fcbc20260630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-19297

FIRST COMMUNITY BANKSHARES, INC.

(Exact name of registrant as specified in its charter)

Virginia

55-0694814

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

P.O. Box 989

Bluefield, Virginia

24605-0989

(Address of principal executive offices)

(Zip Code)

(276) 326-9000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($1.00 par value)	FCBC	NASDAQ Global Select

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☑

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☑ No

As of July 31, 2026, there were 18,910,329 shares outstanding of the registrant’s Common Stock, $1.00 par value.

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FIRST COMMUNITY BANKSHARES, INC.
FORM 10-Q
INDEX

PART I.	FINANCIAL INFORMATION		Page

Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets as of June 30, 2026 (Unaudited) and December 31, 2025	4
		Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)	5
		Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)	6
		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)	7
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 (Unaudited)	9
		Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		53
Item 4.	Controls and Procedures		53

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		53
Item 1A.	Risk Factors		53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		54
Item 3.	Defaults Upon Senior Securities		54
Item 4.	Mine Safety Disclosures		54
Item 5.	Other Information		54
Item 6.	Exhibits		55

Signatures			57

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Forward-looking statements in filings with the Securities and Exchange Commission, including this Quarterly Report on Form 10-Q and the accompanying Exhibits, filings incorporated by reference, reports to shareholders, and other communications that represent the Company’s beliefs, plans, objectives, goals, guidelines, expectations, anticipations, estimates, and intentions are made in good faith pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” and other similar expressions identify forward-looking statements. The following factors, among others, could cause financial performance to differ materially from that expressed in such forward-looking statements:

●

inflation, interest rate, market and monetary fluctuations;

	●	the strength of the U.S. economy in general and the strength of the local economies in which we conduct operations including tariffs or changes in trade policies;
	●	the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Federal Reserve System;

●

timely development of competitive new products and services and the acceptance of these products and services by new and existing customers;

●

the willingness of customers to substitute competitors’ products and services for the Company’s products and services and vice versa;

●

the impact of changes in financial services laws and regulations, including laws about taxes, banking, securities, and insurance;

●

the impact of the U.S. Department of the Treasury and federal banking regulators’ continued implementation of programs to address capital and liquidity in the banking system;

●

technological changes;

	●	the impact prolonged federal government shutdowns;
	●	the cost and effects of cyber incidents or other failures, interruptions, or security breaches of our systems or those of third-party providers;
	●	the effect of continued changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters;

●

the effect of acquisitions, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions;

●

the sustainability of noninterest or fee income being less than expected;

●

unanticipated regulatory or judicial proceedings;

●

changes in consumer spending and saving habits;

	●	increased or expanded competition from banks and other financial service providers in the Company's markets;
	●	the Company's ability to effectively manage its liquidity and maintain adequate regulatory capital to support its business;
	●	risks related to the development and use of artificial intelligence;
	●	the effectiveness of the Company's risk management processes strategies and monitoring; and
	●	the Company’s success at managing the risks mentioned above.

This list of important factors is not exclusive. If one or more of the factors affecting these forward-looking statements proves incorrect, actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking statements contained in this Quarterly Report on Form 10-Q and other reports we file with the Securities and Exchange Commission. Therefore, the Company cautions you not to place undue reliance on forward-looking information and statements. The Company does not intend to update any forward-looking statements, whether written or oral, to reflect changes. These cautionary statements expressly qualify all forward-looking statements that apply to the Company including the risk factors presented in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q and Part I, Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

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PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

	*June 30,*			*December 31,*
	*2026*			*2025(1)*
(Amounts in thousands, except share and per share data)	(Unaudited)
Assets
Cash and due from banks	$	119,377		$	126,068
Federal funds sold		462,592			384,141
Interest-bearing deposits in banks		9,944			2,031
Total cash and cash equivalents		591,913			512,240
Debt securities available-for-sale, at fair value		239,050			132,688
Loans held for investment, net of unearned income		2,459,746			2,314,755
Allowance for credit losses		(32,654	)		(30,761	)
Loans held for investment, net		2,427,092			2,283,994
Premises and equipment, net		50,161			47,560
Other real estate owned		52			-
Interest receivable		9,344			8,720
Goodwill		145,672			143,946
Other intangible assets		18,001			11,098
Other assets		126,435			119,397
Total assets	$	3,607,720		$	3,259,643

Liabilities
Deposits
Noninterest bearing	$	973,218		$	896,255
Interest-bearing		2,043,373			1,789,074
Total deposits		3,016,591			2,685,329
Securities sold under agreements to repurchase		2,924			1,214
Interest, taxes, and other liabilities		49,105			72,553
Total liabilities		3,068,620			2,759,096

Stockholders' equity
Preferred stock, undesignated par value; 1,000,000 shares authorized; Series A Noncumulative Convertible Preferred Stock, $0.01 par value; 25,000 shares authorized; none outstanding		-			-
Common stock, $1 par value; 50,000,000 shares authorized; 28,735,063 shares issued and 18,902,628 outstanding at June 30, 2026; 27,662,570 shares issued and 18,334,787 outstanding at December 31, 2025		18,903			18,335
Additional paid-in capital		186,291			170,358
Retained earnings		342,103			319,368
Accumulated other comprehensive loss		(8,197	)		(7,514	)
Total stockholders' equity		539,100			500,547
Total liabilities and stockholders' equity	$	3,607,720		$	3,259,643

(1) Derived from audited financial statements

See Notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	*Three Months Ended*					*Six Months Ended*
	*June 30,*					*June 30,*
(Amounts in thousands, except share and per share data)	*2026*		*2025*			*2026*		*2025*
Interest income
Interest and fees on loans	$	32,638	$	30,637		$	64,360	$	61,306
Interest on securities -- taxable		2,058		945			4,141		2,092
Interest on securities -- tax-exempt		48		84			163		175
Interest on deposits in banks		4,865		3,722			8,726		6,984
Total interest income		39,609		35,388			77,390		70,557
Interest expense
Interest on deposits		4,734		4,731			9,221		9,602
Total interest expense		4,734		4,731			9,221		9,602
Net interest income		34,875		30,657			68,169		60,955
Provision (recovery) for credit losses		483		(285	)		861		36
Net interest income after provision for credit losses		34,392		30,942			67,308		60,919
Noninterest income
Wealth management		1,399		1,222			2,698		2,384
Service charges on deposits		4,431		4,120			8,616		7,956
Other service charges and fees		4,473		3,791			8,416		7,131
Gain on sale of securities		210		-			208		-
Gain on sale of equity investment		10,384		-			10,384		-
Other operating income		1,444		1,207			3,476		3,098
Total noninterest income		22,341		10,340			33,798		20,569
Noninterest expense
Salaries and employee benefits		15,127		14,349			29,494		27,684
Occupancy expense		1,529		1,290			3,195		2,866
Furniture and equipment expense		1,576		1,587			3,149		3,162
Service fees		2,858		2,475			5,647		4,959
Advertising and public relations		922		1,154			1,795		2,209
Professional fees		324		360			562		732
Amortization of intangibles		841		526			1,687		1,050
FDIC premiums and assessments		408		361			823		723
Merger expenses		-		-			2,310		-
Other operating expense		3,980		3,353			7,640		7,014
Total noninterest expense		27,565		25,455			56,302		50,399
Income before income taxes		29,168		15,827			44,804		31,089
Income tax expense		6,655		3,581			10,264		7,025
Net income	$	22,513	$	12,246		$	34,540	$	24,064

Earnings per common share
Basic	$	1.19	$	0.67		$	1.83	$	1.31
Diluted		1.19		0.67			1.82		1.31
Weighted average shares outstanding
Basic		18,879,907		18,295,465			18,902,567		18,310,032
Diluted		18,979,314		18,400,793			18,999,498		18,427,503

See Notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	*Three Months Ended*						*Six Months Ended*
	*June 30,*						*June 30,*
	*2026*			*2025*			*2026*			*2025*
(Amounts in thousands)
Net income	$	22,513		$	12,246		$	34,540		$	24,064
Other comprehensive income (loss), before tax
Available-for-sale debt securities:
Change in net unrealized (loss) gains on debt securities		(978	)		455			(1,072	)		2,563
Reclassification adjustment for gains recognized in net income		210			-			208			-
Net unrealized (loss) gain on available-for-sale debt securities		(768	)		455			(864	)		2,563
Employee benefit plans:
Net actuarial (loss) gain		(269	)		16			(537	)		11
Reclassification adjustment for amortization of prior service cost and net actuarial loss recognized in net income		269			(16	)		537			(11	)
Net employee benefit plans adjustment		-			-			-			-
Other comprehensive income, before tax		(768	)		455			(864	)		2,563
Income tax (benefit) expense		(161	)		97			(181	)		539
Other comprehensive (loss) gain, net of tax		(607	)		358			(683	)		2,024
Total comprehensive income	$	21,906		$	12,604		$	33,857		$	26,088

See Notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

THREE MONTHS ENDED

June 30, 2026 and 2025


																	*Accumulated*
	*Preferred*				*Common*						*Additional*						*Other*
(Amounts in thousands, except share and per share data)	*Stock Outstanding*		*Preferred Stock*		*Stock Outstanding*			*Common Stock*			*Paid-in Capital*			*Retained Earnings*			*Comprehensive Loss*			*Total*

Balance April 1, 2025		-	$	-		18,326,657		$	18,327		$	169,867		$	317,728		$	(9,505	)	$	496,417
Net income		-		-		-			-			-			12,246			-			12,246
Other comprehensive loss		-		-		-			-			-			-			358			358
Common dividends declared -- $0.31per share		-		-		-			-			-			(5,667	)		-			(5,667	)
Equity-based compensation expense		-		-		34,913			34			1,292			-			-			1,326
Repurchase of common shares at $36.80 per share		-		-		(50,338	)		(50	)		(1,801	)		-			-			(1,851	)
Balance June 30, 2025		-	$	-		18,311,232		$	18,311		$	169,358		$	324,307		$	(9,147	)	$	502,829

Balance April 1, 2026		-	$	-		18,861,295		$	18,861		$	184,684		$	325,439		$	(7,590	)	$	521,394
Net income		-		-		-			-			-			22,513			-			22,513
Other comprehensive income		-		-		-			-			-			-			(607	)		(607	)
Common dividends declared -- $0.31 per share		-		-		-			-			-			(5,849	)		-			(5,849	)
Equity-based compensation expense		-		-		30,742			31			1,338			-			-			1,369
Common stock options exercised		-		-		10,591			11			269			-			-			280
Balance June 30, 2026		-	$	-	$	18,902,628		$	18,903		$	186,291		$	342,103		$	(8,197	)	$	539,100

See Notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

SIX MONTHS ENDED

June 30, 2026 and 2025


																	*Accumulated*
	*Preferred*				*Common*						*Additional*						*Other*
(Amounts in thousands, except share and per share data)	*Stock Outstanding*		*Preferred Stock*		*Stock Outstanding*			*Common Stock*			*Paid-in Capital*			*Retained Earnings*			*Comprehensive Loss*			*Total*
Balance January 1, 2025		-	$	-		18,321,795		$	18,322		$	169,752		$	349,489		$	(11,171	)	$	526,392
Net income		-		-		-			-			-			24,064			-			24,064
Other comprehensive income		-		-		-			-			-			-			2,024			2,024
Common dividends declared -- $0.62 per share and special dividend $2.07 per share		-		-		-			-			-			(49,246	)		-			(49,246	)
Equity-based compensation expense		-		-		34,913			34			1,292			-			-			1,326
Common stock options exercised		-		-		4,877			5			115			-			-			120
Issuance of common stock to 401(k) plan		-		-		(15	)		-			-			-			-			-
Repurchase of common shares at $36.80 per share		-		-		(50,338	)		(50	)		(1,801	)		-			-			(1,851	)
Balance June 30, 2025		-	$	-		18,311,232		$	18,311		$	169,358		$	324,307		$	(9,147	)	$	502,829

Balance January 1, 2026		-	$	-		18,334,787		$	18,335		$	170,358		$	319,368		$	(7,514	)	$	500,547
Hometown Acquisition						1,029,314			1,029			34,044			-			-			35,073
Net income		-		-		-			-			-			34,540			-			34,540
Other comprehensive income		-		-		-			-			-			-			(683	)		(683	)
Common dividends declared -- $0.62 per share		-		-		-			-			-			(11,805	)		-			(11,805	)
Equity-based compensation expense		-		-		30,742			31			1,412			-			-			1,443
Common stock options exercised		-		-		12,437			13			304			-			-			317
Repurchase of common shares at $40.29 per share		-		-		(504,652	)		(505	)		(19,827	)		-			-			(20,332	)
Balance June 30, 2026		-		-		18,902,628			18,903			186,291			342,103			(8,197	)		539,100

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	*Six Months Ended*
	*June 30,*
(Amounts in thousands)	*2026*			*2025*
Operating activities
Net income	$	34,540		$	24,064
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses for loans		861			36
Depreciation and amortization of premises and equipment		1,774			1,998
Accretion of discounts on investments		(18,013	)		(473	)
Amortization of intangible assets		1,687			1,050
Non-cash accretion on acquired loans		(861	)		(986	)
Equity-based compensation expense		1,443			1,326
Net (gain) loss on sale of premises and equipment		(431	)		4
Net loss on sale of other real estate owned		-			93
Net gain on sale of securities		(208	)		-
Net gain on sale of equity investment		(10,384	)		-
(Increase) decrease in accrued interest receivable		(624	)		420
(Increase) decrease in other assets		4,338			-
Increase (decrease) in other liabilities		(6,704	)		(4,100	)
Net cash provided by operating activities		7,418			23,432
Investing activities
Proceeds from sale of securities available-for-sale		327,130			-
Proceeds from maturities, prepayments, and calls of securities available-for-sale		281,441			90,453
Proceeds from the sale of equity investment		13,916			-
Payments to acquire securities available-for-sale		(527,190	)		(50,105	)
Net decrease in loans		24,832			61,744
Purchase of FHLB stock		(34	)		-
Proceeds from the redemption of FHLB stock		192			29
Proceeds from bank owned life insurance		1,232			-
Cash provided by (used in) divestitures and acquisitions, net		28,545			-
Proceeds from sale of premises and equipment		476			-
Payments to acquire premises and equipment		(2,084	)		(1,364	)
Proceeds from sale of other real estate owned		-			164
Net cash provided by investing activities		148,456			100,921
Financing activities
Increase (decrease) in noninterest-bearing deposits, net		20,542			(9,822	)
Decrease in interest-bearing deposits, net		(47,004	)		(46,061	)
Increase in securities sold under agreements to repurchase, net		396			110
Proceeds from stock options exercised		317			120
Payments for repurchase of common stock		(20,332	)		(1,851	)
Payments of common and special dividends		(30,120	)		(49,246	)
Net cash used in financing activities		(76,201	)		(106,750	)
Net increase in cash and cash equivalents		79,673			17,603
Cash and cash equivalents at beginning of period		512,240			377,454
Cash and cash equivalents at end of period	$	591,913		$	395,057

Supplemental disclosure -- cash flow information
Cash paid for interest	$	9,193		$	7,976
Cash paid for income taxes		11,685			7,520

Supplemental transactions -- noncash items
Transfer of loans to other real estate owned		52			191
Loans originated to finance other real estate owned		-			-
(Decrease) increase in other comprehensive income (loss), net of taxes		(683	)		2,024
Noncash transactions related to merger
Assets acquired (excluding cash and cash equivalents)		365,261			-
Liabilities assumed		360,459			-

See Notes to Condensed Consolidated Financial Statements.

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NOTES TO CONDENSED 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.

Recent Accounting Standards

Standards Adopted

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.

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. The Company adopted this ASU on March 31, 2026, on prospective basis. The adoption of this pronouncement did not have a material impact on the Consolidated Financial Statements.

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Standards Not Yet Adopted

In October 2023, the FASB issued ASU No. 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative". The amendment amends the disclosure or presentation requirements and provides clarifications or technical corrections to a variety of topics within the Codification pursuant to matters identified by the Securities and Exchange Commission in its August 2018 Release No. 33-10532, "Disclosure Update and Simplification". The ASU's effective date is contingent on SEC actions, with implementation expected no later than June 30, 2027. The adoption of this pronouncement is not expected to have a material impact on the Company's financial statements.

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. The adoption of this pronouncement is not expected to have a material impact on the Company's financial statements.

In September 2025, the FASB issued ASU No. 2025-06, "Modernizing Internal-Use Software Accounting". The amendment amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40 by eliminating prospective project stages and requires capitalization of internal-use software costs only after 1) management authorizes and commits to funding the project and 2) it is probable the software will be completed and used as intended. Entities also must evaluate and, if present, resolve significant development uncertainty, limited to 1) novel or unproven functionality not yet resolved through coding and testing and 2) situations in which significant performance requirements have not been identified or continue to be substantially revised. 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 September 2025, the FASB issued ASU No. 2025-07, "Derivative Accounting and Customer Share-Based Noncash Consideration". The amendment refines Topic 815 by excluding from derivative accounting any non-exchange-traded contracts whose underlying's are based on operations or activities specific to one of the parties with certain scooping exceptions. Clarifies that share-based noncash consideration received from a customer in a revenue contract is accounted for under Topic 606 until the right to receive or retain that consideration is unconditional, at which point other Topics apply. 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.

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-2025-10, "Accounting for Government Grants". This amendment establishes the authoritative guidance for business entities on accounting for government grants, including definitions, recognition criteria based on a probable threshold, and models for both asset-related and income-related grants. Permits either a deferred income approach or a cost-accumulation approach for asset-related grants and requires expanded annual disclosures. The ASU is effective for annual reporting periods beginning after December 15, 2028, 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

After the close of business 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.

	As recorded by		Fair Value				As recorded by
(Amounts in thousands, except share data)	Hometown		Adjustments				the Company
Assets
Cash and cash equivalents	$	28,547	$	-			$	28,547
Securities available for sale		171,138		(751	)	( a )		170,387
Loans held for investment, net of allowance and mark		173,211		(2,166	)	( b )		171,045
Premises and equipment		2,858		(401	)	( c )		2,457
Other assets		10,863		1,919		( d ), ( e )		12,782
Goodwill		7,067		(7,067	)	( f )		-
Intangible assets		-		8,590		( g )		8,590
Total assets	$	393,684	$	124			$	393,808

LIABILITIES
Deposits:
Noninterest bearing	$	56,421	$	-			$	56,421
Interest-bearing		301,582		(278	)	( h )	$	301,304
Total deposits		358,003		(278	)			357,725
Securities Sold Under Repo-Retail		1,314						1,314
Long term debt		-		-				-
Other liabilities		1,216		204		( i )		1,420
Total liabilities		360,533		(74	)			360,459
Net identifiable assets acquired over (under) liabilities assumed		33,151		198				33,349
Goodwill		-		1,726				1,726
Net assets acquired over liabilities assumed	$	33,151	$	1,924			$	35,075




Consideration:
First Community Bankshares, Inc. common stock issued								1,029,314
Purchase price per share of the Company's common stock							$	34.075
Fair Value of Company common stock issued								35,074
Cash paid for fractional shares								1
Fair Value of total consideration transferred							$	35,075

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:

	*June 30, 2026*
	*Amortized*		*Unrealized*		*Unrealized*			*Fair*
	*Cost*		*Gains*		*Losses*			*Value*
(Amounts in thousands)
U.S. Agency securities	$	1,396	$	-	$	(17	)	$	1,379
U.S. Treasury securities		124,751		-		(1	)		124,750
Municipal securities		7,021		1		(15	)		7,007
Corporate notes		19,926		-		(253	)		19,673
Agency mortgage-backed securities		96,878		64		(10,701	)		86,241
Total	$	249,972	$	65	$	(10,987	)	$	239,050

	*December 31, 2025*
	*Amortized*		*Unrealized*		*Unrealized*			*Fair*
	*Cost*		*Gains*		*Losses*			*Value*
(Amounts in thousands)
U.S. Treasury securities	$	10,924	$	5	$	-		$	10,929
Municipal securities		9,288		1		(27	)		9,262
Corporate notes		24,890		-		(330	)		24,560
Agency mortgage-backed securities		97,644		330		(10,037	)		87,937
Total	$	142,746	$	336	$	(10,394	)	$	132,688

There was no allowance for credit losses for debt securities as of June 30, 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 $667 thousand and $681 thousand as of June 30, 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.

	*June 30, 2026*
	*Amortized*
(Amounts in thousands)	*Cost*		*Fair Value*
Available-for-sale debt securities
Due within one year	$	147,206	$	146,945
Due after one year but within five years		3,989		3,983
Due after five years but within ten years		1,899		1,881
		153,094		152,809
Agency mortgage-backed securities		96,878		86,241
Total debt securities available-for-sale	$	249,972	$	239,050

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:

	*June 30, 2026*
	*Less than 12 Months*					*12 Months or Longer*					*Total*
	*Fair*		*Unrealized*			*Fair*		*Unrealized*			*Fair*		*Unrealized*
	*Value*		*Losses*			*Value*		*Losses*			*Value*		*Losses*
(Amounts in thousands)
U.S. Agency securities	$	1,379	$	(17	)	$	-	$	-		$	1,379	$	(17	)
U.S. Treasury securities	$	124,750	$	(1	)	$	-	$	-		$	124,750	$	(1	)
Municipal securities		2,278		(3	)		2,103		(12	)		4,381		(15	)
Corporate notes		-		-			19,673		(253	)		19,673		(253	)
Agency mortgage-backed securities		17,174		(238	)		61,200		(10,463	)		78,374		(10,701	)
Total	$	145,581	$	(259	)	$	82,976	$	(10,728	)	$	228,557	$	(10,987	)

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	*December 31, 2025*
	*Less than 12 Months*					*12 Months or Longer*					*Total*
	*Fair*		*Unrealized*			*Fair*		*Unrealized*			*Fair*		*Unrealized*
	*Value*		*Losses*			*Value*		*Losses*			*Value*		*Losses*
(Amounts in thousands)
Municipal securities	$	1,567	$	(3	)	$	4,689	$	(24	)	$	6,256	$	(27	)
Corporate notes		-		-			24,560		(330	)		24,560		(330	)
Agency mortgage-backed securities		3,909		(8	)		64,951		(10,029	)		68,860		(10,037	)
Total	$	5,476	$	(11	)	$	94,200	$	(10,383	)	$	99,676	$	(10,394	)

There were 94 individual debt securities in an unrealized loss position as of June 30, 2026, and the combined depreciation in value represented 4.60% 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 States 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 June 30, 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. While no such determination has been made, future conditions may result in management concluding that certain securities should be sold or that a provision for credit losses should be recognized in earnings in future periods.

The carrying amount of securities pledged for various purposes totaled $158.05 million as of June 30, 2026, and $29.85 million as of December 31, 2025.

The following table presents gross realized gains and losses from the sale of available-for-sale debt securities for the periods indicated:

	*Three Months Ended*				*Six Months Ended*
	*June 30,*				*June 30,*
	*2026*		*2025*		*2026*			*2025*
(Amounts in thousands)
Gross realized gains	$	210	$	-	$	210		$	-
Gross realized losses		-		-		(2	)		-
Net gain on sale of securities	$	210	$	-	$	208		$	-

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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 $2.10 million as of June 30, 2026, and $1.65 million as of December 31, 2025. Deferred loan fees, net of loan costs, totaled $6.03 million as of June 30, 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 $6.03 million and $4.75 million and unamortized discount related to loans acquired of $9.65 million and $11.45 million for June 30, 2026, and December 31, 2025, respectively. Accrued interest receivable of $8.68 million as of June 30, 2026, and $8.04 million as of December 31, 2025, is accounted for separately and reported in Interest Receivable on the Consolidated Balance Sheet.

	*June 30, 2026*					*December 31, 2025*
(Amounts in thousands)	*Amount*		*Percent*			*Amount*		*Percent*
Loans held for investment
Commercial loans
Construction, development, other land	$	67,088		2.73	%	$	63,901		2.76	%
Commercial and industrial		279,927		11.38	%		243,983		10.54	%
Multi-family residential		190,690		7.75	%		191,486		8.27	%
Single family non-owner occupied		193,950		7.88	%		171,918		7.43	%
Non-farm, non-residential		893,631		36.33	%		838,458		36.22	%
Agricultural		14,452		0.59	%		13,464		0.58	%
Farmland		11,842		0.48	%		10,725		0.46	%
Total commercial loans		1,651,580		67.14	%		1,533,935		66.26	%
Consumer real estate loans
Home equity lines		83,739		3.40	%		82,764		3.58	%
Single family owner occupied		668,877		27.19	%		632,348		27.32	%
Owner occupied construction		5,169		0.21	%		5,605		0.24	%
Total consumer real estate loans		757,785		30.81	%		720,717		31.14	%
Consumer and other loans
Consumer loans		48,271		1.96	%		58,453		2.53	%
Other		2,110		0.09	%		1,650		0.07	%
Total consumer and other loans		50,381		2.05	%		60,103		2.60	%
Total loans held for investment, net of unearned income	$	2,459,746		100.00	%	$	2,314,755		100.00	%

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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:

	*June 30, 2026*
			*Special*
(Amounts in thousands)	*Pass*		*Mention*		*Substandard*		*Doubtful*		*Loss*		*Total*
Commercial loans
Construction, development, and other land	$	66,773	$	114	$	201	$	-	$	-	$	67,088
Commercial and industrial		270,940		3,893		5,094		-		-		279,927
Multi-family residential		189,988		6		696		-		-		190,690
Single family non-owner occupied		185,390		1,340		7,220		-		-		193,950
Non-farm, non-residential		873,312		12,459		7,860		-		-		893,631
Agricultural		11,268		2,770		414		-		-		14,452
Farmland		9,577		1,307		958		-		-		11,842
Consumer real estate loans
Home equity lines		81,584		269		1,886		-		-		83,739
Single family owner occupied		651,546		1,339		15,992		-		-		668,877
Owner occupied construction		5,169		-		-		-		-		5,169
Consumer and other loans
Consumer loans		47,507		-		764		-		-		48,271
Other		2,110		-		-		-		-		2,110
Total loans	$	2,395,164	$	23,497	$	41,085	$	-	$	-	$	2,459,746

	*December 31, 2025*
			*Special*
(Amounts in thousands)	*Pass*		*Mention*		*Substandard*		*Doubtful*		*Loss*		*Total*

Commercial loans
Construction, development, and other land	$	63,434	$	119	$	348	$	-	$	-	$	63,901
Commercial and industrial		239,949		672		3,362		-		-		243,983
Multi-family residential		191,337		25		124		-		-		191,486
Single family non-owner occupied		165,489		1,250		5,179		-		-		171,918
Non-farm, non-residential		821,442		11,326		5,690		-		-		838,458
Agricultural		10,377		2,909		178		-		-		13,464
Farmland		9,595		224		906		-		-		10,725
Consumer real estate loans
Home equity lines		79,937		415		2,412		-		-		82,764
Single family owner occupied		613,279		1,364		17,705		-		-		632,348
Owner occupied construction		5,605		-		-		-		-		5,605
Consumer and other loans
Consumer loans		57,504		-		949		-		-		58,453
Other		1,650		-		-		-		-		1,650
Total loans	$	2,259,598	$	18,304	$	36,853		-		-	$	2,314,755

Table of Contents

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:

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at June 30, 2026	*2026*		*2025*		*2024*		*2023*		*2022*		*Prior*		*Revolving*		*Total*
Construction, development and other land
Pass	$	15,394	$	16,148	$	6,842	$	4,556	$	7,341	$	16,272	$	220	$	66,773
Special mention		-		-		-		-		-		114		-		114
Substandard		-		-		160		23		-		18		-		201
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total construction, development, and other land	$	15,394	$	16,148	$	7,002	$	4,579	$	7,341	$	16,404	$	220	$	67,088
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	1	$	-	$	1
Commercial and industrial
Pass	$	31,260	$	65,973	$	46,930	$	23,041	$	39,538	$	20,783	$	43,415	$	270,940
Special mention		68		183		2,832		322		233		134		121		3,893
Substandard		46		474		949		366		876		1,263		1,120		5,094
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total commercial and industrial	$	31,374	$	66,630	$	50,711	$	23,729	$	40,647	$	22,180	$	44,656	$	279,927
Current period gross write-offs	$	47	$	251	$	250	$	35	$	45	$	6	$	-	$	634
Multi-family residential
Pass	$	14,792	$	16,361	$	2,926	$	7,559	$	73,270	$	71,716	$	3,364	$	189,988
Special mention		-		-		-		-		-		6		-		6
Substandard		-		-		285		-		229		182		-		696
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total multi-family residential	$	14,792	$	16,361	$	3,211	$	7,559	$	73,499	$	71,904	$	3,364	$	190,690
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Non-farm, non-residential
Pass	$	62,415	$	71,266	$	38,512	$	66,435	$	223,736	$	394,155	$	16,793	$	873,312
Special mention		-		-		1,397		97		2,956		7,941		68		12,459
Substandard		-		280		607		19		384		6,483		87		7,860
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total non-farm, non-residential	$	62,415	$	71,546	$	40,516	$	66,551	$	227,076	$	408,579	$	16,948	$	893,631
Current period gross write-offs	$	-	$	-	$	39	$	-	$	-	$	25	$	-	$	64
Agricultural
Pass	$	3,187	$	2,734	$	195	$	871	$	720	$	2,018	$	1,543	$	11,268
Special mention		-		-		-		-		223		2,547		-		2,770
Substandard		-		-		-		192		206		16		-		414
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total agricultural	$	3,187	$	2,734	$	195	$	1,063	$	1,149	$	4,581	$	1,543	$	14,452
Current period gross write-offs	$	-	$	-	$	-	$	1	$	14	$	3	$	-	$	18
Farmland
Pass	$	319	$	877	$	1,073	$	912	$	719	$	4,615	$	1,062	$	9,577
Special mention		-		-		-		-		-		1,307		-		1,307
Substandard		-		-		-		-		-		958		-		958
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total farmland	$	319	$	877	$	1,073	$	912	$	719	$	6,880	$	1,062	$	11,842
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Table of Contents

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at June 30, 2026	*2026*		*2025*		*2024*		*2023*		*2022*		*Prior*		*Revolving*		*Total*
Home equity lines
Pass	$	22	$	36	$	282	$	315	$	1,138	$	3,785	$	76,006	$	81,584
Special mention		-		-		-		-		-		76		193		269
Substandard		-		-		-		33		12		1,521		320		1,886
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total home equity lines	$	22	$	36	$	282	$	348	$	1,150	$	5,382	$	76,519	$	83,739
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	16	$	16
Single family Mortgage
Pass	$	48,318	$	62,030	$	23,718	$	45,747	$	142,315	$	512,867	$	1,941	$	836,936
Special mention		-		-		-		-		197		2,482		-		2,679
Substandard		31		60		719		1,375		3,126		17,901		-		23,212
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total single family owner and non-owner occupied	$	48,349	$	62,090	$	24,437	$	47,122	$	145,638	$	533,250	$	1,941	$	862,827
Current period gross write-offs	$	-	$	-	$	-	$	-	$	88	$	160	$	-	$	248
Owner occupied construction
Pass	$	-	$	3,410	$	1,326	$	24	$	47	$	362	$	-	$	5,169
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total owner occupied construction	$	-	$	3,410	$	1,326	$	24	$	47	$	362	$	-	$	5,169
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Consumer loans
Pass	$	3,057	$	10,470	$	8,192	$	8,307	$	8,748	$	2,757	$	8,086	$	49,617
Special mention		-		-		-		-		-		-		-		-
Substandard		-		31		148		124		115		305		41		764
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total consumer loans	$	3,057	$	10,501	$	8,340	$	8,431	$	8,863	$	3,062	$	8,127	$	50,381
Current period gross write-offs	$	1,034	$	120	$	267	$	229	$	316	$	125	$	111	$	2,202

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at June 30, 2026	*2026*		*2025*		*2024*		*2023*		*2022*		*Prior*		*Revolving*		*Total*
Total loans
Pass	$	178,764	$	249,305	$	129,996	$	157,767	$	497,572	$	1,029,330	$	152,430	$	2,395,164
Special mention		68		183		4,229		419		3,609		14,607		382		23,497
Substandard		77		845		2,868		2,132		4,948		28,647		1,568		41,085
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total loans	$	178,909	$	250,333	$	137,093	$	160,318	$	506,129	$	1,072,584	$	154,380	$	2,459,746
Current period gross write-offs	$	1,081	$	371	$	556	$	265	$	463	$	320	$	127	$	3,183

Table of Contents

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at December 31, 2025	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Revolving*		*Total*
Construction, development
and other land
Pass	$	9,413	$	8,406	$	2,349	$	27,258	$	11,630	$	4,302	$	76	$	63,434
Special Mention		-		-		-		-		-		119		-		119
Substandard		-		162		110		-		-		76		-		348
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total construction, development, and other land	$	9,413	$	8,568	$	2,459	$	27,258	$	11,630	$	4,497	$	76	$	63,901
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial and industrial
Pass	$	67,302	$	51,979	$	23,184	$	38,494	$	3,688	$	13,398	$	41,904	$	239,949
Special Mention		138		75		59		166		-		75		159		672
Substandard		144		629		314		892		518		689		176		3,362
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total commercial and industrial	$	67,584	$	52,683	$	23,557	$	39,552	$	4,206	$	14,162	$	42,239	$	243,983
Current period gross write-offs	$	20	$	82	$	175	$	228	$	115	$	559			$	1,179
Multi-family residential
Pass	$	11,385	$	673	$	9,176	$	72,897	$	39,194	$	56,176	$	1,836	$	191,337
Special Mention		-		-		-		-		-		25		-		25
Substandard		-		-		-		93		-		31		-		124
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total multi-family residential	$	11,385	$	673	$	9,176	$	72,990	$	39,194	$	56,232	$	1,836	$	191,486
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Non-farm, non-residential
Pass	$	70,136	$	36,383	$	68,826	$	208,994	$	122,622	$	301,436	$	13,045	$	821,442
Special Mention		-		434		-		2,667		3,669		4,489		67		11,326
Substandard		286		596		21		396		1,617		2,774		-		5,690
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total non-farm, non-residential	$	70,422	$	37,413	$	68,847	$	212,057	$	127,908	$	308,699	$	13,112	$	838,458
Current period gross write-offs	$	-	$	-	$	-	$	56	$	-	$	24	$	-	$	80
Agricultural
Pass	$	3,227	$	439	$	1,959	$	1,360	$	692	$	1,907	$	793	$	10,377
Special Mention		-		-		-		234		135		2,540		-		2,909
Substandard		-		-		84		74		18		2		-		178
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total agricultural	$	3,227	$	439	$	2,043	$	1,668	$	845	$	4,449	$	793	$	13,464
Current period gross write-offs	$	-	$	-	$	117	$	45	$	-	$	-	$	-	$	162
Farmland
Pass	$	902	$	829	$	896	$	699	$	1,151	$	3,955	$	1,163	$	9,595
Special Mention		-		-		-		-		94		130		-		224
Substandard		-		-		-		-		-		906		-		906
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total farmland	$	902	$	829	$	896	$	699	$	1,245	$	4,991	$	1,163	$	10,725
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

Table of Contents

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at December 31, 2025	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Revolving*		*Total*
Home equity lines
Pass	$	489	$	231	$	299	$	1,053	$	74	$	3,459	$	74,332	$	79,937
Special Mention		-		-		-		-		-		229		186		415
Substandard		-		-		35		13		49		1,646		669		2,412
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total home equity lines	$	489	$	231	$	334	$	1,066	$	123	$	5,334	$	75,187	$	82,764
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	42	$	42
Single family Mortgage
Pass	$	53,580	$	16,131	$	41,767	$	140,463	$	185,508	$	339,851	$	1,468	$	778,768
Special Mention		-		-		-		-		377		2,237		-		2,614
Substandard		63		7		811		2,598		1,968		17,437		-		22,884
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total single family owner and non-owner occupied	$	53,643	$	16,138	$	42,578	$	143,061	$	187,853	$	359,525	$	1,468	$	804,266
Current period gross write-offs	$	-	$	-	$	53	$	-	$	56	$	49	$	-	$	158
Owner occupied construction
Pass	$	1,989	$	3,149	$	26	$	49	$	147	$	245	$	-	$	5,605
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total owner occupied construction	$	1,989	$	3,149	$	26	$	49	$	147	$	245	$	-	$	5,605
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Consumer loans
Pass	$	13,061	$	10,349	$	10,916	$	12,025	$	4,171	$	1,061	$	7,571	$	59,154
Special Mention		-		-		-		-		-		-		-		-
Substandard		19		108		183		199		129		280		31		949
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total consumer loans	$	13,080	$	10,457	$	11,099	$	12,224	$	4,300	$	1,341	$	7,602	$	60,103
Current period gross write-offs	$	2,018	$	596	$	1,003	$	1,101	$	407	$	95	$	209	$	5,429

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at December 31, 2025	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Revolving*		*Total*
Total loans
Pass	$	231,484	$	128,569	$	159,398	$	503,292	$	368,877	$	725,790	$	142,188	$	2,259,598
Special mention		138		509		59		3,067		4,275		9,844		412		18,304
Substandard		512		1,502		1,558		4,265		4,299		23,841		876		36,853
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total loans	$	232,134	$	130,580	$	161,015	$	510,624	$	377,451	$	759,475	$	143,476	$	2,314,755
Current period gross write-offs	$	2,038	$	678	$	1,348	$	1,430	$	578	$	727	$	251	$	7,050

Table of Contents

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:

	*June 30, 2026*						*December 31, 2025*
(Amounts in thousands)	*No Allowance*		*With an Allowance*		*Total*		*No Allowance*		*With an Allowance*		*Total*
Commercial loans
Construction, development, and other land	$	26	$	-	$	26	$	133	$	-	$	133
Commercial and industrial		2,413		-		2,413		1,318		-		1,318
Multi-family residential		627		-		627		124		-		124
Single family non-owner occupied		2,837		-		2,837		1,003		-		1,003
Non-farm, non-residential		1,604		-		1,604		1,273		-		1,273
Agricultural		78		-		78		84		-		84
Farmland		206		-		206		220		-		220
Consumer real estate loans
Home equity lines		972		-		972		901		-		901
Single family owner occupied		7,589		-		7,589		8,256		-		8,256
Owner occupied construction		-		-		-		-		-		-
Consumer and other loans
Consumer loans		464		-		464		629		-		629
Total nonaccrual loans	$	16,816	$	-	$	16,816	$	13,941	$	-	$	13,941

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 second quarter of 2026 or 2025.

The following tables present 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:

	*June 30, 2026*
													*Amortized Cost of*
	*30 - 59 Days*		*60 - 89 Days*		*90+ Days*		*Total*		*Current*		*Total*		*> 90 Days Accruing*
(Amounts in thousands)	*Past Due*		*Past Due*		*Past Due*		*Past Due*		*Loans*		*Loans*		*No Allowance*

Commercial loans
Construction, development, and other land	$	520	$	-	$	24	$	544	$	66,544	$	67,088	$	-
Commercial and industrial		536		877		1,336		2,749		277,178		279,927		-
Multi-family residential		179		-		425		604		190,086		190,690		-
Single family non-owner occupied		1,014		563		1,606		3,183		190,767		193,950		-
Non-farm, non-residential		1,590		427		610		2,627		891,004		893,631		-
Agricultural		450		6		50		506		13,946		14,452		-
Farmland		114		-		98		212		11,630		11,842		-
Consumer real estate loans
Home equity lines		625		502		334		1,461		82,278		83,739		-
Single family owner occupied		4,460		2,046		1,850		8,356		660,521		668,877		-
Owner occupied construction		-		-		-		-		5,169		5,169		-
Consumer and other loans
Consumer loans		1,406		308		254		1,968		46,303		48,271		-
Other		-		-		-		-		2,110		2,110		-
Total loans	$	10,894	$	4,729	$	6,587	$	22,210	$	2,437,536	$	2,459,746	$	-

Table of Contents

	*December 31, 2025*
													*Amortized Cost of*
	*30 - 59 Days*		*60 - 89 Days*		*90+ Days*		*Total*		*Current*		*Total*		*> 90 Days Accruing*
(Amounts in thousands)	*Past Due*		*Past Due*		*Past Due*		*Past Due*		*Loans*		*Loans*		*No Allowance*

Commercial loans
Construction, development, and other land	$	207	$	-	$	130	$	337	$	63,564	$	63,901		-
Commercial and industrial		1,423		297		1,271		2,991		240,992		243,983		-
Multi-family residential		375.00		-		-		375.00		191,111		191,486		-
Single family non-owner occupied		1,691		292		491		2,474		169,444		171,918		-
Non-farm, non-residential		2,336		-		658		2,994		835,464		838,458		-
Agricultural		73		3		81		157		13,307		13,464		-
Farmland		16		-		-		16		10,709		10,725		-
Consumer real estate loans
Home equity lines		909		397		212		1,518		81,246		82,764		-
Single family owner occupied		5,166		1,518		2,338		9,022		623,326		632,348		-
Owner occupied construction		-		-		-		-		5,605		5,605		-
Consumer and other loans
Consumer loans		1,955		681		305		2,941		55,512		58,453		-
Other		-		-		-		-		1,650		1,650		-
Total loans	$	14,151	$	3,188	$	5,486	$	22,825	$	2,291,930	$	2,314,755		-

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 June 30, 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. 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:

	*Payment Delays*
	*Amortized Cost Basis*		*% of Total Class of*
	*June 30, 2026*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Non-Farm, Non-Residential Property	$	736		0.08	%	Interest only payments; deferred payments to maturity.
Single Family Owner Occupied		618		0.09	%	Deferred principal to loan maturity.
Agricultural		206		1.43	%	Deferred 6 months of principal to loan maturity.
Commercial & Industrial		26		0.01	%	Deferred 6 months of principal to loan maturity.
Single Family Non-Owner Occupied		14		0.01	%	Deferred 6 months of principal to loan maturity.
Total	$	1,600

	*Term Extensions*
	*Amortized Cost Basis*		*% of Total Class of*
	*June 30, 2026*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Commercial & Industrial	$	287		0.10	%	Delayed repayment of P&I.
Single Family Owner Occupied		67		0.01	%	Extended term by 10.5 years.
Consumer		26		0.05	%	Extended terms and deferred payments.
Agricultural		16		0.11	%	Extended maturity by 8 months.
Total	$	396

	*Term Extension and Rate Reduction*
	*Amortized Cost Basis*		*% of Total Class of*
	*June 30, 2026*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Single Family Owner Occupied	$	973		0.15	%	Reduced interest income and extended time to recover principal.
Commercial & Industrial		315		0.11	%	Lowered rate by 2%; extended maturity by 26 months.
Non-Farm, Non-Residential Property		57		0.01	%	Reduced rate to 5%; extended term by approx. 5 years.
Consumer		8		0.02	%	Extended term and reduced interest rate.
Total	$	1,353

	*Interest Rate Reduction*
	*Amortized Cost Basis*		*% of Total Class of*
	*June 30, 2026*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Single Family Owner Occupied	$	86		0.01	%	Reduced interest rate from 3.15% to 1.95%.
Total	$	86

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	*Payment Delays*
	*Amortized Cost Basis*		*% of Total Class of*
	*December 31, 2025*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Non-Farm, Non-Residential Property	$	594		0.07	%	Interest only payments; deferred payments to maturity.
Single Family Owner Occupied		647		0.10	%	Deferred Principal to loan maturity.
Single Family Non-Owner Occupied		20		0.01	%	Deferred 6 months of principal to loan maturity.
Commercial & Industrial		12		0.01	%	Deferred 6 months of interest to loan maturity.
Total	$	1,273

	*Term Extensions*
	*Amortized Cost Basis*		*% of Total Class of*
	*December 31, 2025*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Single Family Owner Occupied	$	68		0.01	%	Extended term by 10.5 years.
Commercial & Industrial		32		0.01	%	Delayed repayment of P & I for 24-46 months.
Total	$	100

	*Term Extension and Rate Reduction*
	*Amortized Cost Basis*		*% of Total Class of*
	*December 31, 2025*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Single Family Owner Occupied	$	976		0.15	%	Reduced interest income and extended time to recover principal.
Consumer		4		0.01	%	Reduced rate to 10.5%; extended term by ten months.
Total	$	980

	Interest Rate Reduction
	Amortized Cost Basis		% of Total Class of
	December 31, 2025		Financing Receivable			Financial Effect

(Amounts in thousands)
Single Family Owner Occupied	$	89		0.01	%	Reduced interest rate from 3.15% to 1.95%
Total	$	89

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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 June 30, 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:

	*June 30, 2026*
	*Payment Status (Amortized Cost Basis)*
	*Current*		*30-89 Days Past Due*		*90+ Days Past Due*
(Amounts in thousands)
Non-Farm, Non-Residential Property	$	450	$	343	$	-
Single Family Owner Occupied		1,177		525		42
Single Family Non-Owner Occupied		14		-		-
Agricultural		222		-		-
Commercial & Industrial		579		49		-
Consumer		14		20		-
Total	$	2,456	$	937	$	42

	*December 31, 2025*
	*Payment Status (Amortized Cost Basis)*
	*Current*		*30-89 Days Past Due*		*90+ Days Past Due*


(Amounts in thousands)
Non-Farm, Non-Residential Property	$	594	$	-	$	-
Single Family Owner Occupied		1,358		401		21
Single Family Non-Owner Occupied		-		20		-
Commercial & Industrial		44		-		-
Consumer		4		-		-
Total	$	2,000	$	421	$	21

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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:

	*June 30, 2026*		*December 31, 2025*
(Amounts in thousands)
OREO	$	52	$	-

OREO secured by residential real estate	$	45	$	-
Residential real estate loans in the foreclosure process (1)	$	3,654	$	2,687

(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 June 30, 2026*
				*Consumer Real*			*Consumer and*			*Total*
(Amounts in thousands)	*Commercial*			*Estate*			*Other*			*Allowance*
Total allowance
Balance at beginning of quarter:
Allowance for credit losses - loans	$	17,898		$	11,879		$	3,766		$	33,543
Allowance for credit losses - loan commitments		249			151			33			433
Total allowance for credit losses beginning of quarter		18,147			12,030			3,799			33,976
Provision for credit losses:
Provision for (recovery of) credit losses - loans		170			(196	)		437			411
Provision for credit losses - loan commitments		38			33			1			72
Total provision for (recovery of) credit losses - loans and loan commitments		208			(163	)		438			483
Charge-offs		(708	)		(111	)		(985	)		(1,804	)
Recoveries		106			80			318			504
Net charge-offs		(602	)		(31	)		(667	)		(1,300	)
Allowance for credit losses - loans		17,466			11,652			3,536			32,654
Allowance for credit losses - loan commitments		287			184			34			505
Ending balance	$	17,753		$	11,836		$	3,570		$	33,159

	*Three Months Ended June 30, 2025*
				*Consumer Real*			*Consumer and*			*Total*
(Amounts in thousands)	*Commercial*			*Estate*			*Other*			*Allowance*
Total allowance
Balance at beginning of quarter:
Allowance for credit losses - loans	$	19,908		$	9,720		$	4,156			33,784
Allowance for credit losses - loan commitments		154			132			26			312
Total allowance for credit losses beginning of quarter		20,062			9,852			4,182			34,096
Provision for credit losses:
(Recovery of) provision for credit losses - loans		(1,104	)		59			753			(292	)
Provision for (recovery of) credit losses - loan commitments		9			(2	)		-			7
Total (recovery of) provision for credit losses - loans and loan commitments		(1,095	)		57			753			(285	)
Charge-offs		(161	)		(22	)		(1,326	)		(1,509	)
Recoveries		604			50			383			1,037
Net recoveries (charge-offs)		443			28			(943	)		(472	)
Allowance for credit losses - loans		19,247			9,807			3,966			33,020
Allowance for credit losses - loan commitments		163			130			26			319
Ending balance	$	19,410		$	9,937		$	3,992		$	33,339

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	*Six Months Ended June 30, 2026*
				*Consumer Real*			*Consumer and*			*Total*
(Amounts in thousands)	*Commercial*			*Estate*			*Other*			*Allowance*
Total allowance
Balance at beginning of year:
Allowance for credit losses - loans	$	16,114		$	10,886		$	3,761		$	30,761
Allowance for credit losses - loan commitments		186			137			32			355
Total allowance for credit losses beginning of year		16,300			11,023			3,793			31,116
Allowance recorded on acquired loans - Hometown		2,152			880			181			3,213
Provision for credit losses:
(Recovery of) provision for credit losses - loans		(302	)		(90	)		1,103			711
Provision for credit losses - loan commitments		101			47			2			150
Total (recovery of) provision for credit losses - loans and loan commitments		(201	)		(43	)		1,105			861
Charge-offs		(786	)		(195	)		(2,202	)		(3,183	)
Recoveries		288			171			693			1,152
Net charge-offs		(498	)		(24	)		(1,509	)		(2,031	)
Allowance for credit losses - loans		17,466			11,652			3,536			32,654
Allowance for credit losses - loan commitments		287			184			34			505
Ending balance	$	17,753		$	11,836		$	3,570		$	33,159

	*Six Months Ended June 30, 2025*
				*Consumer Real*			*Consumer and*			*Total*
(Amounts in thousands)	*Commercial*			*Estate*			*Other*			*Allowance*
Total allowance
Balance at beginning of year:
Allowance for credit losses - loans	$	20,418		$	9,907		$	4,500		$	34,825
Allowance for credit losses - loan commitments		171			138			32			341
Total allowance for credit losses beginning of year		20,589			10,045			4,532			35,166
Provision for credit losses:
(Recovery of) provision for credit losses - loans		(1,162	)		(248	)		1,468		$	58
(Recovery of) provision for credit losses - loan commitments		(8	)		(8	)		(6	)		(22	)
Total (recovery of) provision for credit losses - loans and loan commitments		(1,170	)		(256	)		1,462			36
Charge-offs		(695	)		(29	)		(2,783	)		(3,507	)
Recoveries		686			177			781			1,644
Net (charge-offs) recoveries		(9	)		148			(2,002	)		(1,863	)
Allowance for credit losses - loans		19,247			9,807			3,966			33,020
Allowance for credit losses - loan commitments		163			130			26			319
Ending balance	$	19,410		$	9,937		$	3,992		$	33,339

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Note 7. Deposits

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

	*June 30, 2026*		*December 31, 2025*
(Amounts in thousands)
Noninterest-bearing demand deposits	$	973,218	$	896,255
Interest-bearing deposits:
Interest-bearing demand deposits		821,195		684,245
Money market accounts		356,619		323,808
Savings deposits		657,656		580,653
Certificates of deposit		135,943		129,235
Individual retirement accounts		71,960		71,133
Total interest-bearing deposits		2,043,373		1,789,074
Total deposits	$	3,016,591	$	2,685,329

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Note 8. Borrowings

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

	*June 30, 2026*					*December 31, 2025*
			*Weighted*					*Weighted*
(Amounts in thousands)	*Balance*		*Average Rate*			*Balance*		*Average Rate*
Retail repurchase agreements	$	2,924		1.59	%	$	1,214		0.06	%

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 June 30, 2026, or December 31, 2025.

Unused borrowing capacity with the FHLB totaled $303.35 million, net of FHLB letters of credit of $115.13 million, as of June 30, 2026. As of June 30, 2026, the Company maintains $418.99 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 June 30, 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:

	*June 30, 2026*						*December 31, 2025*
	*Notional or*		*Fair Value*				*Notional or*		*Fair Value*
	*Contractual*		*Derivative*		*Derivative*		*Contractual*		*Derivative*		*Derivative*
(Amounts in thousands)	*Amount*		*Assets*		*Liabilities*		*Amount*		*Assets*		*Liabilities*
Derivatives designated as hedges
Interest rate swaps	$	2,393	$	47	$	-	$	2,637	$	41	$	-
Total derivatives	$	2,393	$	47	$	-	$	2,637	$	41	$	-

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

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
(Amounts in thousands)	*2026*			*2025*			*2026*			*2025*			*Income Statement Location*
Derivatives designated as hedges
Interest rate swaps	$	(9	)	$	(15	)	$	(18	)	$	(31	)	Interest and fees on loans
Total derivative (income) expense	$	(9	)	$	(15	)	$	(18	)	$	(31	)

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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:

	*Three Months Ended June 30,*					*Six Months Ended June 30,*
	*2026*		*2025*			*2026*		*2025*			*Income Statement Location*
(Amounts in thousands)
Interest cost	$	102	$	118		$	203	$	214		Salaries and employee benefits/Other Expense
Amortization of prior service cost		-		-			-		-		Salaries and employee benefits/Other Expense
Amortization of losses		269		(16	)		537		(11	)	Salaries and employee benefits/Other Expense
Net periodic cost	$	371	$	102		$	740	$	203

Note 11. Earnings per Share

The following table presents the calculation of basic earnings per common share for the periods indicated.

	*Three Months Ended*				*Six Months Ended*
	*June 30,*				*June 30,*
	*2026*		*2025*		*2026*		*2025*
(Amounts in thousands, except share and per share data)
Net income	$	22,513	$	12,246	$	34,540	$	24,064

Weighted average common shares outstanding, basic		18,879,907		18,295,465		18,902,567		18,310,032
Dilutive effect of potential common shares
Stock options and awards		37,384		23,634		33,099		27,245
Restricted stock units		62,023		81,694		63,832		90,226
Total dilutive effect of potential common shares		99,407		105,328		96,931		117,471
Weighted average common shares outstanding, diluted		18,979,314		18,400,793		18,999,498		18,427,503

Basic earnings per common share	$	1.19	$	0.67	$	1.83	$	1.31
Diluted earnings per common share		1.19		0.67		1.82		1.31

Antidilutive potential common shares
Stock options and awards		427		58		3,088		29
Stock units		8,991		-		6,397		-
Total potential antidilutive shares		9,418		58		9,485		29

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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 June 30, 2026*
	*Unrealized*
	*Losses on Available-*
	*for-Sale Securities*			*Employee Benefit Plans*		*Total*
(Amounts in thousands)
Beginning balance	$	(8,021	)	$	431	$	(7,590	)
Other comprehensive income before reclassifications		(772	)		-		(772	)
Reclassified from AOCI		165			-		165
Other comprehensive income, net		(607	)		-		(607	)
Ending balance	$	(8,628	)	$	431	$	(8,197	)

	*Three Months Ended June 30, 2025*
	*Unrealized*
	*Losses on Available-*
	*for-Sale Securities*			*Employee Benefit Plans*			*Total*
(Amounts in thousands)
Beginning balance	$	(10,057	)	$	552		$	(9,505	)
Other comprehensive loss before reclassifications		358			13			371
Reclassified from AOCI		-			(13	)		(13	)
Other comprehensive loss, net		358			-			358
Ending balance	$	(9,699	)	$	552		$	(9,147	)

	*Six Months Ended June 30, 2026*
	*Unrealized Gains*
	*(Losses) on Available-*
	*for-Sale Securities*			*Employee Benefit Plans*		*Total*
(Amounts in thousands)
Beginning balance	$	(7,945	)	$	431	$	(7,514	)
Other comprehensive income before reclassifications		(847	)		-		(847	)
Reclassified from AOCI		164			-		164
Other comprehensive income, net		(683	)		-		(683	)
Ending balance	$	(8,628	)	$	431	$	(8,197	)

	*Six Months Ended June 30, 2025*
	*Unrealized Gains*
	*(Losses) on Available-*
	*for-Sale Securities*			*Employee Benefit Plans*			*Total*
(Amounts in thousands)
Beginning balance	$	(11,723	)	$	552		$	(11,171	)
Other comprehensive loss before reclassifications		2,024			8			2,032
Reclassified from AOCI		-			(8	)		(8	)
Other comprehensive loss, net		2,024			-			2,024
Ending balance	$	(9,699	)	$	552		$	(9,147	)

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

	*Three Months Ended*					*Six Months Ended*
	*June 30,*					*June 30,*					*Income Statement*
(Amounts in thousands)	*2026*		*2025*			*2026*		*2025*			*Line Item Affected*
Available-for-sale securities
Gain recognized	$	210	$	-		$	208	$	-		Net gain (loss) on sale of securities
Reclassified out of AOCI, before tax		210		-			208		-		Income before income taxes
Income tax expense		45		-			44		-		Income tax expense
Reclassified out of AOCI, net of tax		165		-			164		-		Net income
Employee benefit plans
Amortization of net actuarial benefit cost		-		(16	)		-		(11	)	Salaries and employee benefits/Other Expense
Reclassified out of AOCI, before tax		-		(16	)		-		(11	)	Income before income taxes
Income tax (benefit) expense		-		(3	)		-		(3	)	Income tax expense
Reclassified out of AOCI, net of tax		-		(13	)		-		(8	)	Net income
Total reclassified out of AOCI, net of tax	$	165	$	(13	)	$	164	$	(8	)	Net income

(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:

	*June 30, 2026*
	*Total*		*Fair Value Measurements Using*
(Amounts in thousands)	*Fair Value*		*Level 1*		*Level 2*		*Level 3*
Available-for-sale debt securities
U.S. Agency securities	$	1,379	$	-	$	1,379	$	-
U.S. Treasury securities		124,750	$	-		124,750	$	-
Municipal securities		7,007		-		7,007		-
Corporate Notes		19,673		-		19,673		-
Agency mortgage-backed securities		86,241		-		86,241		-
Total available-for-sale debt securities		239,050		-		239,050		-
Equity securities		55		-		55		-
Fair value loans		2,346		-		-		2,346
Derivative assets		47		-		47		-
Deferred compensation assets		13,265		13,265		-		-
Deferred compensation liabilities		14,797		14,797		-		-

	*December 31, 2025*
	*Total*		*Fair Value Measurements Using*
(Amounts in thousands)	*Fair Value*		*Level 1*		*Level 2*		*Level 3*
Available-for-sale debt securities
U.S. Treasury securities	$	10,929	$	-	$	10,929	$	-
Municipal securities		9,262		-		9,262		-
Corporate notes		24,560		-		24,560		-
Agency mortgage-backed securities		87,937		-		87,937		-
Total available-for-sale debt securities		132,688		-		132,688		-
Equity securities		55		-		55		-
Fair value loans		2,596		-		-		2,596
Derivative assets		41		-		41		-
Deferred compensation assets		10,951		10,951		-		-
Deferred compensation liabilities		12,479		12,479		-		-

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Assets Measured at Fair Value on a Nonrecurring Basis

Collateral Dependent Loans and OREO: The fair value of collateral-dependent loans and OREO is measured on a nonrecurring basis using Level 3 inputs, which typically include appraised values of collateral that are adjusted for estimated selling costs and other qualitative factors.

The following table presents assets measured at fair value on a nonrecurring basis, by the level of valuation inputs in the fair value hierarchy, as the date indicated. The Company had no collateral-dependent loans or OREO measured at fair value on a nonrecurring basis as of December 31, 2025.

	*June 30, 2026*
	*Total*		*Fair Value Measurements Using*
	*Fair Value*		*Level 1*		*Level 2*		*Level 3*
(Amounts in thousands)
Collateral dependent assets with specific reserves	$	-	$	-	$	-	$	-
OREO		52		-		-		52

Quantitative Information about Level 3 Fair Value Measurements

The following table provides quantitative information for assets measured at fair value on a nonrecurring basis using Level 3 valuation inputs as of the date indicated:

	*June 30, 2026*
	*Valuation*	*Unobservable*	*Discount Range*
	*Technique*	*Input*	*(Weighted Average)*

Collateral dependent assets with specific reserves	Discounted appraisals(1)	Appraisal adjustments(2)		0% (0%)
OREO	Discounted appraisals(1)	Appraisal adjustments(2)		51% to 52% (51%)

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:

	*June 30, 2026*
	*Carrying*				*Fair Value Measurements Using*
(Amounts in thousands)	*Amount*		*Fair Value*		*Level 1*		*Level 2*		*Level 3*
Assets
Cash and cash equivalents	$	591,913	$	591,913	$	591,913	$	-	$	-
Debt securities available-for-sale		239,050		239,050		-		239,050		-
Equity securities		55		55		-		55		-
Loans held for investment, net of allowance		2,427,092		2,261,394		-		-		2,261,394
Derivative financial assets		47		47		-		47		-
Interest receivable		9,344		9,344		-		667		8,677
Deferred compensation assets		13,265		13,265		13,265		-		-

Liabilities
Time deposits		207,903		206,439		-		206,439		-
Securities sold under agreements to repurchase		2,924		2,924		-		2,924		-
Interest payable		547		547		-		547		-
Deferred compensation liabilities		14,797		14,797		14,797		-		-

	*December 31, 2025*
	*Carrying*				*Fair Value Measurements Using*
(Amounts in thousands)	*Amount*		*Fair Value*		*Level 1*		*Level 2*		*Level 3*
Assets
Cash and cash equivalents	$	512,240	$	512,240	$	512,240	$	-	$	-
Debt securities available-for-sale		132,688		132,688		-		132,688		-
Equity securities		55		55		-		55		-
Loans held for investment, net of allowance		2,283,994		2,105,996		-		-		2,105,996
Interest receivable		8,720		8,720		-		681		8,039
Deferred compensation assets		10,951		10,951		10,951		-		-
Derivative assets		41		41		-		41		-

Liabilities
Time deposits		200,368		198,815		-		198,815		-
Securities sold under agreements to repurchase		1,214		1,214		-		1,214		-
Interest payable		570		570		-		570		-
Deferred compensation liabilities		12,479		12,479		12,479		-		-

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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:

	*June 30, 2026*		*December 31, 2025*
(Amounts in thousands)
Commitments to extend credit	$	282,169	$	263,912
Standby letters of credit and financial guarantees (1)		119,007		127,073
Total off-balance sheet risk	$	401,176		390,985

(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 June 30, 2026, the Bank operated 61 branches in Virginia, West Virginia, North Carolina and Tennessee. As of June 30, 2026, full-time equivalent employees, calculated using the number of hours worked, totaled 614. Our primary source of earnings is net interest income, the difference between interest earned on assets and interest paid on liabilities, which is supplemented by fees for services, commissions on sales, and various deposit service charges. We fund our lending and investing activities primarily through the retail deposit operations of our branch banking network. We invest our funds primarily in loans to retail and commercial customers and various investment securities. Our common stock is traded on the NASDAQ Global Select Market under the symbol FCBC.

The Bank offers trust management, estate administration, and investment advisory services through its Trust Division and wholly owned subsidiary First Community Wealth Management Inc. (“FCWM”). The Trust Division manages inter vivos trusts and trusts under will, develops and administers employee benefit and individual retirement plans, and manages and settles estates. Fiduciary fees for these services are charged on a schedule related to the size, nature, and complexity of the account. Revenues consist primarily of investment advisory fees and commissions on assets under management and administration. As of June 30, 2026, the Trust Division and FCWM managed and administered $1.83 billion in combined assets under various fee-based arrangements as fiduciary or agent.

Recent Developments

As described in the Company's Quarterly Report on Form 10Q for the quarter ended March 31, 2026, on January 23, 2026, the Company completed its previously announced merger (the "Merger") with Hometown Bancshares, Inc., 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.

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.

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Performance Overview

Highlights of our results of operations for the three and six months ended June 30, 2026, and financial condition as of June 30, 2026, include the following:

	●	Net income for the second quarter of 2026 reached a record $22.51 million, an increase of $7.87 million over the previous record of $14.64 million reported in the third quarter of 2023, and $10.27 million, or 83.84%, higher than net income of $12.25 million in the second quarter of 2025. Net income of $34.54 million for the first six months of 2026, was an increase of $10.48 million or 43.53%, from the same period in 2025.
	●	When adjusted for merger and non-recurring items, net income for the second quarter was $14.38 million, an increase of $2.14 million, or 17.47%, compared to the same period in 2025. The most significant non-recurring item in the second quarter was a $10.38 million pre-tax gain on the sale of the Company's stake in Bearing Insurance. For the first six months of 2026 net income totaled $28.05 million, an increase of $3.99 million, or 16.57%, from the same time period of 2025. In addition to the Bearing gain, the first six months of 2026 includes pre-tax merger-related costs of $2.31 million.
	●	Net interest margin (FTE), a non-GAAP financial measure, remained strong at 4.38% in the second quarter of 2026, up one basis point from the second quarter of 2025. Net interest rate spread increased nine basis points to 4.06%, driving a $4.27 million, or 13.87%, increase in tax-equivalent net interest income, a non-GAAP financial measure, from the second quarter of 2025. 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 $382.18 million, or 13.52%, from the second quarter of 2025, contributing $4.27 million in additional interest income, while the yield of interest-bearing deposits declined 16 basis points.
	●	Net interest income after provision for credit losses increased $3.45 million, or 11.15%, compared to June 30, 2025. The increase was driven by an increase in average earnings assets, a result of last quarter's acquisition of Hometown.
	●	Noninterest income increased approximately $12.00 million, or 116.06%, when compared to the same quarter of 2025. The increase is attributable primarily to a gain of $10.38 million on the sale of the Company's portion of Bearing Insurance. Noninterest expense increased $2.11 million, or 8.29%, when compared to the same quarter of 2025. The increase is attributable mostly to increases in salaries and benefits of $778 thousand, or 5.42%, other operating expenses of $627 thousand, or 18.70%, and service fees of $383 thousand, or 15.47%.

	●	Annualized return on average assets ("ROA") was 2.49% for the second quarter of 2026 compared to 1.53% for the same period of 2025. Annualized return on average common equity ("ROE") was 16.90% for the second quarter of 2026 compared to 9.84% for the same period of 2025.
	●	When adjusted for merger and non-recurring expenses, ROA was 1.59% and ROE was 10.80% for the second quarter of 2026. Return on average tangible common equity continues to remain strong at 15.58% for the second quarter of 2026.
	●	Consolidated assets totaled $3.61 billion at June 30, 2026.
	●	The Company's loan portfolio increased $145.00 million, or 6.26%, from year-end 2025. Excluding the Hometown transaction, the loan portfolio decreased approximately $26.05 million, or 1.13%. However, loan production for the second quarter of 2026 was $134.45 million, compared to $78.89 million for the same quarter in 2025, a 70.43% increase.
	●	Deposits increased $331.26 million, or 12.34%. Excluding the Hometown transaction, deposits decreased $26.46 million, or 0.99%, from December 31, 2025.
	●	The Company did not repurchase any common shares in the second quarter of 2026; however, 504,652 common shares at a total cost of $20.33 million were repurchased during the first quarter of 2026. The company repurchased 50,338 common shares during the second quarter of 2025 at a cost of $1.85 million.
	●	Non-performing loans to total loans decreased to 0.70%, a 0.09% reduction when compared with the same quarter of 2025. The Company experienced net charge-offs for the second quarter of 2026 of $1.3 million, or 0.21%, of annualized average loans, compared to net charge-offs of $472 thousand, or 0.08%, of annualized average loans for the same period in 2025. Significant recoveries in the amount of $1.04 million were received in the second quarter of 2025 driving the year over year variance.
	●	The allowance for credit losses increased $2.04 million in the second quarter of 2026 compared to December 31, 2025, primarily driven by the $3.21 million impact of the Hometown transaction. The allowance for credit losses to total loans was 1.33% on June 30, 2026, compared to 1.33% on December 31, 2025, and 1.40% on June 30, 2025.
	●	Book value per share on June 30, 2026, was $28.52, an increase of $1.22, or 4.47%, from year-end 2025.

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Results of Operations

Net Income

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

	Three Months Ended												Six Months Ended
(Amounts in thousands, except per	June 30,						Increase						June 30,						Increase
share data)	2026			2025			(Decrease)			% Change			2026			2025			(Decrease)			% Change

Net income	$	22,513		$	12,246		$	10,267			83.84	%	$	34,540		$	24,064		$	10,476			43.53	%

Basic earnings per common share		1.19			0.67			0.52			77.61	%		1.83			1.31			0.52			39.69	%
Diluted earnings per common share		1.19			0.67			0.52			77.61	%		1.82			1.31			0.51			38.93	%

Return on average assets		2.49	%		1.53	%		0.96	%		62.75	%		1.95	%		1.51	%		0.44	%		29.14	%
Return on average common equity		16.90	%		9.84	%		7.06	%		71.75	%		13.15	%		9.67	%		3.48	%		35.99	%

Three-Month Comparison.

Net income for the second quarter of 2026 reached a record $22.51 million, an increase of $7.87 million over the previous quarterly record of $14.64 million reported in the third quarter of 2023, and $10.27 million, or 83.84%, higher than net income of $12.25 million in the second quarter of 2025. The increase was primarily attributable to a $10.38 million pre-tax gain on the sale of the Company's ownership in Bearing Insurance. This was partially offset by a $2.11 million, or 8.29%, increase in noninterest expense, driven primarily by higher salaries and benefits of $778 thousand, or 5.42%, other operating expenses of $627 thousand, or 18.70%, and service fees of $383 thousand, or 15.47%.

Six-Month Comparison.

Net income increased $10.48 million, or 43.53%, in the six months ended June 30, 2026, compared to the same period in 2025. The increase was primarily attributable to a $10.38 million pre-tax gain on the sale of the Company's interest in Bearing Insurance and a $6.39 million, or 10.49%, increase of net interest income after the provision for credit losses. These increases were partially offset by a $5.90 million, or 11.71%, increase in noninterest expense and a $3.24 million, or 46.11%, increase in income tax expense. The increase in noninterest expense was primarily driven by $2.31 million in merger-related expenses associated with the completed Hometown acquisition, a $1.81 million, or 6.54%, increase in salaries and employee benefits, and a $688 thousand, or 13.87%, increase in service fees.

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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)

	Three Months Ended June 30,
	2026							2025
	Average				Average Yield/			Average				Average Yield/
(Amounts in thousands)	Balance		Interest(1)		Rate(1)			Balance		Interest(1)		Rate(1)
Assets
Earning assets
Loans⁽²⁾⁽³⁾	$	2,459,135	$	32,795		5.35	%	$	2,364,362	$	30,731		5.21	%
Securities available-for-sale		243,177		2,118		3.49	%		128,457		1,053		3.29	%
Interest-bearing deposits		506,561		4,866		3.85	%		333,872		3,722		4.47	%
Total earning assets		3,208,873		39,779		4.97	%		2,826,691		35,506		5.04	%
Other assets		417,245							377,879
Total assets	$	3,626,118						$	3,204,570

Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	835,345	$	570		0.27	%	$	657,888	$	177		0.11	%
Savings deposits		1,027,941		3,260		1.27	%		895,024		3,322		1.49	%
Time deposits		212,504		891		1.68	%		228,485		1,232		2.16	%
Total interest-bearing deposits		2,075,790		4,721		0.91	%		1,781,397		4,731		1.07	%
Borrowings
Retail repurchase agreements		2,992		13		1.72	%		1,293		-		0.07	%
Total borrowings		2,992		13		1.72	%		1,293		-		0.07	%
Total interest-bearing liabilities		2,078,782		4,734		0.91	%		1,782,690		4,731		1.06	%
Noninterest-bearing demand deposits		958,302							877,346
Other liabilities		54,601							45,310
Total liabilities		3,091,685							2,705,346
Stockholders' equity		534,433							499,224
Total liabilities and stockholders' equity	$	3,626,118						$	3,204,570
Net interest income, FTE⁽¹⁾			$	35,045						$	30,775
Net interest rate spread						4.06	%						3.97	%
Net interest margin, FTE⁽¹⁾						4.38	%						4.37	%

(1)	Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.
(2)	Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.
(3)	Interest on loans includes non-cash and accelerated purchase accounting accretion of $372 thousand and $430 thousand for the three months ended June 30, 2026 and 2025, respectively.

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AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)

	Six Months Ended June 30,
	2026							2025
	Average				Average Yield/			Average				Average Yield/
(Amounts in thousands)	Balance		Interest(1)		Rate(1)			Balance		Interest(1)		Rate(1)
Assets
Earning assets
Loans(2)(3)	$	2,446,811	$	64,650		5.33	%	$	2,379,630	$	61,488		5.21	%
Securities available-for-sale		250,856		4,341		3.49	%		138,804		2,314		3.36	%
Interest-bearing deposits		458,716		8,731		3.84	%		315,011		6,984		4.47	%
Total earning assets		3,156,383		77,722		4.97	%		2,833,445		70,786		5.04	%
Other assets		415,245							375,846
Total assets	$	3,571,628						$	3,209,291

Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	807,894	$	987		0.25	%	$	658,268	$	357		0.11	%
Savings deposits		1,012,667		6,356		1.27	%		893,096		6,633		1.50	%
Time deposits		214,287		1,856		1.75	%		233,343		2,612		2.26	%
Total interest-bearing deposits		2,034,848		9,199		0.91	%		1,784,707		9,602		1.09	%
Borrowings
Retail repurchase agreements		2,780		22		1.59	%		1,183		-		0.06	%
Total borrowings		2,780		22		1.59	%		1,183		-		0.06	%
Total interest-bearing liabilities		2,037,628		9,221		0.91	%		1,785,890		9,602		1.08	%
Noninterest-bearing demand deposits		945,763							868,714
Other liabilities		58,531							52,698
Total liabilities		3,041,922							2,707,302
Stockholders' equity		529,706							501,989
Total liabilities and stockholders' equity	$	3,571,628						$	3,209,291
Net interest income, FTE(1)			$	68,501						$	61,184
Net interest rate spread						4.05	%						3.96	%
Net interest margin, FTE(1)						4.38	%						4.35	%

(1)	Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.
(2)	Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.
(3)	Interest on loans includes non-cash and accelerated purchase accounting accretion of $861 thousand and $986 thousand for the six months ended June 30, 2026 and 2025, respectively.

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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:

	Three Months Ended												Six Months Ended
	June 30, 2026 Compared to 2025												June 30, 2026 Compared to 2025
	Dollar Increase (Decrease) due to												Dollar Increase (Decrease) due to
							Rate/												Rate/
(Amounts in thousands)	Volume			Rate			Volume			Total			Volume			Rate			Volume			Total
Interest earned on (1)
Loans	$	2,449		$	1,630		$	(2,015	)	$	2,064		$	1,736		$	1,395		$	31		$	3,162
Securities available-for-sale		1,872			130			(937	)		1,065			1,868			88			71			2,027
Interest-bearing deposits with other banks		3,828			(1,022	)		(1,662	)		1,144			3,186			(988	)		(451	)		1,747
Total interest earning assets		8,149			738			(4,614	)		4,273			6,790			495			(349	)		6,936

Interest paid on
Demand deposits		97			534			(238	)		393			81			447			102			630
Savings deposits		982			(967	)		(77	)		(62	)		888			(1,027	)		(138	)		(277	)
Time deposits		(171	)		(542	)		372			(341	)		(213	)		(591	)		48			(756	)
Retail repurchase agreements		-			11			2			13			-			9			13			22
Total interest-bearing liabilities		908			(964	)		59			3			756			(1,162	)		25			(381	)

Change in net interest income (1)	$	7,241		$	1,702		$	(4,673	)	$	4,270		$	6,034		$	1,657		$	(374	)	$	7,317

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

Three-Month Comparison. Net interest income represented 60.95% of total net interest and noninterest income in the second quarter of 2026, compared to 74.78% in the same quarter of 2025. On a GAAP basis, net interest income increased $4.22 million, or 13.76%, while on a fully taxable equivalent ("FTE") basis, it increased $4.27 million, or 13.87%. The FTE net interest margin increased one basis point, and the net interest spread increased nine basis points, or 2.27%. These improvements were primarily driven by growth in average interest- earning assets and lower funding costs.

Average earning assets increased by $382.18 million, or 13.52%, in the second quarter of 2026 compared to the same time period in 2025. The increase was primarily attributable to the acquisition of Hometown, completed in the previous quarter. Although the average yield on earning assets declined seven basis points, interest income increased by $4.27 million, or 12.03%, driven by higher average asset volumes. The average loan-to-deposit ratio decreased to 81.05% from 88.93% in the second quarter of 2025. Non-cash accretion income totaled $372 thousand, compared to $430 thousand in the prior-year period.

Average interest-bearing liabilities, consisting of interest-bearing deposits and borrowings, increased by $296.09 million, or 16.61% in the second quarter of 2026 compared to the same time period in 2025. Despite the increase in average interest-bearing liabilities, interest expense increased by only $3 thousand, or 0.06%, as the cost of funds declined by 15 basis points, or 14.15%, compared to the same quarter in 2025. The minimal increase in interest expense was primarily driven by a 16-basis point, or 14.95%, reduction in the average rate paid on interest-bearing deposits.

Six-Month Comparison. Net interest income represented 66.85% of total net interest and noninterest income in the six months ended June 30, 2026, compared to 74.77% in the same period of 2025. On a GAAP basis, net interest income increased $7.21million, or 11.83%, while on a fully taxable equivalent ("FTE") basis, it increased $7.32 million, or 11.96%. The FTE net interest margin increased three basis points, and the net interest spread increased nine basis points, or 2.27%. These improvements were primarily driven by higher average interest-earning assets primarily attributable to the Hometown acquisition, as well as lower funding costs.

Average earning assets increased $322.94 million, or 11.40%, driven by increases of $143.71 million in interest-bearing deposits, $112.05 million in securities available-for-sale and $67.18 million in loans. Although the average yield on earning assets declined seven basis points, interest income rose $6.94 million, or 9.80%, reflecting higher asset volumes. The average loan-to-deposit ratio decreased to 82.09% from 89.68% for the six months ended June 30, 2025. Non-cash accretion income totaled $861 thousand compared to $986 thousand in the prior-year period.

Average interest-bearing liabilities, consisting of interest-bearing deposits and borrowings, increased $251.74 million, or 14.10%. However, due to a 17-basis point, or 15.74%, decline in cost of funds, interest expense decreased $381 thousand compared to the same period in 2025. The largest contributor to this reduction was interest-bearing deposits, where interest expense decreased $403 thousand, or 4.20%, driven by an 18-basis point decline in yield.

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Provision for Credit Losses

Three-Month Comparison. The provision charged to operations increased $768 thousand in the second quarter of 2026 compared to the same quarter of 2025. In the second quarter of 2026, the Company recorded a $411 thousand provision for credit losses for loans and a $72 thousand provision for credit losses on loan commitments. This compares to a $292 thousand recovery of provision for credit losses on loans and a $7 thousand provision for credit losses on loan commitments recorded in the second quarter of 2025. The increase in the overall provision was primarily attributable to significant loan recoveries totaling $1.04 million recognized in 2025.

Six-Month Comparison. The provision charged to operations increased $825 thousand in the six months ended June 30, 2026, compared to the same period of 2025. During the six months ended June 30, 2026, the Company recorded a $711 thousand provision for credit losses for loans and a $150 thousand provision for credit losses on loan commitments. This compares to a $58 thousand provision for credit losses on loans and a $22 thousand recovery of provision for credit losses on loan commitments recorded in the six months ended June 30, 2025. The increase in the overall provision was primarily attributable to significant loan recoveries totaling $1.64 million recognized in 2025.

Noninterest Income

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

	Three Months Ended									Six Months Ended
	June 30,				Increase					June 30,				Increase		%
	2026		2025		(Decrease)		Change %			2026		2025		(Decrease)		Change
(Amounts in thousands)
Wealth management	$	1,399	$	1,222	$	177		14.48	%	$	2,698	$	2,384	$	314		13.17	%
Service charges on deposits		4,431		4,120		311		7.55	%		8,616		7,956		660		8.30	%
Other service charges and fees		4,473		3,791		682		17.99	%		8,416		7,131		1,285		18.02	%
Loss on sale of securities		210		-		210		NM			208		-		208		NM
Gain on sale of equity investment		10,384		-		10,384		NM			10,384		-		10,384		NM
Other operating income		1,444		1,207		237		19.64	%		3,476		3,098		378		12.20	%
Total noninterest income	$	22,341	$	10,340	$	12,001		116.06	%	$	33,798	$	20,569	$	13,229		64.32	%

Three-Month Comparison. Noninterest income comprised 39.05% of total net interest and noninterest income in the second quarter of 2026 compared to 25.22% in the same quarter of 2025. Noninterest income increased $12.00 million, or 116.06%, compared to the second quarter of 2025. The increase was primarily attributable to a $10.38 million pre-tax gain on the sale of the Company's ownership interest in Bearing Insurance.

Six-Month Comparison. Noninterest income comprised 33.15% of total net interest and noninterest income in the six months ended June 30, 2026, compared to 25.23% in the same period of 2025. Noninterest income increased $13.23 million, or 64.32%, compared to the same period of 2025. The increase was primarily attributable to a $10.38 million pre-tax gain on the sale of the Company's ownership interest in Bearing Insurance and a $1.28 million, or 18.02% increase in other service charges and fees.

Noninterest Expense

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

	Three Months Ended										Six Months Ended
	June 30,				Increase						June 30,				Increase			%
	2026		2025		(Decrease)			Change %			2026		2025		(Decrease)			Change
(Amounts in thousands)
Salaries and employee benefits	$	15,127	$	14,349	$	778			5.42	%	$	29,494	$	27,684	$	1,810			6.54	%
Occupancy expense		1,529		1,290		239			18.53	%		3,195		2,866		329			11.48	%
Furniture and equipment expense		1,576		1,587		(11	)		-0.69	%		3,149		3,162		(13	)		-0.41	%
Service fees		2,858		2,475		383			15.47	%		5,647		4,959		688			13.87	%
Advertising and public relations		922		1,154		(232	)		-20.10	%		1,795		2,209		(414	)		-18.74	%
Professional fees		324		360		(36	)		-10.00	%		562		732		(170	)		-23.22	%
Amortization of intangibles		841		526		315			59.89	%		1,687		1,050		637			60.67	%
FDIC premiums and assessments		408		361		47			13.02	%		823		723		100			13.83	%
Merger expense		-		-		-			0.00	%		2,310		-		2,310			NM
Other operating expense		3,980		3,353		627			18.70	%		7,640		7,014		626			8.93	%
Total noninterest expense	$	27,565	$	25,455	$	2,110			8.29	%	$	56,302	$	50,399	$	5,903			11.71	%

Three-Month Comparison. Noninterest expense increased $2.11 million, or 8.29%, in the second quarter of 2026 compared to the same quarter of 2025. The increase was primarily attributable to increases in salaries and employee benefits of $778 thousand, or 5.42%, other operating expense of $627 thousand, or 18.70%, and service fees of $383 thousand, or 15.47%.

Six-Month Comparison. Noninterest expense increased $5.90 million, or 11.71%, in the six months ended June 30, 2026, compared to the same period of 2025. The increase was primarily attributable to increases of $2.31 million in merger expense, $1.81 million in salaries and employee benefits, and $688 thousand in services fees. The merger expense was related to the acquisition of Hometown, which was completed in the first quarter of 2026.

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Income 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 $3.07 million, or 85.84%. The effective tax rate increased to 22.82% in the second quarter of 2026 from 22.63% in the same quarter of 2025.

Six-Month Comparison. Income tax expense increased $3.24 million, or 46.11%. The effective tax rate increased to 22.91% in the six months ended June 30, 2026, from 22.60% in the same period of 2025.

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 measures 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 and net interest margin, on a FTE basis for the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
(Amounts in thousands)
Net interest income, GAAP	$	34,875		$	30,657		$	68,169		$	60,955
FTE adjustment(1)		170			118			332			229
Net interest income, FTE	$	35,045		$	30,775			68,501			61,184

Net interest margin, GAAP		4.36	%		4.35	%		4.36	%		4.33	%
FTE adjustment(1)		0.02	%		0.02	%		0.02	%		0.02	%
Net interest margin, FTE		4.38	%		4.37	%		4.38	%		4.35	%

(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:

	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
(Amounts in thousands)
Net Income available to common shareholders, GAAP	$	22,513		$	12,246		$	34,540		$	24,064
Add: merger and non-recurring items, net of tax (1)		(8,128	)		-			(6,489	)		-
Tangible net income available to common shareholders	$	14,385		$	12,246		$	28,051		$	24,064
Tangible net income available to common shareholders (annualized)	$	57,698		$	49,119		$	56,567		$	48,527

Average Common Equity	$	534,433		$	499,224		$	529,706		$	501,989
Less: Average Goodwill and Intangibles		164,143			156,165			163,384			156,428
Average Tangible Common Equity	$	370,290		$	343,059		$	366,322		$	345,561

Return on Average Tangible Common Equity		15.58	%		14.32	%		15.44	%		14.04	%

(1)	Includes non-recurring items such as gain (loss) on sale of equity investments and BOLI proceeds

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Financial Condition

Total assets as of June 30, 2026, increased $348.08 million, or 10.68%, from December 31, 2025. Total liabilities increased $309.52 million, or 11.22%, and stockholders' equity increased $38.55 million, or 7.70%. The primary driver of the changes in balance sheet components was the acquisition of Hometown in the first quarter of 2026. The acquisition resulted in an increase in stockholders' equity of $35.07 million. Total assets of $393.81 million and total liabilities of $360.46 million were acquired in the transaction. Excluding the impact of the Hometown transaction, total assets decreased $132.60 million and liabilities decreased $50.93 million compared to December 31, 2025.

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 June 30, 2026, increased $106.36 million, or 80.16%, compared to December 31, 2025. The increase was primarily attributable to securities acquired as part of the Hometown acquisition.

The market value of debt securities available-for-sale as a percentage of amortized cost was 95.63% as of June 30, 2026, compared to 92.95% as of December 31, 2025.

Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) our intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that we will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments. U.S. Treasury Securities, Agency-Backed Securities including GNMA, FHLMC, FNMA, FHLB, FFCB and SBA. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United States 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 June 30, 2026 continue to perform as scheduled and we do not believe that a provision for credit losses is necessary.

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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:

	June 30, 2026					December 31, 2025					June 30, 2025
(Amounts in thousands)	Amount		Percent			Amount		Percent			Amount		Percent
Loans held for investment
Commercial loans
Construction, development, and other land	$	67,088		2.73	%	$	63,901		2.76	%	$	64,441		2.74	%
Commercial and industrial		279,927		11.38	%		243,983		10.54	%		249,674		10.61	%
Multi-family residential		190,690		7.75	%		191,486		8.27	%		189,267		8.04	%
Single family non-owner occupied		193,950		7.88	%		171,918		7.43	%		185,042		7.86	%
Non-farm, non-residential		893,631		36.33	%		838,458		36.22	%		840,642		35.73	%
Agricultural		14,452		0.59	%		13,464		0.58	%		14,077		0.60	%
Farmland		11,842		0.48	%		10,725		0.46	%		11,170		0.47	%
Total commercial loans		1,651,580		67.14	%		1,533,935		66.27	%		1,554,313		66.05	%
Consumer real estate loans
Home equity lines		83,739		3.40	%		82,764		3.58	%		84,629		3.60	%
Single family owner occupied		668,877		27.19	%		632,348		27.32	%		634,898		26.98	%
Owner occupied construction		5,169		0.21	%		5,605		0.24	%		4,775		0.20	%
Total consumer real estate loans		757,785		30.81	%		720,717		31.14	%		724,302		30.78	%
Consumer and other loans
Consumer loans		48,271		1.96	%		58,453		2.53	%		72,325		3.07	%
Other		2,110		0.09	%		1,650		0.07	%		2,337		0.10	%
Total consumer and other loans		50,381		2.05	%		60,103		2.60	%		74,662		3.17	%
Total loans held for investment, net of unearned income		2,459,746		100.00	%		2,314,755		100.00	%		2,353,277		100.00	%
Less: allowance for credit losses		32,654					30,761					33,020
Total loans held for investment, net of unearned income and allowance	$	2,427,092				$	2,283,994				$	2,320,257

Total loans as of June 30, 2026, increased $145.00 million, or 6.26%, compared to December 31, 2025, and was primarily due to the Hometown acquisition with the fair value of loans acquired totaling $171.04 million.

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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:

	June 30, 2026			December 31, 2025			June 30, 2025
(Amounts in thousands)
Nonperforming
Nonaccrual loans	$	16,816		$	13,941		$	18,084
Accruing loans past due 90 days or more		280			212			568
Modified loans past due 90 days or more not included in nonaccrual		-			-			-
Total nonperforming loans		17,096			14,153			18,652
OREO		52			-			455
Total nonperforming assets	$	17,148		$	14,153		$	19,107


Additional Information
Total modified loans	$	3,435		$	2,442		$	2,129


Asset Quality Ratios:
Nonperforming loans to total loans		0.70	%		0.61	%		0.79	%
Nonperforming assets to total assets		0.48	%		0.43	%		0.60	%
Allowance for credit losses to nonperforming loans		191.00	%		217.35	%		177.03	%
Allowance for credit losses to total loans		1.33	%		1.33	%		1.40	%

Nonperforming assets as of June 30, 2026, increased $2.99 million, or 21.16%, from December 31, 2025, and modified loans increased $993 thousand, or 40.66%. As of June 30, 2026, nonaccrual loans were largely attributed to single family owner occupied (45.13%), single family non-owner occupied (16.87%) and commercial and industrial (14.35%). Certain loans included in the nonaccrual category have been written down to estimated realizable value or assigned specific reserves in the allowance for credit losses based on management’s estimate of loss at ultimate resolution.

Delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, totaled $28.50 million as of June 30, 2026, an increase of $650 thousand, or 2.33%, compared to $27.85 million as of December 31, 2025. Delinquent loans as a percent of total loans totaled 1.16% as of June 30, 2026, which includes past due loans (0.48%) and nonaccrual loans (0.68%).

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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 June 30, 2026, were $3.43 million. As of June 30, 2026, $937 thousand of these loans were 30-89 days past due. Modified loans past due 90 days or more totaled $42 thousand and are included in the total for nonaccrual loans.

Other real estate owned ("OREO") is carried at the lesser of estimated net realizable value or cost. No OREO property was held by the Company as of March 31, 2026, or December 31, 2025. The following table presents the changes in OREO during the periods indicated:

	Six Months Ended June 30,
	2026		2025
(Amounts in thousands)
Beginning balance January 1	$	-	$	521
Additions		52		191
Disposals		-		(257	)
Valuation adjustments		-		-
Other adjustments		-		-
Ending balance	$	52	$	455

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.

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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 June 30, 2026, the balance of the ACL totaled $32.65 million, or 1.33%, of total loans. This compares to $30.76 million as of December 31, 2025, reflecting an increase of $1.89 million, or 6.15%. The increase in the ACL is primarily driven by the Hometown acquisition, which resulted in a $3.21 million addition for acquired loans. The increase was offset by net charge-offs of $2.03 million.

As of June 30, 2026, the Company had an allowance for unfunded commitments of $505 thousand, which was recorded in Other Liabilities on the Balance Sheet. During the first six months of 2026, the Company recorded a $150 thousand provision for credit losses on loan commitments, compared to a $22 thousand recovery of provision for credit losses on loan commitments recorded during the same period in 2025.

Deposits

Total deposits as of June 30, 2026, increased $331.26 million, or 12.34%, compared to December 31, 2025. The largest increases occurred in interest-bearing demand deposits of $136.95 million, or 20.01%, and money-market and savings deposits of $109.81 million, or 12.14%. The growth was primarily attributable to the acquisition of Hometown, which contributed $357.72 million in deposits. Excluding the impact of the Hometown acquisition, total deposits decreased $26.46 million, or 0.99%.

Total borrowings in the form of retail repurchase agreements as of June 30, 2026, increased $1.71 million, or 140.86%, compared to December 31, 2025. The increase is primarily attributable to the Hometown acquisition, which included $1.31 million in securities sold under agreements to repurchase.

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.

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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 June 30, 2026, the Company’s cash reserves totaled $22.43 million. The Company’s cash reserves provide adequate working capital to meet obligations for the next twelve months.

In addition to cash on hand and deposits with other financial institutions, we rely on customer deposits, cash flows from loans and investment securities, and lines of credit from the FHLB and the Federal Reserve Bank (“FRB”) Discount Window to meet potential liquidity demands. These sources of liquidity are immediately available to satisfy deposit withdrawals, customer credit needs, and our operations. Secondary sources of liquidity include approved lines of credit with correspondent banks and unpledged available-for-sale securities. As of June 30, 2026, our unencumbered cash totaled $591.91 million, unused borrowing capacity from the FHLB totaled $303.35 million, available credit from the FRB Discount Window totaled $6.91 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $80.99 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 June 30, 2026, increased $38.55 million, or 7.70%, to $539.10 million from $500.55 million as of December 31, 2025. The increase was primarily attributable to the acquisition of Hometown, in connection with which the Company issued 1.03 million shares of common stock, resulting in a $35.07 million increase in capital. Stockholders' equity was further increased by net income of $34.54 million. These increases were partially offset by $11.80 million of common stock dividends declared and $20.33 million of common stock repurchases. Book value per share increased $1.22 to $28.52 as of June 30, 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:

	June 30, 2026		December 31, 2025
	Company	Bank	Company	Bank

Common equity Tier 1 ratio	16.56%	15.32%	16.10%	14.46%
Tier 1 risk-based capital ratio	16.56%	15.32%	16.10%	14.46%
Total risk-based capital ratio	17.81%	16.58%	17.35%	15.71%
Tier 1 leverage ratio	11.05%	10.23%	11.44%	10.38%

As of June 30, 2026, the Company and the Bank continue to maintain strong regulatory capital levels. Compared with December 31, 2025, the Company and the Bank reported increases in their common equity Tier 1, Tier 1 risk-based capital ratio and total risk-based capital ratios, while the Tier 1 leverage ratio declined modestly. The increase in the risk-based capital ratios was primarily driven by growth in regulatory capital during the period. As of June 30, 2026, we continued to meet all capital adequacy requirements and were classified as well-capitalized under the regulatory framework for prompt corrective action due to our capital ratios being in excess of the minimum standards under the Basel III capital rules. Management believes there have been no conditions or events that would have changed the Bank’s classification during the period.

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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:

	June 30, 2026		December 31, 2025
(Amounts in thousands)
Commitments to extend credit	$	282,169	$	263,912
Standby letters of credit and financial guarantees ⁽¹⁾		119,007		127,073
Total off-balance sheet risk	$	401,176	$	390,985

(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 June 30, 2026, the Federal Open Market Committee had set the benchmark federal funds rate to a range of 350 to 375 basis points. The following table presents the sensitivity of net interest income from immediate and sustained rate shocks in various interest rate scenarios over a twelve-month period for the periods indicated:

	June 30, 2026						December 31, 2025
Increase (Decrease) in Basis Points	Change in Net Interest Income			Percent Change			Change in Net Interest Income			Percent Change
(Dollars in thousands)
200	$	7,563			5.3	%	$	4,432			3.5	%
100		3,765			2.7	%		2,232			1.7	%
(100)		(4,603	)		(3.2	)%		(3,888	)		(3.0	)%
(200)		(10,516	)		(7.4	)%		(8,748	)		(6.9	)%

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.

Continued unprecedented levels of federal government spending is causing increased 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.

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Item 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.

Item 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 June 30, 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 June 30, 2026, that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.

OTHER INFORMATION

ITEM 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.

ITEM 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.

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ITEM 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. The Company did not repurchase any common shares during the second quarter of 2026; however, 504,652 common shares were purchased during the first quarter of 2026 at a total cost of $20.33 million. The Company repurchased 50,338 common shares during the second quarter of 2025 at a cost of $1.85 million.

	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)

April 1 - 30, 2026		-	$	-		-		1,690,216
May 1 - 31, 2026		-		-		-		1,690,216
June 1 - 30, 2026		-		-		-		1,690,216
Total		-	$	-		-

(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.

ITEM 3.

Defaults Upon Senior Securities

None.

ITEM 4.

Mine Safety Disclosures

None.

ITEM 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 June 30, 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).

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ITEM 6.

Exhibits

2.1	Agreement and Plan of Reincorporation and Merger between First Community Bancshares, Inc. and First Community Bankshares, Inc., incorporated by reference to Appendix A of the Definitive Proxy Statement on Form DEF 14A dated April 24, 2018, filed on March 13, 2018
2.3	Agreement and Plan of Merger between First Community Bankshares, Inc. and Hometown Bancshares, Inc., incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K dated July 19, 2025, and filed July 21, 2025
3.1	Articles of Incorporation of First Community Bankshares, Inc., incorporated by reference to Appendix B of the Definitive Proxy Statement on Form DEF 14A dated April 24, 2018, filed on March 13, 2018
3.2	Bylaws of First Community Bankshares, Inc., incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K dated and filed October 2, 2018
4.1	Description of First Community Bankshares, Inc. Common Stock, incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K dated and filed October 2, 2018
4.2	Form of First Community Bankshares, Inc. Common Stock Certificate, incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K dated and filed October 2, 2018
10.1.1**	First Community Bancshares, Inc. 1999 Stock Option Plan, incorporated by reference to Exhibit 10.1 of the Annual Report on Form 10-K/A for the period ended December 31, 1999, filed on April 13, 2000
10.1.2**	Amendment One to the First Community Bancshares, Inc. 1999 Stock Option Plan, incorporated by reference to Exhibit 10.1.1 of the Quarterly Report on Form 10-Q for the period ended March 31, 2004, filed on May 7, 2004
10.1.7**	First Community Bankshares Executive Incentive Compensation Plan, incorporated by reference to Exhibit 10.1 of the current Report on Form 8-K filed May 31, 2022
10.2**	First Community Bancshares, Inc. 1999 Stock Option Agreement, incorporated by reference to Exhibit 10.5 of the Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed on August 13, 2002

10.6**	First Community Bancshares, Inc. 2012 Omnibus Equity Compensation Plan, incorporated by reference to Appendix B of the Definitive Proxy Statement on Form DEF 14A dated April 24, 2012, filed on March 7, 2012
10.7**	First Community Bancshares, Inc. 2012 Omnibus Equity Compensation Plan Restricted Stock Grant Agreement, incorporated by reference to Exhibit 99.1 of the Current Report on Form 8-K dated and filed May 28, 2013
10.8**	First Community Bancshares, Inc. Life Insurance Endorsement Method Split Dollar Plan and Agreement, incorporated by reference to Exhibit 10.5 of the Annual Report on Form 10-K/A for the period ended December 31, 1999, filed on April 13, 2000
10.9.1**	First Community Bancshares, Inc. and Affiliates Executive Retention Plan, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated December 30, 2008, filed on January 5, 2009
10.9.2**	Amendment #1 to the First Community Bancshares, Inc. and Affiliates Executive Retention Plan, incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K dated December 16, 2010, filed on December 17, 2010
10.9.3**	Amendment #2 to the First Community Bancshares, Inc. and Affiliates Executive Retention Plan, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated February 21, 2013, filed on February 25, 2013

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10.9.4**	Amendment #3 to the First Community Bancshares, Inc. and Affiliates Executive Retention Plan, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated May 24, 2016, filed on May 31, 2016
10.9.5**	Amendment #4 to the First Community Bancshares, Inc. and Affiliates Executive Retention Plan, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated and filed on February 28, 2017
10.9.6**	Amendment #5 to the First Community Bancshares, Inc. and Affiliates Executive Retention Plan
10.9.7**	Amendment #6 to the First Community Bancshares, Inc. and Affiliates Executive Retention Plan
10.10**	Amended and Restated Deferred Compensation Plan for Directors of First Community Bancshares, Inc. and Affiliates, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated December 16,2019, filed on December 19,2019
10.11.1**	First Community Bancshares, Inc. Amended and Restated Nonqualified Supplemental Cash or Deferred Retirement Plan, incorporated by reference to Exhibit 99.1 of the Current Report on Form 8-K dated August 22, 2006, filed on August 23, 2006, and Amendment #2, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated and filed on February 28, 2017
10.11.2**	Amendment #2 to the First Community Bancshares, Inc. Amended and Restated Nonqualified Supplemental Cash or Deferred Retirement Plan, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated and filed on February 28, 2017
10.12.1**	First Community Bancshares, Inc. Supplemental Directors Retirement Plan, as amended and restated, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated December 16, 2010, filed on December 17, 2010, and Amendment #2, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated May 24, 2016, filed on May 31, 2016
10.12.2**	Amendment #2 to the First Community Bancshares, Inc. Supplemental Directors Retirement Plan, as amended and restated, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated May 24, 2016, filed on May 31, 2016
10.12.3**	Amendment #3 to the First Community Bankshares, Inc. Supplemental Directors Retirement Plan, as amended and restated, incorporated by reference to Exhibit 10.12.3 of the Annual Report on Form 10-K for the period ended December 31, 2021, filed on March 3, 2022
10.12.4**	Amendment #4 to the First Community Bankshares, Inc Supplemental Directors Retirement Plan, as amended and restated, incorporated by reference to Exhibit 10.12.4 of the Annual Report on Form 10-K for the period ended December 31, 2021, filed on March 3, 2022
10.13**	Amended and Restated Employment Agreements between First Community Bankshares, Inc. and William P. Stafford, II, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated and filed on August 27, 2024.
10.14**	Amended and Restated Employment Agreements between First Community Bankshares, Inc. and Gary R. Mills, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated and filed on August 27, 2024.
10.15**	Amended and Restated Employment Agreements between First Community Bankshares, Inc. and David D. Brown, incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K dated and filed on August 27, 2024.
10.16**	Amended and Restated Employment Agreements between First Community Bankshares, Inc. and Jason R. Belcher, incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K dated and filed on August 27, 2024.
10.17**	Amended and Restated Employment Agreements between First Community Bankshares, Inc. and Sarah W. Harmon, incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K dated and filed on August 27, 2024.
10.18**	First Community Bankshares, Inc. 2022 Omnibus Equity Compensation Plan incorporated by reference to Exhibit 99.a of the Definitive Proxy Statement on Form DEF 14A dated April 26, 2022, filed on March 16, 2022
10.19**	Amended Nonqualified Deferred Compensation Plan and Adoption Agreement, incorporated by reference to Exhibit 10.19 of the Annual Report on Form 10-K for the period ended December 31, 2024, filed on March 7, 2025.
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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 June 30, 2026, (Unaudited) and December 31, 2025; (ii) Condensed Consolidated Statements of Income (Unaudited) for the three and six months ended June 30, 2026 and 2025; (iii) Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended June 30, 2026 and 2025; (iv) Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and six months ended June 30, 2026 and 2025; (v) Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 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 June 30, 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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 7, 2026.

		First Community Bankshares, Inc. (Registrant)




		/s/ William P. Stafford, II
		William P. Stafford, II
		Chief Executive Officer
		(Principal Executive Officer)




		/s/ David D. Brown
		David D. Brown
		Chief Financial Officer
		(Principal Accounting Officer)