First Community Bancshares: A Steady Performer Amid Strategic Shift

First Community Bancshares has reported a solid third quarter, demonstrating resilience even as key revenue metrics softened compared to the prior year. The period was marked by a modest earnings beat per share, contrasting with declines in core balance sheet items like loans and deposits. Investors are now weighing whether the institution's pending merger with Hometown Bank can provide a meaningful boost to future performance.

For the three months ended September 30, 2025, the company posted net income of $12.27 million. This translated to diluted earnings per share of $0.67, exceeding analyst consensus estimates by $0.04. However, on a year-over-year basis, the absolute earnings figure represents a decline of 5.9%. The nine-month net income stands at $36.33 million, or $1.97 per share, a decrease of 5.8% from the same period last year.

Profitability ratios reflected this trend, with the annualized return on assets (ROA) at 1.53%, down from 1.60% a year ago. The return on equity (ROE) also moderated to 9.58% from 10.04%.

The consolidated balance sheet, with total assets of $3.19 billion, showed contraction in several areas. Since the start of the year, total loans have decreased by $84.78 million, a reduction of approximately 3.5%. Available-for-sale securities fell more sharply by 22.7%, and total deposits declined by $60.65 million. A positive development was the improvement in asset quality, with non-performing assets dropping to $16.90 million as of September 30, 2025.

Capital Allocation and Strategic Moves

A cornerstone of the investment thesis remains the firm's commitment to shareholder returns. The company has now paid consecutive quarterly dividends for 40 years, with the most recent quarterly distribution set at $0.31 per share. This equates to an annualized dividend of $1.24, yielding approximately 3.54% based on recent trading. It is important to note that a significant special dividend of $2.38 paid in February 2025 heavily influences the year's total dividend growth percentage in analyst models.

Should investors sell immediately? Or is it worth buying First Community Bancshares?

Strategically, management is focused on expansion through acquisition. The planned merger with Hometown Bank (Union Bank, Inc.), which held assets of roughly $402 million as of June 30, 2025, is scheduled for completion in January 2026. Company projections indicate the transaction should be only slightly dilutive to tangible book value per share while providing high single-digit percentage accretion to earnings per share (EPS).

Additionally, the company has been active in repurchasing its own stock, buying back 50,338 shares for $1.85 million during 2025.

Market Sentiment and Outlook

Recent trading activity shows the stock gaining momentum, having closed higher for five consecutive sessions. Over a two-week period, the share price advanced about 4.8%. The 52-week trading range for the equity is $31.21 to $46.36. The prevailing analyst consensus currently rates the stock as a "Hold," though some individual reports carry a "Buy" recommendation.

Looking ahead, the pending merger with Hometown Bank is viewed as a near-term support for the earnings base. For more fundamental improvements in metrics like ROA and ROE, the market will be watching the trajectory of loan and deposit growth in the coming quarters. The success of this integration will be a key driver for the bank's next phase of development.