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First National (NASDAQ: FXNC) lifts Q2 earnings and plans branch sales

Filing Impact
(Very High)
Filing Sentiment
(Neutral)
Form Type
8-K

Rhea-AI Filing Summary

First National Corporation reported second quarter 2026 net income of $5.7 million, with basic and diluted EPS of $0.64 and $0.63, respectively. Return on average assets was 1.11% and return on average equity 12.03%. The fully tax-equivalent net interest margin improved to 4.15% from 3.95% in the prior-year quarter as tax-equivalent net interest income reached $20.1 million, supported by higher earning-asset yields, stable funding costs and $22.7 million of net loan growth.

Total assets were $2.076 billion and loans held for investment were $1.472 billion at June 30, 2026. Asset quality remained strong: nonperforming assets were 0.23% of total assets and 0.32% of loans, with net charge-offs of $105 thousand and an allowance equal to 1.00% of loans, covering nonperforming assets 315%. Total deposits were $1.831 billion, including $520.5 million of noninterest-bearing balances. Available liquidity sources totaled $747.8 million, and estimated uninsured customer deposits were $573.8 million (or $466.9 million excluding collateralized municipal balances).

Capital levels stayed robust, with a total risk-based capital ratio of 14.81% at the holding company and a tangible common equity to tangible assets ratio of 8.65%. Tangible book value per share increased to $19.71, while the quarterly cash dividend was $0.17 per share. The company received all regulatory approvals to sell two North Carolina branches, expects a one-time gain from that transaction in the fourth quarter of 2026, and plans to consolidate three additional offices, reducing its network from 33 to 28 locations as part of a branch optimization initiative.

Positive

  • Q2 2026 net income of $5.7 million and basic EPS of $0.64, both higher than a year earlier.
  • Nonperforming assets only 0.23% of total assets with allowance coverage of 315%, indicating solid credit quality.

Negative

  • None.

Insights

Analyzing...

Item 2.02 Results of Operations and Financial Condition Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01 Financial Statements and Exhibits Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Net income Q2 2026 $5.7 million Consolidated net income for the quarter ended June 30, 2026
Basic EPS Q2 2026 $0.64 per share Basic earnings per common share for Q2 2026
Net interest margin FTE Q2 2026 4.15% Fully tax-equivalent net interest margin for Q2 2026
Total assets $2.076 billion Total assets as of June 30, 2026
Loans held for investment $1.472 billion Loans held for investment net of allowance at June 30, 2026
Nonperforming assets to total assets 0.23% Nonperforming assets as a percentage of total assets at June 30, 2026
Tangible book value per share $19.71 Tangible book value per share at June 30, 2026
Total risk-based capital ratio 14.81% Holding company total risk-based capital ratio at June 30, 2026
net interest margin financial
"The net interest margin in excess of four percent combined with expense management"
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.
allowance for credit losses financial
"The allowance for credit losses on loans totaled $14.9 million, or 1.00% of total loans"
Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.
nonperforming assets financial
"Asset quality remained sound with non-performing assets at 0.23% of total assets"
Nonperforming assets are loans or investments that are not generating expected payments or returns because the borrower has fallen behind on payments or the investment has lost value. They matter to investors because a high level of nonperforming assets can indicate financial trouble for a bank or institution, potentially affecting its stability and profitability.
tangible book value per share financial
"Tangible book value per share grew to $19.71 at June 30, 2026"
Tangible book value per share is the company's total physical and financial assets minus its liabilities and intangible items (like goodwill and brand value), divided by the number of outstanding shares. It gives investors a conservative, per‑share estimate of what would remain if the business sold only its hard assets and paid its debts—useful for judging whether a stock is priced above or below its underlying, tangible worth, like valuing a property by its bricks and cash rather than its reputation.
uninsured customer deposits financial
"The estimated amount of uninsured customer deposits totaled $573.8 million on June 30, 2026"
Net income $5.7 million above Q1 2026 and Q2 2025 net income based on reported figures
Basic EPS $0.64 compared with $0.56 in Q2 2025
Net interest margin FTE 4.15% up from 3.95% in Q2 2025
Return on average assets 1.11% versus 1.00% in Q2 2025
Return on average equity 12.03% versus 11.85% in Q2 2025

AI-generated analysis. How Rhea-AI works. Not financial advice.

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FAQ

What were First National Corporation (FXNC)'s Q2 2026 net income and EPS?
First National Corporation (FXNC) generated net income of $5.7 million in Q2 2026, with basic and diluted EPS of $0.64 and $0.63. In the second quarter of 2025, net income was $5.1 million with EPS of $0.56.

How did First National Corporation (FXNC)'s net interest margin perform in Q2 2026?
The fully tax-equivalent net interest margin was 4.15% in Q2 2026, up from 3.99% in Q1 2026 and 3.95% in Q2 2025. Tax-equivalent net interest income reached $20.1 million, supported by higher earning-asset yields and modestly lower funding costs.

What were First National Corporation (FXNC)'s loan and deposit levels at June 30, 2026?
Loans held for investment net of allowance totaled $1.472 billion at June 30, 2026, up $22.7 million from March 31, 2026. Total deposits were $1.831 billion, including noninterest-bearing deposits of $520.5 million, or 28% of total deposits.

How strong was asset quality for First National Corporation (FXNC) in Q2 2026?
Asset quality was described as sound, with nonperforming assets at 0.23% of total assets and 0.32% of loans. Net charge-offs were only $105 thousand, and the allowance for credit losses covered nonperforming assets by 315%.

What branch optimization steps is First National Corporation (FXNC) taking in 2026?
First National received all regulatory approvals to sell two North Carolina branches, with closing expected in early Q4 2026 and a one-time gain anticipated. It also plans to consolidate three additional offices, reducing locations from 33 to 28 by year-end.

What are First National Corporation (FXNC)'s capital ratios and tangible book value per share?
At June 30, 2026, the holding company’s total risk-based capital ratio was 14.81% and tangible common equity to tangible assets was 8.65%. Tangible book value per share increased to $19.71, up from $17.40 a year earlier.
false 0000719402 0000719402 2026-07-29 2026-07-29
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
___________
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): July 29, 2026
___________
 
FIRST NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
 
Virginia
(State or other jurisdiction of incorporation)
1-38874
(Commission File Number)
54-1232965
(IRS Employer Identification No.)
 
112 West King Street
Strasburg, Virginia
(Address of principal executive offices)
 
22657
(Zip Code)
 
Registrant’s telephone number, including area code: (540) 465-9121
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $1.25 per share
FXNC
The Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
 
      Emerging growth company  ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
 
 
 
Item 2.02
Results of Operations and Financial Condition.
 
On July 29, 2026, First National Corporation issued a press release reporting its financial results for the period ended June 30, 2026.  A copy of the press release is being furnished as an exhibit to this report and is incorporated by reference into this Item 2.02.
 
Item 9.01
Financial Statements and Exhibits.
 
(d)
Exhibits. The following exhibit is being furnished pursuant to Item 2.02 above.
 
Exhibit No.
Description
 
 
99.1
Press Release dated July 29, 2026
   
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
2
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
FIRST NATIONAL CORPORATION
 
(Registrant)
 
 
 
 
 
 
 
 
 
Date:  July 29, 2026
By:
/s/ Brad E. Schwartz
 
 
 
 Brad E. Schwartz
 
 
 
Executive Vice President and Chief Financial Officer
 
 
3
 

Exhibit 99.1

logo.jpg

 

First National Corporation Reports SECOND Quarter 2026 FINANCIAL PERFORMANCE

 

STRASBURG, Va., July 29, 2026 --- First National Corporation (the “Company” or “First National”) (NASDAQ: FXNC), the bank holding company of First Bank (the “Bank”), reported consolidated net income of $5.7 million and basic and diluted earnings per common share of $0.64 and $0.63, respectively, for the second quarter ended June 30, 2026. 

 

"Our quarterly and year-to-date results reflect steady execution of our intentional, profitable growth strategy. Growth in average loan and deposit balances lifted net interest income, and net loans expanded for a second straight quarter as our new and legacy banking teams continue to deepen customer relationships. The net interest margin in excess of four percent combined with expense management and strong asset quality delivered a strong second quarter and first half of the year.  I am also pleased to report that we received all regulatory approvals for the pending sale of our North Carolina branches which we expect to close early in the fourth quarter, continuing our branch optimization initiative announced earlier this year," said Scott C. Harvard, President and Chief Executive Officer of First National Corporation.

 

 

FINANCIAL HIGHLIGHTS FOR SECOND QUARTER 2026

 

  ● Basic earnings per share of $0.64 per share, compared to $0.56 one year prior, and $0.54 in the previous quarter
  ● Adjusted basic earnings per share(1) of $0.64 per share, compared to $0.57 one year prior, and $0.54 in the previous quarter
  ● Return on average assets of 1.11% compared to 1.00% one year prior, and 0.98% in the previous quarter
  ● Return on average equity of 12.03% compared to 11.85% one year prior, and 10.51% in the previous quarter
  ● Tax equivalent net interest margin(1) of 4.15%, up from 3.95% one year prior, and 3.99% in the previous quarter
  ● Net loan growth of $22.7 million for the quarter, a 6.3% annualized growth rate
  ● Asset quality remained sound with non-performing assets at 0.23% of total assets
  ● Noninterest bearing deposits of $520.5 million, or 28% of deposits, contributed to our low funding cost

 

NET INTEREST INCOME

 
For the second quarter of 2026, the Company’s net interest margin fully tax equivalent ("FTE")(1) was 4.15%, compared to 3.99% for the first quarter of 2026 and 3.95% in the second quarter of 2025. The Company’s net interest margin (FTE)(1) for the second quarter of 2026 includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was $245 thousand, a 5-basis point incremental increase to the net interest margin for the second quarter ended June 30, 2026. Prior period acquisition accounting resulted in net accretion income of $211 thousand, or a 4-basis point incremental increase to the net interest margin for the quarter ended March 31, 2026, and net accretion income of $907 thousand, or a 19-basis point incremental increase to the net interest margin for the second quarter ended June 30, 2025.

 

Earning asset yields for the second quarter of 2026 increased 11-basis points to 5.31% compared to the first quarter of 2026. For the second quarter of 2026, net interest income FTE(1) was $20.1 million, an increase of $1.3 million from $18.8 million in the first quarter of 2026 due to an increase in average interest-earning assets, improved yields, reduced funding costs and average and net loan growth.

 

1
 

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

 

   

For the Three Months Ended

    

For the Six Months Ended

  
   

Jun 30, 2026

    

Mar 31, 2026

    

Jun 30, 2025

    

Jun 30, 2026

    

Jun 30, 2025

  

Loans

   $ 334     $ 294     $ 930     $ 628     $ 736  

Deposits

     (14 )     (10 )     163       (24 )     606  

Borrowings

     (75 )     (73 )     (186 )     (148 )     (471 )
    $ 245     $ 211     $ 907     $ 456     $ 871  

 

ALLOWANCE AND PROVISION FOR CREDIT LOSSES

 

The Company recorded a $426 thousand provision for credit losses in the second quarter of 2026, compared to $450 thousand for the first quarter of 2026. The second quarter provision was comprised of a $350 thousand provision for credit losses on loans, a $79 thousand provision for credit losses on unfunded commitments, and a $3 thousand reduction in the credit losses on securities.  Net charge-offs totaled $105 thousand in the second quarter of 2026, compared to net charge-offs of $542 thousand in the first quarter of 2026 and net charge-offs of $448 thousand in the second quarter of 2025.

 

The allowance for credit losses on loans totaled $14.9 million, or 1.00% of total loans on June 30, 2026, compared to $14.7 million, or 1.00% of total loans on March 31, 2026, and $15.2 million, or 1.05% of total loans on June 30, 2025. The allowance for credit losses to total loans remained consistent with the prior period and decreased from the prior year due to declines in specific reserves on individually analyzed loans. The allowance for credit losses to non-performing assets coverage was 315% on June 30, 2026, compared to 331% on March 31, 2026, and 223% on June 30, 2025. 

 

NONINTEREST INCOME AND EXPENSE

 

Noninterest income increased $194 thousand to $4.0 million for the second quarter of 2026 from $3.8 million in the prior quarter. The increase in noninterest income includes increases in ATM and check card income, other operating income, and brokered mortgage fees compared to the prior quarter.

 

Noninterest expense increased $455 thousand to $16.4 million for the second quarter of 2026 from $16.0 million in the prior quarter. The increase in noninterest expense includes increases in other operating expense, marketing expense, legal and professional fees, supplies expense, and data processing expense.

 

The sale of two banking offices in Roanoke Rapids and Louisburg, North Carolina, including most of the deposit and loan accounts associated with those offices, has received all required regulatory approvals with a planned transaction date in October 2026. The company anticipates a one-time gain on the sale of the offices in the fourth quarter of 2026.  The Bank also plans to consolidate three additional banking offices and discontinue low volume ATMs at non-branch locations before year-end. 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 profitability and allocate resources to faster growing markets. 

 

INCOME TAXES

 

Income tax expense was $1.4 million for the second quarter of 2026, compared to $1.2 million for the first quarter of 2026. The effective tax rate of 19.5% for the second quarter of 2026 remained consistent with 19.5% in the first quarter of 2026. 

 

2
 
 
BALANCE SHEET
 
On June 30, 2026, total assets were $2.076 billion, an increase of $34.2 million or 1.7% from June 30, 2025. Total assets were consistent with the prior quarter with the increase in loan growth offset by the decrease in cash and cash equivalents, and the increase from the prior year was driven by loan growth and additional securities available for sale.

 

On June 30, 2026, loans held for investment ("LHFI") net of allowance totaled $1.472 billion, an increase of $22.7 million or 3.0% annualized from $1.450 billion on March 31, 2026, and an increase of $44.2 million or 3.1% from June 30, 2025. Net loan growth in the second quarter and for the year has been driven by increased production from newly hired bankers along with our continued focus on relationship banking. 

 

On June 30, 2026, total investments were $322.8 million, a decrease of $1.7 million or 0.5% from March 31, 2026, and an increase of $23.2 million or 7.7% from June 30, 2025. Available for sale ("AFS") securities totaled $227.8 million on June 30, 2026, and $217.7 million on March 31, 2026, and $187.6 million on June 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 $15.8 million on June 30, 2026, compared to $16.2 million on March 31, 2026, and $18.9 million on June 30, 2025. Held to maturity securities are carried at amortized cost and totaled $89.4 million on June 30, 2026, $101.3 million on March 31, 2026, and $106.4 million on June 30, 2025.

 

On June 30, 2026, total deposits were $1.831 billion, a decrease of $6.2 million or 0.3% from the prior quarter, and an increase of $28.0 million or 1.6% from June 30, 2025. While total deposits as of June 30, 2026 declined when compared to March 31, 2026, average deposit balances for the second quarter were up $49.6 million or 2.7%. Overall, the deposit balances were relatively stable in comparison with the prior quarter and the prior year with increases primarily in savings and interest-bearing demand deposits. There were $25.0 million in other borrowings with the Federal Home Loan Bank on June 30, 2026, March 31, 2026, and June 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 $747.8 million on June 30, 2026, $764.2 million on March 31, 2026, and $633.7 million on June 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 $573.8 million on June 30, 2026, $558.9 million on March 31, 2026, and $545.7 million on June 30, 2025. Excluding municipal deposits that have collateral pledged, the estimated amount of uninsured customer deposits totaled $466.9 million on June 30, 2026, $461.3 million on March 31, 2026, and $451.9 million on June 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 second quarter of 2025. Management classifies NPAs as non-accrual loans and other real estate owned ("OREO"). The Bank had no OREO on June 30, 2026, March 31, 2026, or June 30, 2025. NPAs as a percentage of total loans were 0.32% on June 30, 2026, up from 0.30% on March 31, 2026, but down from 0.47% on June 30, 2025. NPAs increased by $292 thousand to $4.7 million on June 30, 2026, compared to $4.4 million on March 31, 2026, but decreased by $2.1 million from $6.8 million on June 30, 2025.

 

There were no loans past due over 90 days or more and still accruing interest on June 30, 2026, March 31, 2026, or June 30, 2025. Loans past-due 30-89 days and still accruing interest decreased to $2.5 million, or 0.17% of total loans on June 30, 2026, compared to $5.0 million, or 0.34% of total loans on March 31, 2026, and $3.2 million, or 0.22%, of total loans on June 30, 2025.  The health care provider portfolio balance continues to decline with $8.6 million in loan balances and $3.4 million in unamortized premiums. The portfolio has loans totaling $1.8 million currently on non-accrual that are specifically reserved for $1.3 million. 

 

3
 

 

CAPITAL

 

During the second quarter of 2026, the Company declared and paid cash dividends of $0.17 per common share, compared to $0.17 in the first quarter of 2026 and $0.155 in the second quarter of 2025. Tangible book value per share(1) grew to $19.71 at June 30, 2026, from $19.11 per share at March 31, 2026, and $17.40 at June 30, 2025.

 

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

 

First National Corporation (2)

 Jun 30, 2026     Mar 31, 2026     Jun 30, 2025  

Total risk-based capital ratio

   14.81 %   14.64 %   14.89 %

Tier 1 risk-based capital ratio

   13.22 %   13.06 %   12.37 %

Common equity Tier 1 capital ratio

   12.60 %   12.44 %   11.74 %

Leverage ratio

   9.62 %   9.65 %   8.99 %

Tangible common equity to tangible assets (1)

   8.65 %   8.39 %   7.73 %

Tangible book value per share (1)

 $ 19.71   $ 19.11   $ 17.40  
                   

First Bank

 Jun 30, 2026   Mar 31, 2026   Jun 30, 2025  

Total risk-based capital ratio (3)

   13.91 %   13.75 %   12.89 %

Tier 1 risk-based capital ratio (3)

   12.87 %   12.73 %   11.81 %

Common equity Tier 1 capital ratio (3)

   12.87 %   12.73 %   11.81 %

Leverage ratio (3)

   9.44 %   9.38 %   8.56 %

Tangible common equity to tangible assets (1)

   8.75 %   8.49 %   7.68 %

  

4
 

 

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 thirty-three banking office locations located throughout the Shenandoah Valley, the Roanoke Valley, the Richmond MSA, the south-central regions of Virginia, and in northern North Carolina. In addition to providing traditional banking services, the Bank operates a wealth management division under the name First Bank Wealth Management. First Bank also owns First Bank Financial Services, Inc., which owns an interest in 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 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 pending 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 expression. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that 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

 

5
 

FIRST NATIONAL CORPORATION

Performance Summary

(in thousands)

(unaudited)

                                        
    For the Three Months Ended     For the Six Months Ended  
   

Jun 30, 2026

    

Mar 31, 2026

    

Jun 30, 2025

    

Jun 30, 2026

    

Jun 30, 2025

  

Income Statement

                                        

Interest and dividend income

                                        

Interest and fees on loans

   $ 22,145     $ 21,017     $ 21,594     $ 43,162     $ 42,231  

Interest on deposits in banks

     1,288       1,170       1,891       2,458       3,562  

Interest on federal funds sold

     —       —       —       —       40  

Taxable interest on securities

     1,843       1,786       1,313       3,629       2,627  

Tax-exempt interest on securities

     293       292       298       585       598  

Dividends

     64       64       69       128       129  

Total interest and dividend income

   $ 25,633     $ 24,329     $ 25,165     $ 49,962     $ 49,187  

Interest expense

                                        

Interest on deposits

   $ 5,410     $ 5,414     $ 6,080     $ 10,824     $ 12,118  

Interest on subordinated debt

     170       168       468       338       935  

Interest on junior subordinated debt

     69       66       66       135       132  

Interest on other borrowings

     3       5       3       8       3  

Total interest expense

   $ 5,652     $ 5,653     $ 6,617     $ 11,305     $ 13,188  

Net interest income

   $ 19,981     $ 18,676     $ 18,548     $ 38,657     $ 35,999  

Provision for credit losses

     426       450       911       876       1,743  

Net interest income after provision for credit losses

   $ 19,555     $ 18,226     $ 17,637     $ 37,781     $ 34,256  

Noninterest income

                                        

Service charges on deposit accounts

   $ 913     $ 924     $ 1,020     $ 1,837     $ 2,033  

ATM and check card fees

     1,155       1,047       1,128       2,202       2,124  

Wealth management fees

     902       911       867       1,813       1,765  

Fees for other customer services

     295       287       230       582       488  

Brokered mortgage fees

     153       115       183       268       293  

Income from bank owned life insurance

     239       259       231       498       477  

Net (loss) gains on securities available for sale

     —       8       —       8       —  

Net gains on sale of loans held for sale

     4       1       —       5       —  

Net gain on subordinated debt payoff

     —       —       80       —       80  

Gain on disposal of premises and equipment

     56       —       —       56       —  

Other operating income

     301       272       150       573       240  

Total noninterest income

   $ 4,018     $ 3,824     $ 3,889     $ 7,842     $ 7,500  

Noninterest expense

                                        

Salaries and employee benefits

   $ 9,006     $ 8,982     $ 8,033     $ 17,988     $ 16,722  

Occupancy

     974       972       944       1,946       2,013  

Equipment

     1,131       1,093       1,057       2,224       2,082  

Marketing

     476       341       286       817       506  

Supplies

     192       146       198       338       415  

Legal and professional fees

     742       688       594       1,430       1,115  

ATM and check card expense

     608       571       537       1,179       976  

FDIC assessment

     224       227       315       451       729  

Bank franchise tax

     395       380       348       775       665  

Data processing expense

     435       394       504       829       1,266  

Core deposit intangible amortization expense

     433       434       441       867       883  

Other real estate owned (income), net

     —       —       —       —       (7 )

Net loss on disposal of premises and equipment

     —       —       7       —       7  

Merger expense

     —       —       92       —       2,032  

Other operating expense

     1,821       1,754       1,835       3,575       4,122  

Total noninterest expense

   $ 16,437     $ 15,982     $ 15,191     $ 32,419     $ 33,526  

Income before income taxes

   $ 7,136     $ 6,068     $ 6,335     $ 13,204     $ 8,230  

Income tax expense

     1,393       1,181       1,284       2,574       1,581  

Net income

   $ 5,743     $ 4,887     $ 5,051     $ 10,630     $ 6,649  

 

6
 

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 Six Months Ended  
   

Jun 30, 2026

    

Mar 31, 2026

    

Jun 30, 2025

    

Jun 30, 2026

    

Jun 30, 2025

  

Common Share and Per Common Share Data

                                        

Earnings per common share, basic

   $ 0.64     $ 0.54     $ 0.56     $ 1.18     $ 0.74  

Adjusted earnings per common share, basic (1)

   $ 0.64     $ 0.54     $ 0.57     $ 1.18     $ 0.92  

Weighted average shares, basic

     9,041,314       9,031,591       8,987,179       9,036,479       8,983,374  

Earnings per common share, diluted

   $ 0.63     $ 0.54     $ 0.56     $ 1.17     $ 0.74  

Adjusted earnings per common share, diluted (1)

   $ 0.63     $ 0.54     $ 0.57     $ 1.17     $ 0.92  

Weighted average shares, diluted

     9,068,347       9,047,416       9,001,972       9,057,908       9,003,969  

Shares outstanding at period end

     9,042,629       9,040,967       8,989,138       9,042,629       8,989,138  

Tangible book value per share at period end (1)

   $ 19.71     $ 19.11     $ 17.40     $ 19.71     $ 17.40  

Market price per share at period end

   $ 30.02     $ 26.92     $ 19.47     $ 30.02     $ 19.47  

Cash dividends declared

   $ 0.170     $ 0.170     $ 0.155     $ 0.340     $ 0.310  
                                         

Key Performance Ratios

                                        

Return on average assets (4)

     1.11 %     0.98 %     1.00 %     1.05 %     0.66 %

Adjusted return on average assets (1)(4)

     1.11 %     0.98 %     1.02 %     1.05 %     0.83 %

Return on average equity (4)

     12.03 %     10.51 %     11.85 %     11.27 %     7.90 %

Adjusted return on average equity (1)(4)

     12.03 %     10.51 %     12.05 %     11.27 %     9.85 %

Net interest margin (4)

     4.13 %     3.98 %     3.93 %     4.05 %     3.84 %

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

     4.15 %     3.99 %     3.95 %     4.07 %     3.86 %

Efficiency ratio (1)

     66.59 %     68.86 %     65.27 %     67.69 %     70.20 %
                                         

Average Balances

                                        

Average assets

   $ 2,079,467     $ 2,026,947     $ 2,019,344     $ 2,046,074     $ 2,020,425  

Average earning assets

     1,941,385       1,905,400       1,893,133       1,923,459       1,890,749  

Average deposits

     1,861,554       1,811,967       1,808,340       1,829,354       1,809,644  

Average noninterest deposits to total average deposits

     29.15 %     27.96 %     29.88 %     28.27 %     29.49 %

Average shareholders’ equity

   $ 191,465     $ 188,585     $ 170,920       190,234     $ 169,713  
                                         

Asset Quality

                                        

Allowance for credit losses on loans to nonperforming assets

     315.45 %     330.66 %     223.45 %     315.45 %     223.45 %

Allowance for credit losses on loans to period end loans

     1.00 %     1.00 %     1.05 %     1.00 %     1.05 %

Nonperforming assets to period end loans

     0.32 %     0.30 %     0.47 %     0.32 %     0.47 %

Nonperforming assets to total assets

     0.23 %     0.21 %     0.33 %     0.23 %     0.33 %

Loan charge-offs

   $ 266     $ 709     $ 535     $ 975     $ 3,025  

Loan recoveries

     161       167       87       328       176  

Net charge-offs

     105       542       448       647       2,849  

Non-accrual loans

     4,737       4,445       6,796       4,737       6,796  

Other real estate owned, net

     —       —       —       —       —  

Nonperforming assets

     4,737       4,445       6,796       4,737       6,796  

Loans 30 to 89 days past due, accruing

     2,534       5,025       3,190       2,534       3,190  

Loans over 90 days past due, accruing

     —       —       —       —       —  
                                         

Capital Ratios (5)

                                        

Total capital

   $ 210,436     $ 205,509     $ 189,115     $ 210,436     $ 189,115  

Tier 1 capital

     194,778       190,173       173,240       194,778       173,240  

Common equity Tier 1 capital

     194,778       190,173       173,240       194,778       173,240  

Total capital to risk-weighted assets (3)

     13.91 %     13.75 %     12.89 %     13.91 %     12.89 %

Tier 1 capital to risk-weighted assets (3)

     12.87 %     12.73 %     11.81 %     12.87 %     11.81 %

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

     12.87 %     12.73 %     11.81 %     12.87 %     11.81 %

Leverage ratio (3)

     9.44 %     9.38 %     8.56 %     9.44 %     8.56 %

 

7
 

FIRST NATIONAL CORPORATION

Performance Summary

(in thousands)

(unaudited)

                                        
   

For the Period Ended

  
   

Jun 30, 2026

    

Mar 31, 2026

    

Dec 31, 2025

    

Sept 30, 2025

    

Jun 30, 2025

  

Balance Sheet

                                        

Cash and due from banks

   $ 23,294     $ 22,624     $ 20,836     $ 23,716     $ 34,435  

Interest-bearing deposits in banks

     142,854       165,185       140,074       165,601       159,880  

Cash and cash equivalents

   $ 166,148     $ 187,809     $ 160,910     $ 189,317     $ 194,315  

Securities available for sale, at fair value

     227,792       217,655       217,538       196,476       187,579  

Securities held to maturity, at amortized cost (net of allowance for credit losses)

     89,392       101,261       102,872       104,608       106,430  

Restricted securities, at cost

     5,642       5,642       5,624       4,436       5,624  

Loans, net of allowance for credit losses

     1,472,455       1,449,708       1,435,026       1,418,750       1,428,251  

Premises and equipment, net

     34,021       34,327       34,561       34,107       34,530  

Accrued interest receivable

     6,516       6,656       6,467       6,238       6,143  

Bank owned life insurance

     39,078       38,837       38,577       38,652       38,367  

Goodwill

     3,030       3,030       3,030       3,030       3,030  

Core deposit intangibles, net

     12,352       12,785       13,219       13,661       14,102  

Other assets

     19,219       18,113       20,154       21,479       23,070  

Total assets

   $ 2,075,645     $ 2,075,823     $ 2,037,978     $ 2,030,754     $ 2,041,441  
                                         

Noninterest-bearing demand deposits

   $ 520,548     $ 524,323     $ 509,874     $ 511,482     $ 541,204  

Savings and interest-bearing demand deposits

     953,639       953,399       926,579       931,241       900,658  

Time deposits

     356,943       359,570       363,095       366,860       361,304  

Total deposits

   $ 1,831,130     $ 1,837,292     $ 1,799,548     $ 1,809,583     $ 1,803,166  

Other borrowings

     25,000       25,000       25,000       —       25,000  

Subordinated debt, net

     8,460       8,385       8,312       21,241       21,148  

Junior subordinated debt

     9,279       9,279       9,279       9,279       9,279  

Accrued interest payable and other liabilities

     8,188       7,305       9,643       9,442       9,316  

Total liabilities

   $ 1,882,057     $ 1,887,261     $ 1,851,782     $ 1,849,545     $ 1,867,909  
                                         

Common stock

     11,303       11,301       11,282       11,262       11,236  

Surplus

     78,667       78,400       78,216       78,187       77,578  

Retained earnings

     116,494       112,288       108,937       104,964       100,810  

Accumulated other comprehensive (loss), net

     (12,876 )     (13,427 )     (12,239 )     (13,204 )     (16,092 )

Total shareholders’ equity

   $ 193,588     $ 188,562     $ 186,196     $ 181,209     $ 173,532  

Total liabilities and shareholders’ equity

   $ 2,075,645     $ 2,075,823     $ 2,037,978     $ 2,030,754     $ 2,041,441  
                                         

Loan Portfolio

                                        

Real estate loans:

                                        

Construction and land development

   $ 113,289     $ 97,487     $ 88,424     $ 78,470     $ 78,169  

Secured by farmland

     10,348       11,554       11,879       12,812       12,514  

Secured by 1-4 family residential

     522,763       520,821       527,282       533,458       544,577  

Other real estate loans

     709,772       701,013       685,099       671,723       667,550  

Commercial and industrial loans (except those secured by real estate)

     113,205       114,517       117,256       117,047       119,910  

Consumer installment loans

     8,105       8,060       8,419       8,358       8,113  

Deposit overdrafts

     478       547       543       535       454  

All other loans

     9,438       10,407       10,843       10,794       12,150  

Total loans

   $ 1,487,398     $ 1,464,406     $ 1,449,745     $ 1,433,197     $ 1,443,437  

Allowance for credit losses

     (14,943 )     (14,698 )     (14,719 )     (14,447 )     (15,186 )

Loans, net

   $ 1,472,455     $ 1,449,708     $ 1,435,026     $ 1,418,750     $ 1,428,251  

 

8
 

FIRST NATIONAL CORPORATION

Average Balances, Yields and Rates Paid

(in thousands)

(unaudited)

Three Months Ended

  
 

June 30, 2026

    

March 31, 2026

    

June 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

 $ 256,750   $ 1,843     2.88 %   $ 259,592   $ 1,786     2.79 %   $ 220,100   $ 1,313     2.39 %

Tax-exempt (1)

   62,353     372     2.39 %     61,705     369     2.43 %     50,871     377     2.98 %

Restricted

   4,468     64     5.76 %     4,465     64     5.85 %     4,449     70     6.27 %

Total securities

 $ 323,571   $ 2,279     2.82 %   $ 325,762   $ 2,219     2.76 %   $ 275,420   $ 1,760     2.56 %

Loans:

                                                          

Taxable

 $ 1,473,064   $ 22,103     6.02 %   $ 1,446,201   $ 20,974     5.88 %   $ 1,441,800   $ 21,551     6.00 %

Tax-exempt (1)

   3,460     54     6.31 %     3,479     54     6.30 %     4,095     54     5.26 %

Total loans

 $ 1,476,524   $ 22,157     6.02 %   $ 1,449,680   $ 21,028     5.88 %   $ 1,445,895   $ 21,605     5.99 %

Federal funds sold

   1     —     —       38     —     —       1     —     —  

Interest-bearing deposits with other institutions

   141,289     1,287     3.66 %     129,920     1,170     3.65 %     171,817     1,891     4.41 %

Total earning assets

 $ 1,941,385   $ 25,723     5.31 %   $ 1,905,400   $ 24,417     5.20 %   $ 1,893,133   $ 25,256     5.35 %

Less: allowance for credit losses on loans

   (15,039 )                 (15,039 )                 (14,888 )            

Total non-earning assets

   153,121                   136,586                   141,099              

Total assets

 $ 2,079,467                 $ 2,026,947                 $ 2,019,344              

Liabilities and Shareholders’ Equity

                                                          

Interest bearing deposits:

                                                          

Checking

 $ 416,041   $ 1,101     1.06 %   $ 403,086   $ 1,078     1.09 %   $ 364,686   $ 1,208     1.33 %

Regular savings

   212,451     171     0.32 %     211,058     177     0.34 %     212,433     191     0.36 %

Money market accounts

   335,904     1,573     1.88 %     330,735     1,492     1.83 %     329,273     1,869     2.28 %

Time deposits

   354,558     2,565     2.90 %     360,515     2,667     3.00 %     361,571     2,812     3.12 %

Total interest-bearing deposits

 $ 1,318,954   $ 5,410     1.65 %   $ 1,305,394   $ 5,414     1.68 %   $ 1,267,963   $ 6,080     1.92 %

Federal funds purchased

   2     —     —       20     —     —       2     —     —  

Subordinated debt

   8,422     170     8.09 %     8,384     168     8.11 %     21,304     468     8.80 %

Junior subordinated debt

   9,279     69     2.96 %     9,279     66     2.91 %     9,279     66     2.86 %

Other borrowings

   275     3     3.93 %     556     5     3.93 %     275     3     4.63 %

Total interest-bearing liabilities

 $ 1,336,932   $ 5,652     1.70 %   $ 1,323,633   $ 5,653     1.73 %   $ 1,298,823   $ 6,617     2.04 %

Non-interest bearing liabilities

                                                          

Demand deposits

   542,600                   506,573                   540,377              

Other liabilities

   8,470                   8,156                   9,224              

Total liabilities

 $ 1,888,002                 $ 1,838,362                 $ 1,848,424              

Shareholders’ equity

   191,465                   188,585                   170,920              

Total liabilities and Shareholders’ equity

 $ 2,079,467                 $ 2,026,947                 $ 2,019,344              

Net interest income (1)

       $ 20,071                 $ 18,764                 $ 18,639        

Interest rate spread (1)

               3.61 %                 3.47 %                 3.31 %

Cost of funds

               1.21 %                 1.25 %                 1.44 %

Interest expense as a percent of average earning assets

               1.17 %                 1.20 %                 1.40 %

Net interest margin FTE (1)

               4.15 %                 3.99 %                 3.95 %

 

9
 
FIRST NATIONAL CORPORATION
Average Balances, Yields and Rates Paid
(in thousands)

(unaudited)

  

Six Months Ended

  
   

June 30, 2026

    

June 30, 2025

  
   

Average Balance

     Interest Income/ Expense    

Yield / Rate (7)

    

Average Balance

     Interest Income/ Expense    

Yield / Rate (7)

  

Assets

                                                

Securities:

                                                

Taxable

   $ 258,287     $ 3,629       2.83 %   $ 219,990     $ 2,627       2.41 %

Tax-exempt (1)

     61,873       741       2.41 %     51,323       757       2.98 %

Restricted

     4,467       128       5.80 %     4,311       129       6.04 %

Total securities

   $ 324,627     $ 4,498       2.79 %   $ 275,624     $ 3,513       2.57 %

Loans:

                                                

Taxable

   $ 1,459,707     $ 43,076       5.95 %   $ 1,448,191     $ 42,127       5.87 %

Tax-exempt (1)

     3,470       109       6.31 %     4,445       132       5.99 %

Total loans

   $ 1,463,177     $ 43,185       5.95 %   $ 1,452,636     $ 42,259       5.87 %

Federal funds sold

     19       —       —       1,755       39       4.53 %

Interest-bearing deposits with other institutions

     135,636       2,457       3.65 %     160,734       3,562       4.47 %

Total earning assets

   $ 1,923,459     $ 50,140       5.26 %   $ 1,890,749     $ 49,373       5.27 %

Less: allowance for credit losses on loans

     (15,039 )                     (15,749 )                

Total non-earning assets

     137,654                       145,425                  

Total assets

   $ 2,046,074                     $ 2,020,425                  

Liabilities and Shareholders’ Equity

                                                

Interest bearing deposits:

                                                

Checking

   $ 409,600     $ 2,180       1.07 %   $ 366,843     $ 2,439       1.34 %

Regular savings

     211,759       347       0.33 %     212,513       366       0.35 %

Money market accounts

     333,333       3,066       1.85 %     334,261       3,831       2.31 %

Time deposits

     357,517       5,231       2.95 %     362,431       5,481       3.05 %

Total interest-bearing deposits

   $ 1,312,209     $ 10,824       1.66 %   $ 1,276,048     $ 12,117       1.91 %

Federal funds purchased

     11       —       —       1       —       —  

Subordinated debt

     8,460       338       8.04 %     22,500       935       8.38 %

Junior subordinated debt

     9,279       135       2.94 %     9,279       132       2.87 %

Other borrowings

     414       8       3.93 %     138       3       4.63 %

Total interest-bearing liabilities

   $ 1,330,373     $ 11,305       1.71 %   $ 1,307,966     $ 13,187       2.03 %

Non-interest bearing liabilities

                                                

Demand deposits

     517,145                       533,596                  

Other liabilities

     8,322                       9,150                  

Total liabilities

   $ 1,855,840                     $ 1,850,712                  

Shareholders’ equity

     190,234                       169,713                  

Total liabilities and Shareholders’ equity

   $ 2,046,074                     $ 2,020,425                  

Net interest income (1)

           $ 38,835                     $ 36,186          

Interest rate spread (1)

                     3.55 %                     3.24 %

Cost of funds

                     1.23 %                     1.44 %

Interest expense as a percent of average earning assets

                     1.19 %                     1.41 %

Net interest margin FTE (1)

                     4.07 %                     3.86 %

 

10
 

FIRST NATIONAL CORPORATION

Non-GAAP Reconciliation

(in thousands, except share and per share data)

(unaudited)

                                        
    For the Three Months Ended     For the Six Months Ended  
   

Jun 30, 2026

    

Mar 31, 2026

    

Jun 30, 2025

    

Jun 30, 2026

    

Jun 30, 2025

  

Operating Net Income

                                        

Net income (GAAP)

   $ 5,743     $ 4,887     $ 5,051     $ 10,630     $ 6,649  

Add: Merger-related expenses

     —       —       92       —       2,032  

Subtract: Tax effect of adjustment (6)

     —       —       (10 )     —       (391 )

Adjusted operating net income (non-GAAP)

   $ 5,743     $ 4,887     $ 5,133     $ 10,630     $ 8,290  
                                         

Adjusted Earnings Per Share, Basic

                                        

Weighted average shares, basic

     9,041,314       9,031,591       8,987,179       9,036,479       8,983,374  

Basic earnings per share (GAAP)

   $ 0.64     $ 0.54     $ 0.56     $ 1.18     $ 0.74  

Adjusted earnings per share, basic (non-GAAP)

   $ 0.64     $ 0.54     $ 0.57     $ 1.18     $ 0.92  
                                         

Adjusted Earnings Per Share, Diluted

                                        

Weighted average shares, diluted

     9,068,347       9,047,416       9,001,972       9,057,908       9,003,969  

Diluted earnings per share (GAAP)

   $ 0.63     $ 0.54     $ 0.56     $ 1.17     $ 0.74  

Adjusted diluted earnings per share (non-GAAP)

   $ 0.63     $ 0.54     $ 0.57     $ 1.17     $ 0.92  
                                         

Adjusted Pre-Provision, Pre-Tax Earnings

                                        

Net interest income

   $ 19,981     $ 18,676     $ 18,548     $ 38,657     $ 35,999  

Total noninterest income

     4,018       3,824       3,889       7,842       7,500  

Net revenue

   $ 23,999     $ 22,500     $ 22,437     $ 46,499     $ 43,499  

Total noninterest expense

     16,437       15,982       15,191       32,419       33,526  

Pre-provision, pre-tax earnings (non-GAAP)

   $ 7,562     $ 6,518     $ 7,246     $ 14,080     $ 9,973  

Add: Merger expenses

     —       —       92       —       2,032  

Adjusted pre-provision, pre-tax earnings (non-GAAP)

   $ 7,562     $ 6,518     $ 7,338     $ 14,080     $ 12,005  
                                         

Adjusted Performance Ratios

                                        

Average assets

   $ 2,079,467     $ 2,026,947     $ 2,019,344     $ 2,046,074     $ 2,020,425  

Return on average assets (GAAP)

     1.11 %     0.98 %     1.00 %     1.05 %     0.66 %

Adjusted return on average assets (non-GAAP)

     1.11 %     0.98 %     1.02 %     1.05 %     0.83 %
                                         

Average shareholders’ equity

   $ 191,465     $ 188,585     $ 170,920     $ 190,234     $ 169,713  

Return on average equity (GAAP)

     12.03 %     10.51 %     11.85 %     11.27 %     7.90 %

Adjusted return on average equity (non-GAAP)

     12.03 %     10.51 %     12.05 %     11.27 %     9.85 %
                                         

Net Interest Margin

                                        

Net interest income

   $ 19,981     $ 18,676     $ 18,548     $ 38,657     $ 35,999  

Tax-equivalent net interest income (non-GAAP)

     20,071       18,764       18,639       38,835       36,186  

Average earning assets

     1,941,385       1,905,400       1,893,133       1,923,459       1,890,749  

Net interest margin

     4.13 %     3.98 %     3.93 %     4.05 %     3.84 %

Net interest margin fully tax equivalent (non-GAAP)

     4.15 %     3.99 %     3.95 %     4.07 %     3.86 %

 

11
 

FIRST NATIONAL CORPORATION

Non-GAAP Reconciliation

(in thousands)

(unaudited)

  

For the Three Months Ended

    

For the Six Months Ended

  
   

Jun 30, 2026

    

Mar 31, 2026

    

Jun 30, 2025

    

Jun 30, 2026

    

Jun 30, 2025

  

Adjusted Operating Noninterest Expense

                                        

Total noninterest expense (GAAP)

   $ 16,437     $ 15,982     $ 15,191     $ 32,419     $ 33,526  

Subtract: merger expenses

     —       —       (92 )     —       (2,032 )

Subtract: amortization expense

     (433 )     (434 )     (441 )     (867 )     (883 )

Adjusted operating noninterest expense (non-GAAP)

   $ 16,004     $ 15,548     $ 14,658     $ 31,552     $ 30,611  
                                         

Efficiency Ratio

                                        

Total noninterest expense (GAAP)

   $ 16,437     $ 15,982     $ 15,191     $ 32,419     $ 33,526  

Add: other real estate owned income, net

     —       —       —       —       7  

Subtract: amortization of intangibles

     (433 )     (434 )     (441 )     (867 )     (883 )

Add/Subtract: (loss) on disposal of premises and equipment, net

     —       —       (7 )     —       (7 )

Subtract: merger expenses

     —       —       (92 )     —       (2,032 )

Adjusted operating non-interest expense (non-GAAP)

   $ 16,004     $ 15,548     $ 14,651     $ 31,552     $ 30,611  

Tax-equivalent net interest income (non-GAAP)

   $ 20,071     $ 18,764     $ 18,639     $ 38,835     $ 36,186  

Total noninterest income (GAAP)

     4,018       3,824       3,889       7,842       7,500  

Subtract: (gain) on disposal of premises and equipment

     (56 )     —       —       (56 )     —  

Subtract: net (gain) on subordinated debt payoff

     —       —       (80 )     —       (80 )

Subtract: securities (gains), net

     —       (8 )     —       (8 )     —  

Adjusted income for efficiency ratio (non-GAAP)

   $ 24,033     $ 22,580     $ 22,448     $ 46,613     $ 43,606  
                                         

Efficiency ratio (non-GAAP)

     66.59 %     68.86 %     65.27 %     67.69 %     70.20 %

 

12
 

FIRST NATIONAL CORPORATION

Non-GAAP Reconciliation

(in thousands, except share and per share data)

(unaudited)

                                        
    For the Three Months Ended     For the Six Months Ended  
   

Jun 30, 2026

    

Mar 31, 2026

    

Jun 30, 2025

    

Jun 30, 2026

    

Jun 30, 2025

  

Tax-Equivalent Net Interest Income

                                        

GAAP measures:

                                        

Interest income – loans

   $ 22,145     $ 21,017     $ 21,594     $ 43,162     $ 42,231  

Interest income – investments and other

     3,488       3,312       3,571       6,800       6,956  

Interest expense – deposits

     (5,410 )     (5,414 )     (6,080 )     (10,824 )     (12,118 )

Interest expense – subordinated debt

     (170 )     (168 )     (468 )     (338 )     (935 )

Interest expense – junior subordinated debt

     (69 )     (66 )     (66 )     (135 )     (132 )

Interest expense – other borrowings

     (3 )     (5 )     (3 )     (8 )     (3 )

Net interest income

   $ 19,981     $ 18,676     $ 18,548     $ 38,657     $ 35,999  

Non-GAAP measures:

                                        

Add: Tax benefit realized on non-taxable interest income – loans (6)

   $ 12     $ 11     $ 12     $ 23     $ 28  

Add: Tax benefit realized on non-taxable interest income – municipal securities (6)

     78       77       79       155       159  

Tax benefit realized on non-taxable interest income

   $ 90     $ 88     $ 91     $ 178     $ 187  

Tax-equivalent net interest income (non-GAAP)

   $ 20,071     $ 18,764     $ 18,639     $ 38,835     $ 36,186  
                                         

Tangible Common Equity and Tangible Assets

                                        

Total assets (GAAP)

   $ 2,075,645     $ 2,075,823     $ 2,041,441     $ 2,075,645     $ 2,041,441  

Subtract: goodwill

     (3,030 )     (3,030 )     (3,030 )     (3,030 )     (3,030 )

Subtract: core deposit intangibles, net

     (12,352 )     (12,785 )     (14,102 )     (12,352 )     (14,102 )

Tangible assets (Non-GAAP)

   $ 2,060,263     $ 2,060,008     $ 2,024,309     $ 2,060,263     $ 2,024,309  
                                         

Total shareholders’ equity (GAAP)

   $ 193,588     $ 188,562     $ 173,532     $ 193,588     $ 173,532  

Subtract: goodwill

     (3,030 )     (3,030 )     (3,030 )     (3,030 )     (3,030 )

Subtract: core deposit intangibles, net

     (12,352 )     (12,785 )     (14,102 )     (12,352 )     (14,102 )

Tangible common equity (Non-GAAP)

   $ 178,206     $ 172,747     $ 156,400     $ 178,206     $ 156,400  
                                         

Tangible common equity to tangible assets ratio (non-GAAP)

     8.65 %     8.39 %     7.73 %     8.65 %     7.73 %
                                         

Tangible Book Value Per Share

                                        

Tangible common equity (non-GAAP)

   $ 178,206     $ 172,747     $ 156,400     $ 178,206     $ 156,400  

Common shares outstanding, ending

     9,042,629       9,040,967       8,989,138       9,042,629       8,989,138  

Tangible book value per share (non-GAAP)

   $ 19.71     $ 19.11     $ 17.40     $ 19.71     $ 17.40  

 

(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 June 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%

 

13

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