First National Corporation Reports First Quarter Financial Results

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Insights

The reported net income of $3.2 million and EPS of $0.51 indicate a sound financial position for the company, with an appreciable return on average assets (0.90%) and return on average equity (11.07%). The stability of noninterest-bearing deposits at 31% of total deposits is a positive sign of liquidity. Investors may take note of the increase in tangible book value per share, which suggests an improvement in the intrinsic value of the company. However, the moderate increase in net interest income and the announcement of the acquisition of Touchstone Bankshares, Inc. should be evaluated for potential impacts on future earnings and diversification benefits.

The decrease in past due loans from the previous quarter is a positive indicator of credit quality. However, the increase in nonperforming assets (NPAs) from 0.13% to 0.55% year-over-year could raise concerns, potentially indicating a weakness in asset quality. The increased provision for credit losses at $1.0 million, compared to the previous quarter's $6.0 million, may reflect management's assessment of potential defaults. Investors should monitor these metrics, as they are important for assessing the bank's risk management efficacy and future financial health.

The capital ratios reported by the company, including the total capital ratio and Tier 1 capital ratio, are above the minimum regulatory requirements, illustrating a robust capital structure. This positions the bank favorably in terms of regulatory compliance and financial stability. The decision to participate in the Federal Reserve Bank's Bank Term Funding Program at a fixed rate suggests a strategic move to manage interest rate risk while improving net interest income. Investors would want to consider the implications of regulatory changes on the bank's ability to maintain these capital levels and manage borrowing costs.

04/30/2024 - 07:00 AM

STRASBURG, Va., April 30, 2024 (GLOBE NEWSWIRE) -- First National Corporation (the “Company” or “First National”) (NASDAQ: FXNC), the bank holding company of First Bank (the “Bank”), reported unaudited consolidated net income of $3.2 million and diluted earnings per common share of $0.51 for the three months ended March 31, 2024.

FIRST QUARTER HIGHLIGHTS

Key highlights of the three months ended March 31, 2024 are as follows. Comparisons are to the three-month period ended December 31, 2023, unless otherwise stated:

Return on average assets of 0.90%

Return on average equity of 11.07%

Deposits increased $25.4 million, or 8% annualized

Noninterest-bearing deposits stable at 31% of total deposits

Tangible book value per share increased to $18.27

Announced agreement to acquire Touchstone Bankshares, Inc.

“We are pleased with the Company’s performance in the first quarter with return on average assets of 0.90%, return on average equity of 11.07%, and tangible book value per share increasing to $18.27 per share from $17.30 from one year ago,” said Scott Harvard, president and chief executive officer of First National. Harvard continued, “Following a disappointing fourth quarter, our team moved the bank forward reestablishing solid financial performance while undertaking a significant expansion opportunity in our recently announced agreement to acquire Touchstone Bankshares. We continue to remain optimistic about the ability of our team to drive value for our customers, our communities, and our shareholders.”

NET INTEREST INCOME

Net interest income increased $41 thousand to $10.9 million for the first quarter of 2024 compared to the fourth quarter of 2023. Total interest income increased by $1.1 million and was partially offset by an increase in total interest expense of $1.0 million.

The $1.1 million increase in total interest income was primarily attributable to a $920 thousand increase in interest income on deposits in other banks and a $229 thousand increase in interest and fees on loans. The increase in interest income on deposits in other banks was attributable to a $73.7 million increase in average balances. The increase in interest and fees on loans was primarily attributable to a 14-basis point increase in the yield on the loan portfolio.

The $1.0 million increase in total interest expense was attributable to a $539 thousand increase in interest expense on deposits and a $482 thousand increase in interest expense on other borrowings. The higher interest expense on deposits was primarily attributable to a 17-basis point increase in the cost of deposits. Interest expense on other borrowings resulted from a $50.0 million borrowing from the Federal Reserve Bank through its Bank Term Funding Program in December 2023. The bank invested the proceeds of the borrowing in interest-bearing deposits in banks, which resulted in an increase in net interest income and a decrease in net interest margin to 3.23% for the first quarter.

NONINTEREST INCOME

Noninterest income totaled $4.0 million for the first quarter of 2024, which was a $978 thousand increase over the prior quarter. Other operating income increased $1.2 million from a recovery on a charged-off loan that was acquired through a business combination in 2021. Service charges on deposits and ATM and check card income decreased, while wealth management income increased during the first quarter.

During the fourth quarter of 2023, the Company recorded a gain on sale of other investment totaling $186 thousand, which was the result of a contingency payment associated with a sale from a prior year.

NONINTEREST EXPENSE

Noninterest expense totaled $9.9 million for the first quarter of 2024, which was an increase of $787 thousand or 9% over the fourth quarter of 2023. The increase was primarily attributable to an $872 thousand or 17% increase in salaries and employee benefits expense, which resulted from lower expense in the prior quarter. There was an adjustment that decreased salaries and employee benefits expense in the fourth quarter as performance-based compensation was reduced to align with Company’s 2023 financial results.

ASSET QUALITY

Overview

Loans that were past due greater than 30 days and still accruing interest as a percentage of total loans decreased to 0.25% on March 31, 2024, compared to 0.31% on December 31, 2023, and 0.20% on March 31, 2023. Nonperforming assets (“NPAs”) as a percentage of total assets increased to 0.55% on March 31, 2024, compared to 0.48% on December 31, 2023, and 0.13% on March 31, 2023. Net charge-offs totaled $362 thousand in the first quarter of 2024, compared to $2.7 million in the fourth quarter of 2023, and $915 thousand in the first quarter of 2023. The allowance for credit losses on loans totaled $12.6 million, or 1.30% of total loans on March 31, 2024, compared to $12.0 million, or 1.24% of total loans on December 31, 2023, and $8.7 million, or 0.95% of total loans on March 31, 2023.

Past Due Loans

Loans past due greater than 30 days and still accruing interest decreased to $2.5 million, or 0.25% of total loans on March 31, 2024, compared to $3.0 million, or 0.31% of total loans on December 31, 2023, and $1.9 million, or 0.20%, of total loans on March 31, 2023. Of the past due loans still accruing interest, $175 thousand was past due 90 days or more on March 31, 2024, compared to $524 thousand on December 31, 2023, and $47 thousand on March 31, 2023. Loans that were past due 90 days or more and still accruing interest were in the renewal process.

Nonperforming Assets

NPAs increased by $1.2 million to $8.0 million on March 31, 2024, compared to $6.8 million on December 31, 2023, and $1.6 million on March 31, 2023, which represented 0.55%, 0.48%, and 0.13% of total assets, respectively. The increase was primarily attributable to an increase in nonaccrual commercial and industrial loans.

Net Charge-offs

Net charge-offs totaled $362 thousand for the first quarter of 2024 compared to $2.7 million for the prior quarter, and $916 thousand for the first quarter of 2023. Net charge-offs included $315 thousand of commercial and industrial loans.

Provision for Credit Losses

The Bank recorded a $1.0 million provision for credit losses in the first quarter of 2024, compared to a $6.0 million provision for credit losses for the fourth quarter of 2023. The first quarter provision was comprised of a $991 thousand provision for credit losses on loans and a $9 thousand provision for credit losses on held-to-maturity securities. There was no provision for credit losses on unfunded commitments. The provision for credit losses for the fourth quarter of 2023 was comprised of a $5.8 million provision for credit loss on loans, a $224 thousand provision for credit losses on unfunded commitments, and a $25 thousand recovery of credit losses on held-to-maturity securities.

Allowance for Credit Losses on Loans

On March 31, 2024, the allowance for credit losses on loans totaled $12.6 million, compared to $12.0 million on December 31, 2023, and $8.7 million on March 31, 2023. The allowance increased in the first quarter of 2024 from a $859 thousand increase in specific reserves on individually evaluated loans, which was partially offset by a $230 thousand decrease in the collectively evaluated component of the allowance.

The following table provides the changes in the allowance for credit losses on loans for the three-month periods ended (dollars in thousands):

	March 31, 2024			December 31, 2023			March 31, 2023
Allowance for credit losses on loans, beginning of period	$	11,974		$	8,896		$	7,446
Adoption of CECL on January 1, 2023		-			-			2,187
	$	11,974		$	8,896		$	9,633
Net (charge-offs) recoveries		(362	)		(2,673	)		(916	)
Provision for credit losses on loans		991			5,751			-
Allowance for credit losses on loans, end of period	$	12,603		$	11,974		$	8,717

The allowance for credit losses on loans as a percentage of total loans totaled 1.30% on March 31, 2024, 1.24% on December 31, 2023, and 0.95% on March 31, 2023.

Allowance for Credit Losses on Unfunded Commitments

The allowance for credit losses on unfunded commitments totaled $413 thousand on March 31, 2024 and December 31, 2023. There was no provision for credit losses on unfunded commitments for the first quarter of 2024. Provision for credit losses on unfunded commitments totaled $224 thousand for the fourth quarter of 2023. There was no provision for credit losses on unfunded commitments for the first quarter of 2023.

Allowance for Credit Losses on Securities Held to Maturity

The allowance for credit losses on securities totaled $116 thousand on March 31, 2024, compared to $107 thousand on December 31, 2023, and $133 thousand on March 31, 2023. The provision for credit losses on securities totaled $9 thousand for the first quarter of 2024, compared to a recovery of credit losses on securities of $24 thousand in the fourth quarter of 2023. There was no provision for credit losses on securities for the first quarter of 2023.

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 to the Federal Reserve Bank through its Bank Term Funding Program, and available lines of credit totaled $554.8 million on March 31, 2024, $512.7 million on December 31, 2023, and $562.3 million on March 31, 2023.

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 $391.9 million on March 31, 2024, $368.2 million on December 31, 2023, and $407.5 million on March 31, 2023. Excluding municipal deposits, the estimated amount of uninsured customer deposits totaled $308.6 million on March 31, 2024, $293.7 million on December 31, 2023, and $330.4 million on March 31, 2023.

BALANCE SHEET

Assets totaled $1.4 billion on March 31, 2024, which was a $27.9 million, or 8% (annualized), increase from December 31, 2023, and a $74.9 million, or 5%, increase from March 31, 2023. The increase in total assets from the prior quarter was primarily due to a $54.3 million increase in interest-bearing deposits in banks, which was partially offset by a $22.4 million decrease in securities, held to maturity (“HTM”). Total assets increased from March 31, 2023 primarily due to a $64.4 million increase in interest-bearing deposits in banks and a $55.0 million increase in loans, which were partially offset by a $14.7 million decrease in securities, available for sale (“AFS”), and a $25.5 million decrease in HTM securities.

At March 31, 2024, loans totaled $973.0 million, an increase of $3.5 million or 2% (annualized) from $969.4 million, at December 31, 2023. Quarterly average loans totaled $970.6 million, an increase of $5.4 million or 2% (annualized) from the prior quarter. At March 31, 2024, loans increased $55.0 million or 6% from March 31, 2023, and quarterly average loans increased $54.8 million or 6%.

At March 31, 2024, total investments were $273.5 million, a decrease of $27.6 million from December 31, 2023, and a decrease of $40.2 million from March 31, 2023. AFS securities totaled $147.7 million at March 31, 2024, $152.9 million at December 31, 2023, and $162.4 million at March 31, 2023. At March 31, 2024, total net unrealized losses on the AFS securities portfolio were $22.2 million, an increase of $1.6 million from total net unrealized losses on AFS securities of $20.6 at December 31, 2023. HTM securities are carried at cost and totaled $125.8 million at March 31, 2024, $148.2 million at December 31, 2023, and $151.3 million at March 31, 2023 and had net unrealized losses of $11.9 million at March 31, 2024, an increase of $1.2 million from net unrealized losses on HTM securities of $10.7 at December 31, 2023.

At March 31, 2024, total deposits were $1.3 billion, an increase of $25.4 million or approximately 8% (annualized) from December 31, 2023. Quarterly average deposits at March 31, 2024 increased from the prior quarter by $13.6 million or 4% (annualized). Total deposits at March 31, 2024 increased $17.6 million or 1% from March 31, 2023, and quarterly average deposits at March 31, 2024 increased $23.0 million or 8% from the same period in the prior year. Total deposits increased from the prior quarter due to a $20.5 million increase in interest-bearing deposits and a $4.9 million increase in noninterest-bearing demand deposits.

Other borrowings totaled $50.0 million on March 31, 2024 and December 31, 2023, and were comprised of funds borrowed from the Federal Reserve Bank through their Bank Term Funding Program. There were no other borrowings on March 31, 2023. On March 31, 2024, other borrowings had a fixed interest rate of 4.76% and a maturity date of January 15, 2025. The Bank benefited from the borrowing from a reduction in interest rate risk and an increase in net interest income.

The following table provides capital ratios at the periods ended:

	March 31, 2024			December 31, 2023			March 31, 2023
Total capital ratio ⁽²⁾		14.45	%		14.05	%		14.88	%
Tier 1 capital ratio ⁽²⁾		13.20	%		12.82	%		13.94	%
Common equity Tier 1 capital ratio⁽²⁾		13.20	%		12.82	%		13.94	%
Leverage ratio ⁽²⁾		9.19	%		9.31	%		9.70	%
Common equity to total assets ⁽⁵⁾		8.14	%		8.19	%		8.15	%
Tangible common equity to tangible assets ^{(5) (6)}		7.94	%		7.99	%		7.94	%

At March 31, 2024, the Company’s common equity to total assets ratio and tangible common equity to tangible assets ratio decreased compared to the prior quarter primarily due to the increase in total assets. These ratios were stable compared to the prior year.

During the first quarter of 2024, the Company declared and paid cash dividends of $0.15 per common share, which was consistent with the fourth quarter of 2023 and the first quarter of 2023.

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 fully taxable equivalent interest income, the net interest margin, the efficiency ratio, 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 tax-exempt net interest income is included at the end of this release.

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, a loan production office, a customer service center in a retirement community, and 20 bank branch office locations located throughout the Shenandoah Valley, the central regions of Virginia, the Roanoke Valley, and in the city of Richmond. 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.

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 future operations and are generally identified by phrases such as “the Company expects,” “the Company believes” or words of similar import. 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 of the Company 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and other filings with the Securities and Exchange Commission.

CONTACTS

Scott C. Harvard		M. Shane Bell
President and CEO		Executive Vice President and CFO
(540) 465-9121		(540) 465-9121
sharvard@fbvirginia.com		sbell@fbvirginia.com

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

	(unaudited)
	For the Quarter Ended
	March 31,		December 31,			September 30,		June 30,			March 31,
	2024		2023			2023		2023			2023
Income Statement
Interest income
Interest and fees on loans	$	13,484	$	13,255		$	12,640	$	11,886		$	11,512
Interest on deposits in banks		1,288		368			338		759			344
Interest on securities
Taxable interest		1,224		1,318			1,323		1,306			1339
Tax-exempt interest		305		303			304		307			306
Dividends		33		30			26		28			27
Total interest income	$	16,334	$	15,274		$	14,631	$	14,286		$	13,528
Interest expense
Interest on deposits	$	4,771	$	4,232		$	3,810	$	3,402		$	2,216
Interest on subordinated debt		69		70			69		69			69
Interest on junior subordinated debt		68		68			69		67			67
Interest on other borrowings		576		94			—		3			—
Total interest expense	$	5,484	$	4,465		$	3,948	$	3,541		$	2,352
Net interest income	$	10,850	$	10,809		$	10,683	$	10,745		$	11,176
Provision for credit losses		1,000		5,950			100		100			—
Net interest income after provision for credit losses	$	9,850	$	4,859		$	10,583	$	10,645		$	11,176
Noninterest income
Service charges on deposit accounts	$	654	$	718		$	733	$	683		$	646
ATM and check card fees		770		825			976		848			800
Wealth management fees		883		784			811		749			776
Fees for other customer services		195		232			122		220			196
Brokered mortgage fees		38		46			38		35			—
Income from bank owned life insurance		151		168			175		135			149
Gain on sale of other investment		—		186			—		—			—
Other operating income		1,356		110			198		214			211
Total noninterest income	$	4,047	$	3,069		$	3,053	$	2,884		$	2,778
Noninterest expense
Salaries and employee benefits	$	5,871	$	4,999		$	5,505	$	5,189		$	5,346
Occupancy		535		568			534		524			528
Equipment		591		621			598		571			587
Marketing		195		190			204		248			268
Supplies		116		153			128		147			148
Legal and professional fees		452		443			439		422			343
ATM and check card expense		361		313			440		425			400
FDIC assessment		177		154			161		212			106
Bank franchise tax		262		262			262		262			254
Data processing expense		246		327			266		252			202
Amortization expense		4		4			5		4			5
Other real estate owned (income) expense, net		—		2			15		(219	)		3
Net losses on disposal of premises and equipment		49		—			—		—			—
Other operating expense		1,028		1,064			1,227		1,121			1,010
Total noninterest expense	$	9,887	$	9,100		$	9,784	$	9,158		$	9,200
Income (loss) before income taxes	$	4,010	$	(1,172	)	$	3,852	$	4,371		$	4,754
Income tax expense (benefit)		801		(321	)		731		866			905
Net income (loss)	$	3,209	$	(851	)	$	3,121	$	3,505		$	3,849

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

	(unaudited)
	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2024			2023			2023			2023			2023
Common Share and Per Common Share Data
Earnings (loss) per common share, basic	$	0.51		$	(0.14	)	$	0.50		$	0.56		$	0.61
Weighted average shares, basic		6,269,790			6,261,500			6,256,663			6,269,668			6,273,913
Earnings (loss) per common share, diluted	$	0.51		$	(0.14	)	$	0.50		$	0.56		$	0.61
Weighted average shares, diluted		6,282,534			6,282,815			6,271,351			6,277,161			6,281,116
Shares outstanding at period end		6,277,373			6,263,102			6,260,934			6,250,613			6,280,378
Tangible book value at period end (4)	$	18.27		$	18.06		$	17.38		$	17.55		$	17.30
Cash dividends	$	0.15		$	0.15		$	0.15		$	0.15		$	0.15

Key Performance Ratios
Return on average assets		0.90	%		(0.25	%)		0.91	%		1.02	%		1.15	%
Return on average equity		11.07	%		(2.97	%)		10.96	%		12.56	%		14.20	%
Net interest margin		3.23	%		3.35	%		3.35	%		3.36	%		3.60	%
Efficiency ratio (1)		65.65	%		66.23	%		70.67	%		68.37	%		65.49	%

Average Balances
Average assets	$	1,431,612		$	1,372,365		$	1,355,113		$	1,372,781		$	1,351,630
Average earning assets		1,361,172			1,290,231			1,275,112			1,290,828			1,267,829
Average shareholders’ equity		116,628			113,614			112,987			111,917			109,924

Asset Quality
Loan charge-offs	$	413		$	2,765		$	143		$	110		$	976
Loan recoveries		51			92			60			206			60
Net charge-offs (recoveries)		362			2,673			83			(96	)		916
Non-accrual loans		8,015			6,763			3,116			677			1,591
Other real estate owned, net		—			—			—			45			184
Nonperforming assets (3)		8,015			6,763			3,116			722			1,775
Loans 30 to 89 days past due, accruing		2,279			2,484			1,395			970			1,816
Loans over 90 days past due, accruing		175			524			370			226			47
Special mention loans		—			—			—			2,754			—
Substandard loans, accruing		485			287			1,683			418			296

Capital Ratios (2)
Total capital	$	145,977		$	142,333		$	146,163		$	144,278		$	141,501
Tier 1 capital		133,341			129,840			136,947			135,079			132,784
Common equity tier 1 capital		133,341			129,840			136,947			135,079			132,784
Total capital to risk-weighted assets		14.45	%		14.05	%		14.80	%		14.88	%		14.88	%
Tier 1 capital to risk-weighted assets		13.20	%		12.82	%		13.86	%		13.93	%		13.94	%
Common equity tier 1 capital to risk-weighted assets		13.20	%		12.82	%		13.86	%		13.93	%		13.94	%
Leverage ratio		9.19	%		9.31	%		9.97	%		9.72	%		9.70	%

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

	(unaudited)
	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2024			2023			2023			2023			2023
Balance Sheet
Cash and due from banks	$	14,476		$	17,194		$	17,168		$	17,697		$	17,950
Interest-bearing deposits in banks		124,232			69,967			32,931			54,379			59,851
Securities available for sale, at fair value		147,675			152,857			148,175			156,745			162,355
Securities held to maturity, at amortized cost (net of allowance for credit losses)		125,825			148,244			149,948			151,677			151,301
Restricted securities, at cost		2,112			2,078			2,077			1,803			1,803
Loans, net of allowance for credit losses		960,371			957,456			943,603			921,336			909,250
Other real estate owned, net		—			—			—			45			185
Premises and equipment, net		21,993			22,142			21,363			21,556			21,637
Accrued interest receivable		4,978			4,655			4,502			4,248			4,389
Bank owned life insurance		24,652			24,902			24,734			24,559			24,424
Goodwill		3,030			3,030			3,030			3,030			3,030
Core deposit intangibles, net		113			117			122			127			131
Other assets		17,738			16,653			18,567			17,022			16,026
Total assets	$	1,447,195		$	1,419,295		$	1,366,220		$	1,374,224		$	1,372,332

Noninterest-bearing demand deposits	$	384,092		$	379,208		$	403,774		$	396,137		$	410,019
Savings and interest-bearing demand deposits		677,458			662,169			646,980			670,005			676,875
Time deposits		197,587			192,349			184,419			176,226			154,631
Total deposits	$	1,259,137		$	1,233,726		$	1,235,173		$	1,242,368		$	1,241,525
Other borrowings		50,000			50,000			—			—			—
Subordinated debt, net		4,998			4,997			4,997			4,996			4,996
Junior subordinated debt		9,279			9,279			9,279			9,279			9,279
Accrued interest payable and other liabilities		5,965			5,022			4,792			4,721			4,721
Total liabilities	$	1,329,379		$	1,303,024		$	1,254,241		$	1,261,364		$	1,260,521

Preferred stock	$	—		$	—		$	—		$	—		$	—
Common stock		7,847			7,829			7,826			7,813			7,851
Surplus		33,021			32,950			32,840			32,601			32,937
Retained earnings		96,465			94,198			95,988			93,805			91,239
Accumulated other comprehensive (loss), net		(19,517	)		(18,706	)		(24,675	)		(21,359	)		(20,216	)
Total shareholders’ equity	$	117,816		$	116,271		$	111,979		$	112,860		$	111,811
Total liabilities and shareholders’ equity	$	1,447,195		$	1,419,295		$	1,366,220		$	1,374,224		$	1,372,332

Loan Data
Mortgage real estate loans:
Construction and land development	$	53,364		$	52,680		$	50,405		$	49,282		$	48,610
Secured by farmland		9,079			9,154			7,113			3,563			3,150
Secured by 1-4 family residential		347,014			344,369			340,773			337,601			334,302
Other real estate loans		436,006			438,118			426,065			418,409			412,851
Loans to farmers (except those secured by real estate)		332			455			667			714			739
Commercial and industrial loans (except those secured by real estate)		113,230			112,619			116,463			112,088			110,198
Consumer installment loans		4,808			4,753			4,596			4,505			4,206
Deposit overdrafts		251			222			368			251			179
All other loans		8,890			7,060			6,049			3,781			3,732
Total loans	$	972,974		$	969,430		$	952,499		$	930,194		$	917,967
Allowance for credit losses		(12,603	)		(11,974	)		(8,896	)		(8,858	)		(8,717	)
Loans, net	$	960,371		$	957,456		$	943,603		$	921,336		$	909,250

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

	(unaudited)
	For the Quarter Ended
	March 31,			December 31,			September 30,			June 30,			March 31,
	2024			2023			2023			2023			2023
Reconciliation of Tax-Equivalent Net Interest Income (7)
GAAP measures:
Interest income – loans	$	13,484		$	13,255		$	12,640		$	11,886		$	11,512
Interest income – investments and other		2,850			2,019			1,991			2,400			2,016
Interest expense – deposits		(4,771	)		(4,232	)		(3,810	)		(3,402	)		(2,216	)
Interest expense – subordinated debt		(69	)		(70	)		(69	)		(69	)		(69	)
Interest expense – junior subordinated debt		(68	)		(68	)		(69	)		(67	)		(67	)
Interest expense – other borrowings		(576	)		(94	)		—			(3	)		—
Total net interest income	$	10,850		$	10,809		$	10,683		$	10,745		$	11,176
Non-GAAP measures:
Tax benefit realized on non-taxable interest income – municipal securities	$	81		$	80		$	81		$	81		$	82
Total tax benefit realized on non-taxable interest income		81			80			81			81			82
Total tax-equivalent net interest income	$	10,931		$	10,889		$	10,764		$	10,826		$	11,258

⁽¹⁾ The efficiency ratio is computed by dividing noninterest expense excluding other real estate owned income/expense, amortization of intangibles, gains and losses on disposal of premises and equipment by the sum of net interest income on a tax-equivalent basis and noninterest income, excluding gains on sales of securities and gains on other investments. The efficiency ratio is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. Such information is not prepared in accordance with U.S. generally accepted accounting principles (GAAP) and should not be construed as such. Management believes; however, such financial information is meaningful to the reader in understanding operational performance but cautions that such information not be viewed as a substitute for GAAP.

⁽²⁾ Capital ratios are for First Bank.

⁽³⁾ Nonperforming assets are comprised of nonaccrual loans and other real estate owned.

⁽⁴⁾ Tangible book value is calculated by subtracting goodwill and other intangibles from total shareholders' equity. Tangible book value is a non-GAAP financial measure that management believes provides investors with important information that may be related to the valuation of common stock.

⁽⁵⁾ Capital ratios presented are for First National Corporation.

⁽⁶⁾ The ratio of tangible common equity to tangible assets, or TCE ratio, is calculated by dividing consolidated total common shareholders’ equity by consolidated total assets, after reducing both amounts by goodwill and other intangible assets. The TCE ratio is not required by GAAP or by bank regulations, but is a metric used by management to evaluate the adequacy of the Company’s capital levels. Since there is no authoritative requirement to calculate the TCE ratio, our TCE ratio is not necessarily comparable to similar capital measures disclosed or used by other companies in the financial services industry. Tangible common equity and tangible assets are non-GAAP financial measures and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.

⁽⁷⁾Tax-equivalent net interest income is calculated by adding the tax benefit realized from interest income that is nontaxable to total interest income then subtracting total interest expense. The tax rate utilized in calculating the tax benefit is 21%. See the tables above for tax-equivalent net interest income and reconciliations of net interest income to tax-equivalent net interest income.

FAQ

What is the consolidated net income reported by First National for the first quarter of 2024?

First National reported an unaudited consolidated net income of $3.2 million for the first quarter of 2024.

What are the key highlights of First National 's financial performance in the first quarter of 2024?

Key highlights include a return on average assets of 0.90%, return on average equity of 11.07%, and an increase in deposits by $25.4 million.

Which company has First National announced an agreement to acquire?

First National has announced an agreement to acquire Touchstone Bankshares, Inc.

What was the total net interest income for the first quarter of 2024?

Net interest income increased by $41 thousand to $10.9 million for the first quarter of 2024.

What is the current tangible book value per share of First National ?

The tangible book value per share increased to $18.27.

First National Corporation Reports First Quarter Financial Results

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FAQ

What is the consolidated net income reported by First National for the first quarter of 2024?

What are the key highlights of First National 's financial performance in the first quarter of 2024?

Which company has First National announced an agreement to acquire?

What was the total net interest income for the first quarter of 2024?

What is the current tangible book value per share of First National ?

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First National Corporation Reports First Quarter Financial Results

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FAQ

What is the consolidated net income reported by First National for the first quarter of 2024?

What are the key highlights of First National 's financial performance in the first quarter of 2024?

Which company has First National announced an agreement to acquire?

What was the total net interest income for the first quarter of 2024?

What is the current tangible book value per share of First National ?

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