• First National Corporation Reports First Quarter 2025 Financial Results

    المصدر: Nasdaq GlobeNewswire / 30 أبريل 2025 06:30:01   America/Chicago

    STRASBURG, Va., April 30, 2025 (GLOBE NEWSWIRE) -- First National Corporation (the “Company” or “First National”) (NASDAQ: FXNC), the bank holding company of First Bank (the “Bank”), reported earnings for the quarter ending March 31, 2025 of $1.52 million and basic and diluted earnings per common share of $0.18. Excluding acquisition-related items adjusted earnings(1) (non-GAAP) for the first quarter of 2025 were $3.1 million and adjusted basic and diluted earnings(1) per common share was $0.35.

    “We completed the Touchstone system conversion during the first quarter of 2025 and are looking forward to building upon this transformational acquisition.  Earnings were impacted short-term in the first quarter from merger related expenses as well as operating on two different systems until late February.  Going forward we expect to return to our efficient model of banking and enjoy scale and growth from these new markets,” said Scott Harvard, President and Chief Executive Officer of First National. 

    FIRST QUARTER 2025 HIGHLIGHTS

    • Completed operational merger with Touchstone Bankshares, Inc.
    • Total assets at $2.033 billion, up 40.5% from one year prior
    • Net loans held for investment of $1.436 billion, up 49.5% from one year prior
    • Allowance for credit losses to non-performing assets improved 92.6% to 302.88% from one year prior
    • Total deposits of $1.825 billion, up 44.9% from one year prior
    • Noninterest bearing deposits of $540.4 million, up 40.7% from one year prior
    • Noninterest bearing deposits comprised 30% of total deposits at March 31, 2025
    • Net interest margin(1) of 3.77%, up 16.4% from 3.24% one year prior


    MERGER WITH TOUCHSTONE BANKSHARES, INC. (    “TOUCHSTONE”)

    On October 1, 2024, the Company completed its acquisition of Touchstone. Touchstone’s results of operations are included in the Company’s consolidated results since the date of acquisition, and, therefore, the Company’s first quarter 2025 and fourth quarter 2024 results reflect significantly increased levels of average balances, net interest income, direct merger expenses and operational expenses compared to the first quarter 2024. The Company incurred pre-tax merger costs of approximately $1.9 million during the first quarter of 2025 related to the Touchstone acquisition as well as duplicative operating costs until the operational merger was completed in the first quarter.  Duplicative operating costs are not included in merger expenses.

    NET INTEREST INCOME

    For the first quarter of 2025, the Company’s net interest margin fully taxable equivalent ("FTE")(1) was 3.77%, down from 3.83% for the fourth quarter of 2024 but up from 3.24% in the first quarter of 2024. The Company’s net interest margin (FTE)(1) for the first quarter of 2025 includes the impact of acquisition accounting fair value adjustments. Net amortization expense related to acquisition accounting was $36 thousand, or a one basis point incremental decrease to the net interest margin for the first quarter ended March 31, 2025, compared to the net accretion income of $1.1 million or a 22-basis point incremental increase to the net interest margin for the fourth quarter ended December 31, 2024. The impact of accretion and amortization for the periods presented are reflected in the following table (dollars in thousands):

     Loan
    Accretion
    (Amortization)    		  Deposit
    Accretion    		  Borrowings
    Amortization    		  Total 
    For the quarter ended December 31, 2024$492   565   —  $1,057 
    For the quarter ended March 31, 2025 (194)  443   (285)  (36)


    Earning asset yields for the first quarter of 2025 decreased 12 basis points to 5.18% compared to the fourth quarter of 2024, and the cost of funds decreased by 6 basis points to 1.45%, due to changes in deposit mix following the acquisition of Touchstone and federal funds rate cuts in late 2024.  For the first quarter of 2025, net interest income was $17.5 million, a decrease of $908 thousand from $18.4 million in the fourth quarter of 2024 due to the impact of amortization on early payoffs of Touchstone loans which also reduced interest earning assets, partially offset by a $28.9 million decrease in average interest-bearing liabilities.

    NONINTEREST INCOME

    Non-interest income decreased $2.8 million to $3.6 million for the first quarter of 2025 from $6.4 million in the prior quarter.  Excluding the $2.9 million one-time bargain purchase gain associated with the Touchstone acquisition in the fourth quarter of 2024, non-interest income increased 2.5% in the first quarter despite one-time waived customer service charges on acquired deposits to facilitate the Touchstone systems conversion. Service charges on deposits and customer service fees decreased from the prior quarter but were offset by increases in ATM and check card income during the first quarter.

    NONINTEREST EXPENSE

    Noninterest expense decreased $3.6 million to $18.3 million for the first quarter of 2025 from $21.9 million in the prior quarter, primarily driven by a $5.4 million decrease in pre-tax merger-related expenses offset by a $1.2 million increase in salaries and benefit expenses, fraud losses of $294 thousand, and increases in our FDIC insurance assessment. The increase in salaries and benefits reflects additional expenses related to incentives, stock compensation expense, and salary and benefit increases from the prior quarter.

    Adjusted operating noninterest expense(1), which excludes merger-related costs ($1.9 million in the first quarter of  2025 and $7.3 million in the fourth quarter of 2024) and amortization of intangible assets ($442 thousand in the first quarter of  2025 and $448 thousand in the fourth quarter of 2024), increased $1.8 million to $16.0 million for the first quarter of 2025 from $14.2 million in the prior quarter, due to the increase in salary and employee benefits expense, fraud losses, and increases in our FDIC insurance assessment.

    BALANCE SHEET

    At March 31, 2025, total assets were $2.033 billion, an increase of $23.1 million or 1.1% from December 31, 2024, and an increase of $586.2 million or 40.5% from March 31, 2024. The increase in total assets from the prior quarter was primarily due to an increase in cash and cash equivalents and the increase from prior year was primarily driven by growth in loans held for investment (LHFI) (net of deferred fees and costs), primarily due to the Touchstone acquisition.

    At March 31, 2025, LHFI net of allowance totaled $1.436 billion, a decrease of $14.7 million from $1.451 billion or 1.0% at December 31, 2024, and an increase of $475.5 million or 49.5% from March 31, 2024. LHFI was consistent with the prior quarter and increased from the prior year primarily due to the Touchstone acquisition, as well as organic loan growth.

    At March 31, 2025, total investments were $273.7 million, a decrease of $3.6 million or 1.3% from December 31, 2024, and a decrease of $1.9 million or 0.7% from March 31, 2024. Available for sale (AFS) securities totaled $161.0 million at March 31, 2025, and $163.8 million at December 31, 2024, and $147.7 million at March 31, 2024. The decreases compared to the prior quarter was driven by the $2.0 million improvement in unrealized losses. Total net unrealized losses on the AFS securities portfolio were $20.1 million at March 31, 2025, compared to $22.1 million at December 31, 2024, and $22.2 million at March 31, 2024. Held to maturity securities are carried at cost and totaled $108.3 million at March 31, 2025, $109.7 million at December 31, 2024, and $125.8 million at March 31, 2024.

    At March 31, 2025, total deposits were $1.825 billion, an increase of $21.2 million or 1.2% from the prior quarter, and an increase of $565.8 million or 44.9% from March 31, 2024. The increases in deposit balances from the prior quarter and prior year are primarily due to increases in noninterest bearing deposits and the addition of the Touchstone acquired deposits.

    There were no other borrowings on March 31, 2025, or December 31, 2024. Other borrowings totaled $50.0 million on March 31, 2024, and were comprised of funds borrowed from the Federal Reserve Bank through their Bank Term Funding Program which were repaid during the fourth quarter of 2024.

    LIQUIDITY

    Liquidity sources available to the Bank, including interest-bearing deposits in banks, unpledged securities available for sale, at fair value, unpledged securities held-to-maturity, at par, eligible to be pledged, and available lines of credit totaled $800.2 million on March 31, 2025, $770.0 million on December 31, 2024, and $554.8 million on March 31, 2024.

    The Bank maintains liquidity to fund loan growth and to meet potential demand from deposit customers, including potential volatile deposits. The estimated amount of uninsured customer deposits totaled $549.3 million on March 31, 2025, $537.0 million on December 31, 2024, and $391.9 million on March 31, 2024. Excluding municipal deposits, the estimated amount of uninsured customer deposits totaled $458.7 million on March 31, 2025, $445.5 million on December 31, 2024, and $308.6 million on March 31, 2024.

    ASSET QUALITY

    Nonperforming Assets

    Management classifies non-performing assets ("NPAs") as non-accrual loans and other real estate owned (OREO). NPAs as a percentage of total assets decreased to 0.24% on March 31, 2025, compared to 0.35% on December 31, 2024, and 0.55% on March 31, 2024. The allowance for credit losses to NPAs increased to 302.94% on March 31, 2025, compared to 233.49% on December 31, 2024, and 157.24% on March 31, 2024. 

    NPAs decreased by $2.2 million to $4.9 million on March 31, 2025, compared to $7.0 million on December 31, 2024, and $8.0 million on March 31, 2024. The decrease in NPAs during the first quarter of 2025 resulted from the charge-off of previously individually evaluated commercial and industrial loans.

    Past Due Loans

    There were no loans past due over 90 days or more and still accruing interest on March 31, 2025, compared to $365 thousand on December 31, 2024, and $175 thousand on March 31, 2024. Loans past-due 30-89 days and still accruing interest increased to $5.0 million, or 0.35% of total loans on March 31, 2025, compared to $3.1 million, or 0.21% of total loans on December 31, 2024, and $2.3 million, or 0.23%, of total loans on March 31, 2024.

    Net Charge-offs

    For the first quarter of 2025 net charge-offs included $2.2 million of commercial and industrial loans, with $208 thousand of that specific to our pool of loans originated to health care professionals through a third-party lender. Net charge-offs totaled $2.4 million in the first quarter of 2025, compared to $1.3 million in the fourth quarter of 2024, and $362 thousand in the first quarter of 2024. 

    Allowance for Credit Losses

    The allowance for credit losses on loans totaled $14.7 million, or 1.02% of total loans on March 31, 2025, compared to $16.4 million, or 1.12% of total loans on December 31, 2024, and $12.6 million, or 1.30% of total loans on March 31, 2024.  The Company recorded a $832 thousand provision for credit losses in the first quarter of 2025, compared to a $4.8 million provision for credit losses for the fourth quarter of 2024. The first quarter provision was comprised of a $735 thousand provision for credit losses on loans, a $104 thousand provision for credit losses on unfunded commitments and a $7 thousand recovery of credit losses on held-to-maturity securities.

    The calculated specific reserve decreased after previously identified individually evaluated loans were charged off during the quarter.  The provision for credit losses for the fourth quarter of 2024 included a $3.8 million initial provision expense on non-PCD loans and $100 thousand on unfunded commitments, as a result of the Touchstone acquisition. As compared to the prior quarter and same period prior year, the decrease in provision for credit losses, outside of the initial provision expense recorded on non-PCD loans and unfunded commitments acquired from Touchstone, primarily reflects the impact of charge-offs of previously identified specific reserves, lower pool loan balances partially offset by a minor increase in the pooled loans quantitative reserve ratio, and changes in qualitative factor adjustments related to the commercial and industrial loan pool. The overall allowance decreased from the impact of lower pooled loan balances, and the specific reserve decreased following the charge-off of previously identified specific reserves during the quarter.

    CAPITAL

    During the first quarter of 2025, the Company declared and paid cash dividends of $0.155 per common share, compared to $0.155 in the fourth quarter of 2024 and $0.15 in the first quarter of 2024.

    The following table provides capital ratios and values for the periods ended:

     Mar 31, 2025  Dec 31, 2024  Mar 31, 2024 
    Total capital ratio (2) 12.44%  12.35%  14.45%
    Tier 1 capital ratio (2) 11.39%  11.19%  13.20%
    Common equity Tier 1 capital ratio (2) 11.39%  11.19%  13.20%
    Leverage ratio (2) 8.28%  7.95%  9.19%
    Common equity to total assets (3) 8.30%  8.29%  8.14%
    Tangible common equity to tangible assets (1) (3) 7.50%  7.46%  7.94%
    Tangible book value per share$16.81  $16.55  $18.27 


    ABOUT FIRST NATIONAL CORPORATION

    First National Corporation (NASDAQ: FXNC) is the parent company and bank holding company of First Bank, a community bank that first opened for business in 1907 in Strasburg, Virginia. The Bank offers loan and deposit products and services through its website, www.fbvirginia.com, its mobile banking platform, a network of ATMs located throughout its market area, three loan production offices, a customer service center in a retirement community, and thirty-three bank branch office locations located throughout the Shenandoah Valley, the south-central regions of Virginia, the Roanoke Valley, the Richmond MSA, and in northern North Carolina. In addition to providing traditional banking services, the Bank operates a wealth management division under the name First Bank Wealth Management. First Bank also owns First Bank Financial Services, Inc., which owns an interest in an entity that provides title insurance services.

    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 document include adjusted operating net income, adjusted operating non-interest expense, adjusted basic and diluted earnings (loss) per share, adjusted return on average assets, adjusted return on average equity, pre-provision pre-tax earnings, adjusted pre-provision pre-tax earnings, fully taxable equivalent interest income, the net interest margin, the efficiency ratio, tangible book value per share, and tangible common equity to tangible assets.

    The Company believes certain non-GAAP financial measures enhance the understanding of its business and performance. Non-GAAP financial measures 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. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is included at the end of this release.

    FORWARD-LOOKING STATEMENTS

    Certain information contained in this discussion may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company’s plans, objectives, expectations and intentions and other statements that are not historical facts, and other statements identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” and “projects,” as well as similar expression. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties. For details on factors that could affect expectations, future events, or results, see the risk factors and other cautionary language included in First National’s Annual Report on Form 10-K for the year ended December 31, 2024, and most recent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission (the “SEC”).

    CONTACTS

    Scott C. Harvard Brad E. Schwartz
    President and CEO Executive Vice President and CFO
    (540) 465-9121 (540) 465-9121
    sharvard@fbvirginia.com bschwartz@fbvirginia.com


    FIRST NATIONAL CORPORATION
    Performance Summary
    (in thousands, except share and per share data)

    (unaudited)                  
     For the Three Months Ended
     Mar 31,
    2025    		  Dec 31,
    2024    		  Sep 30,
    2024    		  Jun 30,
    2024    		  Mar 31,
    2024
    Income Statement                  
    Interest and dividend income                  
    Interest and fees on loans$20,637  $21,516  $14,479  $14,004  $13,484
    Interest on deposits in banks 1,671   2,085   1,538   1,579   1,288
    Interest on federal funds sold 40   189   —   —   —
    Taxable interest on securities 1,314   1,284   1,091   1,134   1,224
    Tax-exempt interest on securities 300   308   303   306   305
    Dividends 60   104   33   32   33
    Total interest and dividend income$24,022  $25,486  $17,444  $17,055  $16,334
    Interest expense                  
    Interest on deposits$6,038  $6,415  $4,958  $4,820  $4,771
    Interest on federal funds purchased —   1   —   —   —
    Interest on subordinated debt 467   396   69   69   69
    Interest on junior subordinated debt 66   68   68   66   68
    Interest on other borrowings —   247   600   606   576
    Total interest expense$6,571  $7,127  $5,695  $5,561  $5,484
    Net interest income$17,451  $18,359  $11,749  $11,494  $10,850
    Provision for credit losses 832   4,750   1,700   400   1,000
    Net interest income after provision for credit losses$16,619  $13,609  $10,049  $11,094  $9,850
    Noninterest income                  
    Service charges on deposit accounts$1,013  $1,181  $675  $612  $654
    ATM and check card fees 996   792   934   809   770
    Wealth management fees 898   903   952   879   883
    Fees for other customer services 258   317   276   178   195
    Brokered mortgage fees 110   90   92   32   38
    Income from bank owned life insurance 246   264   191   149   151
    Net gains (losses) on securities available for sale —   (154)  39   —   —
    Bargain purchase gain —   2,920   —   —   —
    Other operating income 90   131   44   27   1,356
    Total noninterest income$3,611  $6,444  $3,203  $2,686  $4,047
    Noninterest expense                  
    Salaries and employee benefits$8,689  $7,503  $5,927  $5,839  $5,871
    Occupancy 1,069   913   577   548   535
    Equipment 1,025   1,123   726   691   591
    Marketing 220   331   260   270   195
    Supplies 217   186   110   115   116
    Legal and professional fees 522   520   498   486   452
    ATM and check card expense 439   385   394   368   361
    FDIC assessment 414   285   195   203   177
    Bank franchise tax 317   262   262   261   262
    Data processing expense 762   684   289   160   246
    Amortization expense 442   448   4   5   4
    Other real estate owned expense (income), net (8)  5   10   —   —
    Merger expense 1,940   7,316   219   571   —
    Other operating expense 2,287   1,968   988   1,142   1,077
    Total noninterest expense$18,335  $21,929  $10,459  $10,659  $9,887
    Income (loss) before income taxes$1,895  $(1,876) $2,793  $3,121  $4,010
    Income tax expense (benefit) 297   (943)  545   679   801
    Net income (loss)$1,598  $(933) $2,248  $2,442  $3,209



    FIRST NATIONAL CORPORATION
    Performance Summary
    (in thousands, except share and per share data)

    (unaudited)                   
     As of or For the Three Months Ended 
     Mar 31,
    2025    		  Dec 31,
    2024    		  Sep 30,
    2024    		  Jun 30,
    2024    		  Mar 31,
    2024    		 
    Common Share and Per Common Share Data                   
    Earnings (loss) per common share, basic$0.18  $(0.10) $0.36  $0.39  $0.51 
    Adjusted earnings (loss) per common share, basic (1)$0.35  $0.66  $0.39  $0.48  $0.51 
    Weighted average shares, basic 8,979,527   8,971,649   6,287,997   6,278,113   6,269,790 
    Earnings (loss) per common share, diluted$0.18  $(0.10) $0.36  $0.39  $0.51 
    Adjusted earnings (loss) per common share, diluted (1)$0.35  $0.66  $0.39  $0.48  $0.51 
    Weighted average shares, diluted 9,005,923   8,994,315   6,303,282   6,289,405   6,282,534 
    Shares outstanding at period end 8,986,696   8,974,102   6,296,705   6,280,406   6,277,373 
    Tangible book value per share at period end (1)$16.81  $16.55  $19.37  $18.59  $18.27 
    Cash dividends declared$0.155  $0.155  $0.150  $0.150  $0.150 
                        
    Key Performance Ratios                   
    Return on average assets 0.32%  (0.18%)  0.62%  0.68%  0.90%
    Adjusted return on average assets (1) 0.63%  1.15%  0.67%  0.84%  0.90%
    Return on average equity 3.85%  (2.35%)  7.28%  8.31%  11.07%
    Adjusted return on average equity (1) 7.61%  15.01%  7.93%  10.23%  11.07%
    Net interest margin 3.75%  3.80%  3.40%  3.37%  3.21%
    Net interest margin fully tax-equivalent (1) 3.77%  3.83%  3.43%  3.40%  3.24%
    Efficiency ratio (1) 75.44%  63.97%  68.13%  70.65%  65.65%
                        
    Average Balances                   
    Average assets$2,016,958  $2,051,578  $1,449,185  $1,448,478  $1,431,612 
    Average earning assets 1,888,427   1,919,864   1,374,566   1,370,187   1,361,172 
    Average noninterest deposits to total average deposits 29.01%  29.20%  31.08%  31.44%  30.15%
    Average shareholders’ equity$168,245  $157,844  $122,802  $118,255  $116,628 
                        
    Asset Quality                   
    Allowance for credit losses on loans to nonperforming assets 302.94%  233.49%  212.26%  146.84%  157.24%
    Allowance for credit losses on loans to period end loans 1.02%  1.12%  1.28%  1.27%  1.30%
    Nonperforming assets to period end loans 0.34%  0.48%  0.60%  0.86%  0.82%
    Loan charge-offs$2,490  $1,432  $1,667  $521  $413 
    Loan recoveries 89   98   95   39   51 
    Net charge-offs 2,401   1,334   1,572   482   362 
    Non-accrual loans 4,864   6,971   5,929   8,549   8,015 
    Other real estate owned, net —   53   56   —   — 
    Nonperforming assets 4,864   7,024   5,985   8,549   8,015 
    Loans 30 to 89 days past due, accruing 5,021   3,085   2,358   2,399   2,279 
    Loans over 90 days past due, accruing —   365   —   —   175 
                        
    Capital Ratios (4)                   
    Total capital$182,563  $181,449  $148,477  $147,500  $145,977 
    Tier 1 capital 167,150   164,454   135,490   134,451   133,341 
    Common equity Tier 1 capital 167,150   164,454   135,490   134,451   133,341 
    Total capital to risk-weighted assets 12.44%  12.35%  14.29%  14.13%  14.45%
    Tier 1 capital to risk-weighted assets 11.39%  11.19%  13.04%  12.88%  13.20%
    Common equity Tier 1 capital to risk-weighted assets 11.39%  11.19%  13.04%  12.88%  13.20%
    Leverage ratio 8.28%  7.95%  9.23%  9.17%  9.19%



    FIRST NATIONAL CORPORATION
    Performance Summary
    (in thousands, except share and per share data)

    (unaudited)                   
     For the Period Ended 
     Mar 31,
    2025    		  Dec 31,
    2024    		  Sep 30,
    2024    		  Jun 30,
    2024    		  Mar 31,
    2024    		 
    Balance Sheet                   
    Cash and due from banks$27,432  $24,916  $18,197  $16,729  $14,476 
    Interest-bearing deposits in banks 178,600   137,958   108,319   118,906   124,232 
    Cash and cash equivalents$206,032  $162,874  $126,516  $135,635  $138,708 
    Securities available for sale, at fair value 160,976   163,847   146,013   144,816   147,675 
    Securities held to maturity, at amortized cost (net of allowance for credit losses) 108,292   109,741   121,425   123,497   125,825 
    Restricted securities, at cost 4,436   3,741   2,112   2,112   2,112 
    Loans, net of allowance for credit losses 1,435,895   1,450,604   982,016   977,423   960,371 
    Other real estate owned, net —   53   56   —   — 
    Premises and equipment, net 34,609   34,824   22,960   22,205   21,993 
    Accrued interest receivable 6,126   6,020   4,794   4,916   4,978 
    Bank owned life insurance 38,136   37,873   24,992   24,802   24,652 
    Goodwill 3,030   3,030   3,030   3,030   3,030 
    Core deposit intangibles, net 14,544   14,986   104   108   113 
    Other assets 21,270   22,688   16,698   18,984   17,738 
    Total assets$2,033,346  $2,010,281  $1,450,716  $1,457,528  $1,447,195 
                        
    Noninterest-bearing demand deposits$540,387  $520,153  $383,400  $397,770  $384,092 
    Savings and interest-bearing demand deposits 922,197   924,880   663,925   665,208   677,458 
    Time deposits 362,392   358,745   205,930   202,818   197,587 
    Total deposits$1,824,976  $1,803,778  $1,253,255  $1,265,796  $1,259,137 
    Other borrowings —   —   50,000   50,000   50,000 
    Subordinated debt, net 21,461   21,176   4,999   4,998   4,998 
    Junior subordinated debt 9,279   9,279   9,279   9,279   9,279 
    Accrued interest payable and other liabilities 8,955   9,517   8,068   7,564   5,965 
    Total liabilities$1,864,671  $1,843,750  $1,325,601  $1,337,637  $1,329,379 
                        
    Common stock 11,233   11,218   7,871   7,851   7,847 
    Surplus 77,354   77,058   33,409   33,116   33,021 
    Retained earnings 97,152   96,947   99,270   97,966   96,465 
    Accumulated other comprehensive (loss), net (17,064)  (18,692)  (15,435)  (19,042)  (19,517)
    Total shareholders’ equity$168,675  $166,531  $125,115  $119,891  $117,816 
    Total liabilities and shareholders’ equity$2,033,346  $2,010,281  $1,450,716  $1,457,528  $1,447,195 
                        
    Loan Data                   
    Real estate loans:                   
    Construction and land development$81,596  $84,480  $61,446  $60,919  $53,364 
    Secured by farmland 12,314   14,133   9,099   8,911   9,079 
    Secured by 1-4 family residential 550,183   547,576   351,004   346,976   347,014 
    Other real estate loans 653,367   658,029   440,648   440,857   436,006 
    Loans to farmers (except those secured by real estate) 858   940   633   349   332 
    Commercial and industrial loans (except those secured by real estate) 131,539   140,393   114,190   115,951   113,230 
    Consumer installment loans 8,034   7,582   5,396   5,068   4,808 
    Deposit overdrafts 486   450   253   365   251 
    All other loans 12,253   13,421   12,051   10,580   8,890 
    Total loans$1,450,630  $1,467,004  $994,720  $989,976  $972,974 
    Allowance for credit losses (14,735)  (16,400)  (12,704)  (12,553)  (12,603)
    Loans, net$1,435,895  $1,450,604  $982,016  $977,423  $960,371 



    FIRST NATIONAL CORPORATION
    Non-GAAP Reconciliation
    (in thousands, except share and per share data)

    (unaudited)                   
     For the Three Months Ended 
     Mar 31,
    2025    		  Dec 31,
    2024    		  Sep 30,
    2024    		  Jun 30,
    2024    		  Mar 31,
    2024    		 
    Operating Net Income                   
    Net income (GAAP)$1,598  $(933) $2,248  $2,442  $3,209 
    Add: Merger-related expenses 1,940   7,316   219   571   — 
    Add: Day 2 Non-PCD Provision —   3,931   —   —   — 
    Subtract: Bargain purchase gain —   (2,920)  —   —   — 
    Subtract: Tax effect of adjustment (5) (381)  (1,439)  (19)  (5)  — 
    Adjusted operating net income (non-GAAP)$3,157  $5,955  $2,448  $3,008  $3,209 
                        
    Adjusted Earnings Per Share, Basic                   
    Weighted average shares, basic 8,979,527   8,971,649   6,287,997   6,278,113   6,269,790 
    Basic earnings (loss) per share (GAAP)$0.18  $(0.10) $0.36  $0.39  $0.51 
    Adjusted earnings (loss) per share, basic (non-GAAP)$0.35  $0.66  $0.39  $0.48  $0.51 
                        
    Adjusted Earnings Per Share, Diluted                   
    Weighted average shares, diluted 9,005,923   8,994,315   6,303,282   6,289,405   6,282,534 
    Diluted earnings (loss) per share (GAAP)$0.18  $(0.10) $0.36  $0.39  $0.51 
    Adjusted diluted earnings (loss) per share (non-GAAP)$0.35  $0.66  $0.39  $0.48  $0.51 
                        
    Adjusted Pre-Provision, Pre-Tax Earnings                   
    Net interest income$17,451  $18,359  $11,749  $11,494  $10,850 
    Total noninterest income 3,611   6,444   3,203   2,686   4,047 
    Net revenue$21,062  $24,803  $14,952  $14,180  $14,897 
    Total noninterest expense 18,335   21,929   10,459   10,659   9,887 
    Pre-provision, pre-tax earnings$2,727  $2,874  $4,493  $3,521  $5,010 
    Add: Merger expenses 1,940   7,316   219   571   — 
    Add: Day 2 Non-PCD Provision —   3,931   —   —   — 
    Subtract: Bargain purchase gain —   (2,920)  —   —   — 
    Adjusted pre-provision, pre-tax, earnings$4,667  $11,201  $4,712  $4,092  $5,010 
                        
    Adjusted Performance Ratios                   
    Average assets$2,016,958  $2,051,578  $1,449,185  $1,448,478  $1,431,612 
    Return on average assets (GAAP) 0.32%  (0.18%)  0.62%  0.68%  0.90%
    Adjusted return on average assets (non-GAAP) 0.63%  1.15%  0.67%  0.84%  0.90%
                        
    Average shareholders’ equity$168,245  $157,844  $122,802  $118,255  $116,628 
    Return on average equity (GAAP) 3.85%  (2.35%)  7.28%  8.31%  11.07%
    Adjusted return on average equity (non-GAAP) 7.61%  15.01%  7.93%  10.23%  11.07%
                        
    Pre-provision, pre-tax return on average assets (non-GAAP) 0.54%  0.56%  1.24%  0.98%  1.40%
    Adjusted pre-provision, pre-tax return on average assets (non-GAAP) 0.93%  2.18%  1.30%  1.14%  1.40%
                        
    Adjusted Net Interest Margin                   
    Net interest income$17,451  $18,359  $11,749  $11,494  $10,850 
    Tax-equivalent net interest income (non-GAAP) 17,547   18,461   11,842   11,587   10,931 
    Average earning assets 1,888,427   1,919,864   1,374,566   1,370,187   1,361,172 
    Net interest margin 3.75%  3.80%  3.40%  3.37%  3.21%
    Net interest margin fully tax equivalent (non-GAAP) 3.77%  3.83%  3.43%  3.40%  3.24%


    FIRST NATIONAL CORPORATION
    Non-GAAP Reconciliation
    (in thousands, except share and per share data)

    (unaudited)                   
     For the Three Months Ended 
     Mar 31,
    2025    		  Dec 31,
    2024    		  Sep 30,
    2024    		  Jun 30,
    2024    		  Mar 31,
    2024    		 
    Efficiency Ratio                   
    Total noninterest expense (GAAP)$18,335  $21,929  $10,459  $10,659  $9,887 
    Add: other real estate owned income, net 8   (5)  (10)  —   — 
    Subtract: amortization of intangibles (442)  (448)  (4)  (4)  (4)
    Subtract: loss on disposal of premises and equipment, net —   3   (2)  —   (49)
    Subtract: merger expenses (1,940)  (7,316)  (219)  (571)  — 
    Adjusted non-interest expense (non-GAAP)$15,961  $14,163  $10,224  $10,084  $9,834 
    Tax-equivalent net interest income (non-GAAP)$17,547  $18,461  $11,842  $11,587  $10,931 
    Total noninterest income (GAAP) 3,611   6,444   3,203   2,686   4,047 
    Bargain purchase gain —   (2,920)  —   —   — 
    Securities losses (gains), net —   154   (39)  —   — 
    Adjusted income for efficiency ratio (non-GAAP)$21,158  $22,139  $15,006  $14,273  $14,978 
                        
    Efficiency ratio (non-GAAP) 75.44%  63.97%  68.13%  70.65%  65.65%


    FIRST NATIONAL CORPORATION
    Non-GAAP Reconciliation
    (in thousands, except share and per share data)

    (unaudited)                   
     For the Three Months Ended 
     Mar 31,
    2025    		  Dec 31,
    2024    		  Sep 30,
    2024    		  Jun 30,
    2024    		  Mar 31,
    2024    		 
    Tax-Equivalent Net Interest Income                   
    GAAP measures:                   
    Interest income – loans$20,639  $21,516  $14,479  $14,004  $13,484 
    Interest income – investments and other 3,383   3,970   2,965   3,051   2,850 
    Interest expense – deposits (6,038)  (6,415)  (4,958)  (4,820)  (4,771)
    Interest expense – federal funds purchased —   (1)  —   —   — 
    Interest expense – subordinated debt (467)  (396)  (69)  (69)  (69)
    Interest expense – junior subordinated debt (66)  (68)  (68)  (66)  (68)
    Interest expense – other borrowings —   (247)  (600)  (606)  (576)
    Net interest income$17,451  $18,359  $11,749  $11,494  $10,850 
    Non-GAAP measures:                   
    Add: Tax benefit realized on non-taxable interest income – loans (5)$16  $18  $13  $12  $— 
    Add: Tax benefit realized on non-taxable interest income – municipal securities (5) 80   84   80   81   81 
    Tax benefit realized on non-taxable interest income$96  $102  $93  $93  $81 
    Tax-equivalent net interest income$17,547  $18,461  $11,842  $11,587  $10,931 
                        
                        
    Tangible Common Equity and Tangible Assets                   
    Total assets (GAAP)$2,033,346  $2,010,281  $1,450,716  $1,457,528  $1,447,195 
    Subtract: goodwill (3,030)  (3,030)  (3,030)  (3,030)  (3,030)
    Subtract: core deposit intangibles, net (14,544)  (14,986)  (104)  (108)  (113)
    Tangible assets (Non-GAAP)$2,015,772  $1,992,265  $1,447,582  $1,454,390  $1,444,052 
                        
    Total shareholders’ equity (GAAP)$168,675  $166,531  $125,115  $119,891  $117,816 
    Subtract: goodwill (3,030)  (3,030)  (3,030)  (3,030)  (3,030)
    Subtract: core deposit intangibles, net (14,544)  (14,986)  (104)  (108)  (113)
    Tangible common equity (Non-GAAP)$151,101  $148,515  $121,981  $116,753  $114,673 
                        
    Tangible common equity to tangible assets ratio 7.50%  7.45%  8.43%  8.03%  7.94%
                        
                        
    Tangible Book Value Per Share                   
    Tangible common equity (non-GAAP)$151,101  $148,515  $121,981  $116,753  $114,673 
    Common shares outstanding, ending 8,986,696   8,974,102   6,296,705   6,280,406   6,277,373 
    Tangible book value per share$16.81  $16.55  $19.37  $18.59  $18.27 


    (1)     Non-GAAP financial measure.  See “Non-GAAP Financial Measures” and “Non-GAAP Reconciliations” for additional information and detailed calculations of adjustments.

    (2) All ratios at March 31, 2025 are estimates and subject to change pending the Bank's filing of its Call Report. All other periods are presented as filed.

    (3) Capital ratios presented are for First National Corporation.

    (4) Capital ratios are for First Bank.

    (5) The tax rate utilized in calculating the tax benefit is 21%. Certain merger-related expenses were non-deductible.


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