Sign in

You're signed outSign in or to get full access.

FC

FIRST COMMUNITY BANKSHARES INC /VA/ (FCBC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 diluted EPS was $0.67, a modest beat versus Wall Street consensus of $0.65*; net income was $12.25M driven by stable NIM and lower credit costs (provision recovery) despite softer loan balances .
  • Revenue (S&P-defined) was $41.28M*, above consensus $40.60M*, supported by 10.7% YoY growth in noninterest income, particularly deposit service charges (+20.2% YoY) .
  • Net interest margin (FTE) held at 4.37% (up from 4.34% in Q1; down from 4.51% in Q2’24), with interest expense trending down and earning asset yields modestly lower YoY .
  • Capital return and strategic actions: regular dividend maintained at $0.31 and share repurchases resumed (50,338 shares; $1.85M); announced acquisition of Hometown Bancshares with expected high-single-digit EPS accretion and minimal TBV dilution (non-GAAP) upon closing .

Values with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • NIM resiliency: Net interest margin (FTE) improved sequentially to 4.37% in Q2 from 4.34% in Q1, reflecting disciplined deposit cost management and asset mix .
  • Fee momentum: Noninterest income rose ~10.7% YoY, led by service charges on deposits (+20.2% YoY), providing a recurring revenue offset to softer loan yields/volumes .
  • Credit normalization: Provision was a net recovery of $0.285M versus a provision in the prior year; annualized net charge-offs fell to 0.08% from 0.16% in Q2’24, reflecting improved loss experience .

Selected management quotes (strategic):

  • “This merger aligns with First Community’s strategic focus on growing low-cost core deposits… natural expansion into West Virginia markets…” — Gary R. Mills, President and CEO .
  • “First Community will benefit from Union’s strong deposit base… customers will enjoy increased scale, higher lending limits, and enhanced product and technology offerings” — William P. Stafford, II, Chairman & CEO .
  • “We are confident that our combined franchise will… create value for our customers, shareholders, and employees” — Tim Aiken, CEO of Union Bank .

What Went Wrong

  • Loan headwinds: Average loan balances declined $134.85M YoY and period-end loans fell $62.81M YTD, pressuring interest income; loan yields also dipped 6 bps YoY .
  • Expense pressure: Noninterest expense rose $0.558M (+2.24% YoY), notably salaries/benefits (+$1.86M, +14.9% YoY) and advertising/public relations (+$0.221M, +23.7% YoY) .
  • Returns slightly lower YoY: ROA at 1.53% (vs. 1.58% prior year) and ROE at 9.84% (vs. 10.02% prior year), reflecting revenue mix changes and higher operating costs .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$40.59*$40.21*$41.28*
Diluted EPS ($USD)$0.71 $0.64 $0.67
Net Interest Income ($USD Millions)$31.33 $30.30 $30.66
Net Interest Margin, FTE (%)4.36% 4.34% 4.37%
ROA (%)1.60% 1.49% 1.53%
ROE (%)9.89% 9.49% 9.84%

Values with * retrieved from S&P Global.

Segment/Noninterest Income Breakdown

Metric ($USD Millions)Q2 2024Q1 2025Q2 2025
Wealth Management$1.06 $1.16 $1.22
Service Charges on Deposits$3.43 $3.84 $4.12
Other Service Charges and Fees$3.67 $3.34 $3.79
Other Operating Income$1.18 $1.89 $1.21
Total Noninterest Income$9.34 $10.23 $10.34

Key KPIs and Balance Sheet

KPIQ2 2024Q1 2025Q2 2025
Nonperforming Loans / Total Loans (%)0.80% 0.85% 0.79%
Annualized Net Charge-offs / Avg Loans (%)0.16% 0.24% 0.08%
ACL / Total Loans (%)1.41% 1.42% 1.40%
Nonperforming Assets / Total Assets (%)0.62% 0.64% 0.60%
Loans Held for Investment (Gross)$2.47B $2.38B $2.35B
Total Deposits$2.68B $2.68B $2.64B
Book Value per Share ($)$27.85 $27.09 $27.46

Non-GAAP Adjusted EPS

MetricQ2 2024Q1 2025Q2 2025
Adjusted Diluted EPS (non-GAAP)$0.76 $0.64 $0.67
Adjusted ROA (%)1.75% 1.49% 1.53%
Adjusted ROTCE (%)16.11% 13.79% 14.32%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Regular Dividend per Common ShareQ2 payout (Aug 22, 2025)$0.31 (Q1 2025) $0.31 Maintained
Share RepurchasesQ2 2025No repurchases in Q1 2025 50,338 shares; $1.85M Reinstated
Hometown Bancshares Acquisition – EPS AccretionFY 2026 (post-close)N/AHigh-single-digit EPS accretion expected New
Hometown Bancshares Acquisition – TBV Dilution (non-GAAP)At closingN/AMinimally dilutive to TBV per share New

No formal numeric guidance provided for revenue, margins, OpEx, OI&E, or tax rate in Q2 materials .

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not available in our document corpus or typical public repositories; themes below reflect reported quarterly disclosures and management’s merger commentary .

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Net Interest Margin4.36% in Q4; 4.34% in Q1 4.37% (sequential uptick) Stable to slightly improving
Deposit Costs/MixHigher rates in Q4; modest increase in deposit yield in Q1 Interest expense down vs Q2’24; shift away from higher-rate time deposits Improving
Fee Income (Service Charges)Q4: $3.61M; Q1: $3.84M Q2: $4.12M (+20% YoY) Improving
Loan GrowthAverage balances down YoY; period-end down Q4→Q1 Loans down $62.81M YTD; average down YoY Deteriorating
Asset QualityNPL ratio ~0.83–0.85% in Q4/Q1 NPL ratio 0.79%; NCOs 0.08% Improving
Capital ReturnSpecial dividend in Q4; no buybacks in Q1 Dividend maintained; buybacks resumed Mixed (steady dividend; buybacks back)
M&A StrategyNo M&A announcements in Q1Hometown Bancshares acquisition; deposit-focused expansion Positive strategic expansion

Management Commentary

  • Strategic expansion and deposit focus: “This merger aligns with First Community’s strategic focus on growing low-cost core deposits… natural expansion into West Virginia markets…” — Gary R. Mills, President and CEO .
  • Customer benefits and scale: “First Community will benefit from Union’s strong deposit base… customers will enjoy increased scale, higher lending limits, and enhanced product and technology offerings” — William (Will) P. Stafford, II, Chairman & CEO .
  • Community alignment and services expansion: “We sought a community-minded bank… First Community Bank will bring services… such as Trust and Wealth Management services” — Tim Aiken, CEO of Union Bank .
  • Quarterly narrative highlights: Company emphasized NIM stability (4.37%), fee growth, provision recovery, and disciplined deposit strategy; recognized with Raymond James Community Bankers Cup (top 10%) in 2024 .

Q&A Highlights

  • The Q2 2025 earnings call transcript was not available in our sources; no Q&A details or on-call guidance clarifications could be verified from primary documents .

Estimates Context

MetricQ4 2024 EstimateQ4 2024 ActualQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 Actual
Primary EPS Consensus Mean ($)0.66*0.71*0.64*0.64*0.65*0.67*
Revenue Consensus Mean ($USD Millions)40.00*40.59*40.50*40.21*40.60*41.28*

Values with * retrieved from S&P Global.

Implications: Q2 EPS beat was modest (+$0.02 vs est), aided by fee strength and lower credit costs; revenue beat was small, reflecting stable NIM and higher service charges despite lower average loan balances .

Key Takeaways for Investors

  • EPS and revenue slightly beat consensus in Q2; stability in NIM and fee growth offset pressure from lower loan balances and slightly lower earning asset yields .
  • Sequential NIM improvement (4.37% vs 4.34% in Q1) and reduced interest expense point to ongoing deposit cost discipline—supportive for H2 margin trajectory .
  • Credit quality improved: NPL ratio fell to 0.79%, and annualized NCOs dropped to 0.08%, enabling a provision recovery and supporting earnings durability .
  • Capital return remains intact: Dividend maintained at $0.31 and buybacks resumed—signals confidence in core profitability and capital levels .
  • Strategic M&A (Hometown Bancshares) targets low-cost deposits and accretive EPS; minimal TBV dilution expected—potential medium-term ROE uplift upon integration .
  • Watch expense line: Salaries/benefits and advertising rose materially YoY; operating leverage will be key to future EPS growth if loan balances remain soft .
  • Near-term stock catalysts: Confirmation of Hometown approvals/timeline, sustained fee momentum, and further deposit cost improvement; risks include continued loan contraction and wage inflation .