First Community Bankshares, Inc.

First quarter common net income was $6.9 million, or $0.33 per diluted share. Core earnings were $7.0 million, with core ROA of 1.05% and core ROE of 8.23%. Net interest margin was 4.15%, and the company recognized approximately $3.8 million in accretion, including about $1.9 million of interest received on PGI loans; excluding that, core net interest margin was approximately $3.81 million. Provision for loan losses was $1.142 million, and other real estate costs plus net losses totaled $625,000, for total credit costs of $1.8 million. Total loans were $1.689 billion, and non-covered non-performing assets to total assets were 1.43%. Looking ahead, management projected gross accretion of about $3.4 million in Q2, declining by a couple hundred thousand dollars per quarter thereafter, and indemnification asset negative accretion of about $1.4 million next quarter, declining by about $100,000 per quarter after that. The company also said it would be back in the market for share repurchases in the second quarter after buying back just over 69,000 shares at an average price of $15.60 in Q1.

John Mendez struck an upbeat but cautious tone, saying the quarter was consistent with expectations in a low-rate, slow-growth environment. He emphasized that the company is using this period to sharpen operations, build staffing, improve asset quality, and maintain high liquidity to protect book value and reduce interest rate risk. He also highlighted capital build, the integration of Waccamaw and Peoples, and the return to bid-eligible status as reasons the bank can pursue additional consolidation opportunities in the Virginias and Carolinas.

Dave Brown detailed a profitable quarter with $6.9 million in common net income, $7.0 million in core earnings, and strong profitability ratios. He explained that margin was supported by about $3.8 million of accretion, but also noted that $1.9 million of that was actual interest received on PGI loans, which makes the core net interest margin about $3.81 million. He cited $1.1 million of provision expense, $625,000 of OREO costs and net losses, a 59.6% efficiency ratio, tangible book value per share of $11.84, and tangible common equity of 9.6%. He also said the company bought back just over 69,000 shares at $15.60 and expects to resume repurchases in Q2.

Analysts focused on the indemnification asset, asking whether the negative accretion reflected changes in expected loan life or cash flow assumptions. Management said it was mainly an accounting alignment tied to positive Waccamaw resolution experience and cash coming back, not a worsening credit assumption, and said the noise should continue but should not produce major surprises after Q2. Questions also centered on loan growth: management said first-quarter seasonality and aggressive competition held back commercial originations, but April applications were running at the highest level since 2008 for retail credit and were also improving in small business. Analysts also clarified accretion modeling, and management guided to about $3.4 million of gross accretion in Q2 and about $1.4 million of negative accretion from the indemnification asset.