FCBC Net Income Dips 5.9% Amidst Lower Loan Balances, Higher Noninterest Income

TL;DR

**FCBC's net income is down, but their pivot to fee-based services is a smart play in a tough lending market.**

AI Summary

FIRST COMMUNITY BANKSHARES INC (FCBC) reported a net income of $12.266 million for the three months ended September 30, 2025, a decrease of 5.89% from $13.033 million in the same period of 2024. For the nine months ended September 30, 2025, net income was $36.329 million, down 5.79% from $38.564 million in 2024. Total interest income decreased to $35.699 million for the three-month period in 2025 from $36.892 million in 2024, and to $106.256 million for the nine-month period in 2025 from $109.710 million in 2024. Net interest income after provision for credit losses remained relatively stable at $31.297 million for the three months ended September 30, 2025, compared to $30.234 million in 2024, primarily due to a zero provision for credit losses in 2025 versus $1.360 million in 2024. Noninterest income saw a positive trend, increasing to $10.889 million for the three-month period in 2025 from $10.452 million in 2024, driven by a 28.01% increase in wealth management income to $1.371 million and a 23.44% increase in service charges on deposits to $4.520 million. Total assets decreased by 2.20% to $3.189 billion as of September 30, 2025, from $3.261 billion at December 31, 2024, mainly due to a reduction in loans held for investment, net, from $2.381 billion to $2.299 billion. The company also reported merger expenses of $787 thousand for the three and nine months ended September 30, 2025, which were not present in the prior year.

Why It Matters

FCBC's slight decline in net income and total assets, coupled with increased noninterest income, signals a strategic shift or adaptation to market conditions. For investors, the reduction in loans held for investment, net, by $81.556 million could indicate a more conservative lending approach or reduced demand, impacting future interest income. The rise in wealth management and service charges on deposits suggests successful diversification efforts, which could provide a more stable revenue stream in a competitive banking landscape. Employees might see continued focus on fee-based services, potentially shifting job roles. Customers could benefit from enhanced wealth management offerings. The broader market will watch if this trend of declining loan portfolios and rising noninterest income becomes a norm for regional banks, especially given the $787 thousand in merger expenses, hinting at potential consolidation or expansion activities.

Risk Assessment

Risk Level: medium — The company experienced a 5.79% decrease in net income for the nine months ended September 30, 2025, to $36.329 million from $38.564 million in the prior year. Total assets also declined by 2.20% from $3.261 billion at December 31, 2024, to $3.189 billion at September 30, 2025, primarily driven by an $81.556 million reduction in net loans held for investment. These financial contractions, alongside new merger expenses of $787 thousand, indicate potential headwinds and strategic adjustments.

Analyst Insight

Investors should closely monitor FCBC's future filings for details on the merger expenses and the impact of their noninterest income growth on overall profitability. Evaluate if the increase in wealth management and service charges can sustainably offset the decline in interest income from loans. Consider the implications of the shrinking loan portfolio on long-term growth prospects.

Financial Highlights

revenue

$35.699M

total Assets

$3.189B

net Income

$12.266M

cash Position

$427.705M

revenue Growth

-2.15%

Revenue Breakdown

Key Numbers

• $12.266M — Net Income (Q3 2025) (Decreased from $13.033M in Q3 2024)
• $36.329M — Net Income (9M 2025) (Decreased from $38.564M in 9M 2024)
• $3.189B — Total Assets (Sep 30, 2025) (Decreased from $3.261B at Dec 31, 2024)
• $2.299B — Loans held for investment, net (Sep 30, 2025) (Decreased from $2.381B at Dec 31, 2024)
• $787K — Merger expenses (9M 2025) (New expense not present in 2024)
• $4.520M — Service charges on deposits (Q3 2025) (Increased 23.44% from $3.661M in Q3 2024)
• $1.371M — Wealth management income (Q3 2025) (Increased 28.01% from $1.071M in Q3 2024)
• $0 — Provision for credit losses (Q3 2025) (Decreased from $1.360M in Q3 2024)
• $54.923M — Common dividends declared (9M 2025) (Increased from $16.345M in 9M 2024, including a special dividend of $2.07 per share)
• 18,314,905 — Shares outstanding (Sep 30, 2025) (Slightly decreased from 18,321,795 at Dec 31, 2024)

Key Players & Entities

• FIRST COMMUNITY BANKSHARES INC /VA/ (company) — Registrant
• FCBC (company) — Ticker symbol
• First Community Bank (company) — Wholly owned subsidiary
• First Community Wealth Management (company) — Wholly owned subsidiary
• SEC (regulator) — Securities and Exchange Commission
• $12.266 million (dollar_amount) — Net income for Q3 2025
• $36.329 million (dollar_amount) — Net income for nine months ended Sep 30, 2025
• $3.189 billion (dollar_amount) — Total assets as of Sep 30, 2025
• $787 thousand (dollar_amount) — Merger expenses for Q3 and nine months ended Sep 30, 2025
• NASDAQ Global Select (company) — Exchange where common stock is registered

FAQ

Risk Factors

• Interest Rate Sensitivity [medium — financial]: Fluctuations in interest rates can impact net interest income and the fair value of financial instruments. For example, a decrease in interest rates could reduce the bank's profitability.
• Cybersecurity and Data Breaches [high — operational]: The company relies on technology for its operations, making it vulnerable to cyberattacks and data breaches. A successful breach could lead to financial losses and reputational damage.
• Compliance with Banking Regulations [high — regulatory]: The banking industry is heavily regulated. Changes in regulations or failure to comply can result in fines, penalties, and increased operating costs.
• Economic Downturn [medium — market]: A general economic slowdown or recession could negatively affect loan demand, increase credit risk, and reduce the value of investments.
• Credit Risk [high — financial]: The risk that borrowers will default on their loans, leading to losses for the bank. The allowance for credit losses was $31.597 million as of September 30, 2025.
• Merger and Acquisition Integration [medium — operational]: The company incurred $787 thousand in merger expenses for the nine months ended September 30, 2025. Successful integration of acquired entities is crucial for realizing expected synergies.

Industry Context

The banking industry is characterized by intense competition, stringent regulatory oversight, and sensitivity to macroeconomic conditions. Community banks like FCBC often focus on local markets, leveraging customer relationships while navigating challenges such as digital disruption and evolving consumer preferences. Interest rate environments significantly influence profitability, with rising rates potentially boosting net interest margins but also increasing funding costs and credit risk.

Regulatory Implications

FCBC operates under a complex web of federal and state banking regulations. Compliance with capital adequacy, liquidity, and consumer protection rules is paramount. Any changes in regulatory requirements, such as increased capital buffers or new compliance mandates, could impact profitability and operational flexibility. The company's recent merger expenses also highlight the regulatory scrutiny involved in M&A activities.

What Investors Should Do

1. Monitor loan growth and credit quality trends.
2. Analyze the sustainability of noninterest income growth.
3. Evaluate the impact of merger expenses and integration.
4. Assess the bank's response to interest rate fluctuations.

Key Dates

• 2025-09-30: End of Q3 2025 — Reporting period for the 10-Q, showing decreased net income and total assets compared to prior periods.
• 2024-12-31: End of Fiscal Year 2024 — Baseline for comparison of asset and loan portfolio changes.
• 2024-09-30: End of Q3 2024 — Prior year period for comparison of income statement items, showing higher net income and interest income.

Glossary

Provision for credit losses

An expense set aside by a financial institution to cover potential loan defaults and uncollectible debts. (A zero provision in Q3 2025 compared to $1.360 million in Q3 2024 significantly boosted net interest income after provision.)

Noninterest income

Revenue generated from sources other than traditional interest-bearing activities, such as fees, commissions, and service charges. (Growth in noninterest income, particularly from wealth management and service charges, partially offset declines in interest income.)

Loans held for investment, net

The total value of loans originated by the bank that are intended to be held until maturity, net of unearned income and allowance for credit losses. (A decrease in this category from $2.381 billion to $2.299 billion was a primary driver of the overall decrease in total assets.)

Accumulated other comprehensive loss

A component of equity that includes unrealized gains and losses on certain investments and foreign currency translations that have not yet been realized. (This account showed a reduction in loss from $(11.171) million to $(8.054) million, positively impacting total stockholders' equity.)

Federal funds sold

Short-term loans between banks, typically overnight, to meet reserve requirements or manage liquidity. (An increase in Federal funds sold from $296.997 million to $348.874 million indicates a shift in short-term asset allocation.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, FIRST COMMUNITY BANKSHARES INC /VA/ (FCBC) reported a decline in net income for both the three-month period (down 5.89% to $12.266 million) and the nine-month period (down 5.79% to $36.329 million). Total assets also decreased by 2.20% to $3.189 billion as of September 30, 2025, primarily due to a reduction in loans. A significant factor influencing net interest income was the absence of a provision for credit losses in the current year, which offset a decrease in total interest income.

Key Financial Figures

• $1.00 — nge on which registered Common Stock ($1.00 par value) FCBC NASDAQ Global Selec

Filing Documents

• fcbc20250930_10q.htm (10-Q) — 5150KB
• ex_847338.htm (EX-31.1) — 13KB
• ex_847339.htm (EX-31.2) — 13KB
• ex_847340.htm (EX-32) — 7KB
• 0001437749-25-033752.txt ( ) — 20646KB
• fcbc-20250930.xsd (EX-101.SCH) — 68KB
• fcbc-20250930_cal.xml (EX-101.CAL) — 64KB
• fcbc-20250930_def.xml (EX-101.DEF) — 458KB
• fcbc-20250930_lab.xml (EX-101.LAB) — 412KB
• fcbc-20250930_pre.xml (EX-101.PRE) — 505KB
• fcbc20250930_10q_htm.xml (XML) — 6560KB

Financial Statements

Financial Statements Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024 4 Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 5 Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 6 Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2025 and 2024 (Unaudited) 7 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024 (Unaudited) 9 Notes to Condensed Consolidated Financial Statements (Unaudited) 10 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 36 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 51 Item 4.

Controls and Procedures

Controls and Procedures 51 PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 51 Item 1A.

Risk Factors

Risk Factors 51 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 52 Item 3. Defaults Upon Senior Securities 52 Item 4. Mine Safety Disclosures 52 Item 5. Other Information 52 Item 6. Exhibits 53

Signatures

Signatures 55 2 Table of Contents 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

Financial Statemen ts

Item 1. Financial Statemen ts CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2025 2024(1) (Amounts in thousands, except share and per share data) (Unaudited) Assets Cash and due from banks $ 76,820 $ 78,540 Federal funds sold 348,874 296,997 Interest-bearing deposits in banks 2,011 1,917 Total cash and cash equivalents 427,705 377,454 Debt securities available-for-sale, at fair value 131,314 169,849 Loans held for investment, net of unearned income 2,331,305 2,416,089 Allowance for credit losses ( 31,597 ) ( 34,825 ) Loans held for investment, net 2,299,708 2,381,264 Premises and equipment, net 47,522 48,735 Other real estate owned 264 521 Interest receivable 9,121 9,207 Goodwill 143,946 143,946 Other intangible assets 11,531 13,014 Other assets 118,502 117,226 Total assets $ 3,189,613 $ 3,261,216 Liabilities Deposits Noninterest-bearing $ 865,554 $ 883,499 Interest-bearing 1,765,039 1,807,748 Total deposits 2,630,593 2,691,247 Securities sold under agreements to repurchase 1,429 906 Interest, taxes, and other liabilities 46,866 42,671 Total liabilities 2,678,888 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; 27,642,688 shares issued and 18,314,905 outstanding at September 30, 2025; 27,599,240 shares issued and 18,321,795 outstanding at December 31, 2024 18,315 18,322 Additional paid-in capital 169,569 169,752 Retained earnings 330,895 349,489 Accumulated other comprehensive loss ( 8,054 ) ( 11,171 ) Total stockholders' equity 510,725 526,392 Total liabilities and stockholders' equity $ 3,189,613 $ 3,261,216 (1) Derived from audited financial statements See Notes to Condensed Consolidated Financial Statements. 4 Ta

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