FCBC · First Community Bankshares, Inc.

Performance Summary

First Community Bankshares, Inc. reported net income of $48.8 million for fiscal year 2025, with basic and diluted earnings per common share of $3.00. The company generated total interest income of $142.5 million, consisting of $123.3 million from interest and fees on loans, $4.2 million from taxable securities, $314 thousand from tax-exempt securities, and $14.7 million from deposits in banks. Total interest expense was $17.9 million, resulting in net interest income of $124.6 million. After a provision for credit losses of $72 thousand, net interest income after provision for loan losses was $124.5 million. Noninterest income totaled $42.9 million, including $36.7 million in noninterest income and $6.2 million in other operating income. Noninterest expenses were $104.3 million, with the largest components being salaries and employee benefits ($56.4 million), service fees ($10.3 million), and other operating expenses ($14.1 million). Income before income taxes was $63.1 million, with income tax expense of $14.3 million.

Revenue Analysis

The company's revenue is derived primarily from interest income on loans and securities, supplemented by noninterest income from various banking services. Interest and fees on loans contributed $123.3 million, representing the largest component of total interest income of $142.5 million. Noninterest income of $42.9 million included $36.7 million from core banking services and $6.2 million from other operating income. The company operates through a single operating segment, Community Banking, serving customers across Virginia, West Virginia, North Carolina, and Tennessee. Following the acquisition of Hometown Bancshares, Inc. in January 2026, the company expanded its branch network to 60 locations across these four states.

Margins & Profitability

The company's net interest margin can be inferred from the relationship between net interest income of $124.6 million and interest-earning assets. The provision for credit losses was minimal at $72 thousand, indicating strong credit quality. Noninterest expenses of $104.3 million represented significant operating costs, with salaries and employee benefits accounting for $56.4 million (54% of total noninterest expenses). Other notable expenses included service fees ($10.3 million), furniture and equipment ($6.1 million), occupancy ($5.7 million), and merger expenses ($2.9 million). The company's efficiency ratio (noninterest expenses divided by total revenue) was approximately 56.3%, calculated as $104.3 million divided by $185.4 million (total interest income of $142.5 million plus total noninterest income of $42.9 million).

Cash Flow & Balance Sheet

Net cash provided by operating activities was $62.7 million, driven primarily by net income of $48.8 million adjusted for various non-cash items including depreciation and amortization of $3.7 million, accretion of discounts on investments of $1.0 million, amortization of intangible assets of $1.9 million, and equity-based compensation expense of $1.5 million. Investing activities provided net cash of $139.9 million, mainly from proceeds from maturities, prepayments, and calls of securities available for sale of $136.7 million, partially offset by payments to acquire securities available for sale of $93.8 million. Financing activities used net cash of $67.8 million, primarily due to payments of common stock dividends of $60.6 million and payments for repurchase of common stock of $1.9 million. Total assets were $3.26 billion, including loans held for investment (net) of $2.28 billion, total cash and cash equivalents of $512.2 million, and debt securities available for sale of $132.7 million. Total liabilities were $2.76 billion, with total deposits of $2.69 billion. Total stockholders' equity was $500.5 million, consisting of common stock ($18.3 million), additional paid-in capital ($170.4 million), retained earnings ($319.4 million), and accumulated other comprehensive loss (-$7.5 million).

Outlook

The company's strategic plan focuses on organic growth supplemented by strategic acquisitions of complementary financial institutions, as demonstrated by the Hometown Bancshares acquisition completed in January 2026. Management believes the company's current capital levels exceed the required amounts to be considered well-capitalized and meet the fully phased-in minimum capital requirements under Basel III Capital Rules. Key risk factors include economic conditions in the company's market footprint (West Virginia, Virginia, North Carolina, and Tennessee), regulatory changes in the highly regulated banking industry, and the Bank's ability to pay dividends to the Company, which is subject to regulatory limitations. The company faces strong competition from other commercial banks, thrifts, credit unions, financial technology companies, and other financial services providers. Management seeks to mitigate competitive pressures through relationship-style banking, competitive pricing, and cost efficiencies.