First National Corporation Reports Record Third Quarter and Year to Date 2026 Financial Performance

Loan growth and a wider lending margin accompanied lower quarterly deposits and larger unrealized securities losses.

Rhea-AI Summary

First National (NASDAQ: FXNC) reported third-quarter 2026 net income of $6.9 million, with earnings per share above both comparison quarters. Basic earnings per share reached $0.76 versus $0.62 a year earlier and $0.64 in the second quarter. Nine-month net income was $17.5 million, with basic earnings per share of $1.94 versus $1.36 a year earlier.

The fully tax-equivalent net interest margin, which adjusts for tax-exempt income, reached 4.38% versus 4.15% in the prior quarter; acquisition accounting added 18 basis points. Loans held for investment, net of allowances, rose to $1.486 billion. Deposits fell $2.4 million sequentially to $1.829 billion, while available-for-sale securities' unrealized losses widened to $21.4 million. Noninterest expense increased to $16.7 million. Two North Carolina offices were sold in early October; the company expects a fourth-quarter gain. Tangible book value per share rose to $19.94.

30 points · 0 major

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0 major · 15 points

Hollow bars mark forward-looking points. How the balance works

Positive

• Moderate pointThird-quarter basic EPS rose to $0.76 from $0.62 a year earlier and $0.64 last quarter.
• Moderate pointThird-quarter return on average assets reached 1.32%, versus 1.09% a year earlier and 1.11% last quarter.
• Moderate pointThird-quarter return on average equity reached 14.02%, versus 12.43% a year earlier and 12.03% last quarter.
• Moderate pointThird-quarter fully tax-equivalent net interest margin reached 4.38%, versus 4.15% last quarter and 3.84% a year earlier.
• Moderate pointThird-quarter fully tax-equivalent net interest income increased $1.2 million to $21.3 million sequentially.
• Moderate pointLoans held for investment, net of allowances, rose $13.4 million quarterly and $67.3 million year over year to $1.486 billion.
• Moderate pointTangible book value per share rose to $19.94, versus $19.71 last quarter and $18.26 a year earlier.

23 minor points

• Minor pointNine-month basic EPS increased to $1.94 from $1.36 a year earlier.
• Minor pointNine-month return on average assets increased to 1.15% from 0.81% a year earlier.
• Minor pointNine-month return on average equity increased to 12.26% from 9.47% a year earlier.
• Minor pointNine-month fully tax-equivalent net interest margin rose to 4.19% from 3.85% a year earlier.
• Minor pointThird-quarter acquisition-accounting income reached $867 thousand, adding 18 basis points to net interest margin.
• Minor pointThird-quarter earning asset yields increased 24 basis points to 5.55% from the second quarter.
• Minor pointThird-quarter net credit-loss provision fell to zero from $426 thousand in the second quarter.
• Minor pointThird-quarter noninterest income increased $66 thousand to $4.1 million sequentially.
• Minor point. Forward-looking: it has not happened yet and may not happen.North Carolina office sale was completed in early October; the company anticipates a fourth-quarter one-time gain.
• Minor pointTotal assets increased 2.2% to $2.075 billion from September 30, 2025.
• Minor pointNoninterest-bearing deposits totaled $520.1 million, or 28% of deposits, supporting low funding costs.
• Minor pointNon-accrual loans declined to 0.31% of total loans from both the prior quarter and prior year.
• Minor pointLoans at least 90 days past due and still accruing were $0, versus $388 thousand a year earlier.
• Minor pointThird-quarter dividend was $0.17 per share, unchanged sequentially and above $0.155 a year earlier.
• Minor pointCompany common equity Tier 1 capital ratio rose to 12.98%, versus 12.60% last quarter and 12.20% a year earlier.
• Minor pointCompany Tier 1 capital ratio rose to 13.59%, versus 13.22% last quarter and 12.83% a year earlier.
• Minor pointCompany leverage ratio rose to 10.00%, versus 9.62% last quarter and 9.24% a year earlier.
• Minor pointCompany tangible common equity to tangible assets rose to 8.77%, versus 8.65% quarterly and 8.17% yearly.
• Minor pointCompany total risk-based capital ratio reached 15.14%, above 14.81% last quarter but below 15.15% a year earlier.
• Minor pointFirst Bank total risk-based capital ratio rose to 14.19%, versus 13.91% quarterly and 13.40% yearly.
• Minor pointFirst Bank Tier 1 and common equity Tier 1 ratios reached 13.20%, versus 12.87% quarterly and 12.36% yearly.
• Minor pointFirst Bank leverage ratio reached 9.77%, versus 9.44% last quarter and 8.88% a year earlier.
• Minor pointFirst Bank tangible common equity to tangible assets reached 8.82%, versus 8.75% quarterly and 8.18% yearly.

Negative

• Moderate pointAvailable-for-sale securities' unrealized losses widened to $21.4 million, versus $15.8 million quarterly and $15.4 million yearly.
• Minor pointThird-quarter noninterest expense increased $259 thousand to $16.7 million from the second quarter.
• Minor pointBranch consolidation generated $212 thousand in third-quarter other real estate owned expense.
• Minor pointDeposits fell $2.4 million quarterly to $1.829 billion, although up $19.2 million year over year.
• Minor pointThird-quarter average deposit balances declined $17.6 million, or 3.8% annualized.

10 minor points

• Minor pointAvailable liquidity fell to $721.6 million from $747.8 million quarterly, but exceeded $676.1 million a year earlier.
• Minor pointFederal Home Loan Bank borrowings remained $25.0 million, versus no borrowings a year earlier.
• Minor pointThird-quarter net charge-offs reached $594 thousand, above $105 thousand quarterly but below $939 thousand a year earlier.
• Minor pointLoan-loss allowance fell to 0.96% of loans, versus 1.00% quarterly and 1.01% a year earlier.
• Minor pointAllowance coverage of non-performing assets fell to 268% from 315% quarterly, but exceeded 253% a year earlier.
• Minor pointNon-performing assets reached $5.4 million, up $647 thousand quarterly but down $318 thousand year over year.
• Minor pointLoans 30–89 days past due reached $3.4 million, above $2.5 million quarterly but below $3.6 million yearly.
• Minor pointEstimated uninsured deposits excluding collateralized municipal deposits rose to $483.3 million, versus $466.9 million quarterly and $473.4 million yearly.
• Minor pointHealth care provider loans included $1.4 million on non-accrual, with $1.0 million specifically reserved.
• Minor pointThird-quarter income tax expense increased to $1.7 million from $1.4 million in the second quarter.

News Explained

The company says its branch-optimization process is complete: three offices were consolidated and low-volume off-site ATMs discontinued in the third quarter of 2026; together with the two North Carolina office sales completed in early October, the release states a year-end banking-office count of 28, down from 33.

Key Figures

Consolidated net income: $6.9 million Basic and diluted EPS: $0.76 per share Consolidated net income: $17.5 million +3 more

Consolidated net income

$6.9 million

Three months ended September 30, 2026

Basic and diluted EPS

$0.76 per share

Three months ended September 30, 2026

Consolidated net income

$17.5 million

Nine months ended September 30, 2026

Basic and diluted EPS

$1.94 basic; $1.93 diluted

Nine months ended September 30, 2026

Tax-equivalent net interest margin

4.38%

Third quarter 2026; compared with 3.84% a year earlier

Net loan growth

$13.6 million

Third quarter 2026; 3.7% annualized growth rate

Historical Context

2 past events · Latest: Jul 29

2 events

1. Jul 29

   Q2 earnings

   24h Move

   +3.6%

   Reported Q2 net income and EPS growth alongside higher margin and loan growth.

2. Apr 30

   Q1 earnings

   24h Move

   -4.4%

   Reported Q1 net income and EPS, with higher loan growth and lower non-performing assets.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

net interest margin, acquisition accounting, non-performing assets, net charge-offs, +1 more

5 terms

net interest margin financial

"the Company’s net interest margin (FTE)(1) for the third quarter"

Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.

acquisition accounting financial

"impact of acquisition accounting fair value adjustments"

Accounting method used when one company obtains control of another (a business combination) that requires the acquirer to measure and record the acquired business’s identifiable assets, liabilities and any noncontrolling interest at their fair values on the acquisition date, recognize the consideration transferred, and record any excess of purchase price over fair value of net identifiable assets as goodwill. Acquisition accounting (governed by standards such as ASC 805 under U.S. GAAP and IFRS 3) also sets rules for measuring contingent consideration, allocating purchase price to acquired intangible assets, consolidating the target’s results from the acquisition date forward, and subsequent accounting (for example, goodwill is not amortized but tested for impairment under these standards).

non-performing assets financial

"non-performing assets at 0.26% of total assets"

Loans or other credit exposures that are not producing expected income because borrowers have stopped making scheduled payments for a significant period (commonly around 90 days). Think of it like a business lending money that has gone quiet — the cash flow stops while the lender still carries the debt on its books. High levels of non-performing assets matter to investors because they reduce a lender’s earnings, tie up capital that could be used for growth, and signal higher risk of future losses.

net charge-offs financial

"Net charge-offs totaled $594 thousand in the third quarter"

Net charge-offs are the amount of loans or credit a lender removes from its books as uncollectible after subtracting any money later recovered from previously written-off accounts. Think of it like a store writing off unpaid tabs but getting back a few dollars later — the net figure shows the real loss. Investors watch this to judge a lender’s loan quality, future profits and how much capital may be needed to cover bad debts.

gaap financial

"prepared in accordance with U.S. generally accepted accounting principles (“GAAP”)"

GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.

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STRASBURG, Va., Oct. 23, 2026 (GLOBE NEWSWIRE) -- First National Corporation (the “Company” or “First National”) (NASDAQ: FXNC), the bank holding company of First Bank (the “Bank”), reported consolidated net income of $6.9 million and basic and diluted earnings per common share of $0.76, for the three months ended September 30, 2026. The Company reported consolidated net income of $17.5 million and basic and diluted earnings per common share of $1.94 and $1.93, respectively, for the nine months ended September 30, 2026. 

"We are extremely pleased with our record financial performance for the quarter and the year. Organic loan growth continued in the third quarter with strong new loan production in all our markets. The improved net interest margin, excellent asset quality, and expense management drove the financial performance in the third quarter. Our branch optimization process was completed as we closed and consolidated three banking offices and closed our off-site ATMs in the third quarter. In early October we completed the sale of our two North Carolina banking offices and will book a gain in the fourth quarter," said Scott C. Harvard, President and Chief Executive Officer of First National Corporation.

FINANCIAL HIGHLIGHTS FOR THIRD QUARTER OF 2026

• Basic earnings per share of  $0.76 per share, compared to $0.62 one year prior, and $0.64 in the previous quarter
• Return on average assets of  1.32%  compared to 1.09% one year prior, and 1.11% in the previous quarter
• Return on average equity of  14.02% compared to 12.43% one year prior, and 12.03% in the previous quarter
• Tax equivalent net interest margin⁽¹⁾ of  4.38%, up from 3.84% one year prior, and 4.15% in the previous quarter
• Net loan growth of $13.6 million for the quarter, a 3.7% annualized growth rate
• Asset quality remained sound with non-performing assets at 0.26%  of total assets
• Noninterest bearing deposits of $520.1 million, or 28% of deposits, contributed to our low funding cost
  
  

FINANCIAL HIGHLIGHTS FOR YEAR TO DATE 2026

• Basic earnings per share of $1.94 per share, compared to $1.36 one year prior
• Adjusted basic earnings per share ⁽¹⁾ of $1.94 per share, compared to $1.51 one year prior
• Return on average assets of 1.15% compared to 0.81% one year prior
• Return on average equity of 12.26% compared to 9.47% one year prior
• Tax equivalent net interest margin⁽¹⁾ of 4.19%, up from 3.85% one year prior
• Net loan growth of $67.3 million for the year, a 4.7% growth rate
  
  

NET INTEREST INCOME

For the third quarter of 2026, the Company’s net interest margin fully tax equivalent ("FTE")⁽¹⁾ was 4.38%, compared to 4.15% for the second quarter of 2026 and 3.84% in the third quarter of 2025. The Company’s net interest margin (FTE)⁽¹⁾ for the third quarter of 2026 includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was $867 thousand, an 18-basis point incremental increase to the net interest margin for the third quarter ended September 30, 2026. Prior period acquisition accounting resulted in net accretion income of $245 thousand, or a 5-basis point incremental increase to the net interest margin for the quarter ended June 30, 2026, and net accretion income of $43 thousand, with no incremental impact to the net interest margin for the third quarter ended September 30, 2025. The increase in net accretion income as compared to prior quarters was driven by payoffs on purchased loans.

Earning asset yields for the third quarter of 2026 increased 24 basis points to 5.55% compared to the second quarter of 2026. For the third quarter of 2026, net interest income FTE⁽¹⁾ was $21.3 million, an increase of $1.2 million from $20.1 million in the second quarter of 2026 due to improved yields and interest income related to acquisition accounting.

The impact of acquisition accretion and amortization is reflected in the following table (dollars in thousands):

		For the Three Months Ended												For the Nine Months Ended
		Sept 30, 2026				Jun 30, 2026				Sept 30, 2025				Sept 30, 2026				Sept 30, 2025
Loans		$	958			$	334			$	81			$	1,586			$	1,011
Deposits			(14	)			(14	)			55				(38	)			218
Borrowings			(77	)			(75	)			(93	)			(225	)			(279	)
		$	867			$	245			$	43			$	1,323			$	950

ALLOWANCE AND PROVISION FOR CREDIT LOSSES

The Company recorded no net provision for credit losses in the third quarter of 2026, compared to $426 thousand for the second quarter of 2026. The third quarter provision was comprised of a $64 thousand provision for credit losses on loans, a $79 thousand reduction in provision for credit losses on unfunded commitments, and a $15 thousand provision for credit losses on securities.  Net charge-offs totaled $594 thousand in the third quarter of 2026, compared to net charge-offs of $105 thousand in the second quarter of 2026 and net charge-offs of $939 thousand in the third quarter of 2025.

The allowance for credit losses on loans totaled $14.4 million, or 0.96% of total loans on September 30, 2026, compared to $14.9 million, or 1.00% of total loans on June 30, 2026, and $14.4 million, or 1.01% of total loans on September 30, 2025. The allowance for credit losses to total loans decreased from the prior period and prior year due to declines in specific reserves on individually analyzed loans and lower calculated reserves on pooled loans. The allowance for credit losses to non-performing assets coverage was 268% on September 30, 2026, compared to 315% on June 30, 2026, and 253% on September 30, 2025. 

NONINTEREST INCOME AND EXPENSE

Noninterest income increased $66 thousand to $4.1 million for the third quarter of 2026 from $4.0 million in the prior quarter. The increase in noninterest income includes increases in wealth management fees, income from bank owned life insurance, and gains on sale of loans held for sale, offset by decreases in brokered mortgage fees, loss on disposals, and other operating income compared to the prior quarter.

Noninterest expense increased $259 thousand to $16.7 million for the third quarter of 2026 from $16.4 million in the prior quarter. The increase in noninterest expense includes increases in employee benefit expense related to our above target net income as well as other real estate owned expense, offset by decreases in marketing expense, legal and professional fees, and other operating expense.

Two banking offices in Roanoke Rapids and Louisburg, North Carolina, including most of the deposit and loan accounts associated with those offices were sold in early October. The company anticipates a one-time gain on the sale of the offices in the fourth quarter of 2026.  The Bank consolidated three additional banking offices and discontinued low-volume ATMs at non-branch locations during the third quarter of 2026. The consolidation resulted in other real estate owned expense of $212 thousand in the third quarter. These two closed banking offices are carried as our only other real estate owned and as non-performing assets. The sale and consolidation combined will reduce the number of banking offices from 33 to 28 by year end. The goals of these branch optimization actions are to streamline operations, improve future profitability and allocate resources to faster growing markets. 

INCOME TAXES

Income tax expense was $1.7 million for the third quarter of 2026, compared to $1.4 million for the second quarter of 2026. The effective tax rate of 19.7% for the third quarter of 2026 increased slightly from 19.5% in the second quarter of 2026 due to changes in permanent tax differences.

BALANCE SHEET

On September 30, 2026, total assets were $2.075 billion, an increase of $44.1 million or 2.2% from September 30, 2025. Total assets were consistent with the prior quarter with the increase in loan growth offset by decreases in cash and cash equivalents and investment securities, and the increase from the prior year was driven by loan growth funded by decreases in cash and cash equivalents and securities held to maturity.

On September 30, 2026, loans held for investment ("LHFI") net of allowance totaled $1.486 billion, an increase of $13.4 million or 3.6% annualized from $1.472 billion on June 30, 2026, and an increase of $67.3 million or 4.7% from $1.419 billion on September 30, 2025. Net loan growth in the third quarter and for the year has been driven by increased production from newly hired bankers along with our continued focus on relationship banking. 

On September 30, 2026, total investments were $306.8 million, a decrease of $16.0 million or 5.0% from June 30, 2026, and an increase of $1.3 million or 0.4% from September 30, 2025. Available for sale ("AFS") securities totaled $218.7 million on September 30, 2026, and $227.8 million on June 30, 2026, and $196.5 million on September 30, 2025. The increase compared to the prior year was driven by security purchases exceeding portfolio cashflows and utilization of excess cash. Total net unrealized losses on the AFS securities portfolio were $21.4 million on September 30, 2026, compared to $15.8 million on June 30, 2026, and $15.4 million on September 30, 2025. Held to maturity securities are carried at amortized cost and totaled $82.6 million on September 30, 2026, $89.4 million on June 30, 2026, and $104.6 million on September 30, 2025.

On September 30, 2026, total deposits were $1.829 billion, a decrease of $2.4 million or 0.5% annualized from the prior quarter, and an increase of $19.2 million or 1.1% from September 30, 2025. Average deposit balances for the third quarter declined $17.6 million or 3.8% annualized. Overall, deposit balances were relatively stable in comparison with the prior quarter and the prior year with decreases primarily in interest-bearing demand deposits. There were $25.0 million in other borrowings with the Federal Home Loan Bank on September 30, 2026 and June 30, 2026 and no borrowings on September 30, 2025.

LIQUIDITY

Liquidity sources available to the Bank, including interest-bearing deposits in banks, unpledged securities available for sale, at fair value, and available lines of credit totaled $721.6 million on September 30, 2026, $747.8 million on June 30, 2026, and $676.1 million on September 30, 2025.

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 $575.8 million on September 30, 2026, $573.8 million on June 30, 2026, and $555.0 million on September 30, 2025. Excluding municipal deposits that have collateral pledged, the estimated amount of uninsured customer deposits totaled $483.3 million on September 30, 2026, $466.9 million on June 30, 2026, and $473.4 million on September 30, 2025.

ASSET QUALITY

Non-performing assets ("NPAs") increased slightly from the prior period and improved from the prior year as previously reserved loans were charged off since the third quarter of 2025. Management classifies NPAs as non-accrual loans and other real estate owned ("OREO"). The Bank had $747 thousand in OREO on September 30, 2026, and no OREO on June 30, 2026 or September 30, 2025. The OREO increase is from the carrying values of two closed banking offices driven by the one-time event of the branch consolidation. Non-accrual loans as a percentage of total loans decreased from prior period and prior year to 0.31% on September 30, 2026. NPAs increased by $647 thousand to $5.4 million on September 30, 2026, compared to $4.7 million on June 30, 2026, but decreased by $318 thousand from $5.7 million on September 30, 2025. 

Loans past due over 90 days or more and still accruing interest were $0 on September 30, 2026 and on June 30, 2026, and $388 thousand on September 30, 2025. Loans past-due 30-89 days and still accruing interest increased to $3.4 million, or 0.23% of total loans on September 30, 2026, $2.5 million, or 0.17% of total loans on June 30, 2026, and $3.6 million, or 0.25%, of total loans on September 30, 2025.  The health care provider portfolio balance continues to decline with $7.9 million in loan balances and $3.0 million in remaining unamortized premiums. The portfolio has loans totaling $1.4 million currently on non-accrual that are specifically reserved at $1.0 million. 

CAPITAL

During the third quarter of 2026, the Company declared and paid cash dividends of $0.17 per common share, compared to $0.17 in the second quarter of 2026 and $0.155 in the third quarter of 2025. Tangible book value per share⁽¹⁾ grew to $19.94 on September 30, 2026, from $19.71 per share on June 30, 2026, and $18.26 on September 30, 2025.

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

First National Corporation (2)

​

Sept 30, 2026

​

​

Jun 30, 2026

​

​

Sept 30, 2025

​

Total risk-based capital ratio

​

​

15.14

%

​

​

14.81

%

​

​

15.15

%

Tier 1 risk-based capital ratio

​

​

13.59

%

​

​

13.22

%

​

​

12.83

%

Common equity Tier 1 capital ratio

​

​

12.98

%

​

​

12.60

%

​

​

12.20

%

Leverage ratio

​

​

10.00

%

​

​

9.62

%

​

​

9.24

%

Tangible common equity to tangible assets (1)

​

​

8.77

%

​

​

8.65

%

​

​

8.17

%

Tangible book value per share (1)

​

$

19.94

​

​

$

19.71

​

​

$

18.26

​

​

​

​

​

​

​

​

​

​

​

​

​

​

First Bank

​

Sept 30, 2026

​

​

Jun 30, 2026

​

​

Sept 30, 2025

​

Total risk-based capital ratio (3)

​

​

14.19

%

​

​

13.91

%

​

​

13.40

%

Tier 1 risk-based capital ratio (3)

​

​

13.20

%

​

​

12.87

%

​

​

12.36

%

Common equity Tier 1 capital ratio (3)

​

​

13.20

%

​

​

12.87

%

​

​

12.36

%

Leverage ratio (3)

​

​

9.77

%

​

​

9.44

%

​

​

8.88

%

Tangible common equity to tangible assets (1)

​

​

8.82

%

​

​

8.75

%

​

​

8.18

%

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 bankers, consumer and business mobile banking platforms, a network of ATMs located throughout its market area, a loan production office, a customer service center in a retirement community, and twenty-eight banking office locations located throughout the Shenandoah Valley, the Roanoke Valley, the Richmond MSA, and the south-central regions of Virginia. 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 a title insurance company.

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 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 fully tax-equivalent 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, strategies, expectations and intentions, including with respect to the Company's branch sales and other branch optimization initiatives, and other statements that are not historical facts, and other statements identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” "will," "continue," and “projects,” as well as similar expressions. 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 the Company will achieve the anticipated benefits of its plans and strategies or that its 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 and speak only as of the date of this release. The Company undertakes no obligations to update or revise any forward-looking statement, except as required by law. For details on factors that could affect expectations, future events, or results, see the risk factors and other cautionary language included in First National Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025 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) 545-7695		(540) 465-6130
sharvard@fbvirginia.com		bschwartz@fbvirginia.com

FIRST NATIONAL CORPORATION Performance Summary (in thousands)
(unaudited)				​				​				​				​				​
		For the Three Months Ended												For the Nine Months Ended
		Sept 30, 2026				Jun 30, 2026				Sept 30, 2025				Sept 30, 2026				Sept 30, 2025
Income Statement				​				​				​				​				​
Interest and dividend income				​				​				​				​				​
Interest and fees on loans		$	23,496			$	22,145			$	21,430			$	66,658			$	63,661
Interest on deposits in banks			1,169			$	1,288				1,733				3,627				5,295
Interest on federal funds sold			—				—				1				—				40
Taxable interest on securities			1,899				1,843				1,562				5,528				4,189
Tax-exempt interest on securities			292				293				296				877				894
Dividends			64				64				65				192				194
Total interest and dividend income		$	26,920			$	25,633			$	25,087			$	76,882			$	74,273
Interest expense				​				​				​				​				​
Interest on deposits		$	5,471			$	5,410			$	6,246			$	16,295			$	18,363
Interest on subordinated debt			171				170				479				509				1,414
Interest on junior subordinated debt			69				69				67				204				199
Interest on other borrowings			3				3				—				11				3
Total interest expense		$	5,714			$	5,652			$	6,792			$	17,019			$	19,979
Net interest income		$	21,206			$	19,981			$	18,295			$	59,863			$	54,294
Provision for credit losses			—				426				193				876				1,936
Net interest income after provision for credit losses		$	21,206			$	19,555			$	18,102			$	58,987			$	52,358
Noninterest income				​				​				​				​				​
Service charges on deposit accounts		$	940			$	913			$	985			$	2,777			$	3,018
ATM and check card fees			1,143				1,155				1,336				3,345				3,460
Wealth management fees			1,009				902				910				2,822				2,675
Fees for other customer services			334				295				407				916				895
Brokered mortgage fees			79				153				166				347				459
Income from bank owned life insurance			289				241				284				789				761
Net (loss) gains on securities available for sale			—				—				—				8				—
Net gains on sale of loans held for sale			46				4				5				51				5
Bargain purchase gain			—				—				304				—				304
Net gain on subordinated debt payoff			—				—				—				—				80
(Loss) gain on disposal of premises and equipment			(12	)			56				—				44				—
Other operating income			256				299				103				827				343
Total noninterest income		$	4,084			$	4,018			$	4,500			$	11,926			$	12,000
Noninterest expense				​				​				​				​				​
Salaries and employee benefits		$	9,341			$	9,006			$	8,487			$	27,329			$	25,209
Occupancy			1,002				974				1,025				2,948				3,038
Equipment			1,067				1,131				1,056				3,291				3,138
Marketing			353				476				324				1,170				830
Supplies			199				192				158				537				573
Legal and professional fees			646				742				660				2,076				1,775
ATM and check card expense			629				608				569				1,808				1,545
FDIC assessment			254				224				305				705				1,034
Bank franchise tax			395				395				350				1,170				1,015
Data processing expense			435				435				495				1,264				1,761
Core deposit intangible amortization expense			434				433				442				1,301				1,325
Other real estate owned expense (income), net			212				—				—				212				(7	)
Net loss on disposal of premises and equipment			—				—				(23	)			—				(16	)
Merger expense			—				—				—				—				2,032
Other operating expense			1,729				1,821				1,934				5,304				6,056
Total noninterest expense		$	16,696			$	16,437			$	15,782			$	49,115			$	49,308
Income before income taxes		$	8,594			$	7,136			$	6,820			$	21,798			$	15,050
Income tax expense			1,694				1,393				1,270				4,268				2,851
Net income		$	6,900			$	5,743			$	5,550			$	17,530			$	12,199

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

(unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

At or for the Three Months Ended

​

​

At or for the Nine Months Ended

​

​

​

Sept 30, 2026

​

​

Jun 30, 2026

​

​

Sept 30, 2025

​

​

Sept 30, 2026

​

​

Sept 30, 2025

​

Common Share and Per Common Share Data

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Earnings per common share, basic

​

$

0.76

​

​

$

0.64

​

​

$

0.62

​

​

$

1.94

​

​

$

1.36

​

Adjusted earnings per common share, basic (1)

​

$

0.76

​

​

$

0.64

​

​

$

0.58

​

​

$

1.94

​

​

$

1.51

​

Weighted average shares, basic

​

​

9,050,059

​

​

​

9,041,314

​

​

​

8,999,153

​

​

​

9,041,056

​

​

​

8,988,692

​

Earnings per common share, diluted

​

$

0.76

​

​

$

0.63

​

​

$

0.62

​

​

$

1.93

​

​

$

1.35

​

Adjusted earnings per common share, diluted (1)

​

$

0.76

​

​

$

0.63

​

​

$

0.58

​

​

$

1.93

​

​

$

1.50

​

Weighted average shares, diluted

​

​

9,084,052

​

​

​

9,068,347

​

​

​

9,023,185

​

​

​

9,066,673

​

​

​

9,010,432

​

Shares outstanding at period end

​

​

9,057,224

​

​

​

9,042,629

​

​

​

9,009,209

​

​

​

9,057,224

​

​

​

9,009,209

​

Tangible book value per share at period end (1)

​

$

19.94

​

​

$

19.71

​

​

$

18.26

​

​

$

19.94

​

​

$

18.26

​

Market price per share at period end

​

$

29.38

​

​

$

30.02

​

​

$

22.68

​

​

$

29.38

​

​

$

22.68

​

Cash dividends declared

​

$

0.170

​

​

$

0.170

​

​

$

0.155

​

​

$

0.510

​

​

$

0.465

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Key Performance Ratios

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Return on average assets (4)

​

​

1.32

%

​

​

1.11

%

​

​

1.09

%

​

​

1.15

%

​

​

0.81

%

Adjusted return on average assets (1)(4)

​

​

1.32

%

​

​

1.11

%

​

​

1.03

%

​

​

1.15

%

​

​

0.90

%

Return on average equity (4)

​

​

14.02

%

​

​

12.03

%

​

​

12.43

%

​

​

12.26

%

​

​

9.47

%

Adjusted return on average equity (1)(4)

​

​

14.02

%

​

​

12.03

%

​

​

11.75

%

​

​

12.26

%

​

​

10.50

%

Net interest margin (4)

​

​

4.36

%

​

​

4.13

%

​

​

3.83

%

​

​

4.17

%

​

​

3.83

%

Net interest margin fully tax equivalent (1)(4)

​

​

4.38

%

​

​

4.15

%

​

​

3.84

%

​

​

4.19

%

​

​

3.85

%

Efficiency ratio (1)

​

​

63.21

%

​

​

66.59

%

​

​

67.97

%

​

​

66.11

%

​

​

69.46

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Balances

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Average assets

​

$

2,065,812

​

​

$

2,079,467

​

​

$

2,022,958

​

​

$

2,047,838

​

​

$

2,021,263

​

Average earning assets

​

​

1,930,945

​

​

​

1,941,385

​

​

​

1,897,328

​

​

​

1,925,959

​

​

​

1,892,933

​

Average deposits

​

​

1,843,968

​

​

​

1,861,554

​

​

​

1,806,310

​

​

​

1,829,463

​

​

​

1,808,016

​

Average noninterest deposits to total average deposits

​

​

28.98

%

​

​

29.15

%

​

​

29.13

%

​

​

28.32

%

​

​

29.35

%

Average shareholders’ equity

​

$

195,262

​

​

$

191,465

​

​

$

177,130

​

​

​

191,909

​

​

$

172,297

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Asset Quality

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Allowance for credit losses on loans to nonperforming assets

​

​

267.70

%

​

​

315.45

%

​

​

253.37

%

​

​

267.70

%

​

​

253.37

%

Allowance for credit losses on loans to period end loans

​

​

0.96

%

​

​

1.00

%

​

​

1.01

%

​

​

0.96

%

​

​

1.01

%

Nonperforming assets to period end loans

​

​

0.36

%

​

​

0.32

%

​

​

0.40

%

​

​

0.36

%

​

​

0.40

%

Nonperforming assets to total assets

​

​

0.26

%

​

​

0.23

%

​

​

0.28

%

​

​

0.26

%

​

​

0.28

%

Non-accrual loans to period end loans

​

​

0.31

%

​

​

0.32

%

​

​

0.40

%

​

​

0.31

%

​

​

0.40

%

Non-accrual loans to total assets

​

​

0.22

%

​

​

0.23

%

​

​

0.28

%

​

​

0.22

%

​

​

0.28

%

Loan charge-offs

​

$

728

​

​

$

266

​

​

$

1,027

​

​

$

1,703

​

​

$

4,052

​

Loan recoveries

​

​

134

​

​

​

161

​

​

​

88

​

​

​

462

​

​

​

264

​

Net charge-offs

​

​

594

​

​

​

105

​

​

​

939

​

​

​

1,241

​

​

​

3,788

​

Non-accrual loans

​

​

4,637

​

​

​

4,737

​

​

​

5,702

​

​

​

4,637

​

​

​

5,702

​

Other real estate owned, net

​

​

747

​

​

​

—

​

​

​

—

​

​

​

747

​

​

​

—

​

Nonperforming assets

​

​

5,384

​

​

​

4,737

​

​

​

5,702

​

​

​

5,384

​

​

​

5,702

​

Loans 30 to 89 days past due, accruing

​

​

3,408

​

​

​

2,534

​

​

​

3,580

​

​

​

3,408

​

​

​

3,580

​

Loans over 90 days past due, accruing

​

​

—

​

​

​

—

​

​

​

388

​

​

​

—

​

​

​

388

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Capital Ratios (5)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total capital

​

$

215,522

​

​

$

210,436

​

​

$

194,910

​

​

$

215,522

​

​

$

194,910

​

Tier 1 capital

​

​

200,457

​

​

​

194,778

​

​

​

179,781

​

​

​

200,457

​

​

​

179,781

​

Common equity Tier 1 capital

​

​

200,457

​

​

​

194,778

​

​

​

179,781

​

​

​

200,457

​

​

​

179,781

​

Total capital to risk-weighted assets (3)

​

​

14.19

%

​

​

13.91

%

​

​

13.40

%

​

​

14.19

%

​

​

13.40

%

Tier 1 capital to risk-weighted assets (3)

​

​

13.20

%

​

​

12.87

%

​

​

12.36

%

​

​

13.20

%

​

​

12.36

%

Common equity Tier 1 capital / risk-weighted assets (3)

​

​

13.20

%

​

​

12.87

%

​

​

12.36

%

​

​

13.20

%

​

​

12.36

%

Leverage ratio (3)

​

​

9.77

%

​

​

9.44

%

​

​

8.88

%

​

​

9.77

%

​

​

8.88

%

FIRST NATIONAL CORPORATION Performance Summary (in thousands)
(unaudited)				​				​				​				​				​
		For the Period Ended
		Sept 30, 2026				Jun 30, 2026				Mar 31, 2026				Dec 31, 2025				Sept 30, 2025
Balance Sheet				​				​				​				​				​
Cash and due from banks		$	25,996			$	23,294			$	22,624			$	20,836			$	23,716
Interest-bearing deposits in banks			141,580				142,854				165,185				140,074				165,601
Cash and cash equivalents		$	167,576			$	166,148			$	187,809			$	160,910			$	189,317
Securities available for sale, at fair value			218,668				227,792				217,655				217,538				196,476
Securities held to maturity, at amortized cost (net of allowance for credit losses)			82,513				89,392				101,261				102,872				104,608
Restricted securities, at cost			5,642				5,642				5,642				5,624				4,436
Loans held for sale			262				—				—				—				—
Loans, net of allowance for credit losses			1,485,813				1,472,455				1,449,708				1,435,026				1,418,750
Other real estate owned, net			747				—				—				—				—
Premises and equipment, net			33,162				34,021				34,327				34,561				34,107
Accrued interest receivable			6,732				6,517				6,656				6,467				6,238
Bank owned life insurance			39,371				39,077				38,837				38,577				38,652
Goodwill			3,030				3,030				3,030				3,030				3,030
Core deposit intangibles, net			11,918				12,352				12,785				13,219				13,661
Other assets			19,426				19,219				18,113				20,154				21,479
Total assets		$	2,074,860			$	2,075,645			$	2,075,823			$	2,037,978			$	2,030,754
				​				​				​				​				​
Noninterest-bearing demand deposits		$	520,058			$	520,548			$	524,323			$	509,874			$	511,482
Savings and interest-bearing demand deposits			951,409				953,639				953,399				926,579				931,241
Time deposits			357,273				356,943				359,570				363,095				366,860
Total deposits		$	1,828,740			$	1,831,130			$	1,837,292			$	1,799,548			$	1,809,583
Other borrowings			25,000				25,000				25,000				25,000				—
Subordinated debt, net			8,537				8,460				8,385				8,312				21,241
Junior subordinated debt			9,279				9,279				9,279				9,279				9,279
Accrued interest payable and other liabilities			7,751				8,188				7,305				9,643				9,442
Total liabilities		$	1,879,307			$	1,882,057			$	1,887,261			$	1,851,782			$	1,849,545
				​				​				​				​				​
Common stock			11,320				11,303				11,301				11,282				11,262
Surplus			79,284				78,667				78,400				78,216				78,187
Retained earnings			121,854				116,494				112,288				108,937				104,964
Accumulated other comprehensive (loss), net			(16,905	)			(12,876	)			(13,427	)			(12,239	)			(13,204	)
Total shareholders’ equity		$	195,553			$	193,588			$	188,562			$	186,196			$	181,209
Total liabilities and shareholders’ equity		$	2,074,860			$	2,075,645			$	2,075,823			$	2,037,978			$	2,030,754
				​				​				​				​				​
Loan Portfolio				​				​				​				​				​
Real estate loans:				​				​				​				​				​
Construction and land development		$	99,991			$	113,289			$	97,487			$	88,424			$	78,470
Secured by farmland			10,199				10,348				11,554				11,879				12,812
Secured by 1-4 family residential			526,563				522,763				520,821				527,282				533,458
Other real estate loans			739,805				709,772				701,013				685,099				671,723
Commercial and industrial loans (except those secured by real estate)			106,134				113,205				114,517				117,256				117,047
Consumer installment loans			7,673				8,105				8,060				8,419				8,358
Deposit overdrafts			647				478				547				543				535
All other loans			9,214				9,438				10,407				10,843				10,794
Total loans		$	1,500,226			$	1,487,398			$	1,464,406			$	1,449,745			$	1,433,197
Allowance for credit losses			(14,413	)			(14,943	)			(14,698	)			(14,719	)			(14,447	)
Loans, net		$	1,485,813			$	1,472,455			$	1,449,708			$	1,435,026			$	1,418,750

FIRST NATIONAL CORPORATION Average Balances, Yields and Rates Paid (in thousands)
(unaudited)		Three Months Ended
		September 30, 2026										June 30, 2026										September 30, 2025
		Average Balance				Interest Income/ Expense			Yield/ Rate (7)			Average Balance				Interest Income/ Expense			Yield/ Rate (7)			Average Balance				Interest Income/ Expense			Yield/ Rate (7)
Assets				​				​		​				​				​		​				​				​		​
Securities:				​				​		​				​				​		​				​				​		​
Taxable		$	250,906			$	1,899		3.00	%		$	256,750			$	1,843		2.88	%		$	242,797			$	1,562		2.55	%
Tax-exempt (1)			62,745				370		2.33	%			62,353				372		2.39	%			51,493				375		2.89	%
Restricted			4,468				64		5.66	%			4,468				64		5.76	%			4,436				65		5.80	%
Total securities		$	318,119			$	2,333		2.91	%		$	323,571			$	2,279		2.82	%		$	298,726			$	2,002		2.66	%
Loans:				​				​		​				​				​		​				​				​		​
Taxable		$	1,483,047			$	23,452		6.27	%		$	1,473,064			$	22,103		6.02	%		$	1,437,946			$	21,386		5.90	%
Tax-exempt (1)			3,463				55		6.34	%			3,460				54		6.31	%			3,473				55		6.29	%
Total loans		$	1,486,510			$	23,507		6.27	%		$	1,476,524			$	22,157		6.02	%		$	1,441,419			$	21,441		5.90	%
Federal funds sold			13				—		—				1				—		—				55				—		—
Interest-bearing deposits with other institutions			126,303				1,169		3.67	%			141,289				1,287		3.66	%			157,128				1,734		4.38	%
Total earning assets		$	1,930,945			$	27,009		5.55	%		$	1,941,385			$	25,723		5.31	%		$	1,897,328			$	25,177		5.26	%
Less: allowance for credit losses on loans			(15,193	)				​		​			(15,039	)				​		​			(15,378	)				​		​
Total non-earning assets			150,060					​		​			153,121					​		​			141,008					​		​
Total assets		$	2,065,812					​		​		$	2,079,467					​		​		$	2,022,958					​		​
Liabilities and Shareholders’ Equity				​				​		​				​				​		​				​				​		​
Interest bearing deposits:				​				​		​				​				​		​				​				​		​
Checking		$	409,383			$	1,138		1.10	%		$	416,041			$	1,101		1.06	%		$	376,344			$	1,256		1.32	%
Regular savings			210,192				173		0.33	%			212,451				171		0.32	%			209,909				208		0.39	%
Money market accounts			332,549				1,582		1.89	%			335,904				1,573		1.88	%			330,115				1,882		2.26	%
Time deposits			357,452				2,578		2.86	%			354,558				2,565		2.90	%			363,702				2,900		3.16	%
Total interest-bearing deposits		$	1,309,576			$	5,471		1.66	%		$	1,318,954			$	5,410		1.65	%		$	1,280,070			$	6,246		1.94	%
Federal funds purchased			5				—		—				2				—		—				—				—		—
Subordinated debt			8,498				171		8.02	%			8,422				170		8.09	%			21,304				479		8.92	%
Junior subordinated debt			9,279				69		2.95	%			9,279				69		2.96	%			9,279				67		2.83	%
Other borrowings			272				3		4.19	%			275				3		3.93	%			—				—		—
Total interest-bearing liabilities		$	1,327,630			$	5,714		1.71	%		$	1,336,932			$	5,652		1.70	%		$	1,310,653			$	6,792		2.06	%
Non-interest bearing liabilities				​				​		​				​				​		​				​				​		​
Demand deposits			534,392					​		​			542,600					​		​			526,240					​		​
Other liabilities			8,528					​		​			8,470					​		​			8,935					​		​
Total liabilities		$	1,870,550					​		​		$	1,888,002					​		​		$	1,845,828					​		​
Shareholders’ equity			195,262					​		​			191,465					​		​			177,130					​		​
Total liabilities and Shareholders’ equity		$	2,065,812					​		​		$	2,079,467					​		​		$	2,022,958					​		​
Net interest income (1)				​		$	21,295			​				​		$	20,071			​				​		$	18,385			​
Interest rate spread (1)				​				​	3.84	%				​				​	3.61	%				​				​	3.21	%
Cost of funds				​				​	1.22	%				​				​	1.21	%				​				​	1.47	%
Interest expense as a percent of average earning assets				​				​	1.17	%				​				​	1.17	%				​				​	1.42	%
Net interest margin FTE (1)				​				​	4.38	%				​				​	4.15	%				​				​	3.84	%

FIRST NATIONAL CORPORATION Average Balances, Yields and Rates Paid (in thousands)
(unaudited)		Nine Months Ended
		September 30, 2026										September 30, 2025
		Average Balance				Interest Income/ Expense			Yield / Rate (7)			Average Balance				Interest Income/ Expense			Yield / Rate (7)
Assets				​				​		​				​				​		​
Securities:				​				​		​				​				​		​
Taxable		$	255,719			$	5,528		2.90	%		$	227,643			$	4,189		2.46	%
Tax-exempt (1)			62,225				1,110		2.39	%			51,380				1,132		2.95	%
Restricted			4,467				192		5.78	%			4,353				194		5.96	%
Total securities		$	322,411			$	6,830		2.84	%		$	283,376			$	5,515		2.60	%
Loans:				​				​		​				​				​		​
Taxable		$	1,467,572			$	66,529		6.08	%		$	1,444,739			$	63,513		5.88	%
Tax-exempt (1)			3,468				163		6.34	%			4,117				187		6.08	%
Total loans		$	1,471,040			$	66,692		6.08	%		$	1,448,856			$	63,700		5.88	%
Federal funds sold			17				—		—				1,182				40		4.52	%
Interest-bearing deposits with other institutions			132,491				3,627		3.67	%			159,519				5,295		4.44	%
Total earning assets		$	1,925,959			$	77,149		5.38	%		$	1,892,933			$	74,550		5.27	%
Less: allowance for credit losses on loans			(15,091	)				​		​			(15,624	)				​		​
Total non-earning assets			136,970					​		​			143,954					​		​
Total assets		$	2,047,838					​		​		$	2,021,263					​		​
Liabilities and Shareholders’ Equity				​				​		​				​				​		​
Interest bearing deposits:				​				​		​				​				​		​
Checking		$	409,527			$	3,317		1.09	%		$	370,045			$	3,696		1.34	%
Regular savings			211,231				521		0.33	%			211,635				574		0.36	%
Money market accounts			333,069				4,647		1.87	%			332,864				5,713		2.30	%
Time deposits			357,495				7,810		2.93	%			362,860				8,380		3.09	%
Total interest-bearing deposits		$	1,311,322			$	16,295		1.67	%		$	1,277,404			$	18,363		1.92	%
Federal funds purchased			9				—		—				1				—		—
Subordinated debt			8,423				509		8.11	%			22,500				1,414		8.40	%
Junior subordinated debt			9,279				204		2.95	%			9,279				199		2.86	%
Other borrowings			366				11		4.01	%			92				3		4.63	%
Total interest-bearing liabilities		$	1,329,399			$	17,019		1.72	%		$	1,309,276			$	19,979		2.04	%
Non-interest bearing liabilities				​				​		​				​				​		​
Demand deposits			518,141					​		​			530,612					​		​
Other liabilities			8,389					​		​			9,078					​		​
Total liabilities		$	1,855,929					​		​		$	1,848,966					​		​
Shareholders’ equity			191,909					​		​			172,297					​		​
Total liabilities and Shareholders’ equity		$	2,047,838					​		​		$	2,021,263					​		​
Net interest income (1)				​		$	60,130			​				​		$	54,571			​
Interest rate spread (1)				​				​	3.66	%				​				​	3.23	%
Cost of funds				​				​	1.24	%				​				​	1.45	%
Interest expense as a percent of average earning assets				​				​	1.19	%				​				​	1.41	%
Net interest margin FTE (1)				​				​	4.19	%				​				​	3.85	%

FIRST NATIONAL CORPORATION Non-GAAP Reconciliation (in thousands, except share and per share data)
(unaudited)				​				​				​				​				​
		For the Three Months Ended												For the Nine Months Ended
		Sept 30, 2026				Jun 30, 2026				Sept 30, 2025				Sept 30, 2026				Sept 30, 2025
Operating Net Income				​				​				​				​				​
Net income (GAAP)		$	6,900			$	5,743			$	5,550			$	17,530			$	12,199
Add: Merger-related expenses			—				—				—				—				2,032
Subtract: Bargain purchase gain			—				—				(304	)			—				(304	)
Subtract: Tax effect of adjustment (6)			—				—				64				—				(327	)
Adjusted operating net income (non-GAAP)		$	6,900			$	5,743			$	5,310			$	17,530			$	13,600
				​				​				​				​				​
Adjusted Earnings Per Share, Basic				​				​				​				​				​
Weighted average shares, basic			9,050,059				9,041,314				8,999,153				9,041,056				8,988,692
Basic earnings per share (GAAP)		$	0.76			$	0.64			$	0.62			$	1.94			$	1.36
Adjusted earnings per share, basic (non-GAAP)		$	0.76			$	0.64			$	0.58			$	1.94			$	1.51
				​				​				​				​				​
Adjusted Earnings Per Share, Diluted				​				​				​				​				​
Weighted average shares, diluted			9,084,052				9,068,347				9,023,185				9,066,673				9,010,432
Diluted earnings per share (GAAP)		$	0.76			$	0.63			$	0.62			$	1.93			$	1.35
Adjusted diluted earnings per share (non-GAAP)		$	0.76			$	0.63			$	0.58			$	1.93			$	1.50
				​				​				​				​				​
Adjusted Pre-Provision, Pre-Tax Earnings				​				​				​				​				​
Net interest income		$	21,206			$	19,981			$	18,295			$	59,863			$	54,294
Total noninterest income			4,084				4,018				4,500				11,926				12,000
Net revenue		$	25,290			$	23,999			$	22,795			$	71,789			$	66,294
Total noninterest expense			16,696				16,437				15,782				49,115				49,308
Pre-provision, pre-tax earnings (non-GAAP)		$	8,594			$	7,562			$	7,013			$	22,674			$	16,986
Add: Merger expenses			—				—				—				—				2,032
Subtract: Bargain purchase gain			—				—				(304	)			—				(304	)
Adjusted pre-provision, pre-tax earnings (non-GAAP)		$	8,594			$	7,562			$	6,709			$	22,674			$	18,714
				​				​				​				​				​
Adjusted Performance Ratios				​				​				​				​				​
Average assets		$	2,065,812			$	2,079,467			$	2,022,958			$	2,047,838			$	2,021,263
Return on average assets (GAAP)			1.32	%			1.11	%			1.09	%			1.15	%			0.81	%
Adjusted return on average assets (non-GAAP)			1.32	%			1.11	%			1.03	%			1.15	%			0.90	%
				​				​				​				​				​
Average shareholders’ equity		$	195,262			$	191,465			$	177,130			$	191,909			$	172,297
Return on average equity (GAAP)			14.02	%			12.03	%			12.43	%			12.26	%			9.47	%
Adjusted return on average equity (non-GAAP)			14.02	%			12.03	%			11.75	%			12.26	%			10.50	%
				​				​				​				​				​
Net Interest Margin				​				​				​				​				​
Net interest income		$	21,206			$	19,981			$	18,295			$	59,863			$	54,294
Tax-equivalent net interest income (non-GAAP)			21,295				20,071				18,385				60,130				54,571
Average earning assets			1,930,945				1,941,385				1,897,328				1,925,959				1,892,933
Net interest margin			4.36	%			4.13	%			3.83	%			4.17	%			3.83	%
Net interest margin fully tax equivalent (non-GAAP)			4.38	%			4.15	%			3.84	%			4.19	%			3.85	%

FIRST NATIONAL CORPORATION Non-GAAP Reconciliation (in thousands)
(unaudited)		For the Three Months Ended												For the Nine Months Ended
		Sept 30, 2026				Jun 30, 2026				Sept 30, 2025				Sept 30, 2026				Sept 30, 2025
Adjusted Operating Noninterest Expense				​				​				​				​				​
Total noninterest expense (GAAP)		$	16,696			$	16,437			$	15,782			$	49,115			$	49,308
Subtract: merger expenses			—				—				—				—				(2,032	)
Subtract: amortization expense			(434	)			(433	)			(442	)			(1,301	)			(1,325	)
Adjusted operating noninterest expense (non-GAAP)		$	16,262			$	16,004			$	15,340			$	47,814			$	45,951
				​				​				​				​				​
Efficiency Ratio				​				​				​				​				​
Total noninterest expense (GAAP)		$	16,696			$	16,437			$	15,782			$	49,115			$	49,308
Subtract/Add: other real estate owned (expense) income, net			(212	)			—				—				(212	)			7
Subtract: amortization of intangibles			(434	)			(433	)			(442	)			(1,301	)			(1,325	)
Add: gain on disposal of premises and equipment, net			—				—				9				—				16
Subtract: merger expenses			—				—				—				—				(2,032	)
Adjusted operating non-interest expense (non-GAAP)		$	16,050			$	16,004			$	15,349			$	47,602			$	45,974
Tax-equivalent net interest income (non-GAAP)		$	21,295			$	20,071			$	18,385			$	60,130			$	54,571
Total noninterest income (GAAP)			4,084				4,018				4,500				11,926				12,000
Add/Subtract: loss (gain) on disposal of premises and equipment			12				(56	)			—				(44	)			—
Subtract: net (gain) on subordinated debt payoff			—				—				—				—				(80	)
Subtract: bargain purchase gain			—				—				(304	)			—				(304	)
Subtract: securities (gains), net			—				—				—				(8	)			—
Adjusted income for efficiency ratio (non-GAAP)		$	25,391			$	24,033			$	22,581			$	72,004			$	66,187
				​				​				​				​				​
Efficiency ratio (non-GAAP)			63.21	%			66.59	%			67.97	%			66.11	%			69.46	%

FIRST NATIONAL CORPORATION Non-GAAP Reconciliation (in thousands, except share and per share data)
(unaudited)				​				​				​				​				​
		For the Three Months Ended												For the Nine Months Ended
		Sept 30, 2026				Jun 30, 2026				Sept 30, 2025				Sept 30, 2026				Sept 30, 2025
Tax-Equivalent Net Interest Income				​				​				​				​				​
GAAP measures:				​				​				​				​				​
Interest income – loans		$	23,496			$	22,145			$	21,430			$	66,658			$	63,661
Interest income – investments and other			3,424				3,488				3,657				10,224				10,612
Interest expense – deposits			(5,471	)			(5,410	)			(6,246	)			(16,295	)			(18,363	)
Interest expense – subordinated debt			(171	)			(170	)			(479	)			(509	)			(1,414	)
Interest expense – junior subordinated debt			(69	)			(69	)			(67	)			(204	)			(199	)
Interest expense – other borrowings			(3	)			(3	)			—				(11	)			(3	)
Net interest income		$	21,206			$	19,981			$	18,295			$	59,863			$	54,294
Non-GAAP measures:				​				​				​				​				​
Add: Tax benefit realized on non-taxable interest income – loans (6)		$	11			$	12			$	11			$	34			$	39
Add: Tax benefit realized on non-taxable interest income – municipal securities (6)			78				78				79				233				238
Tax benefit realized on non-taxable interest income		$	89			$	90			$	90			$	267			$	277
Tax-equivalent net interest income (non-GAAP)		$	21,295			$	20,071			$	18,385			$	60,130			$	54,571
				​				​				​				​				​
Tangible Common Equity and Tangible Assets				​				​				​				​				​
Total assets (GAAP)		$	2,074,860			$	2,075,645			$	2,030,754			$	2,074,860			$	2,030,754
Subtract: goodwill			(3,030	)			(3,030	)			(3,030	)			(3,030	)			(3,030	)
Subtract: core deposit intangibles, net			(11,918	)			(12,352	)			(13,661	)			(11,918	)			(13,661	)
Tangible assets (Non-GAAP)		$	2,059,912			$	2,060,263			$	2,014,063			$	2,059,912			$	2,014,063
				​				​				​				​				​
Total shareholders’ equity (GAAP)		$	195,553			$	193,588			$	181,209			$	195,553			$	181,209
Subtract: goodwill			(3,030	)			(3,030	)			(3,030	)			(3,030	)			(3,030	)
Subtract: core deposit intangibles, net			(11,918	)			(12,352	)			(13,661	)			(11,918	)			(13,661	)
Tangible common equity (Non-GAAP)		$	180,605			$	178,206			$	164,518			$	180,605			$	164,518
				​				​				​				​				​
Tangible common equity to tangible assets ratio (non-GAAP)			8.77	%			8.65	%			8.17	%			8.77	%			8.17	%
				​				​				​				​				​
Tangible Book Value Per Share				​				​				​				​				​
Tangible common equity (non-GAAP)		$	180,605			$	178,206			$	164,518			$	180,605			$	164,518
Common shares outstanding, ending			9,057,224				9,042,629				9,009,209				9,057,224				9,009,209
Tangible book value per share (non-GAAP)		$	19.94			$	19.71			$	18.26			$	19.94			$	18.26

(1)	Non-GAAP financial measure. See “Non-GAAP Financial Measures” and “Non-GAAP Reconciliation” tables for additional information and detailed calculations of adjustments.
(2)	The Company is a small bank holding company under applicable regulations and guidance and is not subject to the minimum regulatory capital regulations for bank holding companies. The regulatory requirements that apply to bank holding companies that are subject to regulatory capital requirements are presented below, along with the Company's capital ratios as determined under those regulations.
(3)	All ratios on September 30, 2026, are estimates and subject to change pending the Bank's filing of its Call Report. All other periods are presented as filed.
(4)	Ratios are annualized.
(5)	Capital ratios presented are for First Bank.
(6)	The tax rate utilized in calculating the tax benefit is 21%.
(7)	Yields and interest income are presented on a taxable-equivalent basis using the federal statutory tax rate of 21%.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were First National's third-quarter 2026 earnings?

First National earned $6.9 million in the third quarter of 2026, with basic and diluted earnings per common share of $0.76. Basic earnings per share compared with $0.62 a year earlier and $0.64 in the previous quarter.

How much did acquisition accounting contribute to First National's third-quarter 2026 margin?

Acquisition accounting contributed $867 thousand in net accretion income and added 18 basis points to third-quarter net interest margin. Purchased-loan payoffs drove the increase. The second quarter included $245 thousand and a 5-basis-point margin contribution; the year-earlier quarter included $43 thousand with no incremental margin impact.

Why did First National's non-performing assets increase in the third quarter of 2026?

Two closed banking offices added $747 thousand of other real estate owned, contributing to the quarterly increase in non-performing assets. Non-accrual loans as a percentage of total loans declined from both comparison periods. Non-performing assets include non-accrual loans and other real estate owned.

What is First National's remaining health care provider loan exposure?

The health care provider portfolio had $7.9 million in loan balances and $3.0 million in remaining unamortized premiums. The portfolio continued to decline and included $1.4 million of non-accrual loans with $1.0 million in specific reserves.

Why did First National sell and consolidate banking offices in 2026?

First National said the actions aim to streamline operations, improve future profitability and allocate resources to faster-growing markets.

The bank consolidated three offices and discontinued low-volume off-site ATMs during the third quarter. The two North Carolina offices sold in early October included most associated deposit and loan accounts.