FIRST COMMUNITY BANKSHARES INC /VA/
For the period ended Dec 31, 2025. Filed Mar 6, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 6, 2026
FCBC$45.48+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-07.
0001437749-25-006683
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-06.
0001437749-26-007180
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 101 previous paragraphs and 101 current paragraphs.
71 unchanged; 23 reworded; 7 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 32 previous and 32 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
On January 23, 2026, the Company completed its previously announced merger (the “Merger”) with Hometown Bancshares, Inc. a West Virginia corporation headquartered in Middlebourne, West Virginia (“Hometown”), pursuant to an Agreement and Plan of Merger (the “Agreement”) dated July 19, 2025, by and between the company and Hometown. At the Effective Time, Hometown merged with and into the Company, with the Company as the surviving corporation in the Merger. For additional information, see Note 24, “Subsequent Events,” to the Consolidated Financial Statements in Item 8, of this report.
Current report
2025 Compared to 2024. Pre-tax income declined $2.57 million, or 3.91%, compared to 2024. The decline was primarily driven by a $7.74 million increase in noninterest expense and a $1.86 million reduction in net interest income. These pressures were partially offset by a $3.52 million decrease in the provision for credit losses and a $3.50 million increase in noninterest income. The increase of noninterest expense was largely attributable to higher salaries and employee benefits of $4.73 million, along with a $2.91 million in merger-related costs associated with the Hometown acquisition. The lower provision for credit losses reflected a smaller loan portfolio and continued favorable credit performance. Growth in noninterest income was primarily due to a $3.39 million increase in service charges on deposits and other service fees.
Current report
2025 Compared to 2024. Net interest income represented 74.40% of total net interest and noninterest income in 2025, compared to 76.25% in 2024. The 1.85 percentage-point decline reflects a $1.85 million, or 1.47%, decrease in net interest income and a $3.50 million, or 8.88%, increase in noninterest income. On an FTE basis, net interest income decreased $1.86 million, or 1.46%. Net interest margin and net interest spread experienced modest changes year over year. Net interest margin declined 2 basis points to 4.42%, while net interest spread increased 1 basis point to 4.04%.
Current report
2024 Compared to 2023.
Current report
2025 Compared to 2024. Noninterest income comprised 25.60% of total net interest and noninterest income in 2025 compared to 23.75% in 2024, with noninterest income increasing $3.50 million, or 8.88%, in 2025. The 2025 increase is driven mostly by a $3.39 million increase in service charges on deposits and other service charges and fees. The increase is primarily attributable to increases in non-sufficient funds fees of $2.45 million and interchange income of $854 thousand.
Current report
2025 Compared to 2024. Non interest expense increased $7.74 million, or 8.01%, in 2025 compared to 2024. The increase is attributed mostly to increases in salaries and employee benefits of $4.73 million, merger expense of $2.91 million and other operating expense of $1.00 million. The increase in salaries and employee benefits is driven by a $1.27 million increase in salary expense and a $3.24 million increase in incentive compensation. The increase in merger expense is related to the Hometown acquisition.
Current report
Total assets as of December 31, 2025, decreased $1.57 million, or 0.05%, to $3.26 billion. The decrease is attributable mostly to a decline in loans of $101.33 million, or 4.19%, and a decline in securities available for sale of $37.16 million, or 21.88%, which is offset by an increase in cash and cash equivalents of $134.79 million, or 35.71%. Total liabilities increased $24.27 million, or 0.89%, and is primarily attributable to an increase in interest, taxes and other liabilities of $29.88 million. Stockholders' equity decreased $25.84 million, or 4.91%. The equity decrease is primarily attributable to two special dividends being declared in 2025, in the amount of $3.07 per common share.
Removed paragraphs (7)
Previous report
On April 21, 2023, the Company completed the acquisition of Surrey Bancorp. Total assets of $466.25 million were acquired in the transaction. In addition the Company issued 2.99 million common shares in the transaction. The purchase transaction created $14.38 million in goodwill and $12.7 million in other intangible assets. The Company completed the sale of its Emporia, Virginia branch to Benchmark Community Bank on September 16, 2022, which resulted in a gain of $1.66 million. For additional information, see Note 2, “Acquisitions and Divestitures,” to the Consolidated Financial Statements in Item 8 of this report.
Previous report
During the last week of September 2024, Hurricane Helene made landfall in Florida’s panhandle, resulting in widespread flooding and washing out of towns and roadways. Hurricane Helene had a significant impact on western North Carolina. Millions have lost access to critical services like water and sewer, electricity, and telecommunications. Thousands of miles of roads and bridges were damaged. The hurricane resulted in property damage to our customers, the closing or disruption of many businesses and damage to infrastructure in communities that we serve. Our branch in Banner Elk, North Carolina was temporarily closed due to lack of power and water, but it is now open to the public. We continue to evaluate the impact of Hurricane Helen on our customers and the Bank’s loans. Based on our assessment to date, we do not expect the losses related to Hurricane Helene to have a material impact on the Bank’s financial condition or results of operations.
Previous report
2023 Compared to 2022. Pre-tax income increased $1.82 million compared to 2022. The increase was primarily attributable to an increase in net interest income of $15.02 million. Net interest income totaled $127.68 million compared to $112.66 million in 2022. The increase in net interest income was offset by an increase in the provision for credit losses of $1.41 million and an increase in noninterest expense of $12.06 million. The increase in provision for credit losses was primarily due to $1.61 million recorded for the day two provision for the acquisition of the Surrey loan portfolio. The increase in noninterest expense included a $3.00 million accrual for estimated litigation expenses, an increase in salaries and benefits costs of $2.70 million, and an increase of $1.80 million in merger expenses. Both the merger expense and the increase in salaries and benefits were primarily due to the acquisition of Surrey Bancorp.
Previous report
2023 Compared to 2022. Net interest income comprised 77.32% of total net interest and noninterest income in 2023 compared to 75.19% in 2022. Net interest income increased $15.02 million, or 13.33%, and increased$15.02 million, or 13.28%, on a FTE basis. The FTE net interest margin increased 52 basis points and the FTE net interest spread increased 36 basis points. The increase was primarily driven by increases in both average balances and rates for loans and securities available for sale. The average balance for loans increased $239.86 million, while the yield increased 44 basis points resulting in a tax effected increase in interest on loans of $22.19 million compared to 2022. The average balance for securities available for sale increased $42.17 million and the yield increased 31 basis points resulting in a tax effected increase to interest on securities available for sale of $1.94 million compared to 2022.
Previous report
2023 Compared to 2022. Noninterest income comprised 22.68% of total net interest and noninterest income in 2023 compared to 24.81% in 2022. Noninterest income increased $270 thousand, or 0.73%. The increase was primarily the result of an increase in other service charges and fees of $1.34 million, or 10.88%. The increase in other services charges was primarily driven by an increase in interchange income. Wealth management income increased $324 thousand, or 8.40%. These increases to noninterest income were offset by the 2022 gain recorded for the divestiture of the Emporia, Virginia branch of $1.66 million.
Previous report
2023 Compared to 2022. Non interest expense increased $12.06 million, or 14.51%, compared to 2022. The Company recorded $3.00 million in estimated litigation expenses in the fourth quarter of 2023. Other increases occurred in salaries and employee benefits of $2.70 million, or 5.73%, other operating expense of $1.56 million, or 14.89%, service fees of $1.30 million or 17.12%, and advertising and public relations of $891 thousand, or 36.99%. In addition, the Company recorded merger expenses of $2.39 million in 2023 related to the Surrey Bancorp acquisition. The related cost for the addition of Surrey branches and staff was a primary driver in the increase to noninterest expense.
Previous report
Total assets as of December 31, 2024, decreased $7.33 million, or 0.22%, to $3.26 billion from $3.27 billion as of December 31, 2023. Loans decreased $156.21 million, or 6.07% while securities available for sale decreased $111.11 million, or 39.55%. Total liabilities decreased $30.43 million, or 1.10%, and is primarily attributable to a decrease in deposits of $31.08 million. Stockholders' equity increased $23.10 million, or 4.59%. The increase is primarily due to earnings offset by dividends paid.
Reworded paragraphs (23)
Previous wording
First Community Bankshares, Inc. 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 150 year-old Virginia-chartered banking institution. 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. As of December 31, 2024, the Bank operated 53 branches in Virginia, West Virginia, North Carolina and Tennessee. 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 supplemented by retail and wholesale repurchase agreements and Federal Home Loan Bank (“FHLB”) borrowings. We invest our funds primarily in loans to retail and commercial customers and various investment securities.
Current wording
First Community Bankshares, Inc. 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 151 year-old Virginia-chartered banking institution. 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. As of December 31, 2025, the Bank operated 52 branches in Virginia, West Virginia, North Carolina and Tennessee. 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 supplemented by retail and wholesale repurchase agreements and Federal Home Loan Bank (“FHLB”) borrowings. We invest our funds primarily in loans to retail and commercial customers and various investment securities.
Previous wording
The Bank offers trust management, estate administration, and investment advisory services through its Trust Division and wholly owned subsidiary First Community Wealth Management (“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 commissions on assets under management and investment advisory fees. As of December 31, 2024, the Trust Division and FCWM managed and administered $1.62 billion in combined assets under various fee-based arrangements as fiduciary or agent.
Current wording
The Bank offers trust management, estate administration, and investment advisory services through its Trust Division and wholly owned subsidiary First Community Wealth Management (“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 commissions on assets under management and investment advisory fees. As of December 31, 2025, the Trust Division and FCWM managed and administered $1.79 billion in combined assets under various fee-based arrangements as fiduciary or agent.
Previous wording
The Company uses a number of economic variables to estimate the allowance for credit losses, with the most significant driver being a forecast of the national unemployment rate. In the December 31, 2024, estimate, the Company assumed an unemployment forecast of 4.3%, compared to the range of 4.0% to 4.3% utilized in the December 31, 2023, estimate. Based on a sensitivity analysis as of December 31, 2024, an increase of 1% in the unemployment forecast would result in an increase in the allowance for credit losses of approximately 9.00%.
Current wording
The Company uses a number of economic variables to estimate the allowance for credit losses, with the most significant driver being a forecast of the national unemployment rate. In the December 31, 2025, estimate, the Company assumed an unemployment forecast of approximately 4.5%, compared to the range of 4.0% to 4.3% utilized in the December 31, 2024, estimate. Based on a sensitivity analysis as of December 31, 2025, an increase of 1% in the unemployment forecast would result in an increase in the allowance for credit losses of approximately 9.3%
Previous wording
Goodwill is tested for impairment annually, on October 31 st, or more frequently if events or circumstances indicate there may be impairment. We have one reporting unit, Community Banking. If we elect to perform a qualitative assessment, we evaluate factors such as macroeconomic conditions, industry and market considerations, overall financial performance, changes in stock price, and progress towards stated objectives in determining if it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, a quantitative test is performed; otherwise, no further testing is required. The quantitative test consists of comparing the fair value of our reporting unit to its carrying amount, including goodwill. If the fair value of our reporting unit is greater than its book value, no goodwill impairment exists. If the carrying amount of our reporting unit is greater than its calculated fair value, a goodwill impairment charge is recognized for the difference. We performed a quantitative assessment for the annual test on October 31, 2024, which resulted in no goodwill impairment. For additional information, see Note 8, “Goodwilland Other Intangible Assets,” to the Consolidated Financial Statements in Item 8 of this report.
Current wording
Goodwill is tested for impairment annually, on October 31 st, with additional reviews performed quarterly or more frequently if events or circumstances indicate there may be impairment. We have one reporting unit, Community Banking. If we elect to perform a qualitative assessment, we evaluate factors such as macroeconomic conditions, industry and market considerations, overall financial performance, changes in stock price, and progress towards stated objectives in determining if it is more likely than not that the fair value of our reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, a quantitative test is performed; otherwise, no further testing is required. The quantitative test consists of comparing the fair value of our reporting unit to its carrying amount, including goodwill. If the fair value of our reporting unit is greater than its book value, no goodwill impairment exists. If the carrying amount of our reporting unit is greater than its calculated fair value, a goodwill impairment charge is recognized for the difference. We performed a quantitative assessment for the annual test on October 31, 2025, which resulted in no goodwill impairment. For additional information, see Note 8, “Goodwilland Other Intangible Assets,” to the Consolidated Financial Statements in Item 8 of this report.
Previous wording
Average earning assets decreased $2.16 million, or 0.07%, primarily due to a decrease in interest-bearing deposits with banks of $284.18 million, or 85.91%. This decrease was offset by an increase in average loans and average securities available for sale as noted above. The yield on earning assets increased 79 basis points, or 19.85%, primarily due to significant increase in benchmark rates as compared to the same period of 2022. The average loan to deposit ratio increased to 93.04% from 83.58% in 2022. Non-cash accretion increased $125 thousand, or 4.77% to $2.74 million. The impact of non-cash purchase accounting accretion income on the FTE net interest margin was 9 basis points for both 2023 and 2022.
Current wording
Average earning assets decreased $27.32 million, or 0.96%, due to decreases in both the average balance of loans of $127.67 million, or 5.15%, and the average balance of securities available-for-sale of $31.80 million, or 18.59%. These decreases were offset by an increase in interest-bearing deposits with banks of $132.15 million, or 63.96%. The yield on earning assets decreased 8 basis points, or 1.56%, due to an asset balance shift from higher-yielding loans to lower-yielding interest-bearing deposit accounts held with banks. In addition, non-cash accretion decreased $813 thousand in 2025 to $2.08 million, compared to a 2024 balance of $2.90 million. The impact of non-cash purchase accounting accretion income on the FTE net interest margin was 8 basis points for 2025 compared to 10 basis points in 2024. The average loan to deposit ratio declined to 88.81% in 2025, compared to 92.93% in 2024.
Previous wording
Average interest-bearing liabilities, which consist of interest-bearing deposits and borrowings, decreased $81.94 million, or 4.34%, primarily due to a decrease in deposits. Time deposits decreased $54.20 million, or 16.82%, and savings deposits decreased $32.77 million, or 3.72%. Interest-bearing demand deposits increased $3.03 million or 0.44%. The yield on interest-bearings liabilities increased 43 basis points and is primarily due to increases in benchmark rates throughout 2022 and 2023.
Current wording
Average interest-bearing liabilities, which consist of interest-bearing deposits and borrowings, decreased $10.16 million, or 0.57%, primarily due to a decrease in interest-bearing deposits of $9.69 million, or 0.54%. Interest-bearing demand deposits decreased $1.77 million, or 0.27%, and time deposits decreased $25.49 million, or 10.36%. These decreases were offset by an increase in savings deposits of $17.58 million or 2.00%. The yield on interest-bearings liabilities decreased 9 basis points, or 8.18%, primarily due to an average balance shift from higher rate time deposits to lower rate savings deposits.
Previous wording
2024 Compared to 2023. Net interest income comprised 76.25% of total net interest and noninterest income in 2024 compared to 77.32% in 2023. Net interest income decreased $1.22 million, or 0.95%. On a FTE basis net interest income decreased $1.22 million, or 0.95%. There was no change in the FTE net interest margin; the FTE net interest spread decreased 22 basis points. The decrease was primarily driven by an increase in interest expense due to increases in rates paid on interest-bearing deposits.
Current wording
Net interest income comprised 76.25% of total net interest and noninterest income in 2024 compared to 77.32% in 2023. Net interest income decreased $1.22 million, or 0.95%. On a FTE basis net interest income decreased $1.22 million, or 0.95%. There was no change in the FTE net interest margin; the FTE net interest spread decreased 22 basis points. The decrease was primarily driven by an increase in interest expense due to increases in rates paid on interest-bearing deposits.
Previous wording
2023 Compared to 2022. The provision charged to operations increased $1.41 million compared to the prior year. The provision expense of $7.99 million was comprised of $8.44 million related to provision expense for loans and a recovery of provision of $450 thousand for unfunded loan commitments. Provision for credit losses for loans of $8.44 million was recorded compared to the provision of $6.57 million recorded in 2022. The increase in provision is commensurate with changes in economic forecasts and growth in the loan portfolio associated with the acquisition of Surrey Bancorp on April 21, 2023. $1.61 million of the provision is attributable to day two provision for the Surrey portfolio. As noted above, a recovery of provision for loan commitments was recorded in 2023 of $450 thousand and was recorded in provision for credit losses. A provision expense of $518 thousand was recorded for unfunded loan commitments in 2022 and was recorded in other operating expense.
Current wording
2025 Compared to 2024. The provision charged to operations decreased $3.52 million compared to 2024. The provision expense of $72 thousand was comprised of $58 thousand related to provision expense for loans and $14 thousand related to provision expense for unfunded loan commitments. Provision for credit losses for loans of $58 thousand was recorded compared to the provision of $4.00 million recorded in 2024. The decrease in provision is due a loan portfolio balance decline of $101.33 million from 2024 to 2025, along with continued strong credit performance. As noted, a $14 thousand provision for loan commitments was recorded in 2025 compared to $405 thousand recovery of provision recorded in 2024.
Previous wording
2023 Compared to 2022. Income tax expense increased $459 thousand, or 3.40% and was primarily due to the increase in pre-tax income. The effective tax rate increased slightly to 22.51% in 2023 compared to 22.43% in 2022.
Current wording
2025 Compared to 2024. Income tax expense increased $241 thousand, or 1.71%, due primarily to an increase in pre-tax income. The effective tax rate increased to 22.70% in 2025 compared to 21.45% in 2024.
Previous wording
Our investment securities are used to generate interest income through the deployment of excess funds, to fund loan demand or deposit liquidation, to pledge as collateral where required, and to make selective investments for Community Reinvestment Act purposes. 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 December 31, 2024, decreased $111.11 million, or 39.55%, compared to December 31, 2023. The decrease was primarily due to $221.34 million in maturities, prepayments, and calls in securities available for sale. The decrease was offset by purchases of $109.98 million. The market value of debt securities available for sale as a percentage of amortized cost was 91.97% as of December 31, 2024, compared to 95.23% as of December 31, 2023. There were no held-to-maturity debt securities as of December 31, 2024, or 2023.
Current wording
Our investment securities are used to generate interest income through the deployment of excess funds, to fund loan demand or deposit liquidation, to pledge as collateral where required, and to make selective investments for Community Reinvestment Act purposes. 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 December 31, 2025, decreased $37.16 million, or 21.88%, compared to December 31, 2024. The decrease was primarily due to the sale of $136.71 million in maturities, prepayments, and calls in securities available for sale; offset by purchases of $93.76 million. The market value of debt securities available for sale as a percentage of amortized cost was 92.95% as of December 31, 2025, compared to 91.97% as of December 31, 2024. There were no held-to-maturity debt securities as of December 31, 2025, or 2024.
Previous wording
Total loans held for investment, net of unearned income, as of December 31, 2024, decreased $156.21 million, or 6.07%, compared to December 31, 2023. We had no foreign loans or loan concentrations to any single borrower or industry, which are not otherwise disclosed as a category of loans that represented 10% or more of outstanding loans, as of December 31, 2024 or 2023. For additional information, see Note 4, “Loans,” to the Consolidated Financial Statements in Item 8 of this report.
Current wording
Total loans held for investment, net of unearned income, as of December 31, 2025, decreased $101.33 million, or 4.19%, compared to December 31, 2024. We had no foreign loans or loan concentrations to any single borrower or industry, which are not otherwise disclosed as a category of loans that represented 10% or more of outstanding loans, as of December 31, 2025 or 2024. For additional information, see Note 4, “Loans,” to the Consolidated Financial Statements in Item 8 of this report.
Previous wording
Nonperforming assets as of December 31, 2024, increased $1.02 million, or 5.20%, from December 31, 2023, with the largest increases attributable to an increase in nonaccrual loans of $513 thousand, or 2.65% and OREO of $329 thousand, or 171.35%. As of December 31, 2024, nonaccrual loans were largely attributed to single family owner occupied (46.25%), non-farm, non-residential real estate (14.17%), and commercial and industrial loans (12.54%). Certain loans included in the nonaccrual category have been written down to estimated realizable value or assigned specific reserves in the allowance for credit losses based on management's estimate of loss at ultimate resolution.
Current wording
Nonperforming assets as of December 31, 2025, decreased $6.39 million, or 31.09%, from December 31, 2024, with the largest decreases attributable to nonaccrual loans of $5.93 million, or 29.84%, and OREO of $521 thousand. As of December 31, 2025, nonaccrual loans were largely attributed to single family owner occupied $8.26 million, or 59.22%, non-farm, non-residential real estate $1.27 million, or 9.13%, and commercial and industrial loans $1.32 million, or 9.45%. Certain loans included in the nonaccrual category have been written down to estimated realizable value or assigned specific reserves in the allowance for credit losses based on management's estimate of loss at ultimate resolution.
Previous wording
Delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, totaled $37.55 million as of December 31, 2024, a increase of $3.62 million, or 10.67%, compared to $33.93 million as of December 31, 2023. Delinquent loans as a percent of total loans totaled 1.49% as of December 31, 2024, which includes past due loans 0.73% and nonaccrual loans 0.82%, compared to 1.32% as of December 31, 2023.
Current wording
Delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, totaled $27.85 million as of December 31, 2025, a decrease of $9.70 million, or 25.83%, compared to $37.55 million as of December 31, 2024. Delinquent loans as a percent of total loans decreased in 2025 to 1.20%, compared to 1.49% in 2024. The delinquent loans consist of past due loans, or 0.60%, of total loans, and nonaccrual loans, or 0.60%, of total loans.
Previous wording
When restructuring loans for borrowers experiencing financial difficulty, we generally make concessions in interest rates, loan terms, or amortization terms. As noted above, ASU 2022-02, eliminated and replaced the accounting guidance for borrowers experiencing financial difficulties previously applied under ASC 310-40, Receivables - Troubled Debt Restructurings by Creditors. ASU 2022-02, Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures, discloses loans for borrowers experiencing financial difficulty as modified loans. Total loans modified as of December 31, 2024, were $2.26 million as compared to $2.05 million reported as of December 31, 2023.
Current wording
When restructuring loans for borrowers experiencing financial difficulty, we generally make concessions in interest rates, loan terms, or amortization terms. As noted above, ASU 2022-02, eliminated and replaced the accounting guidance for borrowers experiencing financial difficulties previously applied under ASC 310-40, Receivables - Troubled Debt Restructurings by Creditors. ASU 2022-02, Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures, discloses loans for borrowers experiencing financial difficulty as modified loans. Total loans modified as of December 31, 2025, were $2.44 million as compared to $2.26 million reported as of December 31, 2024.
Previous wording
OREO, which is carried at the lesser of estimated net realizable value or cost, consisted of 7 properties with an average holding period of 4 months as of December 31, 2024. The net loss on the sale of OREO was $28 thousand in 2024, $84 thousand in 2023, and $453 thousand in 2022. The following table presents the changes in OREO during the periods indicated:
Current wording
OREO property is carried at the lesser of estimated net realizable value or cost. As of December 31, 2025, no OREO property was held by the Company. The net loss on the sale of OREO was $193 thousand in 2025, $28 thousand in 2024, and $84 thousand in 2023. The following table presents the changes in OREO during the periods indicated:
Previous wording
With the adoption of ASU 2016-13 effective January 1, 2021, the Company changed its method for calculating it allowance for loan losses from an incurred loss method to a life of loan method. See Note 1 – "Basis of Presentation and Significant Accounting Policies" for further details. As of December 31, 2024, the balance of the ACL for loans was $34.83 million, or 1.44% of total loans. The ACL at December 31, 2024, decreased $1.36 million from the balance of $36.19 million recorded December 31, 2023. This decrease included a provision of $4.00 million and net charge-offs for the twelve months of $5.37 million.
Current wording
As of December 31, 2025, the balance of the ACL for loans was $30.76 million, or 1.33% of total loans. The ACL at December 31, 2025, decreased $4.06 million from the balance of $34.83 million recorded December 31, 2024. This decrease included a provision of $58 thousand and net charge-offs for the twelve months of $4.12 million.
Previous wording
At December 31, 2024, the Company also had an allowance for unfunded commitments of $341 thousand compared to $746 thousand in 2023. The allowance for unfunded commitments is recorded in Other Liabilities on the balance sheet. During 2024, there was a recovery of provision for credit losses on unfunded commitments of $405 thousand. The provision for credit losses on unfunded commitments is recorded in provision expense on the Statement of Income.
Current wording
At December 31, 2025, the Company also had an allowance for unfunded commitments of $355 thousand compared to $341 thousand in 2024. The allowance for unfunded commitments is recorded in Other Liabilities on the balance sheet. During 2025, there was a provision for credit losses on unfunded commitments of $14 thousand. The provision for credit losses on unfunded commitments is recorded in provision expense on the Statement of Income.
Previous wording
Total deposits as of December 31, 2024, decreased $31.08 million, or 1.14%, compared to December 31, 2023. The largest decrease occurred in noninterest-bearing demand with a decrease of $48.42 million, or 5.20%. Other decreases occurred in interest-bearing demand of $18.46 million, or 2.66% and time deposits of $12.83 million, or 5.06%. These decreases were offset by an increase in savings deposits of $48.63 million, or 5.77% We had no deposit concentrations to any single customer or industry that represented 10% or more of outstanding deposits as of December 31, 2024 or 2023.
Current wording
Total deposits as of December 31, 2025, decreased $5.92 million, or 0.22%, compared to December 31, 2024. The decrease was driven by a decline in time deposits of $40.17 million, or 16.70%. The decline in time deposits was offset by increases in interest bearing deposits of $8.72 million, savings/MMA deposits of $12.78 million and noninterest-bearing accounts of $12.76 million. No deposit concentrations to any single customer or industry that represented 10% or more of outstanding deposits occurred as of December 31, 2025, or 2024.
Previous wording
Total borrowings as of December 31, 2024, decreased $213 thousand, or 19.03%, compared to December 31, 2023. Total borrowings for 2024 were comprised entirely of short-term borrowings, which consist of retail repurchase agreements. The weighted average rate of 0.05% as of December 31, 2024, decreased one basis point from the weighted average rate of 0.06% as of December 31, 2023.
Current wording
Total borrowings as of December 31, 2025, increased $308 thousand, or 34.00%, compared to December 31, 2024. Total borrowings for 2025 were comprised entirely of short-term borrowings, which consist of retail repurchase agreements. The weighted average rate of 0.06% as of December 31, 2025, increased one basis point from the weighted average rate of 0.05% as of December 31, 2024.
Previous wording
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 December 31, 2024, the Company’s cash reserves and short-term investment securities totaled $3.95 million and $55.77 million, respectively. The Company’s cash reserves and investments provide adequate working capital to meet obligations and projected dividends to shareholders for the next twelve months.
Current wording
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 December 31, 2025, the Company’s cash reserves and short-term investment securities totaled $36.95 million and $10.93 million, respectively. The Company’s cash reserves and investments provide adequate working capital to meet obligations and projected dividends to shareholders for the next twelve months.
Previous wording
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 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 December 31, 2024, our unencumbered cash totaled $377.45 million, unused borrowing capacity from the FHLB totaled $352.32 million, available credit from the FRB Discount Window totaled $5.80 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $145.21 million.
Current wording
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 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 December 31, 2025, our unencumbered cash totaled $512.24 million, unused borrowing capacity from the FHLB totaled $301.81 million, available credit from the FRB Discount Window totaled $5.85 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $102.83 million.
Previous wording
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 December 31, 2024, increased $23.10 million, or 4.59%, to $526.39 million from $503.29 million as of December 31, 2023. The increase is primarily due to earnings of $51.60 million offset by dividends paid on our common stock totaling $22.02 million. In addition, the Company repurchased 257,294 shares of our common stock totaling $8.72 million. Our book value per common share increased $1.53 to $28.73 as of December 31, 2024, from $27.20 as of December 31, 2023.
Current wording
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 December 31, 2025, decreased $25.84 million, or 4.91%, to $500.55 million from $526.39 million as of December 31, 2024. The decrease is primarily due to regular quarterly and two special dividends being declared in 2025 in the combined total amount of $4.31 per common share, totaling $78.92 million in payments. In addition, the Company repurchased 50,338 shares of our common stock totaling $1.85 million. As a result, our book value per common share decreased $1.43 to $27.30 as of December 31, 2025, from $28.73 as of December 31, 2024.
Previous wording
At December 31, 2024, the Federal Open Market Committee set the benchmark federal funds rate at a range of 4.25% - 4.50% 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. In the downward rate shock presented, benchmark interest rates were assumed at levels with floors near 0%. 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.
Current wording
As of December 31, 2025, the Federal Open Market Committee set the benchmark federal funds rate at a range of 3.50% - 3.75% 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.