased $31.08$5.92 million, or 1.14%,0.22%, compared to December 31, 2023.2024. The largest decrease occurredwas indriven noninterest-bearing demand withby a decrease of $48.42 million, or 5.20%. Other decreases occurreddecline in interest-bearing demand of $18.46 million, or 2.66% and time deposits of $12.83$40.17 million, or 5.06%.16.70%. TheseThe decreasesdecline werein time deposits was offset by an increaseincreases in savingsinterest bearing deposits of $48.63$8.72 million, orsavings/MMA 5.77%deposits Weof had$12.78 nomillion and noninterest-bearing accounts of $12.76 million. No deposit concentrations to any single customer or industry that represented 10% or more of outstanding deposits occurred as of December 31, 20242025, or 2023.2024.
Total borrowings as of December 31, 2024,2025, decreasedincreased $213$308 thousand, or 19.03%,34.00%, compared to December 31, 2023.2024. Total borrowings for 20242025 were comprised entirely of short-term borrowings, which consist of retail repurchase agreements. The weighted average rate of 0.05%0.06% as of December 31, 2024,2025, decreasedincreased one basis point from the weighted average rate of 0.06%0.05% as of December 31, 2023.2024.
We are committed to effectively managing our capital to protect our depositors, creditors, and shareholders. Failure to meet certain capital requirements may result in actions by regulatory agencies that could have a material impact on our operations. Total stockholders’ equity as of December 31, 2024,2025, increaseddecreased $23.10$25.84 million, or 4.59%,4.91%, to $526.39$500.55 million from $503.29$526.39 million as of December 31, 2023.2024. The increasedecrease is primarily due to earningsregular quarterly and two special dividends being declared in 2025 in the combined total amount of $51.60$4.31 per common share, totaling $78.92 million offsetin by dividends paid on our common stock totaling $22.02 million.payments. In addition, the Company repurchased 257,29450,338 shares of our common stock totaling $8.72$1.85 million. OurAs a result, our book value per common share increaseddecreased $1.53$1.43 to $27.30 as of December 31, 2025, from $28.73 as of December 31, 2024, from $27.20 as of December 31, 2023.2024.
AtAs of December 31, 2024,2025, the Federal Open Market Committee set the benchmark federal funds rate at a range of 4.25%3.50% - 4.50%3.75% basis points. The following table presents the sensitivity of net interest income from immediate and sustained rate shocks in various interest rate scenarios over a twelve-month period for the periods indicated. In the downward rate shock presented, benchmark interest rates were assumed at levels with floors near 0%. The following table presents the sensitivity of net interest income from immediate and sustained rate shocks in various interest rate scenarios over a twelve-month period for the periods indicated.
What changed in the latest 10-Q
Risk Factors
The risk factors set forth in our annual report on Form 10-K for the year ended December 31, 2025, discuss potential events, trends, or other circumstances that could adversely affect our business, financial condition, results of operations, cash flows, liquidity, access to capital resources, and, consequently, cause the market value of our common stock to decline. These risks could cause our future results to differ materially from historical results and expectations of future financial performance. If any of the risks occur and the market price of our common stock declines significantly, individuals may lose all, or part, of their investment in our Company. Individuals should carefully consider our risk factors and information included in our annual report on Form 10-K for the year ended December 31, 2025, before making an investment decision. There may be risks and uncertainties that we have not identified or that we have deemed immaterial that could adversely affect our business; therefore, such risk factors are not intended to be an exhaustive list of all risks we face. There have been no material changes to the risk factors included in Part I, Item 1A, “Risk Factors,” of our annual report on Form 10-K for the year ended December 31, 2025.
No wording changes found in this section (only numbers or dates changed in 1 paragraph).
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Six-Month Comparison.”
New heading “AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)”
Largest changes
“AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)”see in full comparison
“Under the terms of the Agreement, all Hometown stock appreciation rights under a stock appreciation award (except certain stock appreciation rights that were unvested as of January 1, 2025) and all Hometown dividend equivalent rights granted under the Hometown Dividend Equivalent Incentive Plan that were outstanding immediately prior to the Effective Time, to the extent not vested, became fully vested, and were canceled. …”see in full comparison
“Total assets as of March 31, 2026, increased $385.30 million, or 11.82%, from December 31, 2025. The primary driver of the change in the balance sheet components was the acquisition of Hometown on January 23, 2026. Total assets of $393.81 million were acquired in the transaction increasing the Company's consolidated assets to $3.64 billion. In addition, the Company issued 1.03 million common shares in the purchase resulting in an increase in capital of $35.07 million. The purchase transaction created $1.73 million in goodwill and $8.59 million in other intangible assets. …”see in full comparison
see in full comparisonAstronomicContinued unprecedented levels of federal government spendingalongsideislaborcausingshortages and supply chain complications have contributed to risingincreased inflation. The timing and impact of inflation and rising interest rates on our business and related financial results will depend on future developments, which are highly uncertain and difficult to predict.
see in full comparisonTheAsCompany'sofrisk-basedJune 30, 2026, the Company and the Bank continue to maintain strong regulatory capitalratioslevels.asComparedof March 31, 2026, decreased fromwith December 31, 2025,primarilythedueCompanytoandathedecreaseBank reported increases incapital levels. The decrease in capital was primarily driven by the repurchase oftheir commonstock.equityWhileTierthe1,Company'sTier 1 risk-based capitalratiosratiodecreased,andthe Bank'stotal risk-based capitalratiosratios,increased.while the Tier 1 leverage ratio declined modestly. The increase in theBank'srisk-based capital ratios was primarilyduedriventobyan increasegrowth inassets.regulatory capital during the period. As ofMarchJune31,30, 2026, we continued to meet all capital adequacy requirements and were classified as well-capitalized under the regulatory framework for prompt correctiveaction.action due to our capital ratios being in excess of the minimum standards under the Basel III capital rules. Management believes there have been no conditions or events that wouldchangehave changed the Bank’sclassification.classificationAdditionally, our capital ratios were in excess ofduring theminimum standards under the Basel III capital rules as of March 31, 2026.period.
Full comparison: every changed paragraph (49)
First Community Bankshares, Inc. (the “Company”) is a financial holding company, headquartered in Bluefield, Virginia, that provides banking products and services through its wholly owned subsidiary First Community Bank (the “Bank”), a Virginia-chartered banking institution. As of MarchJune 31,30, 2026, the Bank operated 61 branches in Virginia, West Virginia, North Carolina and Tennessee. As of MarchJune 31,30, 2026, full-time equivalent employees, calculated using the number of hours worked, totaled 610.614. Our primary source of earnings is net interest income, the difference between interest earned on assets and interest paid on liabilities, which is supplemented by fees for services, commissions on sales, and various deposit service charges. We fund our lending and investing activities primarily through the retail deposit operations of our branch banking network. We invest our funds primarily in loans to retail and commercial customers and various investment securities. Our common stock is traded on the NASDAQ Global Select Market under the symbol FCBC.
The Bank offers trust management, estate administration, and investment advisory services through its Trust Division and wholly owned subsidiary First Community Wealth Management Inc. (“FCWM”). The Trust Division manages inter vivos trusts and trusts under will, develops and administers employee benefit and individual retirement plans, and manages and settles estates. Fiduciary fees for these services are charged on a schedule related to the size, nature, and complexity of the account. Revenues consist primarily of investment advisory fees and commissions on assets under management and administration. As of MarchJune 31,30, 2026, the Trust Division and FCWM managed and administered $1.77$1.83 billion in combined assets under various fee-based arrangements as fiduciary or agent.
OnAs described in the Company's Quarterly Report on Form 10Q for the quarter ended March 31, 2026, on January 23, 2026, the Company completed its previously announced merger (the “"Merger”") with Hometown Bancshares, Inc.Inc., a West Virginia corporation headquartered in Middlebourne, West Virginia (“"Hometown”"), pursuant to an Agreement and Plan of Merger (the “"Agreement”") dated July 19, 2025, by and between the company and Hometown. At the Effective Time, Hometown merged with and into the Company, with the Company as the surviving corporation in the Merger.
Immediately following the Merger, Union Bank, Inc., a wholly-owned subsidiary of Hometown, merged with and into First Community Bank, a wholly-owned subsidiary of the Company (the “Bank Merger”), with First Community Bank as the surviving bank in the Bank Merger.
Pursuant to the Agreement, each outstanding share of common stock of Hometown was converted into the right to receive 11.706 shares (the “Exchange Ratio”) of the Company's common stock, par value $1.00 per share, plus cash, without interest, in lieu of fractional shares. In connection with the transaction, the Company issued 1,029,314 common shares.
Under the terms of the Agreement, all Hometown stock appreciation rights under a stock appreciation award (except certain stock appreciation rights that were unvested as of January 1, 2025) and all Hometown dividend equivalent rights granted under the Hometown Dividend Equivalent Incentive Plan that were outstanding immediately prior to the Effective Time, to the extent not vested, became fully vested, and were canceled. The holders of stock appreciation rights received a cash payment equal to the number determined by multiplying (i) the excess, if any of (A) Average Closing Price (as defined in the Agreement) multiplied by (B) the Exchange Ratio over the applicable exercise price of the stock appreciation right, by (ii) the number of shares of Hometown common stock subject to the applicable stock appreciation right. The holders of dividend equivalent rights received a cash payment equal to the account value of the applicable dividend rights award. The stock appreciation rights that are unvested as of January 1, 2025, were assumed by the Company.
Highlights of our results of operations for the three and six months ended MarchJune 31,30, 2026, and financial condition as of MarchJune 31,30, 2026, include the following:
Net income for the second quarter of 2026 reached a record $22.51 million, an increase of $7.87 million over the previous quarterly record of $14.64 million reported in the third quarter of 2023, and $10.27 million, or 83.84%, higher than net income of $12.25 million in the second quarter of 2025. The increase was primarily attributable to a $10.38 million pre-tax gain on the sale of the Company's ownership in Bearing Insurance. This was partially offset by a $2.11 million, or 8.29%, increase in noninterest expense, driven primarily by higher salaries and benefits of $778 thousand, or 5.42%, other operating expenses of $627 thousand, or 18.70%, and service fees of $383 thousand, or 15.47%.
Six-Month Comparison.
Net income increased $209$10.48 thousand,million, or 1.77%,43.53%, in the firstsix quartermonths ofended 2026June 30, 2026, compared to the same period in 2025. The increase iswas primarily attributable to a $2.94$10.38 million pre-tax gain on the sale of the Company's interest in Bearing Insurance and a $6.39 million, or 9.80%,10.49%, increase inof net interest income after the provision for loancredit losses and a $1.23 million, or 12%, increase in noninterest income.losses. These increases were partially offset by a $3.79$5.90 million, or 15.21%,11.71%, increase in noninterest expense and a $3.24 million, or 46.11%, increase in income tax expense. The increase in noninterest expense was primarily driven by $2.31 million ofin merger-related expenses associated with the completed Hometown acquisition andacquisition, a $1.03$1.81 millionmillion, or 6.54%, increase in salaries and employee benefits.benefits, and a $688 thousand, or 13.87%, increase in service fees.
AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)
Three-Month Comparison. Net interest income represented 74.40%60.95% of total net interest and noninterest income in the firstsecond quarter of 2026, compared to 74.76%74.78% in the same quarter of 2025. On a GAAP basis, net interest income increased $3.00$4.22 million, or 9.89%,13.76%, while on a fully taxable equivalent ("FTE") basis, it increased $3.05$4.27 million, or 10.02%.13.87%. The FTE net interest margin increased 3one basis points,point, and the net interest spread increased 11nine basis points, or 2.79%.2.27%. These improvements were primarily driven by growth in average interest- earning assets and lower funding costs.
Average earning assets increased by $263.04$382.18 million, or 9.26%,13.52%, drivenin bythe increasessecond quarter of $114.402026 millioncompared to the same time period in interest-bearing2025. deposits,The $109.35increase millionwas primarily attributable to the acquisition of Hometown, completed in securitiesthe available-for-saleprevious and $39.28 million in loans.quarter. Although the average yield on earning assets declined 8seven basis points, interest income increased $2.66by $4.27 million, or 7.55%,12.03%, reflectingdriven by higher average asset volumes. The average loan to depositloan-to-deposit ratio decreased to 81.05% from 90.45%88.93% to 83.18%, compared toin the firstsecond quarter of 2025. Non-cash accretion income totaled $490$372 thousandthousand, compared to $556$430 thousand in the prior-year period.
Average interest-bearing liabilities, consisting of interest-bearing deposits and borrowings, increased $206.89by $296.09 million, or 11.56%.16.61% However,in duethe second quarter of 2026 compared to athe 19-basissame point,time period in 2025. Despite the increase in average interest-bearing liabilities, interest expense increased by only $3 thousand, or 17.27%,0.06%, declineas inthe cost of funds,funds interestdeclined expenseby decreased15 $384basis thousand,points, or 14.15%, compared to the same quarter in 2025. The largestminimal driverincrease ofin interest expense savings was timeprimarily depositsdriven whichby declineda $41616-basis thousand,point, or 30.14%,14.95%, due to a $22.16 million decreasereduction in the average balancerate andpaid aon 54-basisinterest-bearing point decline in yield.deposits.
Six-Month Comparison. Net interest income represented 66.85% of total net interest and noninterest income in the six months ended June 30, 2026, compared to 74.77% in the same period of 2025. On a GAAP basis, net interest income increased $7.21million, or 11.83%, while on a fully taxable equivalent ("FTE") basis, it increased $7.32 million, or 11.96%. The FTE net interest margin increased three basis points, and the net interest spread increased nine basis points, or 2.27%. These improvements were primarily driven by higher average interest-earning assets primarily attributable to the Hometown acquisition, as well as lower funding costs.
Average earning assets increased $322.94 million, or 11.40%, driven by increases of $143.71 million in interest-bearing deposits, $112.05 million in securities available-for-sale and $67.18 million in loans. Although the average yield on earning assets declined seven basis points, interest income rose $6.94 million, or 9.80%, reflecting higher asset volumes. The average loan-to-deposit ratio decreased to 82.09% from 89.68% for the six months ended June 30, 2025. Non-cash accretion income totaled $861 thousand compared to $986 thousand in the prior-year period.
Average interest-bearing liabilities, consisting of interest-bearing deposits and borrowings, increased $251.74 million, or 14.10%. However, due to a 17-basis point, or 15.74%, decline in cost of funds, interest expense decreased $381 thousand compared to the same period in 2025. The largest contributor to this reduction was interest-bearing deposits, where interest expense decreased $403 thousand, or 4.20%, driven by an 18-basis point decline in yield.
Three-Month Comparison. The provision charged to operations increased $57$768 thousand, or 17.76%,thousand in the firstsecond quarter of 2026 compared to the same periodquarter of 2025. In the firstsecond quarter of 2026, the Company recorded a $411 thousand provision for credit losses for loans and a $72 thousand provision for credit losses on loan commitments. This compares to a $292 thousand recovery of $300provision thousandfor credit losses on loans and a $7 thousand provision for credit losses on loan commitments of $78 thousand. This compares to a provision for credit losses on loans of $350 thousand and a recovery of provision of $29 thousand on loan commitments recorded in the firstsecond quarter of 2025. The increase in the overall provision was primarily drivenattributable byto growthsignificant loan recoveries totaling $1.04 million recognized in unfunded loan commitments.2025.
Six-Month Comparison. The provision charged to operations increased $825 thousand in the six months ended June 30, 2026, compared to the same period of 2025. During the six months ended June 30, 2026, the Company recorded a $711 thousand provision for credit losses for loans and a $150 thousand provision for credit losses on loan commitments. This compares to a $58 thousand provision for credit losses on loans and a $22 thousand recovery of provision for credit losses on loan commitments recorded in the six months ended June 30, 2025. The increase in the overall provision was primarily attributable to significant loan recoveries totaling $1.64 million recognized in 2025.
Three-Month Comparison. Noninterest income comprised 25.60%39.05% of total net interest and noninterest income in the firstsecond quarter of 2026 compared to 25.24%25.22% in the same quarter of 2025. Noninterest income increased $1.23$12.00 millionmillion, or 12.00%,116.06%, compared to the samesecond periodquarter of 2025. The increase iswas primarily attributable to ana increase$10.38 million pre-tax gain on the sale of the Company's ownership interest in otherBearing service charges and fees of $603 thousand, or 18.05% and service charges on deposits of $349 thousand, or 9.10%.Insurance.
Six-Month Comparison. Noninterest income comprised 33.15% of total net interest and noninterest income in the six months ended June 30, 2026, compared to 25.23% in the same period of 2025. Noninterest income increased $13.23 million, or 64.32%, compared to the same period of 2025. The increase was primarily attributable to a $10.38 million pre-tax gain on the sale of the Company's ownership interest in Bearing Insurance and a $1.28 million, or 18.02% increase in other service charges and fees.
Three-Month Comparison. Noninterest expense increased $3.79$2.11 million, or 15.21%,8.29%, in the firstsecond quarter of 2026 compared to the same quarter of 2025. The increase was primarily dueattributable to an increaseincreases in merger expense of $2.31 and salaries and employee benefits of $1.03$778 million,thousand, or 7.74%.5.42%, Theother mergeroperating expensesexpense relateof to$627 thethousand, Hometownor acquisition.18.70%, and service fees of $383 thousand, or 15.47%.
Six-Month Comparison. Noninterest expense increased $5.90 million, or 11.71%, in the six months ended June 30, 2026, compared to the same period of 2025. The increase was primarily attributable to increases of $2.31 million in merger expense, $1.81 million in salaries and employee benefits, and $688 thousand in services fees. The merger expense was related to the acquisition of Hometown, which was completed in the first quarter of 2026.
Three-Month Comparison. Income tax expense increased $165$3.07 thousand,million, or 4.79%.85.84%. The effective tax rate increased to 23.08%22.82% in the firstsecond quarter of 2026 from 22.57%22.63% in the same quarter of 2025.
Six-Month Comparison. Income tax expense increased $3.24 million, or 46.11%. The effective tax rate increased to 22.91% in the six months ended June 30, 2026, from 22.60% in the same period of 2025.
In addition to financial statements prepared in accordance with GAAP, we use certain non-GAAP financial measures that management believes provide investors with important information useful in understanding our operational performance and comparing our financial measures with other financial institutions. The non-GAAP financial measuremeasures presented in this report includes net interest income on a FTE basis and average tangible common equity. We believe FTE basis is the preferred industry measurement of net interest income and provides better comparability between taxable and tax exempttax-exempt amounts. We use this non-GAAP financial measure to monitor net interest income performance and to manage the composition of our balance sheet. The FTE basis adjusts for the tax benefits of income from certain tax exempttax-exempt loans and investments using the federal statutory rate of 21%. Average tangible common equity is calculated as GAAP total shareholders’ equity minus total intangible assets. Tangible common equity can thus be considered a more conservative valuation of the company.Company. When considering net income, a return on average tangible common equity can be calculated. Management provides a return on average equity to facilitate the understanding of as well as to assess the quality and composition of the Company’s capital structure. This measure, along with others, is used by management to analyze capital adequacy and performance. While we believe certain non-GAAP financial measures enhance understanding of our business and performance, they are supplemental and not a substitute for, or more important than, financial measures prepared on a GAAP basis. Our non-GAAP financial measures may not be comparable to those reported by other financial institutions. The reconciliations of non-GAAP to GAAP measures are presented below.
The following table reconciles net interest income and margin, as presented in our consolidated statements of income, to net interest income and net interest margin, on a FTE basis for the periods indicated:
The following table is a reconciliation of return on average tangible common equity, a non-GAAP financial measurementmeasurement, for the periods indicated:
Total assets as of June 30, 2026, increased $348.08 million, or 10.68%, from December 31, 2025. Total liabilities increased $309.52 million, or 11.22%, and stockholders' equity increased $38.55 million, or 7.70%. The primary driver of the changes in balance sheet components was the acquisition of Hometown in the first quarter of 2026. The acquisition resulted in an increase in stockholders' equity of $35.07 million. Total assets of $393.81 million and total liabilities of $360.46 million were acquired in the transaction. Excluding the impact of the Hometown transaction, total assets decreased $132.60 million and liabilities decreased $50.93 million compared to December 31, 2025.
Total assets as of March 31, 2026, increased $385.30 million, or 11.82%, from December 31, 2025. The primary driver of the change in the balance sheet components was the acquisition of Hometown on January 23, 2026. Total assets of $393.81 million were acquired in the transaction increasing the Company's consolidated assets to $3.64 billion. In addition, the Company issued 1.03 million common shares in the purchase resulting in an increase in capital of $35.07 million. The purchase transaction created $1.73 million in goodwill and $8.59 million in other intangible assets. Other major balance sheet components impacted by the transaction were an increase to loans of $171.04 million and an increase of $357.72 million in deposits.
Excluding the Hometown transaction, total assets decreased $105.21 million, or 3.23%, primarily due to decreases in cash equivalents of $37.11 million, securities available-for-sale of $35.55 million and loans of $29.77 million. Total liabilities increased $4.00 million excluding the Hometown transaction. The increase was driven by a $21.33 million increase in deposits offset by a decrease in other liabilities of $17.99 million.
Available-for-sale debt securities as of MarchJune 31,30, 2026, increased $134.83$106.36 million, or 101.62%,80.16%, compared to December 31, 2025. The net increase was primarily dueattributable to thesecurities purchaseacquired as part of U.S.the TreasuryHometown securities.acquisition.
The market value of debt securities available-for-sale as a percentage of amortized cost was 96.34%95.63% as of MarchJune 31,30, 2026, compared to 92.95% as of December 31, 2025.
Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) our intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that we will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments. U.S. Treasury Securities, Agency-Backed Securities including GNMA, FHLMC, FNMA, FHLB, FFCB and SBA. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United StateStates Government or one of its agencies. Municipal securities and all other securities that do not have a zero expected credit loss are evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value. All debt securities available-for-sale in an unrealized loss position as of MarchJune 31,30, 2026 continue to perform as scheduled and we do not believe that a provision for credit losses is necessary.
Total loans as of MarchJune 31,30, 2026, increased $141.27$145.00 million, or 6.10%,6.26%, compared to December 31, 2025, and was primarily due to the Hometown acquisition with the fair value of loans acquired totaling $171.04 million.
Nonperforming assets as of MarchJune 31,30, 2026, increased $3.55$2.99 million, or 25.08%,21.16%, from December 31, 20252025, and nonaccrualmodified loans increased $3.73$993 million,thousand, or 26.76%.40.66%. As of MarchJune 31,30, 2026, nonaccrual loans were largely attributed to single family owner occupied (50.10%45.13%), single family non-owner occupied (13.52%16.87%) and commercial and industrial of (12.26%14.35%). Certain loans included in the nonaccrual category have been written down to estimated realizable value or assigned specific reserves in the allowance for credit losses based on management’s estimate of loss at ultimate resolution.
Delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, totaled $35.13$28.50 million as of MarchJune 31,30, 2026, an increase of $7.28$650 million,thousand, or 26.15%,2.33%, compared to $27.85 million as of December 31, 2025. Delinquent loans as a percent of total loans totaled 1.43%1.16% as of MarchJune 31,30, 2026, which includes past due loans (0.71%0.48%) and nonaccrual loans (0.72%0.68%).
When restructuring loans for borrowers experiencing financial difficulty, we generally make concessions with respect to interest rates, loan terms, or amortization terms. Total loans modified as of MarchJune 31,30, 2026, were $2.74$3.43 million. As of MarchJune 31,30, 2026, $278$937 thousand of these loans were 30-89 days past due. Modified loans past due 90 days or more totaled $62$42 thousand and are included in the total for nonaccrual loans.
OREO,Other whichreal estate owned ("OREO") is carried at the lesser of estimated net realizable value or cost. As of March 31, 2026 and December 31, 2025, noNo OREO property was held by the Company.Company as of March 31, 2026, or December 31, 2025. The following table presents the changes in OREO during the periods indicated:
As of MarchJune 31,30, 2026, the balance of the ACL totaled $33.54$32.65 million, or 1.37%,1.33%, of total loans. This compares to $30.76 million as of December 31, 2025, reflecting an increase of $2.78$1.89 million, or 9.04%.6.15%. The increase in the ACL is primarily driven by the Hometown acquisition, which resulted in a $3.21 million addition for acquired loans. The increase was offset by net charge-offs of $731$2.03 thousand.million.
As of MarchJune 31,30, 2026, the Company also had an allowance for unfunded commitments of $433$505 thousandthousand, which was recorded in Other Liabilities on the Balance Sheet. During the first threesix months of 2026, the Company recorded a provision$150 tothousand provision for credit losses foron loan commitmentscommitments, ofcompared $78 thousand. There wasto a $22 thousand recovery of provision offor $29credit thousandlosses on loan commitments recorded induring the same period ofin 2025.
Total deposits as of MarchJune 31,30, 2026, increased $379.06$331.26 million, or 14.12%,12.34%, compared to December 31, 2025. The largest increases occurred in interest bearinginterest-bearing demand deposits of $166.33$136.95 million, or 24.31%,20.01%, and money-market and savings deposits of $131.59$109.81 million, or 14.55%.12.14%. The growth was primarily attributable to the acquisition of Hometown, which contributed $357.72 million in deposits. Excluding the impact of the Hometown acquisition, total deposits increaseddecreased $21.33$26.46 million.million, or 0.99%.
Total borrowings in the form of retail repurchase agreements as of MarchJune 31,30, 2026, increased $2.00$1.71 million, or 162.03%,140.86%, compared to December 31, 2025. The increase is primarily attributable to the Hometown acquisition, which included $1.31 million in securities sold under agreements to repurchase.
As a financial holding company, the Company’s primary source of liquidity is dividends received from the Bank, which are subject to certain regulatory limitations. Other sources of liquidity include cash, investment securities, and borrowings. As of MarchJune 31,30, 2026, the Company’s cash reserves totaled $15.09$22.43 million. The Company’s cash reserves provide adequate working capital to meet obligations for the next twelve months.
In addition to cash on hand and deposits with other financial institutions, we rely on customer deposits, cash flows from loans and investment securities, and lines of credit from the FHLB and the Federal Reserve Bank (“FRB”) Discount Window to meet potential liquidity demands. These sources of liquidity are immediately available to satisfy deposit withdrawals, customer credit needs, and our operations. Secondary sources of liquidity include approved lines of credit with correspondent banks and unpledged available-for-sale securities. As of MarchJune 31,30, 2026, our unencumbered cash totaled $600.30$591.91 million, unused borrowing capacity from the FHLB totaled $299.05$303.35 million, available credit from the FRB Discount Window totaled $7.02$6.91 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $80.66$80.99 million.
We are committed to effectively managing our capital to protect our depositors, creditors, and shareholders. Failure to meet certain capital requirements may result in actions by regulatory agencies that could have a material impact on our operations. Total stockholders’ equity as of MarchJune 31,30, 2026, increased $20.84$38.55 million, or 4.16%,7.70%, to $521.39$539.10 million from $500.55 million as of December 31, 2025. The increase was primarily attributable to the acquisition of Hometown, in connection with which the companyCompany issued 1.03 million shares of common stock, resulting in a $35.07 million increase in capital. EquityStockholders' equity was further increased by net income of $12.03$34.54 million. These increases were partially offset by $6.00$11.80 million of common stock dividends declared and $20.33 million of common stock repurchases. Book value per share increased $1.22 to $27.64$28.52 onas Marchof 31,June 30, 2026, compared to $27.30 on December 31, 2025.
TheAs Company'sof risk-basedJune 30, 2026, the Company and the Bank continue to maintain strong regulatory capital ratioslevels. asCompared of March 31, 2026, decreased fromwith December 31, 2025, primarilythe dueCompany toand athe decreaseBank reported increases in capital levels. The decrease in capital was primarily driven by the repurchase oftheir common stock.equity WhileTier the1, Company'sTier 1 risk-based capital ratiosratio decreased,and the Bank'stotal risk-based capital ratiosratios, increased.while the Tier 1 leverage ratio declined modestly. The increase in the Bank's risk-based capital ratios was primarily duedriven toby an increasegrowth in assets.regulatory capital during the period. As of MarchJune 31,30, 2026, we continued to meet all capital adequacy requirements and were classified as well-capitalized under the regulatory framework for prompt corrective action.action due to our capital ratios being in excess of the minimum standards under the Basel III capital rules. Management believes there have been no conditions or events that would changehave changed the Bank’s classification.classification Additionally, our capital ratios were in excess ofduring the minimum standards under the Basel III capital rules as of March 31, 2026.period.
As of MarchJune 31,30, 2026, the Federal Open Market Committee had set the benchmark federal funds rate to a range of 350 to 375 basis points. The following table presents the sensitivity of net interest income from immediate and sustained rate shocks in various interest rate scenarios over a twelve-month period for the periods indicated:
AstronomicContinued unprecedented levels of federal government spending alongsideis laborcausing shortages and supply chain complications have contributed to risingincreased inflation. The timing and impact of inflation and rising interest rates on our business and related financial results will depend on future developments, which are highly uncertain and difficult to predict.
FCBC insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 2 filings (2 insiders, 2 trade dates, 7,829 shares, about $379.9K). Net open-market shares: -7,829 (purchases minus sales); net value about -$379.9K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-21 | Harmon Sarah W |
Option exercise | 5,157 | $33.00 | $170.2K |
| 2026-08-21 | Harmon Sarah W |
Open-market sale | 4,329 | $49.21 | $213.0K |
| 2026-07-30 | Mills Gary R |
Open-market sale | 3,500 | $47.67 | $166.8K |
| 2026-07-28 | Mills Gary R |
Option exercise | 865 | $24.65 | $21.3K |
| 2026-07-28 | Mills Gary R |
Option exercise | 3,500 | $33.00 | $115.5K |
| 2026-05-28 | Taylor Beth Ann |
Disposition to issuer | 928 | $42.50 | $39.4K |
| 2026-05-28 | Taylor Beth Ann |
Option exercise | 928 | — | — |
| 2026-05-28 | Sarver M Adam |
Option exercise | 928 | — | — |
| 2026-05-28 | Price Harriet B |
Option exercise | 928 | — | — |
| 2026-05-28 | Johnson Richard Scott |
Option exercise | 928 | — | — |
| 2026-05-28 | Elmore Samuel L |
Option exercise | 928 | — | — |
| 2026-05-28 | Davis C William |
Option exercise | 928 | — | — |
| 2026-05-26 | Stafford William P Ii |
Shares withheld for tax | 1,850 | $42.38 | $78.4K |
| 2026-05-26 | Stafford William P Ii |
Option exercise | 5,546 | — | — |
| 2026-05-26 | Mills Gary R |
Option exercise | 7,394 | — | — |
| 2026-05-26 | Mills Gary R |
Shares withheld for tax | 3,354 | $42.38 | $142.1K |
| 2026-05-26 | Harmon Sarah W |
Shares withheld for tax | 1,535 | $42.38 | $65.1K |
| 2026-05-26 | Harmon Sarah W |
Option exercise | 2,876 | — | — |
| 2026-05-26 | Brown David D |
Option exercise | 3,132 | — | — |
| 2026-05-26 | Brown David D |
Disposition to issuer | 3,132 | $42.38 | $132.7K |
| 2026-05-26 | Bonnett Derek A |
Option exercise | 2,151 | — | — |
| 2026-05-26 | Bonnett Derek A |
Shares withheld for tax | 1,342 | $42.38 | $56.9K |
| 2026-05-26 | Belcher Jason R |
Option exercise | 3,132 | — | — |
| 2026-05-26 | Belcher Jason R |
Shares withheld for tax | 1,515 | $42.38 | $64.2K |
Well-known investors holding FCBC (13F)
None of the 59 investors we track reported a position in their latest 13F.