First Community Bankshares FCBC Form 10-Q filing Q1 FY2026

Item 1. Financial Statemen****ts

• CONDENSED CONSOLIDATED BALANCE SHEETS

• (1) Derived from audited financial statements
• See Notes to Condensed Consolidated Financial Statements.
• CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

• See Notes to Condensed Consolidated Financial Statements.
• CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

• See Notes to Condensed Consolidated Financial Statements.
• CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
• THREE MONTHS ENDED
• March 31, 2026 and 2025

• See Notes to Condensed Consolidated Financial Statements.
• CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

• See Notes to Condensed Consolidated Financial Statements.

NOTES TO COND****ENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Basis of Presentation

General

First Community Bankshares, Inc. (the “Company”), a financial holding company, was founded in 1989 and reincorporated under the laws of the Commonwealth of Virginia. The Company’s principal executive office is located in Bluefield, Virginia. The Company provides banking products and services to individual and commercial customers through its wholly owned subsidiary First Community Bank (the “Bank”), a Virginia-chartered banking institution founded in 1874. The Bank offers wealth management and investment advice through its Trust Division and wholly owned subsidiary First Community Wealth Management. Unless the context suggests otherwise, the terms “First Community,” “Company,” “we,” “our,” and “us” refer to First Community Bankshares, Inc. and its subsidiaries as a consolidated entity.

Principles of Consolidation

The Company’s accounting and reporting policies conform with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries and eliminate all intercompany balances and transactions. The Company operates in one business segment, Community Banking, which consists of all operations, including commercial and consumer banking, lending activities, and wealth management. Operating results for interim periods are not necessarily indicative of results that may be expected for other interim periods or for the full year. In management’s opinion, the accompanying unaudited interim condensed consolidated financial statements contain all necessary adjustments, including normal recurring accruals, and disclosures for a fair presentation.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), as filed with the Securities and Exchange Commission (the “SEC”) on March 6, 2026. The condensed consolidated balance sheet as of December 31, 2025, has been derived from the audited consolidated financial statements.

Reclassifications

Certain amounts reported in prior years have been reclassified to conform to the current year’s presentation. These reclassifications had no effect on the Company’s results of operations, financial position, or net cash flow.

Use of Estimates

Preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant Accounting Policies

The Company’s significant accounting policies as presented in Note 1, “Basis of Presentation and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8 of the Company’s 2025 Form 10-K remain unchanged except for the following recent accounting standards adopted described below.

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Recent Accounting Standards

Standards Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740).” The amendments in this ASU are related to the rate reconciliation and income taxes paid disclosures and are designed to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The ASU was effective for annual periods beginning January 1, 2025, and was applied on a prospective basis. The adoption of this pronouncement did not have a material impact on the Consolidated Financial Statements.

In November 2025, the FASB issued ASU No. 2025-08, "Financial Instruments- Credit Losses (Topic 326): Purchased Loans". The amendment simplifies accounting for acquired loans under the current expected credit losses (CECL) model by expanding use of the gross-up method to a new category of purchased seasonal loans (PSLs). PSLs are acquired loans purchased more than 90 days after origination or acquired in a business combination. For PSLs, an allowance for credit loss is to be recorded at acquisition with an equal increase to amortized cost and remove credit loss expense on acquisition date. The ASU does not apply to credit cards, Topic 606 trade receivables, and debt securities. ASU 2025-08 requires entities to apply the amendments prospectively to loans acquired on or after the initial application date and does not require retrospective restatement of prior periods. The amendments in this update are effective for annual periods beginning after December 15, 2026, an early adoption is permitted for annual financial statements that have not yet been issued or made available. The Company early adopted the provisions of ASU 2025-08 in connection with its merger of Hometown Bancshares, Inc., which was completed on January 23, 2026. The Company applied the guidance prospectively to loans acquired in the transaction and will apply the guidance to any subsequent acquisitions occurring on or after initial adoption. Due to the adoption of the standard the Company was not required to recognize a $2.98 million provision expense that would otherwise have been recorded.

Standards Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, "Expense Disaggregation Disclosures (Topic 230): Disaggregation of Income Statement Expenses". The amendment requires disclosure of disaggregated information about specific expense categories underlying certain income statement expense line items. The guidance is effective for the Company for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Accordingly, the Company expects to adopt the standard in its annual financial statements for the year ending December 31, 2027, and in interim periods beginning in fiscal year 2028.

In July 2025, the FASB issued ASU No. 2025-05, "Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets". This amendment introduces a practical expedient available to all entities that permits an entity to assume that existing economic conditions at the balance sheet date will persist for the remaining life of current accounts receivable and current contract assets, rather than developing a full forward-looking forecast. This ASU will become effective for the Company in 2026, on a prospective basis. The adoption of this pronouncement is not expected to have a material impact on the Company's financial statements.

In November 2025, the FASB issued ASU No. 2025-09, "Derivatives and Hedging (Topic 815): Targeted Improvements to Hedge Accounting". The amendment amends ASC Topic 815 to clarify, improve, and better align hedge accounting guidance with entities' economic risk management strategies and address implementation challenges in practice. The ASU is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted. The adoption of this pronouncement is not expected to have a material impact on the Company's financial statements.

In December 2025, the FASB issued ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements". The amendment is to enhance the clarity, navigability, and application of interim reporting guidance in ASC Topic 270 without expanding or reducing the fundamental nature of the interim reporting framework. The amendments clarify when interim guidance applies, the form and content of interim financial statements, and the related disclosure requirements under GAAP. The ASU is effective for periods beginning after December 15, 2027, with early adoption permitted. The adoption of this pronouncement is not expected to have a material impact on the Company's financial statements.

In December 2025, the FASB issued ASU No. 2025-12, "Codification Improvements". The amendment consists of technical corrections, clarifications, and narrow-scope improvements that address unintended application issues and improve the clarity and usability of GAAP without making substantive changes to current accounting practice. The amendments are intended to reduce diversity in practice and correct errors or ambiguous provisions in the Codification. The ASU is effective for periods beginning after December 15, 2026, with early adoption permitted. The adoption of this pronouncement is not expected to have a material impact on the Company's financial statements.

The Company does not expect other recent accounting standards issued by the FASB or other standards-setting bodies to have a material impact on the consolidated financial statements.

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Note 2. Acquisitions and Divestitures

On *January 23, 2026 (*the "Effective Time"), 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.

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.

The transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. Fair values are preliminary and subject to refinement for up to a year after the closing date of the acquisition. The Company incurred a total of $5.22 million in merger expenses related to the Hometown transaction, $2.91 million was recorded in 2025 and $2.31 million in the first quarter of 2026. These costs were primarily related to data conversion, investment banking fees, and legal fees.

Goodwill arising from business combinations represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the fair value of the liabilities assumed. The Hometown acquisition resulted in the Company recognizing $1.73 million in goodwill.

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The primary identifiable intangible asset we typically record in connection with a whole bank or bank branch acquisition is the value of the core deposit intangibles which represents the estimated value of the long-term deposit relationships acquired in the transaction. Determining the amount of identifiable intangible assets and their average lives involves multiple assumptions and estimates and is typically determined by performing a discounted cash flow analysis, which involves a combination of any or all of the following assumptions: customer attrition/runoff, alternative funding costs, deposit servicing costs, and discount rates. The core deposit intangibles are amortized over the estimated useful lives of the deposit accounts based on a method that we believe reasonably approximates the anticipated benefit stream from this intangible. Core deposit intangibles for the Hometown transaction totaled $8.59 million.

When loans are acquired, due to the adoption of ASU 2025-08 in conjunction with ASU 2016-13 (CECL), the Company classifies acquired loans as either purchased credit deteriorated (“PCD”), purchased seasoned loans (“PSL”), or other non-PCD loans at the acquisition date. PCD loans, representing assets with more-than-insignificant credit deterioration since origination, and PSL loans, which meet the criteria for application of the gross-up approach under the new guidance, are both recorded by recognizing an allowance for credit losses as an adjustment to the amortized cost basis of the loans at acquisition, resulting in no initial impact to earnings. Subsequent changes in expected credit losses for these loans are recognized through provision expense in the periods in which they occur. Loans that do not meet the definition of PCD or PSL are recorded at fair value, typically determined using a discounted cash flow methodology incorporating assumptions such as discount rates, expected lives, prepayments, probability of default, and loss given default, with any resulting discount accreted into interest income over the estimated remaining life of the loans. An allowance for credit losses on these non-PCD loans is recognized through provision expense in the period of acquisition. This framework aligns the accounting for acquired loans more closely with their underlying credit characteristics while reducing earnings volatility at acquisition. The fair value of purchased loans with credit deterioration was $11.05 million on the date of acquisition with the gross contractual amount totaling $12.66 million. Purchased seasoned loans acquired had a fair value of $159.77 million with a gross contractual value of $161.58 million.

Explanation of fair value adjustments;

(a) Adjustment reflects the fair value adjustment based on the Company's evaluation of the acquired investment portfolio.

(b) Adjustment reflects the fair value adjustments of ($3.76) million based on the Company's evaluation of the acquired loan portfolio and excludes the allowance for credit losses ("ACL") and deferred loan fees of $1.59 million as recorded by Hometown.

(c) Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired premises and equipment.

(d) Adjustment reflects the fair value adjustment based on the Company's evaluation of stocks with other banks of ($3) thousand.

(e) Adjustment to record the deferred tax asset related to the fair value adjustments of $1.92 million.

(f) Goodwill previously recorded on Hometown's financial statements was not carried forward.

(g) Adjustment to record the core deposit intangible on the acquired deposit accounts.

(h) Adjustment reflects the fair value adjustment based on the Company's evaluation of the time deposit portfolio.

(i) Adjustment reflects the reserve for unfunded commitments of ($46) thousand and a fair value adjustment based on the Company's evaluation of the Split-Dollar Policies of $250 thousand.

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Note 3**.** Debt Securities

The following tables present the amortized cost and fair value of available-for-sale debt securities, including gross unrealized gains and losses, as of the dates indicated:

There was no allowance for credit losses for debt securities as of March 31, 2026 or December 31, 2025; therefore, it is not presented in the table above. The Company excludes the accrued interest receivable from the amortized cost basis in measuring expected credit losses on the debt securities and does not record an allowance for credit losses on accrued interest receivable. Accrued interest receivable for debt securities was $1.00 million and $681 thousand as of March 31, 2026, and December 31, 2025, respectively.

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The following table presents the amortized cost and aggregate fair value of available-for-sale debt securities by contractual maturity, as of the date indicated. Actual maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

The following tables present the fair values and unrealized losses for available-for-sale debt securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer as of the dates indicated:

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There were 87 individual debt securities in an unrealized loss position as of March 31, 2026, and the combined depreciation in value represented 3.93% of the debt securities portfolio. There were 85 individual debt securities in an unrealized loss position as of December 31, 2025, and their combined depreciation in value represented 7.83% of the debt securities portfolio.

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. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United State 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 March 31, 2026, continue to perform as scheduled and we do not believe that there is a credit loss or that a provision for credit losses is necessary. Also, as part of our evaluation of our intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, we consider our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not currently intend to sell the securities within the portfolio, and it is not more-likely-than-not that we will be required to sell the debt securities.

Management continues to monitor all of our securities with a high degree of scrutiny. There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of its securities may be sold or would require a charge to earnings as a provision for credit losses in such periods.

The carrying amount of securities pledged for various purposes totaled $186.86 million as of March 31, 2026, and $ 29.85 million as of December 31, 2025.

During the first quarter of 2026, the Company sold some available-for-sale securities and recognized $2 thousand in gross realized losses. The following table presents gross realized gains and losses from the sale of available-for-sale debt securities for the periods indicated:

Note 4**. Loans**

The Company groups loans held for investment into three segments (commercial loans, consumer real estate loans, and consumer and other loans) with each segment divided into various classes. Customer overdrafts reclassified as loans totaled $2.33 million as of March 31, 2026, and $1.65 million as of December 31, 2025. Deferred loan fees, net of loan costs, totaled $5.85 million as of March 31, 2026, and $4.75 million as of December 31, 2025.

The table below reflects the loan portfolio at the amortized cost basis to include net deferred loan fees of $5.85 million and $4.75 million and unamortized discount related to loans acquired of $9.82 million and $11.45 million for March 31, 2026, and December 31, 2025, respectively. Accrued interest receivable of $8.85 million as of March 31, 2026, and $8.04 million as of December 31, 2025, is accounted for separately and reported in Interest Receivable on the Consolidated Balance Sheet.

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Note 5**. Credit Quality**

The Company uses a risk grading matrix to assign a risk grade to each loan in its portfolio. Loan risk ratings may be upgraded or downgraded to reflect current information identified during the loan review process. The general characteristics of each risk grade are as follows:

• Pass -- This grade is assigned to loans with acceptable credit quality and risk. The Company further segments this grade based on borrower characteristics that include capital strength, earnings stability, liquidity, leverage, and industry conditions.

• Special Mention -- This grade is assigned to loans that require an above average degree of supervision and attention. These loans have the characteristics of an asset with acceptable credit quality and risk; however, adverse economic or financial conditions exist that create potential weaknesses deserving of management’s close attention. If potential weaknesses are not corrected, the prospect of repayment may worsen.

• Substandard -- This grade is assigned to loans that have well defined weaknesses that may make payment default, or principal exposure, possible. These loans will likely be dependent on collateral liquidation, secondary repayment sources, or events outside the normal course of business to meet repayment terms.

• Doubtful -- This grade is assigned to loans that have the weaknesses inherent in substandard loans; however, the weaknesses are so severe that collection or liquidation in full is unlikely based on current facts, conditions, and values. Due to certain specific pending factors, the amount of loss cannot yet be determined.

• Loss -- This grade is assigned to loans that will be charged off or charged down when payments, including the timing and value of payments, are uncertain. This risk grade does not imply that the asset has no recovery or salvage value, but simply means that it is not practical or desirable to defer writing off, either all or a portion of, the loan balance even though partial recovery may be realized in the future.

The following table presents the recorded investment of the loan portfolio, by loan class and credit quality, as of the dates indicated:

March 31, 2026

December 31, 2025

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The following tables present the amortized cost basis and current period gross write-offs of the loan portfolio, by year of origination, loan class, and credit quality, as of the date indicated:

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The Company generally places a loan on nonaccrual status when it is 90 days or more past due. The following table presents nonaccrual loans, by loan class, as of the dates indicated:

Loans are considered past due when either principal or interest payments become contractually delinquent by 30 days or more. The Company’s policy is to discontinue the accrual of interest, if warranted, on loans based on the payment status, evaluation of the related collateral, and the financial strength of the borrower. Loans that are 90 days or more past due are placed on nonaccrual status. Management may elect to continue the accrual of interest when the loan is well secured and in process of collection. When interest accruals are discontinued, interest accrued and not collected in the current year is reversed from income, and interest accrued and not collected from prior years is charged to the allowance for credit losses. Nonaccrual loans may be returned to accrual status when all principal and interest amounts contractually due, including past due payments, are brought current; the ability of the borrower to repay the obligation is reasonably assured; and there is generally a period of at least six months of repayment performance by the borrower in accordance with the contractual terms. There was no material nonaccrual loan interest recognized in income during the first quarter of 2026 or 2025.

The following tables presents the aging of past due loans, by loan class, as of the dates indicated. Nonaccrual loans 30 days or more past due are included in the applicable delinquency category:

March 31, 2026

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December 31, 2025

ASC 326 prescribes that when an entity determines foreclosure is probable, the expected credit loss can be measured based on the fair value of the collateral. As a practical expedient, an entity may use the fair value as of the reporting date when recording the net carrying amount of the asset. For the collateral dependent asset ("CDA") a credit loss expense is recorded for loan amounts in excess of fair value of the collateral. The Company had no collateral-dependent loans as of March 31, 2026 or December 31, 2025.

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The Company may make concessions in interest rates, loan terms and/or amortization terms when restructuring loans for borrowers experiencing financial difficulty. Effective, January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. The amendments eliminated TDR accounting guidance for issuers that adopted ASU 2016-13, created a single loan modification accounting model, and clarified disclosure requirements for loan modifications and write-offs. Presented below are the amortized cost basis and percentage of loan class for loan modifications made to borrowers experiencing financial difficulty by loan class, concession type, and financial effect as of the dates indicated:

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Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. There were no modified loans (or portions of a loan) deemed uncollectible as of March 31, 2026, or December 31, 2025.

The Company closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table depicts the performance of loans that have been modified for the periods indicated:

March 31, 2026

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The following table provides information about other real estate owned (“OREO”), which consists of properties acquired through foreclosure, as of the dates indicated:

(1) The recorded investment in mortgage loans collateralized by residential real estate that are in the process of foreclosure according to local requirements of the applicable jurisdiction

Note 6**. Allowance for Credit Losses**

The following tables present the changes in the allowance for credit losses, by loan segment, during the periods indicated:

Three Months Ended March 31, 2026

Three Months Ended March 31, 2025

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Note 7**. Deposits**

The following table presents the components of deposits as of the dates indicated:

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Note 8**. Borrowings**

The following table presents the components of borrowings as of the dates indicated:

Repurchase agreements are secured by certain securities that remain under the Company’s control during the terms of the agreements.

The Company had no long-term borrowings as of March 31, 2026, or December 31, 2025.

Unused borrowing capacity with the FHLB totaled $299.05 million, net of FHLB letters of credit of $126.24 million, as of March 31, 2026. As of March 31, 2026, the Company maintains $425.80 million in qualifying loans to secure the FHLB borrowing capacity.

Note 9**. Derivative Instruments and Hedging Activities**

Generally, derivative instruments help the Company manage exposure to market risk and meet customer financing needs. Market risk represents the possibility that fluctuations in external factors such as interest rates, market-driven loan rates, prices, or other economic factors will adversely affect economic value or net interest income.

The Company has used interest rate swap contracts to modify its exposure to interest rate risk caused by changes in benchmark interest rates in relation to certain designated fixed rate loans. These instruments are used to convert these fixed rate loans to an effective floating rate. If the Secured Overnight Financing Rate ("SOFR") plus a spread falls below the loan’s stated fixed rate for a given period, the Company will owe the floating rate payer the notional amount times the difference between the floating rate and the stated fixed rate. If SOFR is above the stated rate for a given period, the Company will receive payments based on the notional amount times the difference between the floating rate and the stated fixed rate.

The Company's interest rate swaps qualify as fair value hedging instruments; therefore, fair value changes in the derivative and hedged item attributable to the hedged risk are recognized in earnings in the same period. The fair value hedges were effective as of March 31, 2026, and December 31, 2025.

The following table presents the notional, or contractual, amounts and fair values of derivative instruments as of the dates indicated:

The following table presents the effect of derivative and hedging activity, if applicable, on the consolidated statements of income for the periods indicated:

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Note 10**.** Employee Benefit Plans

The Company maintains two nonqualified domestic, noncontributory defined benefit plans (the “Benefit Plans”) for key members of senior management and non-management directors. The Company’s unfunded Benefit Plans include the Supplemental Executive Retention Plan ("SERP") and the Directors’ Supplemental Retirement Plan ("Director Plan"). The SERP was frozen near the end of 2021; the Director Plan was fundamentally frozen at that time as well. The following table presents the components of net periodic pension cost and the effect on the consolidated statements of income for the periods indicated:

Note 11**. Earnings per** Share

The following table presents the calculation of basic earnings per common share for the periods indicated. The Company has no anti-dilutive potential common shares for the periods presented.

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Note 12**. Accumulated Other Comprehensive Income** (Loss)

The following tables present the changes in accumulated other comprehensive income (loss) (“AOCI”), net of tax and by component, during the periods indicated:

Three Months Ended March 31, 2026

Three Months Ended March 31, 2025

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The following table presents reclassifications out of AOCI, by component, during the periods indicated:

(1) Amortization is included in net periodic pension cost. See Note 10, "Employee Benefit Plans."

Note 13**. Fair Value**

Financial Instruments Measured at Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value hierarchy ranks the inputs used in measuring fair value as follows:

• Level 1 – Observable, unadjusted quoted prices in active markets

• Level 2 – Inputs other than quoted prices included in Level 1 that are directly or indirectly observable for the asset or liability

• Level 3 – Unobservable inputs with little or no market activity that require the Company to use reasonable inputs and assumptions

The Company uses fair value measurements to record adjustments to certain financial assets and liabilities on a recurring basis. The Company may be required to record certain assets at fair value on a nonrecurring basis in specific circumstances, such as evidence of impairment. Methodologies used to determine fair value might be highly subjective and judgmental in nature; therefore, valuations may not be precise. If the Company determines that a valuation technique change is necessary, the change is assumed to have occurred at the end of the respective reporting period. The following discussion describes the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments under the valuation hierarchy.

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Assets and Liabilities Reported at Fair Value on a Recurring Basis

Available-for-sale Debt Securities

Debt securities available-for-sale are reported at fair value on a recurring basis. The fair value of Level 1 securities is based on quoted market prices in active markets, if available. If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are primarily derived from or corroborated by observable market data. Level 2 securities use fair value measurements from independent pricing services obtained by the Company. These fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and bond terms and conditions. The Company’s Level 2 securities include U.S. Agency and Treasury securities, municipal securities, and mortgage-backed securities. Securities are based on Level 3 inputs when there is limited activity or less transparency to the valuation inputs. In the absence of observable or corroborated market data, internally developed estimates that incorporate market-based assumptions are used when such information is available.

Fair value models may be required when trading activity has declined significantly or does not exist, prices are not current, or pricing variations are significant. For Level 3 securities, the Company obtains the cash flow of specific securities from third parties that use modeling software to determine cash flows based on market participant data and knowledge of the structures of each individual security. The fair values of Level 3 securities are determined by applying proper market observable discount rates to the cash flow derived from third-party models. Securities with increased uncertainty about the receipt of cash flows are discounted at higher rates due to the addition of a deal specific credit premium based on assumptions about the performance of the underlying collateral. Finally, internal fair value model pricing and external pricing observations are combined by assigning weights to each pricing observation. Pricing is reviewed for reasonableness based on the direction of specific markets and the general economic indicators.

Equity Securities. Equity securities are recorded at fair value on a recurring basis and included in other assets in the consolidated balance sheets. The Company uses Level 1 inputs to value equity securities that are traded in active markets. Equity securities that are not actively traded are classified in Level 2.

Loans Held for Investment. Loans held for investment that are subject to a fair value hedge are reported at fair value derived from third-party models. Loans designated in fair value hedges are recorded at fair value on a recurring basis.

Deferred Compensation Assets and Liabilities. Securities held for trading purposes are recorded at fair value on a recurring basis and included in other assets in the consolidated balance sheets. These securities include assets related to employee deferred compensation plans, which are generally invested in Level 1 equity securities. The liability associated with these deferred compensation plans is carried at the fair value of the obligation to the employee, which corresponds to the fair value of the invested assets.

Derivative Assets and Liabilities. Derivatives are recorded at fair value on a recurring basis. The Company obtains dealer quotes, Level 2 inputs, based on observable data to value derivatives.

The following tables summarize financial assets and liabilities recorded at fair value on a recurring basis, by the level of valuation inputs in the fair value hierarchy, as of the dates indicated:

March 31, 2026

December 31, 2025

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Assets Measured at Fair Value on a Nonrecurring Basis

Collateral Dependent Loans and OREO: TheFair value of collateral dependent loans and OREO is measured on a nonrecurring basis using Level 3 inputs, which typically include appraised values of collateral, adjusted for estimated selling costs and other qualitative factors. The Company had no collateral-dependent loans or OREO measured at fair value on a nonrecurring basis as of March 31, 2026 or December 31, 2025.

Fair Value of Financial Instruments

The following tables present the carrying amounts and fair values of financial instruments, by the level of valuation inputs in the fair value hierarchy, as of the dates indicated:

March 31, 2026

December 31, 2025

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Note 14**.** Litigation, Commitments**,** and Contingencies

Litigation

We are currently a defendant in legal actions and asserted claims in the normal course of business. Although we are unable to assess the ultimate outcome of each matter with certainty, we believe that the resolution of these actions should not have a material adverse effect on our financial position, results of operations, or cash flows.

Commitments and Contingencies

The Company is a party to financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit, and financial guarantees. These instruments involve, to varying degrees, elements of credit and interest rate risk beyond the amount recognized in the consolidated balance sheets. The contractual amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments. If the other party to a financial instrument does not perform, the Company’s credit loss exposure is the same as the contractual amount of the instrument. The Company uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many commitments are expected to expire without being drawn on, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of each customer on a case-by-case basis. Collateral may include accounts receivable, inventory, property, plant and equipment, and income producing commercial properties. The Company maintains a reserve for the risk inherent in unfunded lending commitments, which is included in other liabilities in the consolidated balance sheets.

Standby letters of credit and financial guarantees are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending credit to customers. The amount of collateral obtained, if deemed necessary, to secure the customer’s performance under certain letters of credit is based on management’s credit evaluation of the customer.

The following table presents the off-balance sheet financial instruments as of the dates indicated:

(1) Includes FHLB letters of credit

Note 15. Segment Information

The Company conducts its business activities through community banking. Community banking revolves around serving the community and customers where the bank has branches and offices. Community banking consists of commercial and consumer banking, lending activities, and wealth management.

The Company’s chief executive officer is in charge of allocating the Company’s resources and assessing the Company's performance, and as such, has been identified as the chief operating decision maker. The chief operating decision maker regularly reviews a multitude of reports that have a varying level of combined detail on products offered, however, all of the information and activity reviewed fall under the definition of community banking.

Based on the business activities and information reviewed by the chief operating decision maker, the Company has one reportable segment - Community Banking.

The accounting policies of the community banking segment are the same as those for the Company described in Note 1. In accordance with ASC 280, the Company has concluded that consolidated net income is the measure of segment profit or loss that is required to be reported because it is the measure determined in accordance with measurement principles that are most consistent with US GAAP. As the Company only has one reportable segment, total segment net income and total segment assets are equivalent to the results disclosed in the accompanying Consolidated Statements of Income and Consolidated Balance Sheets, respectively.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our financial condition, changes in financial condition, and results of operations. MD&A contains forward-looking statements and should be read in conjunction with our consolidated financial statements, accompanying notes, and other financial information included in this report and our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Unless the context suggests otherwise, the terms “First Community,” “Company,” “we,” “our,” and “us” refer to First Community Bankshares, Inc. and its subsidiaries as a consolidated entity.

Executive Overview

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 March 31, 2026, the Bank operated 61 branches in Virginia, West Virginia, North Carolina and Tennessee. As of March 31, 2026, full-time equivalent employees, calculated using the number of hours worked, totaled 610. 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 March 31, 2026, the Trust Division and FCWM managed and administered $1.77 billion in combined assets under various fee-based arrangements as fiduciary or agent.

Recent Developments

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.

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.

Acquisition details are described in Note 2, "Acquisitions and Divestitures" of Part I, of this Quarterly Report on Form 10Q.

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with generally accepted accounting principles (“GAAP”) in the U.S. and conform to general practices within the banking industry. Our financial position and results of operations may require management to make significant estimates and assumptions that have a material impact on our financial condition or operating performance. Due to the level of subjectivity and the susceptibility of such matters to change, actual results could differ significantly from management’s assumptions and estimates. Estimates, assumptions, and judgments, which are periodically evaluated, are based on historical experience and other factors, including expectations of future events believed reasonable under the circumstances. These estimates are generally necessary when assets and liabilities are required to be recorded at estimated fair value, when a decline in the value of an asset carried on the financial statements at fair value warrants an impairment write-down or a valuation reserve, or when an asset or liability needs recorded based on the probability of occurrence of a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. Fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices, when available, or third-party sources. When quoted prices or third-party information is not available, management estimates valuation adjustments primarily through the use of financial modeling techniques and appraisal estimates.

Our accounting policies are fundamental in understanding MD&A and the disclosures presented in Item 1, “Financial Statements,” of this Quarterly Report on Form 10-Q. Our accounting policies are described in detail in Note 1, “Basis of Presentation and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8 of our 2025 Form 10-K. Our critical accounting estimates are detailed in the “Critical Accounting Policies” section in Part II, Item 7 of our 2025 Form 10-K.

Performance Overview

Highlights of our results of operations for the three months ended March 31, 2026, and financial condition as of March 31, 2026, include the following:

• Net income of $12.03 million for the first quarter of 2026, was an increase of $209 thousand, or 1.77%, from the same quarter of 2025.

• When adjusted for merger and non-recurring expenses, net income of $13.83 million was an increase of $2.01 million, or 17.02%, from the same period in 2025.

• Net interest margin remained strong at 4.37% in the first quarter of 2026, up 3 basis points from the first quarter of 2025. Net interest rate spread increased 11 basis points to 4.05%, driving a $3.05 million, or 10.02%, increase in tax-equivalent net interest income. The improvement was primarily driven by an increase in the average balance of interest earnings assets and lower funding cost yields. Average earnings assets increased $263.04 million, or 9.26%, contributing $2.67 million in additional interest income, while the yield of interest-bearing deposits declined 19 basis points, reducing interest expense by $393 thousand, or 8.07%.

• Net interest income after provision for loan losses increased $2.94 million, or 9.80%, compared to March 31, 2025. The increase is attributable to an increase in average earnings assets and decreased funding costs.

• Noninterest income increased approximately $1.23 million, or 12.00%, when compared to the same quarter of 2025. The increase is attributable primarily to an increase in other service charges and fees of $603 thousand, or 18.05%, and service charges on deposits of $349 thousand, or 9.10%. Noninterest expense increased $3.79 million, or 15.21%, when compared to the same period of 2025. The increase is attributable to merger expenses of $2.31 million and an increase in salaries and benefits of $1.03 million, or 7.74%. The merger expense is related to the recent acquisition of Hometown Bancshares, Inc. ("Hometown").

• Annualized return on average assets ("ROA") was 1.39% for the first quarter of 2026 compared to 1.49% for the same period of 2025. Annualized return on average common equity ("ROE") was 9.29% for the first quarter of 2026 compared to 9.49% for the same period of 2025.

• When adjusted for merger and non-recurring expenses, ROA was 1.60% for the first quarter of 2026 and ROE was 10.69%. Return on average tangible common equity continues to remain strong at 15.48% for the first quarter of 2026.

• The Company completed the strategic 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 on March 31, 2026. 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 goodwill and $8.59 million in other intangible assets. Other major balance sheet components increased in the transaction with $171.04 million acquired loans and $357.72 million in deposits.

• The Company's loan portfolio increased $141.27 million, or 6.10%, from year end 2025. Excluding the Hometown transaction, the loan portfolio decreased approximately $29.77 million, or 1.29%. Loan production for the first quarter of 2026 was $105.07 million, an increase of $27.16 million over first quarter of 2025.

• Deposits increased $379.06 million, or 14.21%, from December 31, 2025. Excluding the Hometown transaction, deposits increased $21.33 million, or 0.79%.

• The Company repurchased 504,652 common shares for a total cost of $20.33 million during the first quarter of 2026. Shares repurchase activity was suspended in the third quarter of 2025 in anticipation of the acquisition of Hometown Bancshares, Inc. and resumed upon its completion in the first quarter of 2026.

• Non-performing loans to total loans decreased to 0.72%, a 0.12% reduction when compared with the same quarter of 2025. The company experienced net charge-offs for the first quarter of 2026 or $731 thousand, or 0.12%, of annualized average loans, compared to net charge-offs of $1.39 million, or 0.24%, of annualized average loans for the same period in 2025.

• The allowance for credit losses increased $2.78 million, primarily driven by the $3.21 million impact of the Hometown transaction. The allowance for credit losses to total loans was 1.37% on March 31, 2026, compared to 1.42% on March 31,2025.

• Book value per share on March 31, 2026, was $27.64, an increase of $0.34 from year-end 2025.

Results of Operations

Net Income

The following table presents the changes in net income and related information for the periods indicated:

Three*-Month Comparison.*

Net income increased $209 thousand, or 1.77%, in the first quarter of 2026 compared to the same period in 2025. The increase is primarily attributable to a $2.94 million, or 9.80%, increase in net interest income after provision for loan losses and a $1.23 million, or 12%, increase in noninterest income. These increases were partially offset by a $3.79 million, or 15.21%, increase in noninterest expense. The increase in noninterest expense was primarily driven by $2.31 million of merger-related expenses associated with the completed Hometown acquisition and a $1.03 million increase in salaries and employee benefits.

Net Interest Income

Net interest income, our largest contributor to earnings, is analyzed on a fully taxable equivalent (“FTE”) basis, a non-GAAP financial measure. For additional information, see “Non-GAAP Financial Measures” below. The following tables present the consolidated average balance sheets and net interest analysis on a FTE basis for the dates indicated:

• AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

The following table presents the impact to net interest income on an FTE basis due to changes in volume (change in average volume times the prior year’s average rate), rate (average rate times the prior year’s average volume), and rate/volume (average volume times the change in average rate), for the periods indicated:

March 31, 2026 Compared to 2025

(1) FTE basis based on the federal statutory rate of 21%.

Three*-*Month Comparison. Net interest income represented 74.40% of total net interest and noninterest income in the first quarter of 2026, compared to 74.76% in the same quarter of 2025. On a GAAP basis, net interest income increased $3.00 million, or 9.89%, while on a fully taxable equivalent ("FTE") basis, it increased $3.05 million, or 10.02%. The FTE net interest margin increased 3 basis points, and the net interest spread increased 11 basis points, or 2.79%. These improvements were primarily driven by growth in average interest- earning assets and lower funding costs.

Average earning assets increased by $263.04 million, or 9.26%, driven by increases of $114.40 million in interest-bearing deposits, $109.35 million in securities available-for-sale and $39.28 million in loans. Although the average yield on earning assets declined 8 basis points, interest income increased $2.66 million, or 7.55%, reflecting higher asset volumes. The average loan to deposit ratio decreased from 90.45% to 83.18%, compared to the first quarter of 2025. Non-cash accretion income totaled $490 thousand compared to $556 thousand in the prior-year period.

Average interest-bearing liabilities, consisting of interest-bearing deposits and borrowings, increased $206.89 million, or 11.56%. However, due to a 19-basis point, or 17.27%, decline in cost of funds, interest expense decreased $384 thousand, compared to the same quarter in 2025. The largest driver of interest expense savings was time deposits which declined $416 thousand, or 30.14%, due to a $22.16 million decrease in average balance and a 54-basis point decline in yield.

Provision for Credit Losses

Three*-*Month Comparison. The provision charged to operations increased $57 thousand, or 17.76%, in the first quarter of 2026 compared to the same period of 2025. In the first quarter of 2026, the Company recorded a provision for credit losses for loans of $300 thousand and a 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 first quarter of 2025. The increase in the overall provision was primarily driven by growth in unfunded loan commitments.

Noninterest Income

The following table presents the components of, and changes in, noninterest income for the periods indicated:

Three*-*Month Comparison. Noninterest income comprised 25.60% of total net interest and noninterest income in the first quarter of 2026 compared to 25.24% in the same quarter of 2025. Noninterest income increased $1.23 million or 12.00%, compared to the same period of 2025. The increase is primarily attributable to an increase in other service charges and fees of $603 thousand, or 18.05% and service charges on deposits of $349 thousand, or 9.10%.

Noninterest Expense

The following table presents the components of, and changes in, noninterest expense for the periods indicated:

Three*-*Month Comparison. Noninterest expense increased $3.79 million, or 15.21%, in the first quarter of 2026 compared to the same quarter of 2025. The increase was primarily due to an increase in merger expense of $2.31 and salaries and employee benefits of $1.03 million, or 7.74%. The merger expenses relate to the Hometown acquisition.

I**ncome Tax Expense

The Company’s effective tax rate, income tax as a percent of pre-tax income, may vary significantly from the statutory rate due to permanent differences and available tax credits. Permanent differences are income and expense items excluded by law in the calculation of taxable income. The Company’s most significant permanent differences generally include interest income on municipal securities, increase in the cash surrender value of life insurance policies and non-deductible acquisition costs.

Three-Month Comparison. Income tax expense increased $165 thousand, or 4.79%. The effective tax rate increased to 23.08% in the first quarter of 2026 from 22.57% in the same quarter of 2025.

Non-GAAP Financial Measures

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 measure 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 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 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. 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 on a FTE basis for the periods indicated:

(1) FTE basis based on the federal statutory rate of 21%.

The following table is a reconciliation of return on average tangible common equity, a non-GAAP financial measurement for the periods indicated:

Financial Condition

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.

Investment Securities

Our investment securities are used to generate interest income through the employment of excess funds, to provide liquidity, to fund loan demand or deposit liquidation, and to pledge as collateral where required. 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 March 31, 2026, increased $134.83 million, or 101.62%, compared to December 31, 2025. The net increase was primarily due to the purchase of U.S. Treasury securities.

The market value of debt securities available-for-sale as a percentage of amortized cost was 96.34% as of March 31, 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 State 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 March 31, 2026 continue to perform as scheduled and we do not believe that a provision for credit losses is necessary.

Loans Held for Investment

Loans held for investment, which generates the largest component of interest income, are grouped into commercial, consumer real estate, and consumer and other loan segments. Each segment is divided into various loan classes based on collateral or purpose.

The following table presents loans, net of unearned income, by loan class as of the dates indicated:

Total loans as of March 31, 2026, increased $141.27 million, or 6.10%, compared to December 31, 2025, and was primarily due to the Hometown acquisition with the fair value of loans acquired totaling $171.04 million.

Risk Elements

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 credit losses. We track certain credit quality indicators that include: trends related to the risk rating of commercial loans, the level of classified commercial loans, net charge-offs, nonperforming loans, and general economic conditions. The Company's loan review function performs an independent credit analysis on a risk-based sample of commercial loan relationships annually and performs a qualitative review of a sample of smaller commercial and retail loans.

Nonperforming assets consist of nonaccrual loans, accrual loans contractually past due 90 days or more, and modified loans past due 90 days or more, and OREO. Ongoing activity in the classification and categories of nonperforming loans include collections on delinquencies, foreclosures, loan restructurings, and movements into or out of the nonperforming classification due to changing economic conditions, borrower financial capacity, or resolution efforts.

The following table presents the components of nonperforming assets and related information as of the periods indicated:

Nonperforming assets as of March 31, 2026, increased $3.55 million, or 25.08%, from December 31, 2025 and nonaccrual loans increased $3.73 million, or 26.76%. As of March 31, 2026, nonaccrual loans were largely attributed to single family owner occupied (50.10%), single family non-owner occupied (13.52%) and commercial and industrial of (12.26%). 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 million as of March 31, 2026, an increase of $7.28 million, or 26.15%, compared to $27.85 million as of December 31, 2025. Delinquent loans as a percent of total loans totaled 1.43% as of March 31, 2026, which includes past due loans (0.71%) and nonaccrual loans (0.72%).

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 March 31, 2026, were $2.74 million. As of March 31, 2026, $278 thousand of these loans were 30-89 days past due. Modified loans past due 90 days or more totaled $62 thousand and are included in the total for nonaccrual loans.

OREO, which is carried at the lesser of estimated net realizable value or cost. As of March 31, 2026 and December 31, 2025, no OREO property was held by the Company. The following table presents the changes in OREO during the periods indicated:

Allowance for Credit Losses

The ACL reflects management’s estimate of losses that will result from the inability of our borrowers to make required loan payments. Management uses a systematic methodology to determine its ACL for loans held for investment and certain off-balance-sheet credit exposures. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. It is possible that others, given the same information, may at any point in time reach a different reasonable conclusion. The Company’s ACL recorded in the balance sheet reflects management’s best estimate of expected credit losses. The Company recognizes in net income the amount needed to adjust the ACL for management’s current estimate of expected credit losses. The Company’s measurement of credit losses policy adheres to GAAP as well as interagency guidance. The Company's ACL is calculated using collectively evaluated and individually evaluated loans.

​For collectively evaluated loans, the Company in general uses two modeling approaches to estimate expected credit losses. The Company projects the contractual run-off of its portfolio at the segment level and incorporates a prepayment assumption in order to estimate exposure at default. Financial assets that have been individually evaluated can be returned to a pool for purposes of estimating the expected credit loss insofar as their credit profile improves and that the repayment terms were not considered to be unique to the asset.

In addition to its own loss experience, management also includes peer bank historical loss experience in its assessment of expected credit losses to determine the ACL. The Company utilized call report data to measure historical credit loss experience with similar risk characteristics within the segments. For the majority of segment models for collectively evaluated loans, the Company incorporated at least one macroeconomic driver either using a statistical regression modeling methodology or simple loss rate modeling methodology.

Included in its systematic methodology to determine its ACL for loans held for investment and certain off-balance-sheet credit exposures. Management considers the need to qualitatively adjust expected credit losses for information not already captured in the loss estimation process. These qualitative adjustments either increase or decrease the quantitative model estimation (i.e. formulaic model results). Each period the Company considers qualitative factors that are relevant within the qualitative framework. For further discussion of our Allowance for Credit Losses - See Note 1, “Basis of Presentation and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item 8 of our 2025 Form 10-K.

As of March 31, 2026, the balance of the ACL totaled $33.54 million, or 1.37%, of total loans. This compares to $30.76 million as of December 31, 2025, reflecting an increase of $2.78 million, or 9.04%. 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 thousand.

As of March 31, 2026, the Company also had an allowance for unfunded commitments of $433 thousand which was recorded in Other Liabilities on the Balance Sheet. During the first three months of 2026, the Company recorded a provision to provision for credit losses for loan commitments of $78 thousand. There was a recovery of provision of $29 thousand recorded in the same period of 2025.

Deposits

Total deposits as of March 31, 2026, increased $379.06 million, or 14.12%, compared to December 31, 2025. The largest increases occurred in interest bearing demand of $166.33 million, or 24.31%, and savings of $131.59 million, or 14.55%. The growth was primarily attributable to the acquisition of Hometown, which contributed $357.72 million in deposits. Excluding the Hometown acquisition, total deposits increased $21.33 million.

Total borrowings in the form of retail repurchase agreements as of March 31, 2026, increased $2.00 million, or 162.03%, 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.

Liquidity and Capital Resources

Liquidity

Liquidity is a measure of our ability to convert assets to cash or raise cash to meet financial obligations. We believe that liquidity management should encompass an overall balance sheet approach that draws together all sources and uses of liquidity. Poor or inadequate liquidity risk management may result in a funding deficit that could have a material impact on our operations. We maintain a liquidity risk management policy and contingency funding policy (“Liquidity Plan”) to detect potential liquidity issues and protect our depositors, creditors, and shareholders. The Liquidity Plan includes various internal and external indicators that are reviewed on a recurring basis by our Asset/Liability Management Committee (“ALCO”) of the Board of Directors. ALCO reviews liquidity risk exposure and policies related to liquidity management; ensures that systems and internal controls are consistent with liquidity policies; and provides accurate reports about liquidity needs, sources, and compliance. The Liquidity Plan involves ongoing monitoring and estimation of potentially credit sensitive liabilities and the sources and amounts of balance sheet and external liquidity available to replace outflows during a funding crisis. The liquidity model incorporates various funding crisis scenarios and a specific action plan is formulated, and activated, when a financial shock that affects our normal funding activities is identified. Generally, the plan will reflect a strategy of replacing liability outflows with alternative liabilities, rather than balance sheet asset liquidity, to the extent that significant premiums can be avoided. If alternative liabilities are not available, outflows will be met through liquidation of balance sheet assets, including unpledged securities.

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 March 31, 2026, the Company’s cash reserves totaled $15.09 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 March 31, 2026, our unencumbered cash totaled $600.30 million, unused borrowing capacity from the FHLB totaled $299.05 million, available credit from the FRB Discount Window totaled $7.02 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $80.66 million.

Capital Resources

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 March 31, 2026, increased $20.84 million, or 4.16%, to $521.39 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 company issued 1.03 million shares of common stock, resulting in a $35.07 million increase in capital. Equity was further increased by net income of $12.03 million. These increases were partially offset by $6.00 million of common stock dividends declared and $20.33 million of common stock repurchases. Book value per share increased to $27.64 on March 31, 2026, compared to $27.30 on December 31, 2025.

Capital Adequacy Requirements

Risk-based capital guidelines, issued by state and federal banking agencies, include balance sheet assets and off-balance sheet arrangements weighted by the risks inherent in the specific asset type. Our current risk-based capital requirements are based on the international capital standards known as Basel III. A description of the Basel III capital rules is included in Part I, Item 1 of the 2025 Form 10-K. Our current required capital ratios are as follows:

• 4.5% Common Equity Tier 1 capital to risk-weighted assets (effectively 7.00% including the capital conservation buffer)

• 6.0% Tier 1 capital to risk-weighted assets (effectively 8.50% including the capital conservation buffer)

• 8.0% Total capital to risk-weighted assets (effectively 10.50% including the capital conservation buffer)

• 4.0% Tier 1 capital to average consolidated assets (“Tier 1 leverage ratio”)

The following table presents our capital ratios as of the dates indicated:

The Company's risk-based capital ratios as of March 31, 2026, decreased from December 31, 2025, primarily due to a decrease in capital levels. The decrease in capital was primarily driven by the repurchase of common stock. While the Company's risk-based capital ratios decreased, the Bank's risk-based capital ratios increased. The increase in the Bank's risk-based capital ratios was primarily due to an increase in assets. As of March 31, 2026, we continued to meet all capital adequacy requirements and were classified as well-capitalized under the regulatory framework for prompt corrective action. Management believes there have been no conditions or events that would change the Bank’s classification. Additionally, our capital ratios were in excess of the minimum standards under the Basel III capital rules as of March 31, 2026.

Off-Balance Sheet Arrangements

We extend contractual commitments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. Our exposure to credit loss in the event of nonperformance by other parties to financial instruments is the same as the contractual amount of the instrument. The following table presents our off-balance sheet arrangements as of the dates indicated:

(1) Includes FHLB letters of credit

Market Risk and Interest Rate Sensitivity

Market risk represents the risk of loss due to adverse changes in current and future cash flows, fair values, earnings, or capital due to movements in interest rates and other factors. Our profitability is largely dependent upon net interest income, which is subject to variation due to changes in the interest rate environment and unbalanced repricing opportunities. We are subject to interest rate risk when interest-earning assets and interest-bearing liabilities reprice at differing times, when underlying rates change at different levels or in varying degrees, when there is an unequal change in the spread between two or more rates for different maturities, and when embedded options, if any, are exercised. ALCO reviews our mix of assets and liabilities with the goal of limiting exposure to interest rate risk, ensuring adequate liquidity, and coordinating sources and uses of funds while maintaining an acceptable level of net interest income given the current interest rate environment. ALCO is also responsible for overseeing the formulation and implementation of policies and strategies to improve balance sheet positioning and mitigate the effect of interest rate changes.

In order to manage our exposure to interest rate risk, we periodically review internal simulation and third-party models that project net interest income at risk, which measures the impact of different interest rate scenarios on net interest income, and the economic value of equity at risk, which measures potential long-term risk in the balance sheet by valuing our assets and liabilities at fair value under different interest rate scenarios. Simulation results show the existence and severity of interest rate risk in each scenario based on our current balance sheet position, assumptions about changes in the volume and mix of interest-earning assets and interest-bearing liabilities, and estimated yields earned on assets and rates paid on liabilities. The simulation model provides the best tool available to us and the industry for managing interest rate risk; however, the model cannot precisely predict the impact of fluctuations in interest rates on net interest income due to the use of significant estimates and assumptions. Actual results will differ from simulated results due to the timing, magnitude, and frequency of interest rate changes; changes in market conditions and customer behavior; and changes in our strategies that management might undertake in response to a sudden and sustained rate shock.

As of March 31, 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:

Inflation and Changing Prices

Our consolidated financial statements and related notes are presented in accordance with GAAP, which requires the measurement of results of operations and financial position in historical dollars. Inflation may cause a rise in price levels and changes in the relative purchasing power of money. These inflationary effects are not reflected in historical dollar measurements. The primary effect of inflation on our operations is increased operating costs. In management’s opinion, interest rates have a greater impact on our financial performance than inflation. Interest rates do not necessarily fluctuate in the same direction, or to the same extent, as the price of goods and services; therefore, the effect of inflation on businesses with large investments in property, plant, and inventory is generally more significant than the effect on financial institutions.

Astronomic federal government spending alongside labor shortages and supply chain complications have contributed to rising 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.

FILINGSOURCEITEMBOUNDARYBEGIN Item 3. Quantitative and Qualitative Disclosures About Market Risk FILINGSOURCEITEMBOUNDARYENDItem 3. Quantitative and Qualitative Disclosures about Market Risk

The information required in this item is incorporated by reference to “Market Risk and Interest Rate Sensitivity” in Item 2 of this Quarterly Report on Form 10-Q.

FILINGSOURCEITEMBOUNDARYBEGIN Item 4. Controls and Procedures FILINGSOURCEITEMBOUNDARYENDItem 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In connection with this report, we conducted an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures under the Exchange Act Rule 13a-15(b). Based upon that evaluation, the CEO and CFO concluded that, as of March 31, 2026, our disclosure controls and procedures were effective.

The Company's disclosure controls and procedures are designed to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions about required disclosure.

Management, including the CEO and CFO, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, collusion of two or more people, or management’s override of the controls.

Changes in Internal Control over Financial Reporting

We assess the adequacy of our internal control over financial reporting quarterly and enhance our controls in response to internal control assessments and internal and external audit and regulatory recommendations. There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

FILINGSOURCEITEMBOUNDARYBEGIN Item 1. Legal Proceedings FILINGSOURCEITEMBOUNDARYENDITEM 1. Legal Proceedings

We are currently a defendant in various legal actions and asserted claims in the normal course of business. Although we are unable to assess the ultimate outcome of each matter with certainty, we believe that the resolution of these actions should not have a material adverse effect on our financial position, results of operations, or cash flows.

FILINGSOURCEITEMBOUNDARYBEGIN Item 1A. Risk Factors FILINGSOURCEITEMBOUNDARYENDITEM 1A. 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.

FILINGSOURCEITEMBOUNDARYBEGIN Item 2. Unregistered Sales of Equity Securities and Use of Proceeds FILINGSOURCEITEMBOUNDARYENDITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not Applicable

(b) Not Applicable

(c) Issuer Purchases of Equity Securities

The following table provides information about purchases of our common stock made by us or on our behalf by any affiliated purchaser, as defined in Rule 10b-18(a)(3) under the Exchange Act, during the periods indicated:

(1) In September, 2023, the Board of Directors approved a repurchase plan to repurchase 2,700,000 shares of the Company's common stock. The timing, price, and quantity of purchases under the repurchase plan are at the discretion of management and the repurchase plan may be discontinued, suspended, or restarted at any time depending on the facts and circumstances.

FILINGSOURCEITEMBOUNDARYBEGIN Item 3. Defaults Upon Senior Securities FILINGSOURCEITEMBOUNDARYENDITEM 3. Defaults Upon Senio****r Securities

None.

FILINGSOURCEITEMBOUNDARYBEGIN Item 4. Mine Safety Disclosures FILINGSOURCEITEMBOUNDARYENDITEM 4. Mine Safety Disclosures

None.

FILINGSOURCEITEMBOUNDARYBEGIN Item 5. Other Information FILINGSOURCEITEMBOUNDARYENDITEM 5. Other Information

(a) None.

(b) No changes were made to the procedures by which security holders may recommend nominees to the Company's board of directors.

(c) During the three months ended March 31, 2026, none of our directors or executive officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as such terms defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).

FILINGSOURCEITEMBOUNDARYBEGIN Item 6. Exhibits FILINGSOURCEITEMBOUNDARYENDITEM 6. Exhibits

101*** Interactive data files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Balance Sheets as of March 31, 2026, (Unaudited) and December 31, 2025; (ii) Condensed Consolidated Statements of Income (Unaudited) for the three months ended March 31, 2026 and 2025; (iii) Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended March 31, 2026 and 2025; (iv) Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three months ended March 31, 2026 and 2025; (v) Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2026 and 2025; and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).

104* The cover page of First Community Bankshares, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline XBRL (included within the Exhibit 101 attachments).

* Filed herewith.

** Indicates a management contract or compensation plan or agreement. These contracts, plans, or agreements were assumed by First Community Bankshares, Inc. in October 2018 in connection with First Community Bancshares, Inc., a Nevada corporation, merging with and into its wholly-owned subsidiary, First Community Bankshares, Inc., a Virginia corporation, pursuant to an Agreement and Plan of Reincorporation and Merger with First Community Bankshares, Inc. continuing as the surviving corporation.

*** Submitted electronically herewith

SIGNATURES

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