FIRST COMMUNITY BANKSHARES INC /VA/

**Note1. **Basis of Presentation

General

First Community Bankshares, Inc. (the “Company”), a financial holding company, was founded in1989 and reincorporated under the laws of the Commonwealth of Virginia. The Company’s principal executive office is located in Bluefield, Virginia. The Company provides banking products and services to individual and commercial customers through its wholly owned subsidiary First Community Bank (the “Bank”), a Virginia-chartered banking institution founded in1874. The Bank offers wealth management and investment advice through its Trust Division and wholly owned subsidiary First Community Wealth Management. Unless the context suggests otherwise, the terms “First Community,” “Company,” “we,” “our,” and “us” refer to First Community Bankshares, Inc. and its subsidiaries as a consolidated entity.

Principles of Consolidation

The Company’s accounting and reporting policies conform with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form10-Q and Rule10-01 of Regulation S-X. Accordingly, they donot include all of the information and footnotes required by U.S. GAAP for complete financial statements. The consolidated financial statements include all accounts of the Company and its wholly owned subsidiaries and eliminate all intercompany balances and transactions. The Company operates inone business segment, Community Banking, which consists of all operations, including commercial and consumer banking, lending activities, and wealth management. Operating results for interim periods arenot necessarily indicative of results that* may*be expected for other interim periods or for the full year. In management’s opinion, the accompanying unaudited interim condensed consolidated financial statements contain all necessary adjustments, including normal recurring accruals, and disclosures for a fair presentation.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form10-K for the year ended* December 31, 2025* (the “2025 Form10-K”), as filed with the Securities and Exchange Commission (the “SEC”) on* March 6, 2026.The condensed consolidated balance sheet as of December 31, 2025*, has been derived from the audited consolidated financial statements.

Reclassifications

Certain amounts reported in prior years have been reclassified to conform to the current year’s presentation. These reclassifications hadno effect on the Company’s results of operations, financial position, or net cash flow.

Use of Estimates

Preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant Accounting Policies

The Company’s significant accounting policies as presented in Note1, “Basis of Presentation and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Part II, Item8 of the Company’s2025 Form10-K remain unchanged except for the following recent accounting standards adopted described below.

Recent AccountingStandards

Standards Adopted

In* November 2025,the FASB issued ASUNo.* 2025-08, "Financial Instruments- Credit Losses (Topic326): Purchased Loans". The amendment simplifies accounting for acquired loans under the current expected credit losses (CECL) model by expanding use of the gross-up method to a new category of purchased seasonal loans (PSLs). PSLs are acquired loans purchased more than90 days after origination or acquired in a business combination. For PSLs, an allowance for credit loss is to be recorded at acquisition with an equal increase to amortized cost and remove credit loss expense on acquisition date. The ASU doesnot apply to credit cards, Topic606 trade receivables, and debt securities. ASU2025-08 requires entities to apply the amendments prospectively to loans acquired on or after the initial application date and doesnot require retrospective restatement of prior periods. The amendments in this update are effective for annual periods beginning after* December 15, 2026,an early adoption is permitted for annual financial statements that havenot* yet been issued or made available. The Company early adopted the provisions of ASU 2025-08 in connection with its merger of Hometown Bancshares, Inc., which was completed on* January 23, 2026.The Company applied the guidance prospectively to loans acquired in the transaction and will apply the guidance to any subsequent acquisitions occurring on or after initial adoption. Due to the adoption of the standard the Company wasnot* required to recognize a $2.98 million provision expense that would otherwise have been recorded.

In* July 2025,the FASB issued ASUNo.* 2025-05, "Financial Instruments- Credit Losses (Topic326): Measurement of Credit Losses for Accounts Receivable and Contract Assets". This amendment introduces a practical expedient available to all entities that permits an entity to assume that existing economic conditions at the balance sheet date will persist for the remaining life of current accounts receivable and current contract assets, rather than developing a full forward-looking forecast. The Company adopted this ASU on* March 31, 2026,on prospective basis. The adoption of this pronouncement didnot* have a material impact on the Consolidated Financial Statements.

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StandardsNot* Yet Adopted*

In* October 2023,the FASB issued ASUNo.* 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative". The amendment amends the disclosure or presentation requirements and provides clarifications or technical corrections to a variety of topics within the Codification pursuant to matters identified by the Securities and Exchange Commission in its* August 2018ReleaseNo.* 33-10532, "Disclosure Update and Simplification". The ASU's effective date is contingent on SEC actions, with implementation expectedno later than* June 30, 2027.The adoption of this pronouncement isnot* expected to have a material impact on the Company's financial statements.

In* November 2024,the FASB issued ASUNo.* 2024-03, "Expense Disaggregation Disclosures (Topic230): Disaggregation of Income Statement Expenses". The amendment requires disclosure of disaggregated information about specific expense categories underlying certain income statement expense line items. The guidance is effective for the Company for annual reporting periods beginning after* December 15, 2026,and interim reporting periods beginning after December 15, 2027.Accordingly, the Company expects to adopt the standard in its annual financial statements for the year ending December 31, 2027,and in interim periods beginning in fiscal year2028.* The adoption of this pronouncement isnot expected to have a material impact on the Company's financial statements.

In* September 2025,the FASB issued ASUNo.* 2025-06, "Modernizing Internal-Use Software Accounting". The amendment amends certain aspects of the accounting for and disclosure of software costs under ASC350-40 by eliminating prospective project stages and requires capitalization of internal-use software costs only after1) management authorizes and commits to funding the project and2) it is probable the software will be completed and used as intended. Entities also must evaluate and, if present, resolve significant development uncertainty, limited to1) novel or unproven functionalitynot yet resolved through coding and testing and2) situations in which significant performance requirements havenot been identified or continue to be substantially revised. The ASU is effective for periods beginning after* December 15, 2027,with early adoption permitted. The adoption of this pronouncement isnot* expected to have a material impact on the Company's financial statements.

In* September 2025,the FASB issued ASUNo.* 2025-07, "Derivative Accounting and Customer Share-Based Noncash Consideration". The amendment refines Topic815 by excluding from derivative accounting any non-exchange-traded contracts whose underlying's are based on operations or activities specific toone of the parties with certain scooping exceptions. Clarifies that share-based noncash consideration received from a customer in a revenue contract is accounted for under Topic606 until the right to receive or retain that consideration is unconditional, at which point other Topics apply. The ASU is effective for periods beginning after* December 15, 2026,with early adoption permitted. The adoption of this pronouncement isnot* expected to have a material impact on the Company's financial statements.

In* November 2025,the FASB issued ASUNo.* 2025-09, "Derivatives and Hedging (Topic815): Targeted Improvements to Hedge Accounting". The amendment amends ASC Topic815 to clarify, improve, and better align hedge accounting guidance with entities' economic risk management strategies and address implementation challenges in practice. The ASU is effective for annual reporting periods beginning after* December 15, 2026,with early adoption permitted. The adoption of this pronouncement isnot* expected to have a material impact on the Company's financial statements.

In* December**2025,* the FASB issued ASU-2025-10, "Accounting for Government Grants". This amendment establishes the authoritative guidance for business entities on accounting for government grants, including definitions, recognition criteria based on a probable threshold, and models for both asset-related and income-related grants. Permits either a deferred income approach or a cost-accumulation approach for asset-related grants and requires expanded annual disclosures. The ASU is effective for annual reporting periods beginning after* December 15, 2028,with early adoption permitted. The adoption of this pronouncement isnot* expected to have a material impact on the Company's financial statements.

In* December 2025,the FASB issued ASUNo.* 2025-11, "Interim Reporting (Topic270): Narrow-Scope Improvements". The amendment is to enhance the clarity, navigability, and application of interim reporting guidance in ASC Topic270 without expanding or reducing the fundamental nature of the interim reporting framework. The amendments clarify when interim guidance applies, the form and content of interim financial statements, and the related disclosure requirements under GAAP. The ASU is effective for periods beginning after* December 15, 2027,with early adoption permitted. The adoption of this pronouncement isnot* expected to have a material impact on the Company's financial statements.

In* December 2025,the FASB issued ASUNo.* 2025-12, "Codification Improvements". The amendment consists of technical corrections, clarifications, and narrow-scope improvements that address unintended application issues and improve the clarity and usability of GAAP without making substantive changes to current accounting practice. The amendments are intended to reduce diversity in practice and correct errors or ambiguous provisions in the Codification. The ASU is effective for periods beginning after* December 15, 2026,with early adoption permitted. The adoption of this pronouncement isnot* expected to have a material impact on the Company's financial statements.

The Company doesnot expect other recent accounting standards issued by the FASB or other standards-setting bodies to have a material impact on the consolidated financial statements.

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Note2. Acquisitions

After the close of business on* January 23, 2026 (the "Effective Time"), the Company completed its previously announced merger (the “Merger”) with Hometown Bancshares, Inc. ("Hometown"), a West Virginia corporation headquartered in Middlebourne, West Virginia, pursuant to an Agreement and Plan of Merger (the “Agreement”) dated July 19, 2025,*by and between the company and Hometown. At the Effective Time, Hometown merged with and into the Company, with the Company as the surviving corporation in the Merger.

Immediately following the Merger, Union Bank, Inc., a wholly-owned subsidiary of Hometown, merged with and into First Community Bank, a wholly-owned subsidiary of the Company (the “Bank Merger”), with First Community Bank as the surviving bank in the Bank Merger.

Pursuant to the Agreement, each outstanding share of common stock of Hometown was converted into the right to receive 11.706 shares (the “Exchange Ratio”) of the Company's common stock, par value $1.00 per share, plus cash, without interest, in lieu of fractional shares. In connection with the transaction, the Company issued 1,029,314 common shares.

Under the terms of the Agreement, all Hometown stock appreciation rights under a stock appreciation award (except certain stock appreciation rights that were unvested as of* January 1, 2025)and all Hometown dividend equivalent rights granted under the Hometown Dividend Equivalent Incentive Plan that were outstanding immediately prior to the Effective Time, to the extentnot* vested, became fully vested, and were canceled. The holders of stock appreciation rights received a cash payment equal to the number determined by multiplying (i) the excess, if any of (A) Average Closing Price (as defined in the Agreement) multiplied by (B) the Exchange Ratio over the applicable exercise price of the stock appreciation right, by (ii) the number of shares of Hometown common stock subject to the applicable stock appreciation right. The holders of dividend equivalent rights received a cash payment equal to the account value of the applicable dividend rights award. The stock appreciation rights that are unvested as of* January 1, 2025,*were assumed by the Company.

The transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date. Fair values are preliminary and subject to refinement for up to a year after the closing date of the acquisition. The Company incurred a total of $5.22 million in merger expenses related to the Hometown transaction, $2.91 million was recorded in2025 and $2.31 million in thefirst quarter of2026. These costs were primarily related to data conversion, investment banking fees, and legal fees.

Goodwill arising from business combinations represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the fair value of the liabilities assumed. The Hometown acquisition resulted in the Company recognizing $1.73 million in goodwill.

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The primary identifiable intangible asset we typically record in connection with a whole bank or bank branch acquisition is the value of the core deposit intangibles which represents the estimated value of the long-term deposit relationships acquired in the transaction. Determining the amount of identifiable intangible assets and their average lives involves multiple assumptions and estimates and is typically determined by performing a discounted cash flow analysis, which involves a combination of any or all of the following assumptions: customer attrition/runoff, alternative funding costs, deposit servicing costs, and discount rates. The core deposit intangibles are amortized over the estimated useful lives of the deposit accounts based on a method that we believe reasonably approximates the anticipated benefit stream from this intangible. Core deposit intangibles for the Hometown transaction totaled $8.59 million.

When loans are acquired, due to the adoption of ASU2025-08 in conjunction with ASU2016-13 (CECL), the Company classifies acquired loans as either purchased credit deteriorated (“PCD”), purchased seasoned loans (“PSL”), or other non-PCD loans at the acquisition date. PCD loans, representing assets with more-than-insignificant credit deterioration since origination, and PSL loans, which meet the criteria for application of the gross-up approach under the new guidance, are both recorded by recognizing an allowance for credit losses as an adjustment to the amortized cost basis of the loans at acquisition, resulting inno initial impact to earnings. Subsequent changes in expected credit losses for these loans are recognized through provision expense in the periods in which they occur. Loans that donot meet the definition of PCD or PSL are recorded at fair value, typically determined using a discounted cash flow methodology incorporating assumptions such as discount rates, expected lives, prepayments, probability of default, and loss given default, with any resulting discount accreted into interest income over the estimated remaining life of the loans. An allowance for credit losses on these non-PCD loans is recognized through provision expense in the period of acquisition. This framework aligns the accounting for acquired loans more closely with their underlying credit characteristics while reducing earnings volatility at acquisition. The fair value of purchased loans with credit deterioration was $11.05 million on the date of acquisition with the gross contractual amount totaling $12.66 million. Purchased seasoned loans acquired had a fair value of $159.77 million with a gross contractual value of $161.58 million.

Explanation of fair value adjustments;

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Note*3***.DebtSecurities**

The following tables present the amortized cost and fair value of available-for-sale debt securities, including gross unrealized gains and losses, as of the dates indicated:

There wasno allowance for credit losses for debt securities as of* September 30, 2026* or* December 31, 2025;therefore, it isnot* presented in the table above. The Company excludes the accrued interest receivable from the amortized cost basis in measuring expected credit losses on the debt securities and doesnot record an allowance for credit losses on accrued interest receivable. Accrued interest receivable for debt securities was $1.00 million and $681 thousand as of* September 30, 2026*, and* December 31, 2025*, respectively.

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The following table presents the amortized cost and aggregate fair value of available-for-sale debt securities by contractual maturity, as of the date indicated. Actual maturities could differ from contractual maturities because issuers* may*have the right to call or prepay obligations with or without penalties.

The following tables present the fair values and unrealized losses for available-for-sale debt securities in a continuous unrealized loss position for less than12 months and for12 months or longer as of the dates indicated:

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There were 109 individual debt securities in an unrealized loss position as of* September 30, 2026*, and the combined depreciation in value represented 4.60% of the debt securities portfolio. There were 85 individual debt securities in an unrealized loss position as of* December 31, 2025*, and their combined depreciation in value represented 7.83% of the debt securities portfolio.

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

Management continues to monitor all of our securities with a high degree of scrutiny. Whileno such determination has been made, future conditions* may*result in management concluding that certain securities should be sold or that a provision for credit losses should be recognized in earnings in future periods.

The carrying amount of securities pledged for various purposes totaled $225.13 million as of* September 30, 2026*, and $29.85 million as of* December 31, 2025*.

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

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Note*4***. Loans**

The Company groups loans held for investment intothree segments (commercial loans, consumer real estate loans, and consumer and other loans) with each segment divided into various classes. Customer overdrafts reclassified as loans totaled $2.15 million as of* September 30, 2026*, and $1.65 million as of* December 31, 2025*. Deferred loan fees, net of loan costs, totaled $6.12 million as of* September 30, 2026*, and $4.75 million as of* December 31, 2025*.

The table below reflects the loan portfolio at the amortized cost basis to include net deferred loan fees of $6.12 million and $4.75 million and unamortized discount related to loans acquired of $9.50 million and $11.45 million for* September 30, 2026*, and* December 31, 2025*, respectively. Accrued interest receivable of $8.74 million as of* September 30, 2026*, and $8.04 million as of* December 31, 2025*, is accounted for separately and reported in Interest Receivable on the Consolidated Balance Sheet.

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Note*5***. Credit Quality**** **

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

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

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

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The Company generally places a loan on nonaccrual status when it is90 days or more past due. The following table presents nonaccrual loans, by loan class, as of the dates indicated:

Loans are considered past due when either principal or interest payments become contractually delinquent by30 days or more. The Company’s policy is to discontinue the accrual of interest, if warranted, on loans based on the payment status, evaluation of the related collateral, and the financial strength of the borrower. Loans that are90 days or more past due are placed on nonaccrual status. Management* mayelect to continue the accrual of interest when the loan is well secured and in process of collection. When interest accruals are discontinued, interest accrued andnot* collected in the current year is reversed from income, and interest accrued andnot collected from prior years is charged to the allowance for credit losses. Nonaccrual loans* maybe returned to accrual status when all principal and interest amounts contractually due, including past due payments, are brought current; the ability of the borrower to repay the obligation is reasonably assured; and there is generally a period of at leastsix* months of repayment performance by the borrower in accordance with the contractual terms. There wasno material nonaccrual loan interest recognized in income during thethird quarter of2026 or2025.

The following tables present the aging of past due loans, by loan class, as of the dates indicated. Nonaccrual loans30 days or more past due are included in the applicable delinquency category:

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ASC326 prescribes that when an entity determines foreclosure is probable, the expected credit loss can be measured based on the fair value of the collateral. As a practical expedient, an entity* mayuse the fair value as of the reporting date when recording the net carrying amount of the asset. For the collateral dependent asset ("CDA") a credit loss expense is recorded for loan amounts in excess of fair value of the collateral. The Company hadno collateral-dependent loans as of September 30, 2026*, or* December 31, 2025*.

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The Company* may*make concessions in interest rates, loan terms and/or amortization terms when restructuring loans for borrowers experiencing financial difficulty. Presented below are the amortized cost basis and percentage of loan class for loan modifications made to borrowers experiencing financial difficulty by loan class, concession type, and financial effect as of the dates indicated:

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Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. There wereno modified loans (or portions of a loan) deemed uncollectible as of* September 30, 2026*, or* December 31, 2025*.

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

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The following table provides information about other real estate owned (“OREO”), which consists of properties acquired through foreclosure, as of the dates indicated:

Note*6***. Allowance for Credit Losses**** **

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

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Note*7***. Deposits**

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

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Note*8***. Borrowings**

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

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

The Company hadno long-term borrowings as of* September 30, 2026*, or* December 31, 2025*.

Unused borrowing capacity with the FHLB totaled $301.57 million, net of FHLB letters of credit of $115.13 million, as of* September 30, 2026*. As of* September 30, 2026*, the Company maintains $417.21 million in qualifying loans to secure the FHLB borrowing capacity.

Note*9***. Derivative Instruments and Hedging Activities**

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

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

The Company's interest rate swaps qualify as fair value hedging instruments; therefore, fair value changes in the derivative and hedged item attributable to the hedged risk are recognized in earnings in the same period. The fair value hedges were effective as of* September 30, 2026*, and* December 31, 2025*.

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

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

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Note*10***.EmployeeBenefit Plans**

The Company maintainstwo nonqualified domestic, noncontributory defined benefit plans (the “Benefit Plans”) for key members of senior management and non-management directors. The Company’s unfunded Benefit Plans include the Supplemental Executive Retention Plan ("SERP") and the Directors’ Supplemental Retirement Plan ("Director Plan"). The SERP was frozen near the end of2021; the Director Plan was fundamentally frozen at that time as well. The following table presents the components of net periodic pension cost and the effect on the consolidated statements of income for the periods indicated:

Note*11***. Earnings per**** Share**

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

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Note*12***. Accumulated Other Comprehensive Income**** (Loss)**

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

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

Note*13***. Fair Value**

Financial Instruments Measured at Fair Value

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

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

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Assets and Liabilities Reported at Fair Value on a Recurring Basis

Available-for-saleDebtSecurities

Debt securities available-for-sale are reported at fair value on a recurring basis. The fair value of Level1 securities is based on quoted market prices in active markets, if available. If quoted market prices arenot available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are primarily derived from or corroborated by observable market data. Level2 securities use fair value measurements from independent pricing services obtained by the Company. These fair value measurements consider observable data that* mayinclude dealer quotes, market spreads, cash flows, the Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and bond terms and conditions. The Company’s Level2* securities include U.S. Agency and Treasury securities, municipal securities, corporate notes and mortgage-backed securities. Securities are based on Level3 inputs when there is limited activity or less transparency to the valuation inputs. In the absence of observable or corroborated market data, internally developed estimates that incorporate market-based assumptions are used when such information is available.

Fair value models* maybe required when trading activity has declined significantly or doesnot* exist, prices arenot current, or pricing variations are significant. For Level3 securities, the Company obtains the cash flow of specific securities fromthird parties that use modeling software to determine cash flows based on market participant data and knowledge of the structures of each individual security. The fair values of Level3 securities are determined by applying proper market observable discount rates to the cash flow derived fromthird-party models. Securities with increased uncertainty about the receipt of cash flows are discounted at higher rates due to the addition of a deal specific credit premium based on assumptions about the performance of the underlying collateral. Finally, internal fair value model pricing and external pricing observations are combined by assigning weights to each pricing observation. Pricing is reviewed for reasonableness based on the direction of specific markets and the general economic indicators.

Equity Securities. Equity securities are recorded at fair value on a recurring basis and included in other assets in the consolidated balance sheets. The Company uses Level1 inputs to value equity securities that are traded in active markets. Equity securities that arenot actively traded are classified in Level2.

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

Deferred Compensation Assets and Liabilities. Securities held for trading purposes are recorded at fair value on a recurring basis and included in other assets in the consolidated balance sheets. These securities include assets related to employee deferred compensation plans, which are generally invested in Level1 equity securities. The liability associated with these deferred compensation plans is carried at the fair value of the obligation to the employee, which corresponds to the fair value of the invested assets.

Derivative Assets and Liabilities. Derivatives are recorded at fair value on a recurring basis. The Company obtains dealer quotes, Level2 inputs, based on observable data to value derivatives.

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

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Assets Measured at Fair Value on a Nonrecurring Basis

Collateral Dependent Loans and OREO:The fair value of collateral-dependent loans and OREO is measured on a nonrecurring basis using Level3 inputs, which typically include appraised values of collateral that are adjusted for estimated selling costs and other qualitative factors.

The following table presents assets measured at fair value on a nonrecurring basis, by the level of valuation inputs in the fair value hierarchy, as the date indicated. The Company hadno collateral-dependent loans or OREO measured at fair value on a nonrecurring basis as of* December 31, 2025.*

Quantitative Information about Level3* Fair Value Measurements*

The following table provides quantitative information for assets measured at fair value on a nonrecurring basis using Level3 valuation inputs as of the date indicated:

Fair Value of Financial Instruments

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

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Note*14***.Litigation, Commitments,**** and Contingencies**** **

Litigation

We are currently a defendant in legal actions and asserted claims in the normal course of business. Although we are unable to assess the ultimate outcome of each matter with certainty, we believe that the resolution of these actions shouldnot have a material adverse effect on our financial position, results of operations, or cash flows.

Commitments and Contingencies

The Company is a party to financial instruments with off balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit, and financial guarantees. These instruments involve, to varying degrees, elements of credit and interest rate risk beyond the amount recognized in the consolidated balance sheets. The contractual amounts of these instruments reflect the extent of involvement the Company has in particular classes of financial instruments. If the other party to a financial instrument doesnot perform, the Company’s credit loss exposure is the same as the contractual amount of the instrument. The Company uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there isno violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and* mayrequire payment of a fee. Since many commitments are expected to expire without being drawn on, the total commitment amounts donot* necessarily represent future cash requirements. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of each customer on a case-by-case basis. Collateral* may*include accounts receivable, inventory, property, plant and equipment, and income producing commercial properties. The Company maintains a reserve for the risk inherent in unfunded lending commitments, which is included in other liabilities in the consolidated balance sheets.

Standby letters of credit and financial guarantees are conditional commitments issued by the Company to guarantee the performance of a customer to athird party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending credit to customers. The amount of collateral obtained, if deemed necessary, to secure the customer’s performance under certain letters of credit is based on management’s credit evaluation of the customer.

The following table presents the off-balance sheet financial instruments as of the dates indicated:

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Note15. Segment Information

The Company conducts its business activities through community banking. Community banking revolves around serving the community and customers where the bank has branches and offices. Community banking consists of commercial and consumer banking, lending activities, and wealth management.

The Company’s chief executive officer is in charge of allocating the Company’s resources and assessing the Company's performance, and as such, has been identified as the chief operating decision maker. The chief operating decision maker regularly reviews a multitude of reports that have a varying level of combined detail on products offered, however, all of the information and activity reviewed fall under the definition of community banking.

Based on the business activities and information reviewed by the chief operating decision maker, the Company hasone reportable segment - Community Banking.

The accounting policies of the community banking segment are the same as those for the Company described in Note1. In accordance with ASC280, the Company has concluded that consolidated net income is the measure of segment profit or loss that is required to be reported because it is the measure determined in accordance with measurement principles that are most consistent with US GAAP. As the Company only hasone reportable segment, total segment net income and total segment assets are equivalent to the results disclosed in the accompanying Consolidated Statements of Income and Consolidated Balance Sheets, respectively.

Note16. Subsequent Events

On* October 27, 2026,*the Company entered into an Agreement and Plan of Merger (the “Agreement”) with Main Street Financial Services Corp., a West Virginia corporation (“Main Street”), under which the Company will acquire Main Street.

Main Street is a bank holding company headquartered in Wooster, Ohio, with total assets of approximately $1.6 billion, total loans of approximately $1.3 billion, total liabilities of approximately $1.5 billion, total deposits of approximately $1.4 billion and total shareholders' equity of approximately $137 million as of* September 30, 2026.*Main Street is the parent company of Main Street Bank Corp., which operates 21 banking offices across east central Ohio and in the northern panhandle of West Virginia.

Pursuant to the terms and conditions set forth in the Agreement, at the effective time of the Merger (the “Effective Time”), Main Street will merge with and into the Company. Main Street will cease to exist, and the Company will survive and continue to exist as a Virginia corporation. The Agreement further provides that following the Effective Time, Main Street Bank Corp. will merge with and into First Community Bank, a wholly owned subsidiary of the Company (the “Bank Merger”). First Community Bank will survive the Bank Merger and continue to exist as a Virginia banking corporation.

The Agreement provides that, upon the terms and conditions set forth in the Agreement, at the Effective Time, each share of Main Street common stock, par value $1.00 per outstanding immediately prior to the Effective Time will be converted into the right to receive 0.6174 shares of the Company common stock, par value $1.00 per share. Holders of Main Street Common Stock will receive cash in lieu of fractional shares.

Pursuant to the Agreement, outstanding stock options of Main Street will be cancelled at closing and converted into the right to receive cash consideration in accordance with the terms of the Agreement.

The completion of the Merger and the Bank Merger are subject to customary conditions, including receipt of the requisite approval of both the Company’s and Main Street’s shareholders of the Agreement and receipt of required regulatory approvals from the Board of Governors of the Federal Reserve System and the Virginia State Corporation Commission Bureau of Financial Institutions and regulatory filings with the West Virginia Division of Financial Institutions.

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