STRASBURG, Va., July 29, 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 $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 costNET 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.
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 $871ALLOWANCE 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.
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.
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 BankJun 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%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. HarvardBrad E. SchwartzPresident and CEOExecutive Vice President and CFO(540) 545-7695(540) [email protected] [email protected]FIRST NATIONAL CORPORATION
Performance Summary
(in thousands)
(unaudited)
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
FIRST NATIONAL CORPORATION
Performance Summary
(in thousands, except share and per share data)
(unaudited)
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%
FIRST NATIONAL CORPORATION
Performance Summary
(in thousands)
(unaudited)
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
FIRST NATIONAL CORPORATION
Average Balances, Yields and Rates Paid
(in thousands)
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%
FIRST NATIONAL CORPORATION
Average Balances, Yields and Rates Paid
(in thousands)
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%
FIRST NATIONAL CORPORATION
Non-GAAP Reconciliation
(in thousands, except share and per share data)
(unaudited)
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%
FIRST NATIONAL CORPORATION
Non-GAAP Reconciliation
(in thousands)
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%
FIRST NATIONAL CORPORATION
Non-GAAP Reconciliation
(in thousands, except share and per share data)
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%