First Community Bankshares (FCBC) 8-K/A Financial Statements and Exhibits

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial statements are based on the separate historical financial statements of First Community Bankshares, Inc. (the “Company”) and Highlands Bankshares, Inc. (“Highlands”) after giving effect to the merger and the issuance of the Company’s common stock in connection therewith, and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed combined balance sheet as of September 30, 2019, is presented as if the merger with Highlands had occurred on September 30, 2019. The unaudited pro forma condensed combined income statement for the year ended December 31, 2018 and the nine months ended September 30, 2019, is presented as if the merger had occurred on January 1, 2018. The historical consolidated financial information has been adjusted to reflect factually supportable items that are directly attributable to the merger and, with respect to the income statements only, expected to have a continuing impact on consolidated results of operations.

The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting for business combinations under accounting principles generally accepted in the United States. The Company is the acquirer for accounting purposes. The Company has completed an initial evaluation of significant identifiable long-lived tangible assets associated with Highlands’ balance sheet. A determination of the acquisition consideration and fair values of Highlands’ assets and liabilities has been made as of the acquisition date of December 31, 2019, and included in these pro forma financial statements.

In connection with the plan to integrate the operations of the Company and Highlands following the completion of the merger, the Company anticipates that nonrecurring charges, such as costs associated with systems implementation, severance, and other costs related to exit or disposal activities, will be incurred.

The unaudited pro forma condensed combined financial statements are provided for informational purposes only. The unaudited pro forma condensed combined financial statements are not necessarily, and should not be assumed to be, an indication of the results that would have been achieved had the transaction been completed as of the dates indicated or that may be achieved in the future. The preparation of the unaudited pro forma condensed combined financial statements and related adjustments required management to make certain assumptions and estimates. The unaudited pro forma condensed combined financial statements should be read together with:

● The accompanying notes to the unaudited pro forma condensed combined financial statements:

● The Company’s separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2018, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018;

● The Company’s separate unaudited historical condensed consolidated financial statement and accompanying notes as of and for the nine months ended September 30, 2019, included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019;

● Highlands’ separate audited historical consolidated financial statements and accompanying notes as of and for the year ended December 31, 2018, included in Highlands’ Annual Report on Form 10-K for the year ended December 31, 2018; and

● Highlands’ separate unaudited historical condensed consolidated financial statement and accompanying notes as of and for the nine months ended September 30, 2019, included in Highlands’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2019

The unaudited pro forma condensed combined balance sheet as of September 30, 2019 presents the consolidated financial position giving pro forma effect to the following transactions as if they had occurred as of September 30, 2019:

● The completion of the Company’s acquisition of Highlands, including the issuance of 2,795,712 shares (based upon the number of shares outstanding of Highlands’ common and preferred stock as of September 30, 2019 and an exchange ratio of 0.2703 shares of the Company stock for one Highlands’ share) of the Company’s common stock; and

The unaudited pro forma condensed combined income statement for the year ended December 31, 2018 and for the nine months ended September 30, 2019 presents the consolidated results of operations giving pro forma effect to the following transactions as if they had occurred as of January 1, 2018:

● The full-year impact of Highlands’ income statement, including pro forma amortization and accretion of purchase accounting adjustment on loans, deposits, other borrowings and intangible assets; and

● The issuance of additional Company common stock applying the 0.2703 exchange ratio to the weighted-average shares outstanding of Highlands’ shares in determining EPS.

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First Community Bankshares, Inc.

Condensed Consolidated Balance Sheets

	September 30, 2019
	First						Purchase
	Community			Highlands			Accounting
	Bankshares, Inc.			Bankshares, Inc.			& Pro Forma				Pro Forma
(Amounts in thousands, except share and per share data)	(as reported)			(as reported)			Adjustments				Combined
Assets
Cash and due from banks	$	48,209		$	20,248		$	-			$	68,457
Federal funds sold		133,253			2,627			-				135,880
Interest-bearing deposits in banks		996			-			-				996
Total cash and cash equivalents		182,458			22,875			-				205,333
Debt securities available for sale		115,537			56,472			-				172,009
Debt securities held to maturity		-			1,493			-				1,493
Loans held for sale		-			233			-				233
Loans held for investment, net of unearned income (includes covered loans of $14,158)		1,694,116			453,239			(15,664	)	(a)		2,131,691
Allowance for loan losses		(18,493	)		(4,168	)		4,168		(a)		(18,493	)
Loans held for investment, net		1,675,623			449,071			(11,496	)			2,113,198
FDIC indemnification asset		3,458			-			-				3,458
Premises and equipment, net		48,521			17,559			(2,317	)	(b)		63,763
Other real estate owned		2,528			2,484			-				5,012
Interest receivable		4,842			1,962			-				6,804
Goodwill		92,744			-			37,647		(g)		130,391
Other intangible assets		4,280			-			4,490		(d)		8,770
Other assets		75,056			23,125			2,264		(c)		100,445
Total assets	$	2,205,047		$	575,274		$	30,588			$	2,810,909
Liabilities
Noninterest-bearing deposits	$	472,478		$	154,279		$	-			$	626,757
Interest-bearing deposits		1,364,374			355,826			1,261		(e)		1,721,461
Total deposits		1,836,852			510,105			1,261				2,348,218
Federal funds purchased		-			-			-				-
Securities sold under agreements to repurchase		1,863			-			-				1,863
FHLB borrowings		-			54			-				54
Other borrowings		-			-			-				-
Interest, taxes, and other liabilities		28,969			3,747			1,730		(f) (j)		34,446
Total liabilities		1,867,684			513,906			2,991				2,384,581
Stockholders' equity
Preferred stock		-			5,156			(5,156	)	(h)		-
Common stock		15,580			4,184			(1,388	)	(h) (i)		18,376
Additional paid-in capital		108,222			19,312			68,389		(h) (i)		195,923
Retained earnings		213,866			32,608			(34,140	)	(h) (i) (j)		212,334
Treasury stock		-			-			-		(h) (i)		-
Accumulated other comprehensive loss		(305	)		108			(108	)	(h)		(305	)
Total stockholders' equity		337,363			61,368			27,597				426,328
Total liabilities and stockholders' equity	$	2,205,047		$	575,274		$	30,588			$	2,810,909
Outstanding shares		15,579,740			10,343,000							18,375,452
Book value per common share	$	21.65		$	5.93						$	23.20

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Purchase Accounting Adjustments:

(a)	Adjustment reflects the fair value adjustments of $(14.694) million based on the Company's evaluation of the acquired loan portfolio and net deferred loan fees of $(970) thousand and Highlands' ALLR of $4.168 million.
(b)	Adjustment reflects the fair value adjustments based on the Company's evaluation of the acquired premises and equipment.
(c)	Adjustment to record the deferred tax asset $2.264 million related to the fair value adjustments at a rate of 21%.
(d)	Adjustment reflects the recording of the core deposit intangible on the acquired deposit accounts.
(e)	Adjustment reflects the fair value adjustment based on the Company's evaluation of the time deposit portfolio.
(f)	Adjustment reflects the fair value adjustment for death benefits payable of $320 thousand, the fair value adjustment for lease liability of $(37) thousand and the fair value adjustment to the reserve for unfunded commitments of $(85) thousand.
(g)	Adjustment reflects the goodwill generated as a result of the consideration paid being greater than the net assets acquired.
(h)	Adjustment reflects the reversal of Highlands September 30, 2019 retained earnings, common stock, surplus, and accumulated other comprehensive income.
(i)	Adjustment to record the issuance of 2,795,712 of Company common stock in exchange for 10,343,000 shares of Highlands common and preferred stock at an exchange ratio of 0.2703 shares at the market price of $32.37.

Proforma Adjustments:

( j) Additional merger expenses of $1.53 million.

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First Community Bankshares, Inc.

Condensed Statement of Income

	For the nine months ended September 30, 2019
	First					Purchase
	Community			Highlands		Accounting
	Bankshares, Inc.			Bankshares, Inc.		& Pro Forma			Pro Forma
(Amounts in thousands, except share and per share data)	(as reported)			(as reported)		Adjustments			Combined
Interest income
Interest and fees on loans	$	66,968		$	17,217	$	2,871	(a)	$	87,056
Interest on securities		2,846			1,233		-			4,079
Interest on deposits in banks		1,784			453		-			2,237
Total interest income		71,598			18,903		2,871			93,372
Interest expense
Interest on deposits		4,080			2,746		235	(c)		7,061
Interest on short-term borrowings		122			-		-			122
Interest on long-term debt		-			664		-			664
Total interest expense		4,202			3,410		235			7,847
Net interest income		67,396			15,493		2,636			85,525
Provision for loan losses		3,480			1,487		-			4,967
Net interest income after provision for loan losses		63,916			14,006		2,636			80,558
Noninterest income
Wealth management		2,581			-		-			2,581
Service charges on deposits		10,892			1,028		-			11,920
Other service charges and fees		6,185			1,110		-			7,295
Insurance commissions		-			-		-			-
Net (loss) gain on sale of securities		(43	)		21		-			(22	)
Net FDIC indemnification asset amortization		(1,787	)		-		-			(1,787	)
Other income		4,600			-		-			4,600
Other operating income		1,935			639		-			2,574
Total noninterest income		24,363			2,798		-			27,161
Noninterest expense
Salaries and employee benefits		27,653			6,959		-			34,612
Occupancy, furniture and equipment expense		6,555			1,770		-			8,325
Amortization of intangibles		746			-		333	(b)		1,079
Merger/acquisition/divestiture expenses		592			-					592
Other operating expense		15,334			5,010		-			20,344
Total noninterest expense		50,880			13,739		333			64,952
Income before income taxes		37,399			3,065		2,303			42,767
Income tax expense		8,161			588		503	(d)		9,252
Net income	$	29,238		$	2,477	$	1,800		$	33,515
Earnings per common share
Basic	$	1.86		$	0.30				$	1.40
Diluted		1.85			0.24				$	1.28
Weighted average shares outstanding
Basic		15,717,678			8,256,666					23,974,344
Diluted		15,785,484			10,320,833					26,106,317

Proforma Adjustments:

(a)	Record loan accretion for $2.87 million.
(b)	Record core intangible amoritization $333 thousand.
(c)	Record CD amortization for $235 thousand.
(d)	Record income taxes on proforma adjustments at a rate of $21.82%.

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First Community Bankshares, Inc.

Condensed Statement of Income

	For the year ended December 31, 2018
	First					Purchase
	Community			Highlands		Accounting
	Bankshares, Inc.			Bankshares, Inc.		& Pro Forma			Pro Forma
(Amounts in thousands, except share and per share data)	(as reported)			(as reported)		Adjustments			Combined
Interest income
Interest and fees on loans	$	91,671		$	21,936	$	3,828	(a)	$	117,435
Interest on securities		5,086			1,807		-			6,893
Interest on deposits in banks		1,537			250		-			1,787
Total interest income		98,294			23,993		3,828			126,115
Interest expense
Interest on deposits		5,144			2,090		313	(c)		7,547
Interest on short-term borrowings		811			-		-			811
Interest on long-term debt		1,494			1,317		-			2,811
Total interest expense		7,449			3,407		313			11,169
Net interest income		90,845			20,586		3,515			114,946
Provision for loan losses		2,393			738		-			3,131
Net interest income after provision for loan losses		88,452			19,848		3,515			111,815
Noninterest income
Wealth management		3,262			-		-			3,262
Service charges on deposits		14,733			1,471		-			16,204
Other service charges and fees		7,733			1,627		-			9,360
Insurance commissions		966			-		-			966
Net loss on sale of securities		(618	)		-		-			(618	)
Net FDIC indemnification asset amortization		(2,181	)		-		-			(2,181	)
Other income		-			-		-			-
Other operating income		2,548			1,169		-			3,717
Total noninterest income		26,443			4,267		-			30,710
Noninterest expense
Salaries and employee benefits		36,690			9,648		-			46,338
Occupancy, furniture and equipment expense		8,522			2,658		444	(b)		11,624
Amortization of intangibles		1,039			-		-			1,039
Merger/acquisition/divestiture expenses		-			-		1,532	(d)		1,532
Other operating expense		23,522			7,268		-			30,790
Total noninterest expense		69,773			19,574		1,976			91,323
Income before income taxes		45,122			4,541		1,539			51,202
Income tax expense		8,782			949		336	(e)		10,067
Net income	$	36,340		$	3,592	$	1,203		$	41,135
Earnings per common share
Basic	$	2.19		$	0.44				$	1.66
Diluted		2.18			0.35				$	1.53
Weighted average shares outstanding
Basic		16,587,504			8,163,636					24,751,140
Diluted		16,666,385			10,262,857					26,929,242

Proforma Adjustments:

(a)	Record loan accretion for $3.83 million.
(b)	Record core intangible amoritization $444 thousand.
(c)	Record CD amortization for $313 thousand.
(d)	Merger expense of $1.53 million.
(e)	Record income taxes on proforma adjustments at a rate of $21.82%.

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