FIRST COMMUNITY BANKSHARES INC /VA/ First Community Bankshares Finalizes Major Merger, Expands Footprint

First Community Bankshares, Inc. (FCBC) has finalized a major merger, dramatically expanding its footprint and financial power. Effective January 23, 2026, the bank successfully integrated Hometown Bancshares, Inc. and its subsidiary, Union Bank, Inc., into the First Community family.

This all-stock transaction, valued at approximately $102.5 million based on First Community's stock price at the initial announcement, saw each share of Hometown Bancshares common stock convert into 11.706 shares of First Community common stock. Fractional shares received cash payments.

Timeline: Key Dates of the Merger

This significant integration followed a clear timeline:

• July 19, 2025: Initial merger agreement signed.
• January 23, 2026: Merger officially became effective.
• January 26, 2026: First Community publicly announced the completion via press release.

Strategic Vision: Why This Merger Makes Sense

This merger represents a strategic move designed to significantly expand First Community's footprint and strengthen its competitive position. By acquiring Hometown Bancshares, headquartered in Middlebourne, West Virginia, First Community aims to achieve several key objectives:

• Expand Geographic Reach: Grow its presence in vital West Virginia markets, adding 12 new branch locations to its network.
• Increase Scale and Market Share: The combined entity now commands approximately $4.4 billion in assets, $3.6 billion in deposits, and $3.3 billion in loans, establishing it as a more formidable regional bank.
• Achieve Cost Synergies: Management anticipates realizing approximately $7.5 million in annual cost savings through operational efficiencies and reduced overhead, enhancing profitability.
• Enhance Earnings Power: The transaction projects to be accretive to First Community's earnings per share (EPS) by approximately 10% in the first full year post-integration, excluding one-time merger-related costs.
• Diversify and Strengthen: A larger asset base and broader customer reach provide greater financial stability and open opportunities for diversified revenue streams.

The New Scale: What It Means for First Community

The merger transforms First Community Bankshares into a significantly larger and more robust financial institution. The combined entity now operates 89 branches across Virginia, West Virginia, North Carolina, Tennessee, and South Carolina. This expanded scale will provide greater resources for technology investments, product development, and community engagement.

However, this growth also brings new complexities. The merger's success depends on effective integration. Investors should recognize potential integration risks, including customer attrition, operational disruptions, and the challenge of blending corporate cultures.

Impact on Stakeholders: Who's Affected?

This merger impacts various groups:

• Customers: Former Hometown Bancshares and Union Bank customers are now First Community Bank customers. They can expect a seamless transition of their accounts and services, gaining access to an expanded branch network and a broader range of products. New branding will roll out over time.
• Employees: Integrating two organizations brings changes for employees. While new opportunities may arise within the larger company, job consolidations are possible due to overlapping roles. As part of the merger agreement, certain stock appreciation rights and dividend equivalent rights for Hometown employees and executives vested and paid out in cash.
• Investors/Shareholders:
  • Former Hometown shareholders now own shares of First Community Bankshares, participating in the combined entity's future growth.
  • Existing First Community shareholders now own a stake in a larger, more diversified bank with increased assets and market presence. The projected EPS accretion suggests potential for long-term value creation, assuming successful integration. However, the issuance of new shares results in a slight dilution of ownership percentage for existing shareholders.

The Road Ahead: Integration and Future Performance

First Community's immediate focus is the complex integration of the two companies. This process includes merging computer systems, harmonizing product offerings, consolidating branch operations, and blending corporate cultures. This integration typically spans multiple quarters, with significant milestones anticipated over the next 12 to 18 months.

Key challenges involve ensuring customer retention, maintaining operational efficiency during the transition, and effectively realizing the projected cost synergies. The bank's ability to navigate these challenges is critical to achieving the anticipated financial benefits and delivering on its strategic goals.

Investor's Checklist: Key Takeaways

For investors and traders, here are key considerations:

• Monitor Earnings Reports Closely: Closely monitor First Community's upcoming quarterly earnings. Focus on metrics like:
  • Realized Cost Savings: How much of the projected $7.5 million in synergies are realized?
  • Loan and Deposit Growth: Does the combined entity retain and grow its customer base?
  • Asset Quality: Are there signs of loan portfolio deterioration?
  • EPS Accretion: Does the merger deliver on its promise of increased earnings per share?
• Watch for Integration Updates: Look for management commentary on the progress of systems conversions, branch consolidations, and customer transitions. Significant delays or issues could impact financial performance.
• Understand the Risks: While the merger offers growth potential, remember the inherent risks of integration, potential customer attrition, and the broader economic environment.
• Look for Updated Guidance: Management may provide updated financial guidance for the combined entity in future earnings calls, offering a clearer picture of their outlook.
• Long-Term View: Mergers are long-term plays. While short-term volatility may occur, the true success of this combination will measure over several quarters as integration progresses and strategic benefits materialize.