fcbc20250331

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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 March 31, 2025

☐ 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 April 29, 2025, there were 18,279,128 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 March 31, 2025 (Unaudited) and December 31, 2024	4
		Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2025 and 2024 (Unaudited)	5
		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2025 and 2024 (Unaudited)	6
		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2025 and 2024 (Unaudited)	7
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 (Unaudited)	8
		Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		48
Item 4.	Controls and Procedures		48

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		48
Item 1A.	Risk Factors		48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		49
Item 3.	Defaults Upon Senior Securities		49
Item 4.	Mine Safety Disclosures		49
Item 5.	Other Information		49
Item 6.	Exhibits		50

Signatures			52

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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 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 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; 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, 2024.

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PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

	*March 31,*			*December 31,*
	*2025*			*2024(1)*
(Amounts in thousands, except share and per share data)	(Unaudited)
Assets
Cash and due from banks	$	85,486		$	78,540
Federal funds sold		327,226			296,997
Interest-bearing deposits in banks		1,970			1,917
Total cash and cash equivalents		414,682			377,454
Debt securities available-for-sale, at fair value		129,659			169,849
Loans held for investment, net of unearned income		2,382,699			2,416,089
Allowance for credit losses		(33,784	)		(34,825	)
Loans held for investment, net		2,348,915			2,381,264
Premises and equipment, net		48,780			48,735
Other real estate owned		298			521
Interest receivable		9,306			9,207
Goodwill		143,946			143,946
Other intangible assets		12,490			13,014
Other assets		117,697			117,226
Total assets	$	3,225,773		$	3,261,216

Liabilities
Deposits
Noninterest-bearing	$	893,794		$	883,499
Interest-bearing		1,790,683			1,807,748
Total deposits		2,684,477			2,691,247
Securities sold under agreements to repurchase		908			906
Interest, taxes, and other liabilities		43,971			42,671
Total liabilities		2,729,356			2,734,824

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; 27,604,102 shares issued and 18,326,657 outstanding at March 31, 2025; 27,599,240 shares issued and 18,321,795 outstanding at December 31, 2024		18,327			18,322
Additional paid-in capital		169,867			169,752
Retained earnings		317,728			349,489
Accumulated other comprehensive loss		(9,505	)		(11,171	)
Total stockholders' equity		496,417			526,392
Total liabilities and stockholders' equity	$	3,225,773		$	3,261,216

(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*
	*March 31,*
(Amounts in thousands, except share and per share data)	*2025*		*2024*
Interest income
Interest and fees on loans	$	30,669	$	33,418
Interest on securities -- taxable		1,147		1,563
Interest on securities -- tax-exempt		91		135
Interest on deposits in banks		3,262		913
Total interest income		35,169		36,029
Interest expense
Interest on deposits		4,871		4,365
Interest on short-term borrowings		-		35
Total interest expense		4,871		4,400
Net interest income		30,298		31,629
Provision for credit losses		321		1,011
Net interest income after provision for credit losses		29,977		30,618
Noninterest income
Wealth management		1,162		1,099
Service charges on deposits		3,836		3,310
Other service charges and fees		3,340		3,450
Other operating income		1,891		1,400
Total noninterest income		10,229		9,259
Noninterest expense
Salaries and employee benefits		13,335		12,581
Occupancy expense		1,576		1,378
Furniture and equipment expense		1,575		1,545
Service fees		2,484		2,449
Advertising and public relations		1,055		796
Professional fees		372		372
Amortization of intangibles		524		530
FDIC premiums and assessments		362		369
Other operating expense		3,661		3,366
Total noninterest expense		24,944		23,386
Income before income taxes		15,262		16,491
Income tax expense		3,444		3,646
Net income	$	11,818	$	12,845

Earnings per common share
Basic	$	0.64	$	0.70
Diluted		0.64		0.71
Weighted average shares outstanding
Basic		18,324,760		18,476,128
Diluted		18,451,321		18,545,910

See Notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	*Three Months Ended*
	*March 31,*
	*2025*			*2024*
(Amounts in thousands)
Net income	$	11,818		$	12,845
Other comprehensive income (loss), before tax
Available-for-sale debt securities:
Change in net unrealized gains (losses) gains on debt securities		2,108			(1,198	)
Reclassification adjustment for loss recognized in net income		-			-
Net unrealized gains (losses) on available-for-sale debt securities		2,108			(1,198	)
Employee benefit plans:
Net actuarial loss		(5	)		(9	)
Reclassification adjustment for amortization of prior service cost and net actuarial loss recognized in net income		5			9
Net unrealized gains (losses) on employee benefit plans		-			-
Other comprehensive income (loss), before tax		2,108			(1,198	)
Income tax expense (benefit) expense		442			(250	)
Other comprehensive gain (loss), net of tax		1,666			(948	)
Total comprehensive income	$	13,484		$	11,897

See Notes to Condensed Consolidated Financial Statements.

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

THREE MONTHS ENDED

March 31, 2025 and 2024


																	*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, 2024		-	$	-		18,502,396		$	18,502		$	175,841		$	319,902		$	(10,951	)	$	503,294
Net income		-		-		-			-			-			12,845			-			12,845
Other comprehensive loss		-		-		-			-			-			-			(948	)		(948	)
Common dividends declared -- $0.29 per share		-		-		-			-			-			(5,358	)		-			(5,358	)
Equity-based compensation expense		-		-		-			-			81			-			-			81
Issuance of common stock to 401(k) plan		-		-		88			-			3			-			-			3
Repurchase of common shares at $33.26 per share		-		-		(89,396	)		(89	)		(2,884	)		-			-			(2,973	)
Balance March 31, 2024		-	$	-		18,413,088		$	18,413		$	173,041		$	327,389		$	(11,899	)	$	506,944

Balance January 1, 2025		-	$	-		18,321,795		$	18,322		$	169,752		$	349,489		$	(11,171	)	$	526,392
Net income		-		-		-			-			-			11,818			-			11,818
Other comprehensive income		-		-		-			-			-			-			1,666			1,666
Common dividends declared -- $0.31 per share and special dividend $2.07 per share		-		-		-			-			-			(43,579	)		-			(43,579	)
Common stock options exercised		-		-		4,877			5			115			-			-			120
Issuance of common stock to 401(k) plan		-		-		(15	)		-			-			-			-			-
Balance March 31, 2025		-	$	-		18,326,657		$	18,327		$	169,867		$	317,728		$	(9,505	)	$	496,417

See Notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	*Three Months Ended*
	*March 31,*
(Amounts in thousands)	*2025*			*2024*
Operating activities
Net income	$	11,818		$	12,845
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses for loans		321			1,011
Depreciation and amortization of premises and equipment		1,039			1,096
Accretion of discounts on investments		(339	)		(200	)
Amortization of intangible assets		524			530
Accretion on acquired loans		(556	)		(781	)
Equity-based compensation expense		-			81
Issuance of common stock to 401(k) plan		-			3
Loss (gain) on sale of premises and equipment, net		2			(5	)
Loss on sale of other real estate owned		80			14
(Increase) decrease in accrued interest receivable		(99	)		162
Increase in other operating activities		421			2,176
Net cash provided by operating activities		13,211			16,932
Investing activities
Proceeds from maturities, prepayments, and calls of securities available-for-sale		81,386			118,968
Payments to acquire securities available-for-sale		(38,748	)		(5,252	)
Net decrease in loans		32,555			51,235
Proceeds from the sale of FHLB stock, net		29			265
Proceeds from bank owned life insurance		-			585
Proceeds from sale of premises and equipment		-			10
Payments to acquire premises and equipment		(1,121	)		(1,780	)
Proceeds from sale of other real estate owned		143			76
Net cash provided by investing activities		74,244			164,107
Financing activities
Decrease (increase) in noninterest-bearing deposits, net		10,295			(29,524	)
Decrease in interest-bearing deposits, net		(17,065	)		(10,586	)
Increase (decrease) in securities sold under agreements to repurchase, net		2			(113	)
Proceeds from stock options exercised		120			-
Payments for repurchase of common stock		-			(2,973	)
Payments of common dividends		(43,579	)		(5,358	)
Net cash used in financing activities		(50,227	)		(48,554	)
Net increase in cash and cash equivalents		37,228			132,485
Cash and cash equivalents at beginning of period		377,454			116,420
Cash and cash equivalents at end of period	$	414,682		$	248,905

Supplemental disclosure -- cash flow information
Cash paid for interest	$	3,153		$	4,281
Cash paid for income taxes		-			-

Supplemental transactions -- noncash items
Transfer of loans to other real estate owned		-			272
Increase (decrease) in other comprehensive income (loss), net of taxes		1,666			(948	)

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, 2024 (the “2024 Form 10-K”), as filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2025. The condensed consolidated balance sheet as of December 31, 2024, 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 are included 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 2024 Form 10-K.

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Recent Accounting Standards

Standards Adopted

In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". The amendment requires companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker. This ASU became effective for the Company on December 31, 2024. The Company has one reportable segment and as such, adoption of ASU No. 2023-07 did not have a material impact on the Company's financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740).” The amendments in this ASU are related to the rate reconciliation and income taxes paid disclosures and are designed to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. The ASU is effective for annual periods beginning after December 31, 2024, and will be applied on a prospective basis with the option to apply the standard retrospectively. The adoption of the ASU has no material impact on the Company's financial statements.

Standards Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, "Expense Disaggregation Disclosures (Topic 230): Disaggregation of Income Statement Expenses". The amendment requires disclosure of disaggregated information about specific expense categories underlying certain income statement expense line items. This ASU will become effective for the Company on December 31, 2027. The Company does not expect this ASU to have a material impact on the consolidated 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.

Note 2. 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:

	*March 31, 2025*
	*Amortized*		*Unrealized*		*Unrealized*			*Fair*
	*Cost*		*Gains*		*Losses*			*Value*
(Amounts in thousands)
U.S. Treasury securities	$	10,922	$	-	$	(1	)	$	10,921
Municipal securities		12,545		2		(80	)		12,467
Corporate notes		28,606		-		(779	)		27,827
Agency mortgage-backed securities		90,316		54		(11,926	)		78,444
Total	$	142,389	$	56	$	(12,786	)	$	129,659

	*December 31, 2024*
	*Amortized*		*Unrealized*		*Unrealized*			*Fair*
	*Cost*		*Gains*		*Losses*			*Value*
(Amounts in thousands)
U.S. Treasury securities	$	55,760	$	10	$	(1	)	$	55,769
Municipal securities		13,949		2		(114	)		13,837
Corporate notes		28,598		—		(1,056	)		27,542
Agency mortgage-backed securities		86,380		—		(13,679	)		72,701
Total	$	184,687	$	12	$	(14,850	)	$	169,849

There was no allowance for credit losses for debt securities as of March 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 $925 thousand and $694 thousand as of March 31, 2025, and December 31, 2024, 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.

	*March 31, 2025*
	*Amortized*
(Amounts in thousands)	*Cost*		*Fair Value*
Available-for-sale debt securities
Due within one year	$	18,402	$	18,381
Due after one year but within five years		33,671		32,834
Due after five years but within ten years		-		-
		52,073		51,215
Agency mortgage-backed securities		90,316		78,444
Total debt securities available-for-sale	$	142,389	$	129,659

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:

	*March 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)
U.S. Treasury securities	$	5,427	$	(1	)	$	-	$	-		$	5,427	$	(1	)
Municipal securities		2,345		(10	)		5,722		(70	)		8,067		(80	)
Corporate notes		-		-			27,827		(779	)		27,827		(779	)
Agency mortgage-backed securities		5,234		(19	)		68,351		(11,907	)		73,585		(11,926	)
Total	$	13,006	$	(30	)	$	101,900	$	(12,756	)	$	114,906	$	(12,786	)

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	*December 31, 2024*
	*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. Treasury securities	$	4,984	$	(1	)	$	-	$	-		$	4,984	$	(1	)
Municipal securities		3,914		(16	)		6,638		(98	)		10,552		(114	)
Corporate notes		—		—			27,542		(1,056	)		27,542		(1,056	)
Agency mortgage-backed securities		4,100		(81	)		68,601		(13,598	)		72,701		(13,679	)
Total	$	12,998	$	(98	)	$	102,781	$	(14,752	)	$	115,779	$	(14,850	)

There were 98 individual debt securities in an unrealized loss position as of March 31, 2025, and the combined depreciation in value represented 9.86% of the debt securities portfolio. There were 103 individual debt securities in an unrealized loss position as of December 31, 2024, and their combined depreciation in value represented 8.74% of the debt securities portfolio.

Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) our intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that we will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United State Government or one of its agencies. Municipal securities and all other securities that do not have a zero expected credit loss are evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value. All debt securities available-for-sale in an unrealized loss position as of March 31, 2025, continue to perform as scheduled and we do not believe that there is a credit loss or that a provision for credit losses is necessary. Also, as part of our evaluation of our intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, we consider our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not currently intend to sell the securities within the portfolio and it is not more-likely-than-not that we will be required to sell the debt securities.

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

There were no available-for-sale securities sold during the first quarter of 2025 or 2024.

The carrying amount of securities pledged for various purposes totaled $25.44 million as of March 31, 2025, and $24.64 million as of December 31, 2024.

Note 3. 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 $2.02 million as of March 31, 2025, and $1.82 million as of December 31, 2024. Deferred loan fees, net of loan costs, totaled $6.38 million as of March 31, 2025, and $6.60 million as of December 31, 2024.

In accordance with the adoption of ASU 2016-13, the table below reflects the loan portfolio at the amortized cost basis to include net deferred loan fees of $6.38 million and $6.60 million and unamortized discount related to loans acquired of $11.83 million and $12.39 million for March 31, 2025, and December 31, 2024, respectively. Accrued interest receivable of $8.38 million as of March 31, 2025, and $8.51 million as of December 31, 2024, is accounted for separately and reported in Interest Receivable on the Consolidated Balance Sheet.

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	*March 31, 2025*					*December 31, 2024*
(Amounts in thousands)	*Amount*		*Percent*			*Amount*		*Percent*
Loans held for investment
Commercial loans
Construction, development, other land	$	70,205		2.95	%	$	72,319		2.99	%
Commercial and industrial		246,602		10.35	%		232,854		9.64	%
Multi-family residential		192,193		8.07	%		199,521		8.26	%
Single family non-owner occupied		191,531		8.04	%		195,588		8.10	%
Non-farm, non-residential		840,746		35.29	%		852,223		35.27	%
Agricultural		15,579		0.65	%		16,676		0.69	%
Farmland		11,794		0.49	%		12,311		0.51	%
Total commercial loans		1,568,650		65.84	%		1,581,492		65.46	%
Consumer real estate loans
Home equity lines		87,988		3.69	%		90,227		3.73	%
Single family owner occupied		640,669		26.89	%		650,306		26.92	%
Owner occupied construction		3,873		0.16	%		4,491		0.19	%
Total consumer real estate loans		732,530		30.74	%		745,024		30.84	%
Consumer and other loans
Consumer loans		79,503		3.34	%		87,758		3.63	%
Other		2,016		0.08	%		1,815		0.08	%
Total consumer and other loans		81,519		3.42	%		89,573		3.71	%
Total loans held for investment, net of unearned income	$	2,382,699		100.00	%	$	2,416,089		100.00	%

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Note 4. Credit Quality

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

●

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

●

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

●

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

●

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

●

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

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

	*March 31, 2025*
			*Special*
(Amounts in thousands)	*Pass*		*Mention*		*Substandard*		*Doubtful*		*Loss*		*Total*
Commercial loans
Construction, development, and other land	$	68,591	$	131	$	1,483	$	-	$	-	$	70,205
Commercial and industrial		241,694		1,301		3,607		-		-		246,602
Multi-family residential		191,893		154		146		-		-		192,193
Single family non-owner occupied		182,978		1,670		6,883		-		-		191,531
Non-farm, non-residential		820,637		12,237		7,872		-		-		840,746
Agricultural		10,177		3,521		1,881		-		-		15,579
Farmland		10,251		408		1,135		-		-		11,794
Consumer real estate loans
Home equity lines		84,606		424		2,958		-		-		87,988
Single family owner occupied		618,681		1,708		20,280		-		-		640,669
Owner occupied construction		3,873		-		-		-		-		3,873
Consumer and other loans
Consumer loans		77,891		-		1,612		-		-		79,503
Other		2,016		-		-		-		-		2,016
Total loans	$	2,313,288	$	21,554	$	47,857	$	-	$	-	$	2,382,699

	*December 31, 2024*
			*Special*
(Amounts in thousands)	*Pass*		*Mention*		*Substandard*		*Doubtful*		*Loss*		*Total*

Commercial loans
Construction, development, and other land	$	69,290	$	133	$	2,896	$	—	$	—	$	72,319
Commercial and industrial		227,108		2,045		3,701		—		—		232,854
Multi-family residential		194,865		3,319		1,337		—		—		199,521
Single family non-owner occupied		187,762		1,701		6,125		—		—		195,588
Non-farm, non-residential		831,821		12,572		7,830		—		—		852,223
Agricultural		11,144		3,589		1,943		—		—		16,676
Farmland		10,729		430		1,152		—		—		12,311
Consumer real estate loans
Home equity lines		86,908		476		2,843		—		—		90,227
Single family owner occupied		627,853		2,047		20,406		—		—		650,306
Owner occupied construction		4,491		—		—		—		—		4,491
Consumer and other loans
Consumer loans		86,177		—		1,581		—		—		87,758
Other		1,815		—		—		—		—		1,815
Total loans	$	2,339,963	$	26,312	$	49,814	$	—	$	—	$	2,416,089

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

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at March 31, 2025	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Revolving*		*Total*
Construction, development and other land
Pass	$	429	$	10,300	$	7,306	$	32,155	$	12,272	$	5,474	$	655	$	68,591
Special mention		-		-		-		-		-		131		-		131
Substandard		-		164		1,155		-		-		164		-		1,483
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total construction, development, and other land	$	429	$	10,464	$	8,461	$	32,155	$	12,272	$	5,769	$	655	$	70,205
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial and industrial
Pass	$	26,647	$	66,417	$	30,840	$	47,235	$	9,971	$	18,218	$	42,366	$	241,694
Special mention		-		2		-		60		-		947		292		1,301
Substandard		64		341		380		901		571		1,000		350		3,607
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total commercial and industrial	$	26,711	$	66,760	$	31,220	$	48,196	$	10,542	$	20,165	$	43,008	$	246,602
Current period gross write-offs	$	-	$	33	$	11	$	40	$	-	$	393	$	-	$	477
Multi-family residential
Pass	$	-	$	768	$	10,011	$	73,072	$	40,115	$	65,172	$	2,755	$	191,893
Special mention		-		-		-		-		-		154		-		154
Substandard		-		-		-		103		-		43		-		146
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total multi-family residential	$	-	$	768	$	10,011	$	73,175	$	40,115	$	65,369	$	2,755	$	192,193
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Non-farm, non-residential
Pass	$	10,484	$	38,925	$	74,887	$	221,780	$	133,780	$	330,686	$	10,095	$	820,637
Special mention		-		153		-		560		3,789		7,735		-		12,237
Substandard		-		-		82		339		2,620		4,521		310		7,872
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total non-farm, non-residential	$	10,484	$	39,078	$	74,969	$	222,679	$	140,189	$	342,942	$	10,405	$	840,746
Current period gross write-offs	$	-	$	-	$	-	$	56	$	-	$	-	$	-	$	56
Agricultural
Pass	$	20	$	585	$	2,929	$	2,515	$	1,398	$	1,898	$	832	$	10,177
Special mention		-		-		-		251		155		2,715		400		3,521
Substandard		-		-		447		159		22		1,253		-		1,881
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total agricultural	$	20	$	585	$	3,376	$	2,925	$	1,575	$	5,866	$	1,232	$	15,579
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Farmland
Pass	$	155	$	854	$	1,110	$	1,023	$	1,345	$	4,602	$	1,162	$	10,251
Special mention		-		-		-		-		97		311		-		408
Substandard		-		-		-		-		-		1,135		-		1,135
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total farmland	$	155	$	854	$	1,110	$	1,023	$	1,442	$	6,048	$	1,162	$	11,794
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

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(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at March 31, 2025	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Revolving*		*Total*
Home equity lines
Pass	$	765	$	9	$	101	$	1,217	$	149	$	4,050	$	78,315	$	84,606
Special mention		-		-		-		-		-		88		336		424
Substandard		-		-		22		13		-		1,909		1,014		2,958
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total home equity lines	$	765	$	9	$	123	$	1,230	$	149	$	6,047	$	79,665	$	87,988
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	5	$	5
Single family Mortgage
Pass	$	7,775	$	16,695	$	47,858	$	150,458	$	199,756	$	378,532	$	585	$	801,659
Special mention		-		-		-		-		541		2,837		-		3,378
Substandard		-		30		878		2,853		1,388		22,014		-		27,163
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total single family owner and non-owner occupied	$	7,775	$	16,725	$	48,736	$	153,311	$	201,685	$	403,383	$	585	$	832,200
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	1	$	-	$	1
Owner occupied construction
Pass	$	87	$	3,135	$	153	$	51	$	161	$	286	$	-	$	3,873
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total owner occupied construction	$	87	$	3,135	$	153	$	51	$	161	$	286	$	-	$	3,873
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Consumer loans
Pass	$	5,949	$	15,806	$	18,094	$	20,608	$	8,379	$	3,442	$	7,629	$	79,907
Special mention		-		-		-		-		-		-		-		-
Substandard		-		139		252		525		331		331		34		1,612
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total consumer loans	$	5,949	$	15,945	$	18,346	$	21,133	$	8,710	$	3,773	$	7,663	$	81,519
Current period gross write-offs	$	379	$	175	$	312	$	316	$	159	$	37	$	81	$	1,459

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at March 31, 2025	*2025*		*2024*		*2023*		*2022*		*2021*		*Prior*		*Revolving*		*Total*
Total loans
Pass	$	52,311	$	153,494	$	193,289	$	550,114	$	407,326	$	812,360	$	144,394	$	2,313,288
Special mention		-		155		-		871		4,582		14,918		1,028		21,554
Substandard		64		674		3,216		4,893		4,932		32,370		1,708		47,857
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total loans	$	52,375	$	154,323	$	196,505	$	555,878	$	416,840	$	859,648	$	147,130	$	2,382,699
Current period gross write-offs	$	379	$	208	$	323	$	412	$	159	$	431	$	86	$	1,998

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(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at December 31, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Revolving*		*Total*
Construction, development
and other land
Pass	$	9,806	$	7,378	$	33,423	$	12,495	$	1,948	$	3,589	$	651	$	69,290
Special Mention		-		-		-		-		65		68		-		133
Substandard		164		2,418		-		-		11		303				2,896
Doubtful		-		-		-		-		-		-				-
Loss		-		-		-		-		-		-		-		-
Total construction, development, and other land	$	9,970	$	9,796	$	33,423	$	12,495	$	2,024	$	3,960	$	651	$	72,319
Current period gross write-offs	$	-	$	-	$	-	$	-	$	1	$	8	$	-	$	9
Commercial and industrial
Pass	$	71,241	$	34,794	$	50,214	$	11,973	$	7,332	$	12,265	$	39,289	$	227,108
Special Mention		5		-		35		82		-		1,584		339		2,045
Substandard		193		404		831		457		465		1,351		-		3,701
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total commercial and industrial	$	71,439	$	35,198	$	51,080	$	12,512	$	7,797	$	15,200	$	39,628	$	232,854
Current period gross write-offs	$	24	$	95	$	351	$	48	$	34	$	2	$	-	$	554
Multi-family residential
Pass	$	775	$	10,084	$	73,633	$	42,533	$	28,855	$	36,150	$	2,835	$	194,865
Special Mention		-		-		-		-		-		3,319				3,319
Substandard		-		-		1,285		-		-		52				1,337
Doubtful		-		-		-		-		-		-				-
Loss		-		-		-		-		-		-		-		-
Total multi-family residential	$	775	$	10,084	$	74,918	$	42,533	$	28,855	$	39,521	$	2,835	$	199,521
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Non-farm, non-residential
Pass	$	40,054	$	76,285	$	226,217	$	140,911	$	104,728	$	235,001	$	8,625	$	831,821
Special Mention		154		-		565		1,758		-		10,095		-		12,572
Substandard		-		593		285		1,882		872		3,885		313		7,830
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-				-
Total non-farm, non-residential	$	40,208	$	76,878	$	227,067	$	144,551	$	105,600	$	248,981	$	8,938	$	852,223
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	29	$	-	$	29
Agricultural
Pass	$	646	$	3,168	$	2,723	$	1,561	$	245	$	1,754	$	1,047	$	11,144
Special Mention		-		-		256		161		3		3,169				3,589
Substandard		-		429		166		25		79		1,244				1,943
Doubtful		-		-		-		-		-		-				-
Loss		-		-		-		-		-		-		-		-
Total agricultural	$	646	$	3,597	$	3,145	$	1,747	$	327	$	6,167	$	1,047	$	16,676
Current period gross write-offs	$	-	$	115	$	96	$	19	$	-	$	-	$	-	$	230
Farmland
Pass	$	861	$	1,175	$	1,052	$	1,389	$	665	$	4,429	$	1,158	$	10,729
Special Mention		-		-		-		99		-		331				430
Substandard		-		-		-		-		142		1,010				1,152
Doubtful		-		-		-		-		-		-				-
Loss		-		-		-		-		-		-		-		-
Total farmland	$	861	$	1,175	$	1,052	$	1,488	$	807	$	5,770	$	1,158	$	12,311
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

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(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at December 31, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Revolving*		*Total*
Home equity lines
Pass	$	10	$	106	$	1,205	$	100	$	86	$	4,175	$	81,226	$	86,908
Special Mention		-		-		-		-		-		140		336		476
Substandard		23		22		78		-		22		1,793		905		2,843
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total home equity lines	$	33	$	128	$	1,283	$	100	$	108	$	6,108	$	82,467	$	90,227
Current period gross write-offs	$	3	$	-	$	-	$	-	$	47	$	-	$	17	$	67
Single family Mortgage
Pass	$	16,876	$	47,598	$	154,680	$	204,443	$	173,310	$	218,047	$	661	$	815,615
Special Mention		-		-		-		440		-		3,308		-		3,748
Substandard		6		779		1,550		1,270		1,161		21,765		-		26,531
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total single family owner and non-owner occupied	$	16,882	$	48,377	$	156,230	$	206,153	$	174,471	$	243,120	$	661	$	845,894
Current period gross write-offs	$	-	$	-	$	-	$	185	$	-	$	84	$	-	$	269
Owner occupied construction
Pass	$	2,387	$	1,272	$	318	$	217	$	-	$	297	$	-	$	4,491
Special Mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		-		-		-
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total owner occupied construction	$	2,387	$	1,272	$	318	$	217	$	-	$	297	$	-	$	4,491
Current period gross write-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Consumer loans
Pass	$	19,684	$	20,709	$	24,573	$	10,590	$	3,214	$	1,493	$	7,729	$	87,992
Special Mention		-		-		-		-		-		-		-		-
Substandard		94		327		532		284		30		279		35		1,581
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total consumer loans	$	19,778	$	21,036	$	25,105	$	10,874	$	3,244	$	1,772	$	7,764	$	89,573
Current period gross write-offs	$	1,518	$	1,269	$	2,277	$	908	$	243	$	105	$	373	$	6,693

(Amounts in thousands)	*Term Loans Amortized Cost Basis by Origination Year*
Balance at December 31, 2024	*2024*		*2023*		*2022*		*2021*		*2020*		*Prior*		*Revolving*		*Total*
Total loans
Pass	$	162,340	$	202,569	$	568,038	$	426,212	$	320,383	$	517,200	$	143,221	$	2,339,963
Special mention		159		-		856		2,540		68		22,014		675		26,312
Substandard		480		4,972		4,727		3,918		2,782		31,682		1,253		49,814
Doubtful		-		-		-		-		-		-		-		-
Loss		-		-		-		-		-		-		-		-
Total loans	$	162,979	$	207,541	$	573,621	$	432,670	$	323,233	$	570,896	$	145,149	$	2,416,089
Current period gross write-offs	$	1,545	$	1,479	$	2,724	$	1,160	$	325	$	228	$	390	$	7,851

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

	*March 31, 2025*						*December 31, 2024*
(Amounts in thousands)	*No Allowance*		*With an Allowance*		*Total*		*No Allowance*		*With an Allowance*		*Total*
Commercial loans
Construction, development, and other land	$	16	$	1,156	$	1,172	$	140	$	—	$	140
Commercial and industrial		2,163		-		2,163		2,492		—		2,492
Multi-family residential		147		-		147		152		—		152
Single family non-owner occupied		1,093		-		1,093		983		—		983
Non-farm, non-residential		2,475		-		2,475		2,284		531		2,815
Agricultural		1,524		-		1,524		1,541		—		1,541
Farmland		383		-		383		386		—		386
Consumer real estate loans
Home equity lines		1,162		-		1,162		1,072		—		1,072
Single family owner occupied		8,775		-		8,775		9,189		—		9,189
Owner occupied construction		-		-		-		—		—		—
Consumer and other loans
Consumer loans		1,080		-		1,080		1,099		—		1,099
Total nonaccrual loans	$	18,818	$	1,156	$	19,974	$	19,338	$	531	$	19,869

Loans are considered past due when either principal or interest payments become contractually delinquent by 30 days or more. The Company’s policy is to discontinue the accrual of interest, if warranted, on loans based on the payment status, evaluation of the related collateral, and the financial strength of the borrower. Loans that are 90 days or more past due are placed on nonaccrual status. Management may elect to continue the accrual of interest when the loan is well secured and in process of collection. When interest accruals are discontinued, interest accrued and not collected in the current year is reversed from income, and interest accrued and not collected from prior years is charged to the allowance for credit losses. Nonaccrual loans may be returned to accrual status when all principal and interest amounts contractually due, including past due payments, are brought current; the ability of the borrower to repay the obligation is reasonably assured; and there is generally a period of at least six months of repayment performance by the borrower in accordance with the contractual terms. There was no material nonaccrual loan interest recognized in income during the first quarter of 2025 or 2024.

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

	*March 31, 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	$	275	$	-	$	1,168	$	1,443	$	68,762	$	70,205	$	-
Commercial and industrial		808		696		1,922		3,426		243,176		246,602		-
Multi-family residential		103		-		-		103		192,090		192,193		-
Single family non-owner occupied		905		1,001		674		2,580		188,951		191,531		-
Non-farm, non-residential		2,009		366		1,788		4,163		836,583		840,746		-
Agricultural		83		1		304		388		15,191		15,579		-
Farmland		302		1		142		445		11,349		11,794		-
Consumer real estate loans
Home equity lines		213		239		466		918		87,070		87,988		-
Single family owner occupied		4,807		2,574		1,667		9,048		631,621		640,669		-
Owner occupied construction		-		-		-		-		3,873		3,873		-
Consumer and other loans
Consumer loans		2,343		764		468		3,575		75,928		79,503		-
Other		-		-		-		-		2,016		2,016		-
Total loans	$	11,848	$	5,642	$	8,599	$	26,089	$	2,356,610	$	2,382,699	$	-

Table of Contents

	*December 31, 2024*
													*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	$	40	$	2,424	$	143	$	2,607	$	69,712	$	72,319	$	—
Commercial and industrial		1,100		295		2,285		3,680		229,174		232,854		—
Multi-family residential		—		—		—		—		199,521		199,521		—
Single family non-owner occupied		1,228		434		500		2,162		193,426		195,588		—
Non-farm, non-residential		3,182		123		1,457		4,762		847,461		852,223		—
Agricultural		159		67		492		718		15,958		16,676		—
Farmland		11		2		142		155		12,156		12,311		—
Consumer real estate loans
Home equity lines		599		230		558		1,387		88,840		90,227		—
Single family owner occupied		5,812		1,457		3,974		11,243		639,063		650,306		—
Owner occupied construction		—		—		—		—		4,491		4,491		—
Consumer and other loans
Consumer loans		2,960		932		560		4,452		83,306		87,758		—
Other		—		—		—		—		1,815		1,815		—
Total loans	$	15,091	$	5,964	$	10,111	$	31,166	$	2,384,923	$	2,416,089	$	—

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 table below summarizes collateral dependent loans, where foreclosure is probable, by type of collateral, and the extent to which they are collateralized during the period.

	*March 31, 2025*							*December 31, 2024*
(Amounts in thousands)	*Balance*		*Collateral Coverage*		%			*Balance*		*Collateral Coverage*		%
Commercial Real Estate	$	1,156	$	1,956		169.14	%	$	-	$	-		-
Other		-		-		-			531		645		121.57	%
Total collateral dependent loans	$	1,156	$	1,956		169.14	%	$	531	$	645		121.57	%

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

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

(Amounts in thousands)
Non Farm, Non Residential Property	$	192		0.02	%	Deferred 6 months of interest to loan maturity.
Single Family Owner Occupied		498		0.08	%	Deferred $66 thousand in principal to loan maturity.
Single Family Non Owner Occupied		28		0.01	%	Deferred 6 months of interest to loan maturity.
Agricultural		182		1.17	%	Deferred 6 months of interest to loan maturity.
Commercial & Industrial		125		0.05	%	Deferred $8 thousand in principal to loan maturity.
Total	$	1,025

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

(Amounts in thousands)
Single Family Owner Occupied	$	71		0.01	%	Extended term 10.5 years.
Commercial & Industrial		130		0.05	%	Delayed repayment of P & I for two years.
Consumer		1		0.00	%	Extended term from 60 to 84 months.
HELOC		1		0.00	%	Delayed repayment of P & I for two years.
Total	$	203

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

(Amounts in thousands)
Single Family Owner Occupied	$	796		0.12	%	Reduced interest income and extended time to recover principal.
Consumer		7		0.01	%	Reduced rate to 10.5%; extended term by ten months.
Total	$	803

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

(Amounts in thousands)
Single Family Owner Occupied	$	93		0.01	%	Reduced interest rate from 3.15% to 1.95%.
Total	$	93

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	*Payment Delays*
	*Amortized Cost Basis*		*% of Total Class of*
	*December 31, 2024*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Non Farm, Non Residential Property	$	625		0.07	%	Deferred 6 months of interest to Loan Maturity.
Single Family Owner Occupied		509		0.08	%	Deferred $66 thousand in Principal to Loan Maturity.
Single Family Non Owner Occupied		30		0.02	%	Deferred 6 months of interest to Loan Maturity.
Commercial & Industrial		135		0.06	%	Deferred $8 thousand in Principal to Loan Maturity.
Total	$	1,299

	*Term Extensions*
	*Amortized Cost Basis*		*% of Total Class of*
	*December 31, 2024*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Commercial & Industrial	$	144		0.06	%	Delayed repayment of P & I for two years.
Consumer		2		0.00	%	Extended term from 60 to 84 months.
Home Equity		2		0.00	%	Delayed repayment of P & I for two years.
Total	$	148


	*Term Extension and Rate Reduction*
	*Amortized Cost Basis*		*% of Total Class of*
	*December 31, 2024*		*Financing Receivable*			*Financial Effect*

(Amounts in thousands)
Single Family Owner Occupied	$	806		0.12	%	Reduced interest income and extended time to recover principal.
Consumer		7		0.01	%	Reduced rate to 10.5%; extended term by ten months.
Total	$	813

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Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. There were no modified loans (or portions of a loan) deemed uncollectible as of March 31, 2025, or December 31, 2024.

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

	*March 31, 2025*
	*Payment Status (Amortized Cost Basis)*
	*Current*		*30-89 Days Past Due*		*90+ Days Past Due*
(Amounts in thousands)
Non Farm, Non Residential Property	$	192	$	-	$	-
Single Family Owner Occupied		1,310		148		-
Single Family Non Owner Occupied		-		28		-
Agricultural		182		-		-
Commercial & Industrial		130		-		125
Consumer		8		-		-
Home Equity		1		-		-
Total	$	1,823	$	176	$	125

	*December 31, 2024*
	*Payment Status (Amortized Cost Basis)*
	*Current*		*30-89 Days Past Due*		*90+ Days Past Due*

(Amounts in thousands)
Non Farm, Non Residential Property	$	625	$	-	$	-
Single Family Owner Occupied		1,140		174		-
Single Family Non Owner Occupied		-		30		-
Commercial & Industrial		144		-		135
Consumer		10		-		-
Home Equity		2
Total	$	1,921	$	204	$	135

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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:

	*March 31, 2025*		*December 31, 2024*
(Amounts in thousands)
OREO	$	298	$	521

OREO secured by residential real estate	$	298	$	521
Residential real estate loans in the foreclosure process⁽¹⁾	$	1,727	$	2,625

(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 5. Allowance for Credit Losses

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

	*Three Months Ended March 31, 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	$	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		(59	)		(307	)		716			350
Recovery of credit losses - loan commitments		(17	)		(6	)		(6	)		(29	)
Total (recovery of) provision for credit losses - loans and loan commitments		(76	)		(313	)		710			321
Charge-offs		(533	)		(6	)		(1,459	)		(1,998	)
Recoveries		82			126			399			607
Net recoveries (charge-offs)		(451	)		120			(1,060	)		(1,391	)
Allowance for credit losses - loans		19,908			9,720			4,156			33,784
Allowance for credit losses - loan commitments		154			132			26			312
Ending balance	$	20,062		$	9,852		$	4,182		$	34,096

	*Three Months Ended March 31, 2024*
				*Consumer Real*			*Consumer and*			*Total*
(Amounts in thousands)	*Commercial*			*Estate*			*Other*			*Allowance*
Total allowance
Balance at beginning of quarter:
Allowance for credit losses - loans	$	21,850		$	9,693		$	4,646		$	36,189
Allowance for credit losses - loan commitments		597			121			28			746
Total allowance for credit losses beginning of year		22,447			9,814			4,674			36,935
Provision for credit losses:
(Recovery of) provision for credit losses - loans		(552	)		(135	)		1,698			1,011
Recovery of credit losses - loan commitments		-			-			-			-
Total (recovery of) provision for credit losses - loans and loan commitments		(552	)		(135	)		1,698			1,011
Charge-offs		(362	)		(66	)		(2,020	)		(2,448	)
Recoveries		116			209			384			709
Net (charge-offs) recoveries		(246	)		143			(1,636	)		(1,739	)
Allowance for credit losses - loans		21,052			9,701			4,708			35,461
Allowance for credit losses - loan commitments		597			121			28			746
Ending balance	$	21,649		$	9,822		$	4,736		$	36,207

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Note 6. Deposits

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

	*March 31, 2025*		*December 31, 2024*
(Amounts in thousands)
Noninterest-bearing demand deposits	$	893,794	$	883,499
Interest-bearing deposits:
Interest-bearing demand deposits		654,738		675,522
Money market accounts		330,327		338,527
Savings deposits		570,661		553,158
Certificates of deposit		158,735		162,139
Individual retirement accounts		76,222		78,402
Total interest-bearing deposits		1,790,683		1,807,748
Total deposits	$	2,684,477	$	2,691,247

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Note 7. Borrowings

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

	*March 31, 2025*					*December 31, 2024*
			*Weighted*					*Weighted*
(Amounts in thousands)	*Balance*		*Average Rate*			*Balance*		*Average Rate*
Retail repurchase agreements	$	908		0.06	%	$	906		0.05	%

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

The Company had no long-term borrowings as of March 31, 2025, or December 31, 2024.

Unused borrowing capacity with the FHLB totaled $330.83 million, net of FHLB letters of credit of $122.72 million, as of March 31, 2025. As of March 31, 2025, the Company maintains $453.54 million in qualifying loans to secure the FHLB borrowing capacity.

Note 8. Derivative Instruments and Hedging Activities

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

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

The Company's interest rate swaps qualify as fair value hedging instruments; therefore, fair value changes in the derivative and hedged item attributable to the hedged risk are recognized in earnings in the same period. The fair value hedges were effective as of March 31, 2025, and December 31, 2024.

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

	*March 31, 2025*						*December 31, 2024*
	*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	$	2,892	$	84	$	-	$	3,109	$	116	$	—
Total derivatives	$	2,892	$	84	$	-	$	3,109	$	116	$	-

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 March 31,*
(Amounts in thousands)	*2025*			*2024*			*Income Statement Location*
Derivatives designated as hedges
Interest rate swaps	$	(16	)	$	(27	)	Interest and fees on loans
Total derivative (income) expense	$	(16	)	$	(27	)

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Note 9. 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 March 31,*
	*2025*		*2024*		*Income Statement Location*
(Amounts in thousands)
Interest cost	$	95	$	104	Other expense
Amortization of prior service cost		-		-	Other expense
Amortization of losses		5		9	Other expense
Net periodic cost	$	100	$	113

Note 10. Earnings per Share

The following table presents the calculation of basic and diluted earnings per common share for the periods indicated:

	*Three Months Ended*
	*March 31,*
	*2025*		*2024*
(Amounts in thousands, except share and per share data)
Net income	$	11,818	$	12,845

Weighted average common shares outstanding, basic		18,324,760		18,476,128
Dilutive effect of potential common shares
Stock options		30,724		21,132
Restricted stock units		95,837		48,651
Total dilutive effect of potential common shares		126,561		69,782
Weighted average common shares outstanding, diluted		18,451,321		18,545,910

Basic earnings per common share	$	0.64	$	0.70
Diluted earnings per common share		0.64		0.71

Antidilutive potential common shares
Stock options		-		-
Stock units		-		-
Total potential antidilutive shares		-		-

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Note 11. Accumulated Other Comprehensive Income (Loss)

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

	*Three Months Ended March 31, 2025*
	*Unrealized*
	*Losses on Available-*
	*for-Sale Securities*			*Employee Benefit Plans*			*Total*
(Amounts in thousands)
Beginning balance	$	(11,723	)	$	552		$	(11,171	)
Other comprehensive income before reclassifications		1,666			(4	)		1,662
Reclassified from AOCI		-			4			4
Other comprehensive income, net		1,666			-			1,666
Ending balance	$	(10,057	)	$	552		$	(9,505	)

	*Three Months Ended March 31, 2024*
	*Unrealized*
	*Losses on Available-*
	*for-Sale Securities*			*Employee Benefit Plans*			*Total*
(Amounts in thousands)
Beginning balance	$	(11,126	)	$	175		$	(10,951	)
Other comprehensive loss before reclassifications		(948	)		(7	)		(955	)
Reclassified from AOCI		-			7			7
Other comprehensive loss, net		(948	)		-			(948	)
Ending balance	$	(12,074	)	$	175		$	(11,899	)

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

	*Three Months Ended*
	*March 31,*				*Income Statement*
(Amounts in thousands)	*2025*		*2024*		*Line Item Affected*
Available-for-sale securities
Gain recognized	$	-	$	-	Net loss on sale of securities
Reclassified out of AOCI, before tax		-		-	Income before income taxes
Income tax expense		-		-	Income tax expense
Reclassified out of AOCI, net of tax		-		-	Net income
Employee benefit plans
Amortization of prior service cost	$	-	$	-	Salaries and employee benefits
Amortization of net actuarial benefit cost		5		9	Salaries and employee benefits
Reclassified out of AOCI, before tax		5		9	Income before income taxes
Income tax expense		1		2	Income tax expense
Reclassified out of AOCI, net of tax		4		7	Net income
Total reclassified out of AOCI, net of tax	$	4	$	7	Net income

(1)	Amortization is included in net periodic pension cost. See Note 9, "Employee Benefit Plans."

Note 12. Fair Value

Financial Instruments Measured at Fair Value

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

●

Level 1 – Observable, unadjusted quoted prices in active markets

●

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

●

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

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

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Assets and Liabilities Reported at Fair Value on a Recurring Basis

Available-for-sale Debt Securities

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

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

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

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

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

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

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

	*March 31, 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	$	10,921	$	-	$	10,921	$	-
Municipal securities		12,467		-		12,467		-
Corporate Notes		27,827				27,827
Agency mortgage-backed securities		78,444		-		78,444		-
Total available-for-sale debt securities		129,659		-		129,659		-
Equity securities		55		-		55		-
Fair value loans		2,808		-		-		2,808
Derivative assets		84		-		84		-
Deferred compensation assets		9,255		9,255		-		-
Deferred compensation liabilities		10,761		10,761		-		-

	*December 31, 2024*
	*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	$	55,769	$	-	$	55,769	$	-
Municipal securities		13,837		-		13,837		-
Corporate notes		27,542		-		27,542		-
Agency mortgage-backed securities		72,701		-		72,701		-
Total available-for-sale debt securities		169,849		-		169,849		-
Equity securities		55		—		55		—
Fair value loans		2,993		—		—		2,993
Derivative assets		116		—		116		—
Deferred compensation assets		8,571		8,571		—		—
Deferred compensation liabilities		10,189		10,189		—		—

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Assets Measured at Fair Value on a Nonrecurring Basis

Impaired Loans. Fair value is based on appraised value adjusted for customized discounting criteria, Level 3 inputs.

The Company maintains an active and robust problem credit identification system. The impairment review includes obtaining third-party collateral valuations to help management identify potential credit impairment and determine the amount of impairment to record. The Company’s Special Assets staff manages and monitors all impaired loans. Internal collateral valuations are generally performed within two to four weeks of identifying the initial potential impairment. The internal valuation compares the original appraisal to current local real estate market conditions and considers experience and expected liquidation costs. The Company typically receives a third-party valuation within thirty to forty-five days of completing the internal valuation. When a third-party valuation is received, it is reviewed for reasonableness. Once the valuation is reviewed and accepted, discounts are applied to fair market value, based on, but not limited to, our historical liquidation experience for like collateral, resulting in an estimated net realizable value. The estimated net realizable value is compared to the outstanding loan balance to determine the appropriate amount of specific impairment reserve.

OREO. OREO is recorded at fair value on a nonrecurring basis using Level 3 inputs. The Company calculates the fair value of OREO from current or prior appraisals that have been adjusted for valuation declines, estimated selling costs, and other proprietary qualitative adjustments that are deemed necessary.

The following tables present assets measured at fair value on a nonrecurring basis, by the level of valuation inputs in the fair value hierarchy, as of the dates indicated:

	*March 31, 2025*
	*Total*		*Fair Value Measurements Using*
	*Fair Value*		*Level 1*		*Level 2*		*Level 3*
(Amounts in thousands)
Collateral dependent assets with specific reserves	$	1,156	$	-	$	-	$	1,156
OREO		298		-		-		298

	*December 31, 2024*
	*Total*		*Fair Value Measurements Using*
	*Fair Value*		*Level 1*		*Level 2*		*Level 3*
(Amounts in thousands)
Collateral dependent assets with specific reserves	$	531	$	-	$	-	$	531
OREO		521		-		-		521

Quantitative Information about Level 3 Fair Value Measurements

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

			*Discount Range*
	*Valuation*	*Unobservable*	*(Weighted Average)*
	*Technique*	*Input*	*March 31, 2025*

Collateral dependent assets with specific reserves	Discounted appraisals(1)	Appraisal adjustments(2)		0% (0%)
OREO	Discounted appraisals⁽¹⁾	Appraisal adjustments⁽²⁾		20% to 67% (62%)

(1)	Fair value is generally based on appraisals of the underlying collateral.
(2)	Appraisals may be adjusted by management for customized discounting criteria, estimated sales costs, and proprietary qualitative adjustments.

			*Discount Range*
	*Valuation*	*Unobservable*	*(Weighted Average)*
	*Technique*	*Input*	*December 31, 2024*

Collateral dependent assets with specific reserves	Discounted appraisals⁽¹⁾	Appraisal adjustments⁽²⁾		0% (0%)
OREO	Discounted appraisals⁽¹⁾	Appraisal adjustments⁽²⁾		20% to 74% (61%)

(1)	Fair value is generally based on appraisals of the underlying collateral.
(2)	Appraisals may be adjusted by management for customized discounting criteria, estimated sales costs, and proprietary qualitative adjustments.

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Fair Value of Financial Instruments

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

	*March 31, 2025*
	*Carrying*				*Fair Value Measurements Using*
(Amounts in thousands)	*Amount*		*Fair Value*		*Level 1*		*Level 2*		*Level 3*
Assets
Cash and cash equivalents	$	414,682	$	414,682	$	414,682	$	-	$	-
Debt securities available-for-sale		129,659		129,659		-		129,659		-
Equity securities		55		55		-		55		-
Loans held for investment, net of allowance		2,348,915		2,151,524		-		-		2,151,524
Derivative financial assets		84		84		-		84		-
Interest receivable		9,306		9,306		-		856		9,027
Deferred compensation assets		9,255		9,255		9,255		-		-

Liabilities
Time deposits		234,957		232,741		-		232,741		-
Securities sold under agreements to repurchase		908		908		-		908		-
Interest payable		838		838		-		838		-
Deferred compensation liabilities		10,761		10,761		10,761		-		-

	*December 31, 2024*
	*Carrying*				*Fair Value Measurements Using*
(Amounts in thousands)	*Amount*		*Fair Value*		*Level 1*		*Level 2*		*Level 3*
Assets
Cash and cash equivalents	$	377,454	$	377,454	$	377,454	$	-	$	-
Debt securities available-for-sale		169,849		169,849		-		169,849		-
Equity securities		55		55		-		55		-
Loans held for investment, net of allowance		2,381,264		2,177,891		-		-		2,177,891
Interest receivable		9,207		9,207		-		1,246		9,635
Deferred compensation assets		8,571		8,571		8,571		-		-
Derivative assets		116		116		-		116		-

Liabilities
Time deposits		240,541		238,262		-		238,262		-
Securities sold under agreements to repurchase		906		906		-		906		-
Interest payable		880		880		—		880		—
Deferred compensation liabilities		10,189		10,189		10,189		—		—

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Note 13. 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:

	*March 31, 2025*		*December 31, 2024*
(Amounts in thousands)
Commitments to extend credit	$	247,031	$	252,225
Standby letters of credit and financial guarantees⁽¹⁾		125,586		125,561
Total off-balance sheet risk	$	372,617		377,786

(1)	Includes FHLB letters of credit

Note 14. 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, 2024 (the “2024 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.

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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 bank institution. As of March 31, 2025, the Bank operated 53 branches in Virginia, West Virginia, North Carolina and Tennessee. As of March 31, 2025, full-time equivalent employees, calculated using the number of hours worked, totaled 583. Our primary source of earnings is net interest income, the difference between interest earned on assets and interest paid on liabilities, which is supplemented by fees for services, commissions on sales, and various deposit service charges. We fund our lending and investing activities primarily through the retail deposit operations of our branch banking network. We invest our funds primarily in loans to retail and commercial customers and various investment securities. Our common stock is traded on the NASDAQ Global Select Market under the symbol FCBC.

The Bank offers trust management, estate administration, and investment advisory services through its Trust Division and wholly owned subsidiary First Community Wealth Management Inc. (“FCWM”). The Trust Division manages inter vivos trusts and trusts under will, develops and administers employee benefit and individual retirement plans, and manages and settles estates. Fiduciary fees for these services are charged on a schedule related to the size, nature, and complexity of the account. Revenues consist primarily of investment advisory fees and commissions on assets under management and administration. As of March 31, 2025, the Trust Division and FCWM managed and administered $1.62 billion in combined assets under various fee-based arrangements as fiduciary or agent. The Bank also offers a full range of commercial and personal insurance products through its strategic partnership with Bankers Insurance, LLC.

Critical Accounting Estimates

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 2024 Form 10-K. Our critical accounting estimates are detailed in the “Critical Accounting Estimates” section in Part II, Item 7 of our 2024 Form 10-K.

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Performance Overview

Highlights of our results of operations for the three months ended March 31, 2025, and financial condition as of March 31, 2025, include the following:

●

Net interest margin for the first quarter of 2025 was 4.34%. The yield on earning assets decreased 5 basis points from the same period of 2024 and is primarily attributable to a decrease in interest income of $867 thousand. Interest income for loans and securities available-for-sale decreased $2.74 million and $470 thousand, respectively. The decreases were primarily due to decreases in the average balance for loans and securities available-for-sale of $154.04 million and $89.74 million, respectively. Additionally, the yield on loans decreased 8 basis points. The decrease in interest income on loans and securities available-for sale was somewhat offset by an increase in interest income on interest-bearing deposits with banks. Interest expense on interest-bearing liabilities increased $472 thousand and is primarily attributable to an increase in yield of 11 basis points.

	●	Noninterest income increased approximately $970 thousand, or 10.48%, when compared to the same quarter of 2024. The increase is primarily attributable to an increase in service charges on deposits of $526 thousand, or 15.89%, and an increase in other operating income of $491 thousand, or 35.07%. Noninterest expense increased $1.56 million, or 6.66%, when compared to the same period of 2024. The increase is primarily attributable to an increase in salaries and benefits of $754 thousand, or 5.99%.
	●	Annualized return on average assets ("ROA") was 1.49% for the first quarter of 2025 compared to 1.60% for the same period of 2024. Annualized return on average common equity ("ROE") was 9.49% for the first quarter of 2025 compared to 10.18% for the same period of 2024.

	●	Consolidated assets totaled $3.23 billion at March 31, 2025.
	●	Loans decreased $33.39 million, or 1.38%, from December 31, 2024. Securities available for sale decreased $40.19 million, or 23.66%, from December 31, 2024. Deposits decreased $6.77 million, or 0.25%, which was largely a function of declining higher-rate time deposits. Stockholder equity decreased $29.98 million, or 5.69% due to the payment of a special cash dividend in the first quarter of 2025. The net effect of these balance sheet changes resulted in an increase in cash and cash equivalents of $37.23 million, or 9.86%.
	●	The Company did not repurchase any common shares during the first quarter of 2025.
	●	Non-performing loans to total loans increased to 0.85% when compared with the same quarter of 2024. The Company experienced net charge-offs for the first quarter of 2025 of $1.39 million, or 0.24% of annualized average loans, compared to net charge-offs of $1.74 million, or 0.27%, of annualized average loans for the same period in 2024.
	●	The allowance for credit losses to total loans was 1.42% at March 31, 2025 compared to 1.44% at December 31, 2023, and 1.41% for March 31, 2024.
	●	Book value per share at March 31, 2025, was $27.09, a decrease of $1.64 from year-end 2024. The decrease is primarily attributable to the payment of the special cash dividend in the first quarter of 2025 of $2.07 per share totaling approximately $37.93 million.

Economic and Trade Policy Uncertainty

The Company continues to monitor the potential impact of evolving trade policies, including the threat of additional tariffs imposed by the United States. While no specific tariffs have been implemented during the reporting period that materially affect the Company’s operations, the potential for future changes in cross-border trade arrangements and import/export duties contributes to broader economic uncertainty. Management has considered these risks in its forward-looking assessments and determined that, as of the reporting date, there are no material adverse effects on the Company’s financial position, results of operations, or estimates related to credit losses or asset impairments.

Results of Operations

Net Income

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

	Three Months Ended
(Amounts in thousands, except per	March 31,						Increase
share data)	2025			2024			(Decrease)			% Change

Net income	$	11,818		$	12,845		$	(1,027	)		-8.00	%

Basic earnings per common share		0.64			0.70			(0.06	)		-8.57	%
Diluted earnings per common share		0.64			0.71			(0.07	)		-9.86	%

Return on average assets		1.49	%		1.60	%		-0.11	%		-6.88	%
Return on average common equity		9.49	%		10.18	%		-0.69	%		-6.78	%

Three-Month Comparison.

Net income decreased $1.03 million in the first quarter of 2025 compared to the same period in 2024. The decrease is primarily attributable to a decrease in net interest income of $1.33 million. Interest income decreased $860 thousand, or 2.39%, for the first quarter of 2025 when compared with the same period of 2024. Interest expense increased $471 thousand, or 10.70%, when compared with the same period of 2024. The increase in interest expense is primarily attributable to an increase in yield on time deposits.

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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 March 31,
	2025							2024
	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⁾	$	2,395,068	$	30,757		5.21	%	$	2,549,107	$	33,500		5.29	%
Securities available-for-sale		149,266		1,261		3.43	%		239,010		1,731		2.91	%
Interest-bearing deposits		295,939		3,262		4.47	%		66,483		916		5.54	%
Total earning assets		2,840,273		35,280		5.04	%		2,854,600		36,147		5.09	%
Other assets		373,791							373,614
Total assets	$	3,214,064						$	3,228,214

Liabilities and stockholders' equity
Interest-bearing deposits
Demand deposits	$	658,651	$	180		0.11	%	$	665,875	$	162		0.10	%
Savings deposits		891,148		3,311		1.51	%		866,084		3,412		1.58	%
Time deposits		238,254		1,380		2.35	%		249,974		790		1.27	%
Total interest-bearing deposits		1,788,053		4,871		1.10	%		1,781,933		4,364		0.98	%
Borrowings
Retail repurchase agreements		1,071		-		0.06	%		1,127		-		0.05	%
Federal funds purchased		-		-		-			2,527		35		5.52	%
Total borrowings		1,071		-		0.06	%		3,654		35		3.85	%
Total interest-bearing liabilities		1,789,124		4,871		1.10	%		1,785,587		4,399		0.99	%
Noninterest-bearing demand deposits		859,988							886,947
Other liabilities		60,167							48,298
Total liabilities		2,709,279							2,720,832
Stockholders' equity		504,785							507,382
Total liabilities and stockholders' equity	$	3,214,064						$	3,228,214
Net interest income, FTE⁽¹⁾			$	30,409						$	31,748
Net interest rate spread						3.94	%						4.10	%
Net interest margin, FTE⁽¹⁾						4.34	%						4.47	%

(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 $556 thousand and $781 thousand for the three months ended March 31, 2025 and 2024, 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
	March 31, 2025 Compared to 2024
	Dollar Increase (Decrease) due to
							Rate/
(Amounts in thousands)	Volume			Rate			Volume			Total
Interest earned on (1)
Loans	$	(2,024	)	$	(492	)	$	(227	)	$	(2,743	)
Securities available-for-sale		(650	)		305			(125	)		(470	)
Interest-bearing deposits with other banks		3,161			(177	)		(638	)		2,346
Total interest earning assets		487			(364	)		(990	)		(867	)

Interest paid on
Demand deposits		(2	)		21			(1	)		18
Savings deposits		99			(167	)		(33	)		(101	)
Time deposits		(37	)		670			(43	)		590
Federal funds purchased		-			-			(35	)		(35	)
Retail repurchase agreements		-			-			-			-
FHLB advances and other borrowings		-			-			-			-
Total interest-bearing liabilities		60			524			(112	)		472

Change in net interest income (1)	$	427		$	(888	)	$	(878	)	$	(1,339	)

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

Three-Month Comparison. Net interest income comprised 74.76% of total net interest and noninterest income in the first quarter of 2025 compared to 77.36% in the same quarter of 2024. Net interest income on a GAAP basis decreased $1.33 million, or 4.21%. Net interest income on a FTE basis decreased $1.34 million, with a percentage decrease of 4.22%. The net interest margin on a FTE basis decreased 13 basis points while the net interest spread on a FTE basis decreased 16 basis points. The decrease in both the net interest margin and the net interest spread was primarily the result of a decrease in interest income driven by a decrease in the average balance in both the loan and the securities available for sale portfolios. In addition interest expense increased and was primarily driven by an increase in yield paid on time deposits.

Average earning assets decreased $14.33 million, or 0.50%, primarily due to a decrease in the average balance for loans of $154.04 million, or 6.04%. In addition, the average balance for available-for-sale securities decreased $89.74 million, or 37.55%. These decreases to earning assets were offset by an increase in the average balance for interest-bearing balances with banks of $229.46 million, or 345.13%. The yield on earning assets decreased 5 basis points, or 0.98%, primarily due to a decrease in the yield on loans of 8 basis points, or 1.51%. The average loan to deposit ratio decreased to 90.45% from 95.51% reported in the same quarter of 2024. Non-cash accretion income was $556 thousand for the first quarter compared to $781 thousand reported in the same period of 2024.

Average interest-bearing liabilities, which consist of interest-bearing deposits and borrowings, increased $3.54 million, or 0.20%, primarily due to a increase in deposits of $6.12 million, or 0.34%. Savings deposits increased $25.06 million, or 2.89%. Time deposits decreased $11.72 million, or 4.69% and interest-bearing demand deposits decreased $7.22 million, or 1.08%. The yield on interest-bearing liabilities increased 11 basis points and is primarily due to the increase in yield on time deposits.

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Provision for Credit Losses

Three-Month Comparison. The provision charged to operations decreased $690 thousand in the first quarter of 2025 compared to the same quarter of 2024. Provision for credit losses for loans of $350 thousand was recorded in the first quarter of 2025 compared to the provision of $1.01 million recorded in the same period of 2024. There was a recovery of provision recorded for the allowance for unfunded commitments during the first quarter of 2025 of $29 thousand. There was no provision or recovery of provision recorded for unfunded commitments during the first quarter of 2024.

Noninterest Income

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

	Three Months Ended
	March 31,				Increase			%
	2025		2024		(Decrease)			Change
(Amounts in thousands)
Wealth management	$	1,162	$	1,099	$	63			5.73	%
Service charges on deposits		3,836		3,310		526			15.89	%
Other service charges and fees		3,340		3,450		(110	)		-3.19	%
Other operating income		1,891		1,400		491			35.07	%
Total noninterest income	$	10,229	$	9,259	$	970			10.48	%

Three-Month Comparison. Noninterest income comprised 25.24% of total net interest and noninterest income in the first quarter of 2025 compared to 22.64% in the same quarter of 2024. Noninterest income increased $970 thousand or 10.48%. The increase is primarily attributable to an increase in service charges on deposits of $526 thousand, or 15.89%, and an increase in other operating income of $491 thousand, or 35.07%.

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Noninterest Expense

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

	Three Months Ended
	March 31,				Increase					%
	2025		2024		(Decrease)			Change
(Amounts in thousands)
Salaries and employee benefits	$	13,335	$	12,581	$	754			5.99	%
Occupancy expense		1,576		1,378		198			14.37	%
Furniture and equipment expense		1,575		1,545		30			1.94	%
Service fees		2,484		2,449		35			1.43	%
Advertising and public relations		1,055		796		259			32.54	%
Professional fees		372		372		-			0.00	%
Amortization of intangibles		524		530		(6	)		-1.13	%
FDIC premiums and assessments		362		369		(7	)		-1.90	%
Other operating expense		3,661		3,366		295			8.76	%
Total noninterest expense	$	24,944	$	23,386	$	1,558			6.66	%

Three-Month Comparison. Noninterest expense increased $1.56 million, or 6.66%, in the first quarter of 2025 compared to the same quarter of 2024. The largest increases were primarily due to increases in salaries and employee benefits of $754 thousand, or 5.99%, other operating expense of $295 thousand, or 8.76%, and advertising and public relations of $259 thousand, or 32.54%.

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 and increases in the cash surrender value of life insurance policies.

Three-Month Comparison. Income tax expense decreased $202 thousand, or 5.54%. The effective tax rate increased to 22.57% in the first quarter of 2025 from 22.11% in the same quarter of 2024.

Non-GAAP Financial Measures

In addition to financial statements prepared in accordance with GAAP, we use certain non-GAAP financial measures that management believes provide investors with important information useful in understanding our operational performance and comparing our financial measures with other financial institutions. The non-GAAP financial measure presented in this report includes net interest income on a FTE basis. 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%. 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.

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The following table reconciles net interest income and margin, as presented in our consolidated statements of income, to net interest income on a FTE basis for the periods indicated:

	Three Months Ended March 31,
	2025			2024
(Amounts in thousands)
Net interest income, GAAP	$	30,298		$	31,629
FTE adjustment(1)		111			119
Net interest income, FTE		30,409			31,748

Net interest margin, GAAP		4.33	%		4.44	%
FTE adjustment(1)		0.02	%		0.03	%
Net interest margin, FTE		4.34	%		4.47	%

(1) FTE basis of 21%.

Financial Condition

Total assets as of March 31, 2025, decreased $35.44 million, or 1.09%, from December 31, 2024. The decrease in assets was primarily driven by decreases in the loans and securities available-for-sale portfolios. Total liabilities decreased $5.47 million, or 0.20%, and was primarily driven by a decrease in deposits. Stockholders' equity decreased $29.98 million, or 5.69%.

Investment Securities

Our investment securities are used to generate interest income through the employment of excess funds, to provide liquidity, to fund loan demand or deposit liquidation, and to pledge as collateral where required. The composition of our investment portfolio changes from time to time as we consider our liquidity needs, interest rate expectations, asset/liability management strategies, and capital requirements.

Available-for-sale debt securities as of March 31, 2025, decreased $40.19 million, or 23.66%, compared to December 31, 2024. The decrease is primarily due to the maturities and calls of securities of $81.39 million during the first quarter of 2025 offset by purchases of $38.75 million. The market value of debt securities available-for-sale as a percentage of amortized cost was 91.06% as of March 31, 2025, compared to 91.97% as of December 31, 2024.

Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) our intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that we will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments. U.S. Treasury Securities, Agency-Backed Securities including GNMA, FHLMC, FNMA, FHLB, FFCB and SBA. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United State Government or one of its agencies. Municipal securities and all other securities that do not have a zero expected credit loss are evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value. All debt securities available-for-sale in an unrealized loss position as of March 31, 2025 continue to perform as scheduled and we do not believe that a provision for credit losses is necessary.

Loans Held for Investment

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

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

	March 31, 2025					December 31, 2024					March 31, 2024
(Amounts in thousands)	Amount		Percent			Amount		Percent			Amount		Percent
Loans held for investment
Commercial loans
Construction, development, and other land	$	70,205		2.95	%	$	72,319		2.99	%	$	88,841		3.53	%
Commercial and industrial		246,602		10.35	%		232,854		9.64	%		203,530		8.08	%
Multi-family residential		192,193		8.07	%		199,521		8.26	%		194,188		7.71	%
Single family non-owner occupied		191,531		8.04	%		195,588		8.10	%		219,669		8.72	%
Non-farm, non-residential		840,746		35.29	%		852,223		35.27	%		887,255		35.21	%
Agricultural		15,579		0.65	%		16,676		0.69	%		19,763		0.78	%
Farmland		11,794		0.49	%		12,311		0.51	%		13,572		0.53	%
Total commercial loans		1,568,650		65.84	%		1,581,492		65.46	%		1,626,818		64.56	%
Consumer real estate loans
Home equity lines		87,988		3.69	%		90,227		3.73	%		87,181		3.46	%
Single family owner occupied		640,669		26.89	%		650,306		26.92	%		687,810		27.30	%
Owner occupied construction		3,873		0.16	%		4,491		0.19	%		5,848		0.23	%
Total consumer real estate loans		732,530		30.74	%		745,024		30.84	%		780,839		30.99	%
Consumer and other loans
Consumer loans		79,503		3.34	%		87,758		3.63	%		110,787		4.40	%
Other		2,016		0.08	%		1,815		0.08	%		1,389		0.05	%
Total consumer and other loans		81,519		3.42	%		89,573		3.71	%		112,176		4.45	%
Total loans held for investment, net of unearned income		2,382,699		100.00	%		2,416,089		100.00	%		2,519,833		100.00	%
Less: allowance for credit losses		33,784					34,825					35,461
Total loans held for investment, net of unearned income and allowance	$	2,348,915				$	2,381,264				$	2,484,372

Total loans as of March 31, 2025, decreased $33.39 million, or 1.38%, compared to December 31, 2024. The largest decrease occurred in the commercial loans segment with an overall decrease of $12.84 million, or 0.81%. Within this segment, the largest decreases occurred in non-farm, non-residential loans, multi-family, and single family non-owner occupied loans with decreases of $11.48 million, $7.33 million, and $4.06 million, respectively. These decreases were offset by an increase in commercial and industrial loans of $13.75 million. The consumer real estate segment decreased $12.49 million, or 1.68%, primarily due to a decrease in single family owner occupied of $9.64 million, or 1.48%.

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 loan 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.

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

	March 31, 2025			December 31, 2024			March 31, 2024
(Amounts in thousands)
Nonperforming
Nonaccrual loans	$	19,974		$	19,869		$	19,617
Accruing loans past due 90 days or more		117			149			30
Modified loans past due 90 days or more not included in nonaccrual		-			-			-
Total nonperforming loans		20,091			20,018			19,647
OREO		298			521			374
Total nonperforming assets	$	20,389		$	20,539		$	20,021


Additional Information
Total modified loans	$	2,124		$	2,260		$	2,177


Asset Quality Ratios:
Nonperforming loans to total loans		0.84	%		0.83	%		0.78	%
Nonperforming assets to total assets		0.63	%		0.63	%		0.62	%
Allowance for credit losses to nonperforming loans		168.15	%		173.97	%		180.49	%
Allowance for credit losses to total loans		1.42	%		1.44	%		1.41	%

Nonperforming assets as of March 31, 2025, decreased $150 thousand, or 0.73%, from December 31, 2024. Nonaccrual loans increased $105 thousand, or 0.53%. OREO decreased $223 thousand, or 42.80%. In addition, accruing loans past due 90 days or more decreased $32 thousand from year-end. As of March 31, 2025, nonaccrual loans were largely attributed to single family owner occupied (43.93%), non-farm, non-residential (12.39%), and commercial and industrial of (10.83%). Certain loans included in the nonaccrual category have been written down to estimated realizable value or assigned specific reserves in the allowance for loan 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 $33.49 million as of March 31, 2025, a decrease of $4.06 million, or 10.81%, compared to $37.55 million as of December 31, 2024. Delinquent loans as a percent of total loans totaled 1.33% as of March 31, 2025, which includes past due loans (0.57%) and nonaccrual loans (0.84%).

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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 March 31, 2025, were $2.12 million. As of March 31, 2025, $176 thousand of these loans were 30-89 days past due. Modified loans past due 90 days or more totaled $125 thousand and are included in the total for nonaccrual loans.

OREO, which is carried at the lesser of estimated net realizable value or cost, decreased $223 thousand, or 42.80%, as of March 31, 2025, compared to December 31, 2024, and consisted of 5 properties with an average holding period of approximately 8 months. The net loss on the sale of OREO totaled $80 thousand for the three months ended March 31, 2025, compared to a net loss of $14 thousand for the same period of the prior year. The following table presents the changes in OREO during the periods indicated:

	Three Months Ended March 31,
	2025			2024
(Amounts in thousands)
Beginning balance January 1	$	521		$	192
Additions		-			272
Disposals		(223	)		(41	)
Valuation adjustments		-			(14	)
Other adjustments		-			(35	)
Ending balance	$	298		$	374

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 2024 Form 10-K.

As of March 31, 2025, the balance of the ACL for loans was $33.78 million, or 1.42% of total loans. The ACL at March 31, 2025, decreased $1.04 million from the balance of $34.83 million recorded at December 31, 2024. This decrease included a $350 thousand provision offset by net charge-offs for the three months of $1.39 million.

At March 31, 2025, the Company also had an allowance for unfunded commitments of $312 thousand which was recorded in Other Liabilities on the Balance Sheet. During the first three months of 2025, the Company recorded a recovery of provision for credit losses for loan commitments of $29 thousand There was no provision or recovery of provision recorded in the same period of 2024.

Deposits

Total deposits as of March 31, 2025, decreased $6.77 million, or 0.25%, compared to December 31, 2024. The largest decreases in deposits occurred in interest-bearing demand of $20.78 million, or 3.08%, and time deposits of $5.58 million, or 2.32%. These decreases were offset by an increase in noninterest-bearing demand of $10.30 million, or 1.17% and savings of $9.3 million, or 1.04%.

Total borrowings in the form of retail repurchase agreements as of March 31, 2025, decreased $2 thousand, or 0.22%, compared to December 31, 2024.

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 March 31, 2025, the Company’s cash reserves and short-term investment securities totaled $18.14 million and $10.92 million, respectively. The Company’s cash reserves and investments provide adequate working capital to meet obligations for the next twelve months.

In addition to cash on hand and deposits with other financial institutions, we rely on customer deposits, cash flows from loans and investment securities, and lines of credit from the FHLB and the Federal Reserve Bank (“FRB”) Discount Window to meet potential liquidity demands. These sources of liquidity are immediately available to satisfy deposit withdrawals, customer credit needs, and our operations. Secondary sources of liquidity include approved lines of credit with correspondent banks and unpledged available-for-sale securities. As of March 31, 2025, our unencumbered cash totaled $414.68 million, unused borrowing capacity from the FHLB totaled $330.83 million, available credit from the FRB Discount Window totaled $5.82 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $104.22 million.

Capital Resources

We are committed to effectively managing our capital to protect our depositors, creditors, and shareholders. Failure to meet certain capital requirements may result in actions by regulatory agencies that could have a material impact on our operations. Total stockholders’ equity as of March 31, 2025, decreased $29.98 million, or 5.69%, to $496.42 million from $526.39 million as of December 31, 2024. The decrease in capital is primarily attributable to the payment of the special cash dividend in the first quarter of 2025 of $2.07 per share totaling approximately $37.93 million in addition to the regular cash dividend of $0.31 per share totaling approximately $5.65 million. The decrease was offset by net income of $11.82 million. Book value per share at March 31, 2025, was $27.09 compared to $28.73 at year-end 2024.

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 2024 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:

	March 31, 2025		December 31, 2024
	Company	Bank	Company	Bank

Common equity Tier 1 ratio	15.56%	14.03%	16.75%	13.89%
Tier 1 risk-based capital ratio	15.56%	14.03%	16.75%	13.89%
Total risk-based capital ratio	16.81%	15.28%	18.00%	15.15%
Tier 1 leverage ratio	11.37%	10.37%	12.25%	10.32%

The Company's risk-based capital ratios as of March 31, 2025, decreased from December 31, 2024, primarily due to a decrease in capital levels. The decrease in capital was primarily driven by the payment of a special cash dividend of $2.07 per share totaling approximately $37.93 million during the first quarter of 2025. While the Company's risk-based capital ratios decreased, the Bank's risk-based capital ratios increased. The increase in the Bank's risk-based capital ratios was primarily due to a decrease in risk-weighted assets. As of March 31, 2025, we continued to meet all capital adequacy requirements and were classified as well-capitalized under the regulatory framework for prompt corrective action. Management believes there have been no conditions or events that would change the Bank’s classification. Additionally, our capital ratios were in excess of the minimum standards under the Basel III capital rules as of March 31, 2025.

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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:

	March 31, 2025		December 31, 2024
(Amounts in thousands)
Commitments to extend credit	$	247,031	$	252,225
Standby letters of credit and financial guarantees ⁽¹⁾		125,586		125,561
Total off-balance sheet risk	$	372,617	$	377,786

(1)	Includes FHLB letters of credit

Market Risk and Interest Rate Sensitivity

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

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

As of March 31, 2025, the Federal Open Market Committee had set the benchmark federal funds rate to a range of 425 to 450 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:

	March 31, 2025						December 31, 2024
Increase (Decrease) in Basis Points	Change in Net Interest Income			Percent Change			Change in Net Interest Income			Percent Change
(Dollars in thousands)
200	$	2,795			2.2	%	$	2,997			2.4	%
100		1,405			1.1	%		1,505			1.2	%
(100)		(553	)		(0.4	)%		(2,883	)		-2.3	%
(200)		(1,221	)		(1.0	)%		(6,325	)		-5.0	%

Inflation and Changing Prices

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

Astronomic federal government spending alongside labor shortages and supply chain complications have contributed to rising inflation. The timing and impact of inflation and rising interest rates on our business and related financial results will depend on future developments, which are highly uncertain and difficult to predict.

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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 March 31, 2025, our disclosure controls and procedures were effective.

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

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

Changes in Internal Control over Financial Reporting

We assess the adequacy of our internal control over financial reporting quarterly and enhance our controls in response to internal control assessments and internal and external audit and regulatory recommendations. There were no changes in our internal control over financial reporting during the quarter ended March 31, 2025, 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, 2024, 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, 2024 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, 2024.

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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

During the first quarter of 2025, the Company purchased 12,854 shares of its common stock.

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

	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)

January 1-31, 2025		-	$	-		-		2,245,206
February 1-28, 2025		-		-		-		2,245,206
March 1-31, 2025		-		-		-		2,245,206
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 March 31, 2025, 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 Surrey Bancorp, incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K dated and filed November 18, 2022
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
10.2**	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
10.1.7**	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
10.3**	First Community Bancshares, Inc. 2001 Nonqualified Director Stock Option Agreement, incorporated by reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q for the period ended June 30, 2002, filed on August 14, 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**	Employment Agreement between First Community Bancshares, Inc. and David D. Brown, incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K dated and filed on April 16, 2015
10.15**	Employment Agreement between First Community Bancshares, Inc. and Gary R. Mills, incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated and filed on April 16, 2015
10.16**	Employment Agreement between First Community Bancshares, 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 April 16, 2015
10.17**	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
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 March 31, 2025, (Unaudited) and December 31, 2024; (ii) Condensed Consolidated Statements of Income (Unaudited) for the three months ended March 31, 2025 and 2024; (iii) Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended March 31, 2025 and 2024; (iv) Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three months ended March 31, 2025 and 2024; (v) Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2025 and 2024; and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).

104*

The cover page of First Community Bankshares, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, 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 May 2, 2025.

		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)