# EDGAR Filing Document

**Accession Number:** 0000859070
**File Stem:** 0001437749-23-001682
**Filing Date:** 2023-1
**Character Count:** 34654
**Document Hash:** b5625d7b2381f0ae92424206fabcc546
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-23-001682.hdr.sgml**: 20230124

**ACCESSION NUMBER**: 0001437749-23-001682

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230124

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Other Events

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230124

**DATE AS OF CHANGE**: 20230124

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** FIRST COMMUNITY BANKSHARES INC /VA/
- **CENTRAL INDEX KEY:** 0000859070
- **STANDARD INDUSTRIAL CLASSIFICATION:** STATE COMMERCIAL BANKS [6022]
- **IRS NUMBER:** 550694814
- **STATE OF INCORPORATION:** VA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-19297
- **FILM NUMBER:** 23548752

**BUSINESS ADDRESS:**
- **STREET 1:** PO BOX 989
- **CITY:** BLUEFIELD
- **STATE:** VA
- **ZIP:** 24605
- **BUSINESS PHONE:** 3043236300

**MAIL ADDRESS:**
- **STREET 1:** 29 COLLEGE DRIVE
- **STREET 2:** P O BOX 989
- **CITY:** BLUEFIELD
- **STATE:** VA
- **ZIP:** 24605

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** FIRST COMMUNITY BANCSHARES INC /NV/
- **DATE OF NAME CHANGE:** 19971121

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** FCFT INC
- **DATE OF NAME CHANGE:** 19930328

fcbc20230123_8k.htm

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM **8-K**

**CURRENT REPORT** 

**Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934**

Date of Report (Date of earliest event reported): **January 24, 2023**

---

| | |
|:---|:---|
|  | **FIRST COMMUNITY BANKSHARES, INC.** |
| (Exact name of registrant as specified in its charter) | (Exact name of registrant as specified in its charter) |

---

---

| | | |
|:---|:---|:---|
| **Virginia** | **000-19297** | **55-0694814** |
| (State or other jurisdiction | (Commission | (IRS Employer |
| of incorporation) | File Number) | Identification No.) |

---

---

| | |
|:---|:---|
| **P.O. Box 989**<br> **Bluefield**, **Virginia** | **24605-0989** |
| (Address of principal executive offices) | (Zip Code) |
| Registrant's telephone number, including area code: **(**276**) **326-9000** | Registrant's telephone number, including area code: **(**276**) **326-9000** |

---

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☒ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

**Securities registered pursuant to Section 12(b) of the Act:**

---

| | |
|:---|:---|
| **Title of each class** | **Name of each exchange on which registered** |
| Common Stock ($1.00 par value)<br> FCBC | NASDAQ Global Select |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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**Item 2.02 Results of Operations and Financial Condition.**

On January 24, 2023, First Community Bankshares, Inc. (the "Company") announced by press release its earnings for the fourth quarter of 2022. A copy of the press release is attached hereto as Exhibit 99.1.

**Item 8.01 Other Events.**

On January 24, 2023, the Company announced by press release its quarterly cash dividend to common shareholders of twenty-nine cents ($0.29) per common share, payable on or about February 24, 2023, to shareholders of record on February 10, 2023. A copy of the press release is attached hereto as Exhibit 99.1.

**Item 9.01 Financial Statements and Exhibits.**

(d) The following exhibit is included with this report:

---

| | |
|:---|:---|
| Exhibit No. | Exhibit Description |
| 99.1 | [Earnings release dated January 24, 2023.](ex_466792.htm) |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL). |

---

**Forward-Looking Statements**

This Current Report on Form 8-K contains forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company's Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

------

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
| | | FIRST COMMUNITY BANKSHARES, INC. | FIRST COMMUNITY BANKSHARES, INC. |
| Date: | January 24, 2023 | By: | /s/ David D. Brown |
|  |  |  | David D. Brown |
|  |  |  | Chief Financial Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

![logo.jpg](logo.jpg)

**NEWS RELEASE**

---

| | |
|:---|:---|
| **FOR IMMEDIATE RELEASE:** | **FOR MORE INFORMATION, CONTACT:** |
| January 24, 2023 | David D. Brown |
|  | (276) 326-9000 |

---

**First Community Bankshares, Inc. Announces Fourth Quarter 2022 Results and Quarterly Cash Dividend**

Bluefield, Virginia – First Community Bankshares, Inc. (NASDAQ: FCBC) (<u>www.firstcommunitybank.com</u>) (the "Company") today reported its unaudited results of operations and other financial information for the quarter ended December 31, 2022. The Company reported net income of $12.58 million, or $0.77 per diluted common share, for the quarter ended December 31, 2022. Net income for the year ended December 31, 2022, was $46.66 million or $2.82 per diluted common share.

The Company also declared a quarterly cash dividend to common shareholders of twenty-nine cents ($0.29) per common share, an increase of two cents ($0.02), or 7.41%, over the quarterly dividend declared in the same quarter of 2021. The quarterly dividend is payable to common shareholders of record on February 10, 2023, and is expected to be paid on or about February 24, 2023. This marks the 38<sup>th</sup> consecutive year of regular dividends to common shareholders.

During the fourth quarter, the Company entered into an agreement to acquire Mount Airy, North Carolina-based Surrey Bancorp. The acquisition will strengthen the Company's presence in western North Carolina, result in top market share in Mount Airy, and add approximately $500 million in assets. Surrey has a record of excellent financial performance and a very strong core deposit franchise across its seven branch network. The acquisition is subject to customary regulatory and shareholder approvals and is expected to close in the second quarter of 2023.

**Fourth Quarter 2022 and Current Highlights**

**Income Statement**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Net income of $12.58 million for the quarter was an increase of $2.03 million compared to $10.56 million recorded in the same quarter of 2021. The increase is primarily attributable to an increase in net interest income of $5.39 million as well as a decrease in noninterest expense of $971 thousand. The positive increases to income were offset by an increase in the provision for credit losses of $4.26 million compared to the same quarter of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Annualized return on average assets was 1.59% for the fourth quarter and 1.45% for year-end 2022. Annualized return on average common equity was 11.99% for the fourth quarter and 11.04% for year-end 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Net interest margin for the fourth quarter was 4.34%, which was an 82 basis point increase from 3.52% reported for fourth quarter of 2021. The yield on earning assets increased 79 basis points, primarily driven by increased earnings on loans and securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o The cost of interest-bearing deposits declined 5 basis points to 0.08%, primarily driven by a decrease in the cost of time deposits and an increase in non-maturing deposits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Net interest income increased $5.39 million compared to the same quarter of 2021. Interest and fees on loans increased $2.64 million from the same quarter of 2021 and is primarily attributable to loan demand and originations. Interest income from securities of $1.90 million was an increase of $1.54 million over the fourth quarter of 2021. Interest on deposits in banks also increased $981 thousand to $1.22 million for the fourth quarter as a result of the Federal Open Market Committee's incremental 425 basis point rate increase in overnight rates throughout 2022 as compared to the overnight rates of 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o The provision for credit losses of $3.42 million for the quarter was an increase of $4.26 million compared to the same quarter of 2021. The increase was largely attributable to the growth of the loan portfolio throughout 2022 and an economic forecast that projects higher unemployment rates and weaker macroeconomic trends. The fourth quarter and full year of 2021 included recoveries of pandemic-related provisioning.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Salaries and employee benefits for the fourth quarter decreased $580 thousand, or 4.64%, over the same quarter in 2021, while increasing $2.94 million, or 6.65%, for the full year of 2022 compared with 2021. During the first quarter of 2022, the Company implemented annualized wage increases of approximately $2.5 million as part of its ongoing strategic initiative to enhance Human Capital Management, which included an increased minimum wage.

------

**Balance Sheet and Asset Quality**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o The Company's loan portfolio increased by $234.63 million, a growth rate of 10.83%, during of 2022. Loan demand and originations were strong in all categories, including construction, commercial real estate, residential mortgage, and consumer loans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o During the fourth quarter, the Company repurchased 55,210 of its common shares for $1.89 million. The Company repurchased 706,117 common shares for $21.31 million during 2022. Share repurchases have been curtailed due to the announced acquisition of Surrey Bancorp.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Non-performing loans to total loans remained low at 0.70% of total loans and continues the declining trend experienced over the past four quarters. The Company experienced net charge-offs for the fourth quarter of 2022 of $2.25 million, or 0.37% of annualized average loans, compared to net charge-offs of $1.17 million, or 0.22% of annualized average loans, for the same period in 2021. Net charge-offs for the year ended December 31, 2022, were $3.87 million, or 0.23% of annualized average loans, compared to net charge-offs of $2.96 million, or 0.18% of annualized average loans, for the same period in 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o The allowance for credit losses to total loans was 1.27% at December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Book value per share at December 31, 2022, was $26.01, an increase of $0.67 from year-end 2021.

**Non-GAAP Financial Measures**

In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this news release include "tangible book value per common share," "return on average tangible common equity," "adjusted earnings," "adjusted diluted earnings per share," "adjusted return on average assets," "adjusted return on average common equity," "adjusted return on average tangible common equity," and certain financial measures presented on a fully taxable equivalent ("FTE") basis. FTE basis is calculated using the federal statutory income tax rate of 21%. While the Company believes certain non-GAAP financial measures enhance the understanding of its business and performance, they are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions.

**About First Community Bankshares, Inc.**

First Community Bankshares, Inc., a financial holding company headquartered in Bluefield, Virginia, provides banking products and services through its wholly owned subsidiary First Community Bank. First Community Bank operated 48 branch banking locations in Virginia, West Virginia, North Carolina, and Tennessee as of December 31, 2022. First Community Bank offers wealth management and investment advice and services through its Trust Division and through its wholly owned subsidiary, First Community Wealth Management, which collectively managed and administered $1.28 billion in combined assets as of December 31, 2022. The Company reported consolidated assets of $3.14 billion as of December 31, 2022. The Company's common stock is listed on the NASDAQ Global Select Market under the trading symbol, "FCBC". Additional investor information is available on the Company's website at www.firstcommunitybank.com.

*This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the timely development, production and acceptance of new products and services; the challenge of managing asset/liability levels; the management of credit risk and interest rate risk; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company*'*s Securities and Exchange Commission reports including, but not limited to, the Annual Report on Form 10-K for the most recent fiscal year end. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made*.

------

**CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** |
| *(Amounts in thousands, except* | **December 31,** | **September 30,** | **June 30,** | **March 31,** | **December 31,** | **December 31,** | **December 31,** |
| *share and per share data)* | **2022** | **2022** | **2022** | **2022** | **2021** | **2022** | **2021** |
| **Interest income** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Interest and fees on loans | $27873 | $26405 | $25651 | $24641 | $25236 | $104570 | $102832 |
| &nbsp;&nbsp;&nbsp; Interest on securities | 1900 | 1785 | 1551 | 750 | 362 | 5986 | 1737 |
| &nbsp;&nbsp;&nbsp; Interest on deposits in banks | 1215 | 1532 | 768 | 248 | 234 | 3763 | 741 |
| Total interest income | 30988 | 29722 | 27970 | 25639 | 25832 | 114319 | 105310 |
| **Interest expense** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Interest on deposits | 366 | 380 | 422 | 486 | 600 | 1654 | 2835 |
| &nbsp;&nbsp;&nbsp; Interest on borrowings | 1 |  | 1 |  |  | 2 | 1 |
| Total interest expense | 367 | 380 | 423 | 486 | 600 | 1656 | 2836 |
| **Net interest income** | 30621 | 29342 | 27547 | 25153 | 25232 | 112663 | 102474 |
| Provision for (recovery of) credit losses | 3416 | 685 | 510 | 1961 | (846) | 6572 | (8471) |
| **Net interest income after provision** | 27205 | 28657 | 27037 | 23192 | 26078 | 106091 | 110945 |
| Noninterest income | 9184 | 9950 | 8854 | 9194 | 9215 | 37182 | 34301 |
| Noninterest expense | 20730 | 21145 | 21255 | 19986 | 21701 | 83116 | 78718 |
| Income before income taxes | 15659 | 17462 | 14636 | 12400 | 13592 | 60157 | 66528 |
| Income tax expense | 3076 | 4111 | 3423 | 2885 | 3037 | 13495 | 15360 |
| **Net income** | $12583 | $13351 | $11213 | $9515 | $10555 | $46662 | $51168 |
| Earnings per common share |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Basic | $0.78 | $0.82 | $0.67 | $0.57 | $0.62 | $2.82 | $2.95 |
| &nbsp;&nbsp;&nbsp; Diluted | 0.77 | 0.81 | 0.67 | 0.56 | 0.62 | 2.82 | 2.94 |
| Cash dividends per common share |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Regular | 0.29 | 0.29 | 0.27 | 0.27 | 0.27 | 1.12 | 1.04 |
| Weighted average shares outstanding |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Basic | 16229289 | 16378022 | 16662817 | 16817284 | 16974005 | 16519848 | 17335615 |
| &nbsp;&nbsp;&nbsp; Diluted | 16281922 | 16413202 | 16682615 | 16864515 | 17038980 | 16562257 | 17402936 |
| Performance ratios |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Return on average assets | 1.59% | 1.63% | 1.38% | 1.20% | 1.32% | 1.45% | 1.63% |
| &nbsp;&nbsp;&nbsp; Return on average common equity | 11.99% | 12.60% | 10.61% | 8.98% | 9.77% | 11.04% | 11.96% |
| &nbsp;&nbsp;&nbsp; Return on average tangible common equity<sup>(1)</sup> | 17.75% | 18.51% | 15.56% | 13.10% | 14.28% | 16.17% | 17.53% |

---

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&nbsp;&nbsp;&nbsp;&nbsp;(1) A non-GAAP financial measure defined as net income divided by average stockholders' equity less average goodwill and other intangible assets

**CONDENSED CONSOLIDATED QUARTERLY NONINTEREST INCOME AND EXPENSE (Unaudited)**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Twelve Months Ended** | **Twelve Months Ended** |
|  | **December 31,** | **September 30,** | **June 30,** | **March 31,** | **December 31,** | **December 31,** | **December 31,** |
| *(Amounts in thousands)* | **2022** | **2022** | **2022** | **2022** | **2021** | **2022** | **2021** |
| **Noninterest income** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Wealth management | $958 | $932 | $993 | $972 | $940 | $3855 | $3853 |
| &nbsp;&nbsp;&nbsp; Service charges on deposits | 3354 | 3689 | 3672 | 3498 | 3718 | 14213 | 13446 |
| &nbsp;&nbsp;&nbsp; Other service charges and fees | 3006 | 2988 | 3297 | 3017 | 3091 | 12308 | 12422 |
| &nbsp;&nbsp;&nbsp; Net FDIC indemnification asset amortization |  |  |  |  |  |  | (1226) |
| &nbsp;&nbsp;&nbsp; Gain on divestiture |  | 1658 |  |  |  | 1658 |  |
| &nbsp;&nbsp;&nbsp; Other operating income | 1866 | 683 | 892 | 1707 | 1466 | 5148 | 5806 |
| Total noninterest income | $9184 | $9950 | $8854 | $9194 | $9215 | $37182 | $34301 |
| **Noninterest expense** |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Salaries and employee benefits | $11913 | $12081 | $11518 | $11671 | $12493 | $47183 | $44239 |
| &nbsp;&nbsp;&nbsp; Occupancy expense | 1196 | 1188 | 1165 | 1269 | 1368 | 4818 | 4913 |
| &nbsp;&nbsp;&nbsp; Furniture and equipment expense | 1413 | 1478 | 1496 | 1614 | 1418 | 6001 | 5627 |
| &nbsp;&nbsp;&nbsp; Service fees | 1905 | 1635 | 2563 | 1503 | 1946 | 7606 | 6324 |
| &nbsp;&nbsp;&nbsp; Advertising and public relations | 574 | 718 | 577 | 540 | 589 | 2409 | 2076 |
| &nbsp;&nbsp;&nbsp; Professional fees | 98 | 208 | 544 | 453 | 455 | 1303 | 1524 |
| &nbsp;&nbsp;&nbsp; Amortization of intangibles | 364 | 365 | 360 | 357 | 364 | 1446 | 1446 |
| &nbsp;&nbsp;&nbsp; FDIC premiums and assessments | 330 | 321 | 257 | 218 | 213 | 1126 | 832 |
| &nbsp;&nbsp;&nbsp; Merger expense | 596 |  |  |  |  | 596 |  |
| &nbsp;&nbsp;&nbsp; Divestiture expense |  | 153 |  |  |  | 153 |  |
| &nbsp;&nbsp;&nbsp; Other operating expense | 2341 | 2998 | 2775 | 2361 | 2855 | 10475 | 11737 |
| Total noninterest expense | $20730 | $21145 | $21255 | $19986 | $21701 | $83116 | $78718 |

---

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**RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EARNINGS (Unaudited)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |  | **Twelve Months Ended** | **Twelve Months Ended** |  |
|  | **December 31,** | **September 30,** | **June 30,** | **March 31,** |  | **December 31,** |  | **December 31,** | **December 31,** |  |
| *(Amounts in thousands, except* | **2022** | **2022** | **2022** | **2022** |  | **2021** |  | **2022** | **2021** |  |
| *per share data)* | | | | | | | | | | |
| **Net income** | $12583 | $13351 | $11213 | $9515 |  | $10555 |  | $46662 | $51168 |  |
| Non-GAAP adjustments: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Merger expense | 596 |  |  |  |  |  |  | 596 |  |  |
| &nbsp;&nbsp;&nbsp; Divestiture expense |  | 153 |  |  |  |  |  | 153 |  |  |
| &nbsp;&nbsp;&nbsp; Gain on divestiture |  | (1658) |  |  |  |  |  | (1658) |  |  |
| &nbsp;&nbsp;&nbsp; Other items<sup>(1)</sup> | (450) |  | (92) |  |  |  |  | (542) |  |  |
| Total adjustments | 146 | (1505) | (92) |  |  |  |  | (1451) |  |  |
| Tax effect | (29) | (361) | (22) |  |  |  |  | (412) |  |  |
| **Adjusted earnings, non-GAAP** | $12758 | $12207 | $11143 | $9515 |  | $10555 |  | $45623 | $51168 |  |
| Adjusted diluted earnings per common share, non-GAAP | $0.78 | $0.74 | $0.67 | $0.56 |  | $0.62 |  | $2.75 | $2.94 |  |
| Performance ratios, non-GAAP |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Adjusted return on average assets | 1.61 | 1.49 | 1.37 | 1.20 | % | 1.32 | % | 1.42 | 1.63 | % |
| &nbsp;&nbsp;&nbsp; Adjusted return on average common equity | 12.16 | 11.52 | 10.55 | 8.98 | % | 9.77 | % | 10.80 | 11.96 | % |
| &nbsp;&nbsp;&nbsp; Adjusted return on average tangible common equity<sup>(2)</sup> | 17.93 | 16.92 | 15.46 | 13.10 | % | 14.28 | % | 15.84 | 17.53 | % |

---

------

&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes other non-recurring income and expense items

&nbsp;&nbsp;&nbsp;&nbsp;(2) A non-GAAP financial measure defined as adjusted earnings divided by average stockholders' equity less average goodwill and other intangible assets

------

**AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Three Months Ended December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Average** |  | **Average Yield/** | **Average** |  | **Average Yield/** |
| *(Amounts in thousands)* | **Balance** | **Interest<sup>(1)</sup>** | **Rate<sup>(1)</sup>** | **Balance** | **Interest<sup>(1)</sup>** | **Rate<sup>(1)</sup>** |
| **Assets** |  |  |  |  |  |  |
| Earning assets |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Loans<sup>(2)(3)</sup> | $2383161 | $27944 | 4.65% | $2163613 | $25274 | 4.63% |
| &nbsp;&nbsp;&nbsp; Securities available for sale | 299488 | 1942 | 2.57% | 76556 | 418 | 2.17% |
| &nbsp;&nbsp;&nbsp; Interest-bearing deposits | 130363 | 1218 | 3.71% | 613377 | 237 | 0.15% |
| Total earning assets | 2813012 | 31104 | 4.39% | 2853546 | 25929 | 3.60% |
| Other assets | 326043 |  |  | 328866 |  |  |
| Total assets | $3139055 |  |  | $3182412 |  |  |
| **Liabilities and stockholders' equity** |  |  |  |  |  |  |
| Interest-bearing deposits |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Demand deposits | $666517 | $27 | 0.02% | $668335 | $28 | 0.02% |
| &nbsp;&nbsp;&nbsp; Savings deposits | 856755 | 106 | 0.05% | 843501 | 64 | 0.03% |
| &nbsp;&nbsp;&nbsp; Time deposits | 293520 | 232 | 0.31% | 362869 | 509 | 0.56% |
| Total interest-bearing deposits | 1816792 | 365 | 0.08% | 1874705 | 601 | 0.13% |
| Borrowings |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Retail repurchase agreements | 2473 | 1 | 0.07% | 1236 |  | N/M |
| Total borrowings | 2473 | 1 | 0.07% | 1236 |  | N/M |
| Total interest-bearing liabilities | 1819265 | 366 | 0.08% | 1875941 | 601 | 0.13% |
| Noninterest-bearing demand deposits | 864537 |  |  | 838920 |  |  |
| Other liabilities | 38993 |  |  | 38986 |  |  |
| Total liabilities | 2722795 |  |  | 2753847 |  |  |
| Stockholders' equity | 416260 |  |  | 428565 |  |  |
| Total liabilities and stockholders' equity | $3139055 |  |  | $3182412 |  |  |
| Net interest income, FTE<sup>(1)</sup> |  | $30738 |  |  | $25328 |  |
| Net interest rate spread |  |  | 4.31% |  |  | 3.47% |
| Net interest margin, FTE<sup>(1)</sup> |  |  | 4.34% |  |  | 3.52% |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Interest on loans includes non-cash and accelerated purchase accounting accretion of $395 thousand and $1.10 million for the three months ended December 31, 2022 and 2021, respectively.

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**AVERAGE BALANCE SHEETS AND NET INTEREST INCOME ANALYSIS (Unaudited)**

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** | **Twelve Months Ended December 31,** |
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Average** |  | **Average Yield/** | **Average** |  | **Average Yield/** |
| *(Amounts in thousands)* | **Balance** | **Interest<sup>(1)</sup>** | **Rate<sup>(1)</sup>** | **Balance** | **Interest<sup>(1)</sup>** | **Rate<sup>(1)</sup>** |
| **Assets** |  |  |  |  |  |  |
| Earning assets |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Loans<sup>(2)(3)</sup> | $2298503 | $104830 | 4.56% | $2153099 | $102996 | 4.78% |
| &nbsp;&nbsp;&nbsp; Securities available for sale | 256221 | 6172 | 2.41% | 81049 | 2008 | 2.48% |
| &nbsp;&nbsp;&nbsp; Interest-bearing deposits | 330785 | 3767 | 1.14% | 570040 | 745 | 0.13% |
| Total earning assets | 2885509 | 114769 | 3.98% | 2804188 | 105749 | 3.77% |
| Other assets | 328635 |  |  | 330640 |  |  |
| Total assets | $3214144 |  |  | $3134828 |  |  |
| **Liabilities and stockholders' equity** |  |  |  |  |  |  |
| Interest-bearing deposits |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Demand deposits | $683502 | $112 | 0.02% | $646999 | $127 | 0.02% |
| &nbsp;&nbsp;&nbsp; Savings deposits | 880171 | 306 | 0.03% | 816845 | 281 | 0.03% |
| &nbsp;&nbsp;&nbsp; Time deposits | 322158 | 1235 | 0.38% | 387249 | 2427 | 0.63% |
| Total interest-bearing deposits | 1885831 | 1653 | 0.09% | 1851093 | 2835 | 0.15% |
| Borrowings |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Retail repurchase agreements | 2239 | 2 | 0.07% | 1194 | 1 | 0.07% |
| Total borrowings | 2239 | 2 | 0.07% | 1194 | 1 | 0.07% |
| Total interest-bearing liabilities | 1888070 | 1655 | 0.09% | 1852287 | 2836 | 0.15% |
| Noninterest-bearing demand deposits | 864224 |  |  | 816638 |  |  |
| Other liabilities | 39363 |  |  | 38151 |  |  |
| Total liabilities | 2791657 |  |  | 2707076 |  |  |
| Stockholders' equity | 422487 |  |  | 427752 |  |  |
| Total liabilities and stockholders' equity | $3214144 |  |  | $3134828 |  |  |
| Net interest income, FTE<sup>(1)</sup> |  | $113114 |  |  | $102913 |  |
| Net interest rate spread |  |  | 3.89% |  |  | 3.62% |
| Net interest margin, FTE<sup>(1)</sup> |  |  | 3.92% |  |  | 3.67% |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Interest income and average yield/rate are presented on a FTE, non-GAAP, basis using the federal statutory income tax rate of 21%.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Nonaccrual loans are included in the average balance; however, no related interest income is recorded during the period of nonaccrual.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Interest on loans includes non-cash and accelerated purchase accounting accretion of $2.62 million and $4.66 million for the twelve months ended December 31, 2022 and 2021, respectively.

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**CONDENSED CONSOLIDATED QUARTERLY BALANCE SHEETS (Unaudited)**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31,** | **September 30,** | **June 30,** | **March 31,** | **December 31,** |
| *(Amounts in thousands, except per share data)* | **2022** | **2022** | **2022** | **2022** | **2021** |
| **Assets** |  |  |  |  |  |
| Cash and cash equivalents | $170846 | $229095 | $398242 | $457306 | $677439 |
| Debt securities available for sale | 300349 | 299620 | 287767 | 268703 | 76292 |
| Loans held for investment, net of unearned income | 2400197 | 2362733 | 2299798 | 2244296 | 2165569 |
| &nbsp;&nbsp;&nbsp; Allowance for credit losses | (30556) | (29388) | (29749) | (28981) | (27858) |
| Loans held for investment, net | 2369641 | 2333345 | 2270049 | 2215315 | 2137711 |
| Premises and equipment, net | 47340 | 47891 | 49752 | 50912 | 52284 |
| Other real estate owned | 703 | 559 | 579 | 848 | 1015 |
| Interest receivable | 9279 | 8345 | 8433 | 8100 | 7900 |
| Goodwill | 129565 | 129565 | 129565 | 129565 | 129565 |
| Other intangible assets | 4176 | 4541 | 4905 | 5266 | 5622 |
| Other assets | 103673 | 107838 | 109085 | 108112 | 106691 |
| Total assets | $3135572 | $3160799 | $3258377 | $3244127 | $3194519 |
| **Liabilities** |  |  |  |  |  |
| Deposits |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Noninterest-bearing | $872168 | $878423 | $877962 | $860652 | $842783 |
| &nbsp;&nbsp;&nbsp; Interest-bearing | 1806647 | 1831798 | 1920577 | 1922292 | 1886608 |
| Total deposits | 2678815 | 2710221 | 2798539 | 2782944 | 2729391 |
| Securities sold under agreements to repurchase | 1874 | 1958 | 2635 | 2488 | 1536 |
| Interest, taxes, and other liabilities | 32898 | 36362 | 39157 | 34539 | 35817 |
| Total liabilities | 2713587 | 2748541 | 2840331 | 2819971 | 2766744 |
| **Stockholders' equity** |  |  |  |  |  |
| Common stock | 16225 | 16273 | 16502 | 16782 | 16878 |
| Additional paid-in capital | 128508 | 129914 | 136705 | 144088 | 147619 |
| Retained earnings | 292971 | 285096 | 276499 | 269798 | 264824 |
| Accumulated other comprehensive loss | (15719) | (19025) | (11660) | (6512) | (1546) |
| Total stockholders' equity | 421985 | 412258 | 418046 | 424156 | 427775 |
| Total liabilities and stockholders' equity | $3135572 | $3160799 | $3258377 | $3244127 | $3194519 |
| Shares outstanding at period-end | 16225399 | 16273177 | 16502144 | 16781975 | 16878220 |
| Book value per common share | $26.01 | $25.33 | $25.33 | $25.27 | $25.34 |
| Tangible book value per common share<sup>(1)</sup> | 17.76 | 17.09 | 17.18 | 17.24 | 17.34 |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) A non-GAAP financial measure defined as stockholders' equity less goodwill and other intangible assets, divided by shares outstanding

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**SELECTED CREDIT QUALITY INFORMATION (Unaudited)**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31,** | **September 30,** | **June 30,** | **March 31,** | **December 31,** |
| *(Amounts in thousands)* | **2022** | **2022** | **2022** | **2022** | **2021** |
| **Allowance for Credit Losses** |  |  |  |  |  |
| Beginning balance | $29388 | $29749 | $28981 | $27858 | $29877 |
| Provision for (recovery of) credit losses charged to operations | 3416 | 685 | 510 | 1961 | (846) |
| Charge-offs | (2873) | (2158) | (1469) | (1302) | (1887) |
| Recoveries | 625 | 1112 | 1727 | 464 | 714 |
| Net (charge-offs) recoveries | (2248) | (1046) | 258 | (838) | (1173) |
| Ending balance | $30556 | $29388 | $29749 | $28981 | $27858 |
| **Nonperforming Assets** |  |  |  |  |  |
| Nonaccrual loans | $15208 | $15303 | $17826 | $20487 | $20768 |
| Accruing loans past due 90 days or more | 142 | 131 | 131 |  | 87 |
| Troubled debt restructurings ("TDRs")<sup>(1)</sup> | 1346 | 1331 | 515 | 1141 | 1367 |
| Total nonperforming loans | 16696 | 16765 | 18472 | 21628 | 22222 |
| OREO | 703 | 559 | 579 | 848 | 1015 |
| Total nonperforming assets | $17399 | $17324 | $19051 | $22476 | $23237 |
| **Additional Information** |  |  |  |  |  |
| Total accruing TDRs <sup>(2)</sup> | $7112 | $7028 | $8313 | $8782 | $8652 |
| **Asset Quality Ratios** |  |  |  |  |  |
| Nonperforming loans to total loans | 0.70% | 0.71% | 0.80% | 0.96% | 1.03% |
| Nonperforming assets to total assets | 0.55% | 0.55% | 0.58% | 0.69% | 0.73% |
| Allowance for credit losses to nonperforming loans | 183.01% | 175.29% | 161.05% | 134.00% | 125.36% |
| Allowance for credit losses to total loans | 1.27% | 1.24% | 1.29% | 1.29% | 1.29% |
| Annualized net charge-offs (recoveries) to average loans | 0.37% | 0.18% | -0.05% | 0.15% | 0.22% |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Accruing TDRs restructured within the past six months or nonperforming

&nbsp;&nbsp;&nbsp;&nbsp;(2) Accruing total TDRs