FIRST COMMUNITY BANKSHARES INC /VA/

Previous wording

First Community Bankshares, Inc. (the “Company”) is a financial holding company, headquartered in Bluefield, Virginia, that provides banking products and services through its wholly owned subsidiary First Community Bank (the “Bank”), a Virginia-chartered banking institution. As of March 31, 2026, the Bank operated 61 branches in Virginia, West Virginia, North Carolina and Tennessee. As of March 31, 2026, full-time equivalent employees, calculated using the number of hours worked, totaled 610. Our primary source of earnings is net interest income, the difference between interest earned on assets and interest paid on liabilities, which is supplemented by fees for services, commissions on sales, and various deposit service charges. We fund our lending and investing activities primarily through the retail deposit operations of our branch banking network. We invest our funds primarily in loans to retail and commercial customers and various investment securities. Our common stock is traded on the NASDAQ Global Select Market under the symbol FCBC.

Current wording

First Community Bankshares, Inc. (the “Company”) is a financial holding company, headquartered in Bluefield, Virginia, that provides banking products and services through its wholly owned subsidiary First Community Bank (the “Bank”), a Virginia-chartered banking institution. As of June 30, 2026, the Bank operated 61 branches in Virginia, West Virginia, North Carolina and Tennessee. As of June 30, 2026, full-time equivalent employees, calculated using the number of hours worked, totaled 614. Our primary source of earnings is net interest income, the difference between interest earned on assets and interest paid on liabilities, which is supplemented by fees for services, commissions on sales, and various deposit service charges. We fund our lending and investing activities primarily through the retail deposit operations of our branch banking network. We invest our funds primarily in loans to retail and commercial customers and various investment securities. Our common stock is traded on the NASDAQ Global Select Market under the symbol FCBC.

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 Inc. (“FCWM”). The Trust Division manages inter vivos trusts and trusts under will, develops and administers employee benefit and individual retirement plans, and manages and settles estates. Fiduciary fees for these services are charged on a schedule related to the size, nature, and complexity of the account. Revenues consist primarily of investment advisory fees and commissions on assets under management and administration. As of March 31, 2026, the Trust Division and FCWM managed and administered $1.77 billion in combined assets under various fee-based arrangements as fiduciary or agent.

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

Previous wording

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.

Current wording

As described in the Company's Quarterly Report on Form 10Q for the quarter ended March 31, 2026, on January 23, 2026, the Company completed its previously announced merger (the "Merger") with Hometown Bancshares, Inc., a West Virginia corporation headquartered in Middlebourne, West Virginia ("Hometown"), pursuant to an Agreement and Plan of Merger (the "Agreement") dated July 19, 2025, by and between the company and Hometown. At the Effective Time, Hometown merged with and into the Company, with the Company as the surviving corporation in the Merger.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Three*-*Month Comparison. The provision charged to operations increased $57 thousand, or 17.76%, in the first quarter of 2026 compared to the same period of 2025. In the first quarter of 2026, the Company recorded a provision for credit losses for loans of $300 thousand and a provision for credit losses on loan commitments of $78 thousand. This compares to a provision for credit losses on loans of $350 thousand and a recovery of provision of $29 thousand on loan commitments recorded in the first quarter of 2025. The increase in the overall provision was primarily driven by growth in unfunded loan commitments.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

In addition to financial statements prepared in accordance with GAAP, we use certain non-GAAP financial measures that management believes provide investors with important information useful in understanding our operational performance and comparing our financial measures with other financial institutions. The non-GAAP financial measure presented in this report includes net interest income on a FTE basis and average tangible common equity. We believe FTE basis is the preferred industry measurement of net interest income and provides better comparability between taxable and tax exempt amounts. We use this non-GAAP financial measure to monitor net interest income performance and to manage the composition of our balance sheet. The FTE basis adjusts for the tax benefits of income from certain tax exempt loans and investments using the federal statutory rate of 21%. Average tangible common equity is calculated as GAAP total shareholders’ equity minus total intangible assets. Tangible common equity can thus be considered a more conservative valuation of the company. When considering net income, a return on average tangible common equity can be calculated. Management provides a return on average equity to facilitate the understanding of as well as to assess the quality and composition of the Company’s capital structure. This measure, along with others, is used by management to analyze capital adequacy and performance. While we believe certain non-GAAP financial measures enhance understanding of our business and performance, they are supplemental and not a substitute for, or more important than, financial measures prepared on a GAAP basis. Our non-GAAP financial measures may not be comparable to those reported by other financial institutions. The reconciliations of non-GAAP to GAAP measures are presented below.

Current wording

In addition to financial statements prepared in accordance with GAAP, we use certain non-GAAP financial measures that management believes provide investors with important information useful in understanding our operational performance and comparing our financial measures with other financial institutions. The non-GAAP financial measures presented in this report includes net interest income on a FTE basis and average tangible common equity. We believe FTE basis is the preferred industry measurement of net interest income and provides better comparability between taxable and tax-exempt amounts. We use this non-GAAP financial measure to monitor net interest income performance and to manage the composition of our balance sheet. The FTE basis adjusts for the tax benefits of income from certain tax-exempt loans and investments using the federal statutory rate of 21%. Average tangible common equity is calculated as GAAP total shareholders’ equity minus total intangible assets. Tangible common equity can thus be considered a more conservative valuation of the Company. When considering net income, a return on average tangible common equity can be calculated. Management provides a return on average equity to facilitate the understanding of as well as to assess the quality and composition of the Company’s capital structure. This measure, along with others, is used by management to analyze capital adequacy and performance. While we believe certain non-GAAP financial measures enhance understanding of our business and performance, they are supplemental and not a substitute for, or more important than, financial measures prepared on a GAAP basis. Our non-GAAP financial measures may not be comparable to those reported by other financial institutions. The reconciliations of non-GAAP to GAAP measures are presented below.

Previous wording

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:

Current wording

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

Previous wording

Available-for-sale debt securities as of March 31, 2026, increased $134.83 million, or 101.62%, compared to December 31, 2025. The net increase was primarily due to the purchase of U.S. Treasury securities.

Current wording

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

Previous wording

The market value of debt securities available-for-sale as a percentage of amortized cost was 96.34% as of March 31, 2026, compared to 92.95% as of December 31, 2025.

Current wording

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

Previous wording

Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) our intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that we will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments. U.S. Treasury Securities, Agency-Backed Securities including GNMA, FHLMC, FNMA, FHLB, FFCB and SBA. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United State Government or one of its agencies. Municipal securities and all other securities that do not have a zero expected credit loss are evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value. All debt securities available-for-sale in an unrealized loss position as of March 31, 2026 continue to perform as scheduled and we do not believe that a provision for credit losses is necessary.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Nonperforming assets as of March 31, 2026, increased $3.55 million, or 25.08%, from December 31, 2025 and nonaccrual loans increased $3.73 million, or 26.76%. As of March 31, 2026, nonaccrual loans were largely attributed to single family owner occupied (50.10%), single family non-owner occupied (13.52%) and commercial and industrial of (12.26%). Certain loans included in the nonaccrual category have been written down to estimated realizable value or assigned specific reserves in the allowance for credit losses based on management’s estimate of loss at ultimate resolution.

Current wording

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

Previous wording

Delinquent loans, comprised of loans 30 days or more past due and nonaccrual loans, totaled $35.13 million as of March 31, 2026, an increase of $7.28 million, or 26.15%, compared to $27.85 million as of December 31, 2025. Delinquent loans as a percent of total loans totaled 1.43% as of March 31, 2026, which includes past due loans (0.71%) and nonaccrual loans (0.72%).

Current wording

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

Previous wording

When restructuring loans for borrowers experiencing financial difficulty, we generally make concessions with respect to interest rates, loan terms, or amortization terms. Total loans modified as of March 31, 2026, were $2.74 million. As of March 31, 2026, $278 thousand of these loans were 30-89 days past due. Modified loans past due 90 days or more totaled $62 thousand and are included in the total for nonaccrual loans.

Current wording

When restructuring loans for borrowers experiencing financial difficulty, we generally make concessions with respect to interest rates, loan terms, or amortization terms. Total loans modified as of June 30, 2026, were $3.43 million. As of June 30, 2026, $937 thousand of these loans were 30-89 days past due. Modified loans past due 90 days or more totaled $42 thousand and are included in the total for nonaccrual loans.

Previous wording

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

Current wording

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

Previous wording

As of March 31, 2026, the balance of the ACL totaled $33.54 million, or 1.37%, of total loans. This compares to $30.76 million as of December 31, 2025, reflecting an increase of $2.78 million, or 9.04%. The increase in the ACL is primarily driven by the Hometown acquisition, which resulted in a $3.21 million addition for acquired loans. The increase was offset by net charge-offs of $731 thousand.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Total borrowings in the form of retail repurchase agreements as of March 31, 2026, increased $2.00 million, or 162.03%, compared to December 31, 2025. The increase is primarily attributable to the Hometown acquisition, which included $1.31 million in securities sold under agreements to repurchase.

Current wording

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

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 March 31, 2026, the Company’s cash reserves totaled $15.09 million. The Company’s cash reserves provide adequate working capital to meet obligations for the next twelve months.

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

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 Federal Reserve Bank (“FRB”) Discount Window to meet potential liquidity demands. These sources of liquidity are immediately available to satisfy deposit withdrawals, customer credit needs, and our operations. Secondary sources of liquidity include approved lines of credit with correspondent banks and unpledged available-for-sale securities. As of March 31, 2026, our unencumbered cash totaled $600.30 million, unused borrowing capacity from the FHLB totaled $299.05 million, available credit from the FRB Discount Window totaled $7.02 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $80.66 million.

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 Federal Reserve Bank (“FRB”) Discount Window to meet potential liquidity demands. These sources of liquidity are immediately available to satisfy deposit withdrawals, customer credit needs, and our operations. Secondary sources of liquidity include approved lines of credit with correspondent banks and unpledged available-for-sale securities. As of June 30, 2026, our unencumbered cash totaled $591.91 million, unused borrowing capacity from the FHLB totaled $303.35 million, available credit from the FRB Discount Window totaled $6.91 million, available lines from correspondent banks totaled $100.00 million, and unpledged available-for-sale securities totaled $80.99 million.

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 March 31, 2026, increased $20.84 million, or 4.16%, to $521.39 million from $500.55 million as of December 31, 2025. The increase was primarily attributable to the acquisition of Hometown, in connection with which the company issued 1.03 million shares of common stock, resulting in a $35.07 million increase in capital. Equity was further increased by net income of $12.03 million. These increases were partially offset by $6.00 million of common stock dividends declared and $20.33 million of common stock repurchases. Book value per share increased to $27.64 on March 31, 2026, compared to $27.30 on December 31, 2025.

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 June 30, 2026, increased $38.55 million, or 7.70%, to $539.10 million from $500.55 million as of December 31, 2025. The increase was primarily attributable to the acquisition of Hometown, in connection with which the Company issued 1.03 million shares of common stock, resulting in a $35.07 million increase in capital. Stockholders' equity was further increased by net income of $34.54 million. These increases were partially offset by $11.80 million of common stock dividends declared and $20.33 million of common stock repurchases. Book value per share increased $1.22 to $28.52 as of June 30, 2026, compared to $27.30 on December 31, 2025.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

Continued unprecedented levels of federal government spending is causing increased inflation. The timing and impact of inflation and rising interest rates on our business and related financial results will depend on future developments, which are highly uncertain and difficult to predict.