First National Corporation Reports Record Second Quarter 2025 Earnings

STRASBURG, Va., July 30, 2025 (GLOBE NEWSWIRE) -- First National Corporation (the "Company" or "First National") (NASDAQ:FXNC), the bank holding company of First Bank (the "Bank"), reported earnings for the quarter ended June 30, 2025 of $5.05 million and basic and diluted earnings per common share of $0.56. Excluding acquisition-related items, adjusted earnings⁽¹⁾ (non-GAAP) for the second quarter of 2025 were $5.1 million and adjusted basic and diluted earnings⁽¹⁾ per common share were $0.57.

"We are extremely pleased with our performance in the second quarter as we begin to realize the value of our recently completed acquisition of the Touchstone franchise. Earnings improved over the prior quarter and the previous year due to net interest margin expansion and our improved efficiency as a combined company. While growth was muted due to higher than average loan payoff volumes and our focus on managing deposit pricing, this discipline delivered on improved earnings, strong liquidity and capital growth," said Scott Harvard, President and Chief Executive Officer of First National. 

FINANCIAL HIGHLIGHTS FOR SECOND QUARTER 2025

• Earnings per share of $0.56 per share, up 211% from the previous period and up 44% from one year prior
• Return on average assets of 1.00% compared to 0.32% in the previous period and 0.68% one year prior
• Return on average equity of 11.85% compared to 3.85% in the previous period and 8.31% one year prior
• Net interest margin fully taxable equivalent ("FTE")⁽¹⁾ of 3.95%, up 16.2% from 3.40% one year prior
• Efficiency ratio⁽¹⁾ improved to 65.11% from 75.44% in the previous period and 70.64% one year prior
• Net loans held for investment of $1.428 billion, up 46.1% from one year prior
• Total deposits of $1.803 billion, up 42.5% from one year prior
• Noninterest bearing deposits of $541.2 million, up 36.1% from one year prior
• Noninterest bearing deposits comprised 30% of total deposits at June 30, 2025
  
  
  
  

NET INTEREST INCOME

For the second quarter of 2025, the Company's net interest margin (FTE)⁽¹⁾ was 3.95%, up from 3.77% for the first quarter of 2025 and up from 3.40% in the second quarter of 2024. The Company's net interest margin (FTE)⁽¹⁾ for the second quarter of 2025 includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was $907 thousand, or an 18-basis point incremental increase to the net interest margin for the second quarter ended June 30, 2025, compared to the net amortization expense of $36 thousand or a 1-basis point incremental decrease to the net interest margin for the first quarter ended March 31, 2025. The impact of accretion and amortization for the periods presented are reflected in the following table (dollars in thousands):

		Loan Accretion (Amortization)				Deposit Accretion				Borrowings (Amortization)				Total
For the quarter ended March 31, 2025		$	(194	)		$	443			$	(285	)		$	(36	)
For the quarter ended June 30, 2025			930				163				(186	)			907

Earning asset yields for the second quarter of 2025 increased 17 basis points to 5.35% compared to the first quarter of 2025, driven primarily by the $1.1 million increase in accretion on purchased loans. Loan accretion increased in the second quarter after several large loans with purchase accounting premiums were paid off in the first quarter, resulting in the accelerated amortization of those premiums. Deposit accretion decreased from the prior quarter consistent with the accelerated accretion schedule of acquired deposits. For the second quarter of 2025, net interest income was $18.5 million, an increase of $1.0 million from $17.5 million in the first quarter of 2025 due to increases in loan yields and net accretion income combined with a $15.9 million decrease in average interest-bearing liabilities.

NONINTEREST INCOME

Non-interest income increased $278 thousand to $3.9 million for the second quarter of 2025 from $3.6 million in the prior quarter. Non-interest income increased 7.7% in the second quarter primarily due to increases in ATM and check card income as well as brokered mortgage fees. 

NONINTEREST EXPENSE

Noninterest expense decreased $3.1 million to $15.2 million for the second quarter of 2025 from $18.3 million in the prior quarter, primarily driven by a $1.8 million decrease in pre-tax merger-related expenses, $656 thousand decrease in salaries and employee benefit expenses, $448 thousand decrease in other operating expenses, and $258 thousand decrease in data processes expense. The decrease in salaries and benefits reflects reduced expenses related to incentives, stock compensation expense, and other salary and benefits. The decrease in other operating expenses is driven by $294 thousand of fraud losses recognized in the first quarter and a reduction in internet banking expenses of $296 thousand. In the first quarter of 2025 the Bank was operating two core banking systems which added to our expense structure. The conversion to one system occurred in February of 2025, which was a driver of reduced operating expenses in the second quarter of 2025.

Adjusted operating noninterest expense⁽¹⁾, which excludes merger-related costs ($92 thousand in the second quarter of 2025 and $1.9 million in the first quarter of 2025) and amortization of intangible assets ($441 thousand in the second quarter of 2025 and $442 thousand in the first quarter of 2025), decreased $1.3 million to $14.7 million for the second quarter of 2025 from $16.0 million in the prior quarter, due to decreases in salary and employee benefits expense, fraud losses, data processing, and internet banking expenses.

BALANCE SHEET

At June 30, 2025, total assets were $2.041 billion, an increase of $8.1 million or 0.4% from March 31, 2025, and an increase of $583.9 million or 40.1% from June 30, 2024. Total assets were consistent with the prior quarter and the increase from the prior year was primarily driven by growth in loans held for investment ("LHFI") (net of deferred fees and costs), primarily due to the Touchstone acquisition.

At June 30, 2025, LHFI net of allowance totaled $1.428 billion, a decrease of $7.6 million from $1.436 billion or 0.5% at March 31, 2025, and an increase of $450.8 million or 46.1% from June 30, 2024. LHFI was consistent with the prior quarter and increased from the prior year primarily due to the Touchstone acquisition, as well as organic loan growth. Higher than average loan payoffs more than offset positive net production growth in the second quarter of 2025.

At June 30, 2025, total investments were $299.6 million, an increase of $25.9 million or 9.5% from March 31, 2025, and an increase of $29.2 million or 10.8% from June 30, 2024. Available for sale ("AFS") securities totaled $187.6 million at June 30, 2025, and $161.0 million at March 31, 2025, and $144.8 million at June 30, 2024. The increases compared to the prior quarter was driven by securities purchases and a $3.1 million improvement in unrealized losses. Total net unrealized losses on the AFS securities portfolio were $18.9 million at June 30, 2025, compared to $20.1 million at March 31, 2025, and $21.9 million at June 30, 2024. Held to maturity securities are carried at amortized cost and totaled $106.4 million at June 30, 2025, $108.3 million at March 31, 2025, and $123.5 million at June 30, 2024.

At June 30, 2025, total deposits were $1.803 billion, a decrease of $21.8 million or 1.2% from the prior quarter, and an increase of $537.4 million or 42.5% from June 30, 2024. The decreases in deposit balances from the prior quarter is primarily due to a decrease in interest-bearing demand deposits and the increase from prior year is primarily due to the addition of the Touchstone acquired deposits. Non-interest-bearing demand deposits increased slightly and time deposits decreased slightly in the second quarter of 2025.

There were $25.0 million in other borrowings with the Federal Home Loan Bank on June 30, 2025 compared to no borrowings on March 31, 2025. Other borrowings totaled $50.0 million on June 30, 2024, and were comprised of funds borrowed from the Federal Reserve Bank through their Bank Term Funding Program which were repaid during the fourth quarter of 2024.

LIQUIDITY

Liquidity sources available to the Bank, including interest-bearing deposits in banks, unpledged securities available for sale, at fair value, unpledged securities held-to-maturity, at par, eligible to be pledged, and available lines of credit totaled $633.7 million on June 30, 2025, $800.2 million on March 31, 2025, and $533.3 million on June 30, 2024.

The Bank maintains liquidity to fund loan growth and to meet potential demand from deposit customers, including potential volatile deposits. The estimated amount of uninsured customer deposits totaled $545.7 million on June 30, 2025, $549.3 million on March 31, 2025, and $419.4 million on June 30, 2024. Excluding municipal deposits, the estimated amount of uninsured customer deposits totaled $451.9 million on June 30, 2025, $458.7 million on March 31, 2025, and $324.5 million on June 30, 2024.

ASSET QUALITY

Nonperforming Assets

Management classifies non-performing assets ("NPAs") as non-accrual loans and other real estate owned ("OREO"). NPAs as a percentage of total assets increased to 0.33% on June 30, 2025, compared to 0.24% on March 31, 2025, and decreased from 0.59% on June 30, 2024.

NPAs increased by $1.9 million to $6.8 million on June 30, 2025, compared to $4.9 million on March 31, 2025, and $8.5 million on June 30, 2024. 

Past Due Loans

There were no loans past due over 90 days or more and still accruing interest on June 30, 2025, consistent with $0 on March 31, 2025, and $0 on June 30, 2024. Loans past-due 30-89 days and still accruing interest decreased to $3.2 million, or 0.22% of total loans on June 30, 2025, compared to $5.0 million, or 0.35% of total loans on March 31, 2025, and $2.4 million, or 0.24%, of total loans on June 30, 2024.

Net Charge-offs

Net charge-offs totaled $448 thousand in the second quarter of 2025, compared to $2.4 million in the first quarter of 2025, and $482 thousand in the second quarter of 2024.

Allowance and Provision for Credit Losses

The allowance for credit losses on loans totaled $15.2 million, or 1.05% of total loans on June 30, 2025, compared to $14.7 million, or 1.02% of total loans on March 31, 2025, and $12.6 million, or 1.27% of total loans on June 30, 2024. The allowance for credit losses to NPAs decreased to 223.45% on June 30, 2025 compared to 302.94% on March 31, 2025, but increased from 146.84% on June 30, 2024. 

The Company recorded a $911 thousand provision for credit losses in the second quarter of 2025, compared to a $832 thousand provision for credit losses for the first quarter of 2025. The second quarter provision was comprised of a $900 thousand provision for credit losses on loans, a $1 thousand provision for credit losses on unfunded commitments and a $10 thousand provision for credit losses on held-to-maturity securities. The increase in provision for credit losses is primarily due to the calculated specific reserves on individually analyzed loans that were increased during the quarter in tandem with an increase in the total amount of loan balances individually analyzed for impairment.

CAPITAL

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

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

First National Corporation (3)	Jun 30, 2025				Mar 31, 2025			Jun 30, 2024
Total capital ratio (2)		14.89	%		14.58	%		15.58	%
Tier 1 capital ratio (2)		12.37	%		12.07	%		13.85	%
Common equity Tier 1 capital ratio (2)		11.74	%		11.44	%		12.97	%
Leverage ratio (2)		8.99	%		8.78	%		9.88	%
Common equity to total assets		8.51	%		8.30	%		8.23	%
Tangible common equity to tangible assets (1)		7.73	%		7.50	%		8.03	%
Tangible book value per share (1)	$	17.40		$	16.81		$	18.59
First Bank	Jun 30, 2025			Mar 31, 2025			Jun 30, 2024
Total capital ratio (2)		12.89	%		12.44	%		14.13	%
Tier 1 capital ratio (2)		11.81	%		11.39	%		12.88	%
Common equity Tier 1 capital ratio (2)		11.81	%		11.39	%		12.88	%
Leverage ratio (2)		8.56	%		8.28	%		9.17	%
Common equity to total assets		8.45	%		8.15	%		7.99	%
Tangible common equity to tangible assets (1)		7.68	%		7.35	%		7.79	%

ABOUT FIRST NATIONAL CORPORATION

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

NON-GAAP FINANCIAL MEASURES

In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. The non-GAAP financial measures presented in this document include adjusted operating net income, adjusted operating non-interest expense, adjusted basic and diluted earnings per share, adjusted return on average assets, adjusted return on average equity, pre-provision pre-tax earnings, adjusted pre-provision pre-tax earnings, fully taxable equivalent interest income, the net interest margin, the efficiency ratio, tangible book value per share, and tangible common equity to tangible assets.

The Company believes certain non-GAAP financial measures enhance the understanding of its business and performance. Non-GAAP financial measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure is included at the end of this release.

FORWARD-LOOKING STATEMENTS

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

CONTACTS

Scott C. Harvard		Brad E. Schwartz
President and CEO		Executive Vice President and CFO
(540) 465-9121		(540) 465-9121
[email protected]		[email protected]

FIRST NATIONAL CORPORATION

Performance Summary

(in thousands)

(unaudited)

		For the Three Months Ended												For the Six Months Ended
		Jun 30, 2025				Mar 31, 2025				Jun 30, 2024				Jun 30, 2025				Jun 30, 2024
Income Statement
Interest and dividend income
Interest and fees on loans		$	21,594			$	20,637			$	14,004			$	42,231			$	27,488
Interest on deposits in banks			1,891				1,671				1,579				3,562				2,867
Interest on federal funds sold			—				40				—				40				—
Taxable interest on securities			1,313				1,314				1,134				2,627				2,358
Tax-exempt interest on securities			298				300				306				598				611
Dividends			69				60				32				129				65
Total interest and dividend income		$	25,165			$	24,022			$	17,055			$	49,187			$	33,389
Interest expense
Interest on deposits		$	6,080			$	6,038			$	4,820			$	12,118			$	9,591
Interest on subordinated debt			468				467				69				935				138
Interest on junior subordinated debt			66				66				66				132				134
Interest on other borrowings			3				—				606				3				1,182
Total interest expense		$	6,617			$	6,571			$	5,561			$	13,188			$	11,045
Net interest income		$	18,548			$	17,451			$	11,494			$	35,999			$	22,344
Provision for credit losses			911				832				400				1,743				1,400
Net interest income after provision for credit losses		$	17,637			$	16,619			$	11,094			$	34,256			$	20,944
Noninterest income
Service charges on deposit accounts		$	1,020			$	1,013			$	612			$	2,033			$	1,266
ATM and check card fees			1,128				996				809				2,124				1,579
Wealth management fees			867				898				879				1,765				1,762
Fees for other customer services			230				258				178				488				373
Brokered mortgage fees			183				110				32				293				70
Income from bank owned life insurance			231				246				149				477				300
Net gain on subdebt payoff			80				—				—				80				—
Other operating income			150				90				27				240				1,383
Total noninterest income		$	3,889			$	3,611			$	2,686			$	7,500			$	6,733
Noninterest expense
Salaries and employee benefits		$	8,033			$	8,689			$	5,839			$	16,722			$	11,710
Occupancy			944				1,069				548				2,013				1,083
Equipment			1,057				1,025				691				2,082				1,282
Marketing			286				220				273				506				468
Supplies			198				217				115				415				231
Legal and professional fees			593				522				1,124				1,115				1,576
ATM and check card expense			537				439				368				976				729
FDIC assessment			315				414				203				729				380
Bank franchise tax			348				317				261				665				523
Data processing expense			504				762				163				1,266				409
Amortization expense			441				442				5				883				9
Other real estate owned expense (income), net			(3	)			(8	)			—				(11	)			—
Net loss on disposal of premises and equipment			7				—				—				7				49
Merger expense			92				1,940				—				2,032				—
Other operating expense			1,839				2,287				1,069				4,126				2,097
Total noninterest expense		$	15,191			$	18,335			$	10,659			$	33,526			$	20,546
Income before income taxes		$	6,335			$	1,895			$	3,121			$	8,230			$	7,131
Income tax expense			1,284				297				679				1,581				1,480
Net income		$	5,051			$	1,598			$	2,442			$	6,649			$	5,651

FIRST NATIONAL CORPORATION

Performance Summary

(in thousands, except share and per share data)

(unaudited)

		As of or For the Three Months Ended												For the Six Months Ended
		Jun 30, 2025				Mar 31, 2025				Jun 30, 2024				Jun 30, 2025				Jun 30, 2024
Common Share and Per Common Share Data
Earnings (loss) per common share, basic		$	0.56			$	0.18			$	0.39			$	0.74			$	0.90
Adjusted earnings (loss) per common share, basic (1)		$	0.57			$	0.35				0.48			$	0.92			$	0.99
Weighted average shares, basic			8,987,179				8,979,527				6,278,113				8,983,374				6,273,952
Earnings (loss) per common share, diluted		$	0.56			$	0.18			$	0.39			$	0.74			$	0.90
Adjusted earnings (loss) per common share, diluted (1)		$	0.57			$	0.35				0.48			$	0.92			$	0.99
Weighted average shares, diluted			9,001,972				9,005,923				6,289,405				9,003,969				6,285,970
Shares outstanding at period end			8,989,138				8,986,696				6,280,406				8,989,138				6,280,406
Tangible book value per share at period end (1)		$	17.40			$	16.81			$	18.59			$	17.40			$	18.59
Cash dividends declared		$	0.155			$	0.155			$	0.15			$	0.31			$	0.30
Key Performance Ratios
Return on average assets (4)			1.00	%			0.32	%			0.68	%			0.66	%			0.79	%
Adjusted return on average assets (1)(4)			1.02	%			0.63	%			0.84	%			0.83	%			0.86	%
Return on average equity (4)			11.85	%			3.85	%			8.31	%			7.90	%			9.68	%
Adjusted return on average equity (1)(4)			12.05	%			7.61	%			10.23	%			11.19	%			10.65	%
Net interest margin (4)			3.93	%			3.75	%			3.37	%			3.84	%			3.30	%
Net interest margin fully tax-equivalent (1)(4)			3.95	%			3.77	%			3.40	%			3.86	%			3.31	%
Efficiency ratio (1)			65.11	%			75.44	%			70.64	%			70.01	%			68.09	%
Average Balances
Average assets		$	2,019,344			$	2,016,958			$	1,448,478			$	2,020,425			$	1,438,219
Average earning assets			1,893,133				1,888,428				1,370,072				1,890,749				1,362,687
Average noninterest deposits to total average deposits			29.88	%			29.01	%			31.44	%			29.49	%			30.70	%
Average shareholders' equity		$	170,920			$	168,245				118,255			$	169,713				117,388
Asset Quality
Allowance for credit losses on loans to nonperforming assets			223.45	%			302.94	%			146.84	%			223.45	%			146.84	%
Allowance for credit losses on loans to period end loans			1.05	%			1.02	%			1.27	%			1.05	%			1.27	%
Nonperforming assets to period end loans			0.47	%			0.34	%			0.86	%			0.47	%			0.86	%
Loan charge-offs		$	535			$	2,490			$	521			$	3,025			$	934
Loan recoveries			87				89				39				176				90
Net charge-offs			448				2,401				482				2,849				844
Non-accrual loans			6,796				4,864				8,549				6,796				8,549
Other real estate owned, net			—				—				—				—				—
Nonperforming assets			6,796				4,864				8,549				6,796				8,549
Loans 30 to 89 days past due, accruing			3,190				5,021				2,399				3,190				2,399
Loans over 90 days past due, accruing			—				—				—				—				—
Capital Ratios (5)
Total capital		$	189,115			$	182,563			$	147,500			$	189,115			$	147,500
Tier 1 capital			173,240				167,150				134,451				173,240				134,451
Common equity Tier 1 capital			173,240				167,150				134,451				173,240				134,451
Total capital to risk-weighted assets (2)			12.89	%			12.44	%			14.13	%			12.89	%			14.13	%
Tier 1 capital to risk-weighted assets (2)			11.81	%			11.39	%			12.88	%			11.81	%			12.88	%
Common equity Tier 1 capital to risk-weighted assets (2)			11.81	%			11.39	%			12.88	%			11.81	%			12.88	%
Leverage ratio (2)			8.56	%			8.28	%			9.17	%			8.56	%			9.17	%

FIRST NATIONAL CORPORATION

Performance Summary

(in thousands)

(unaudited)

		For the Period Ended
		Jun 30, 2025				Mar 31, 2025				Dec 31, 2024				Sep 30, 2024				Jun 30, 2024
Balance Sheet
Cash and due from banks		$	34,435			$	27,432			$	24,916			$	18,197			$	16,729
Interest-bearing deposits in banks			159,880				178,600				137,958				108,319				118,906
Cash and cash equivalents		$	194,315			$	206,032			$	162,874			$	126,516			$	135,635
Securities available for sale, at fair value			187,579				160,976				163,847				146,013				144,816
Securities held to maturity, at amortized cost (net of allowance for credit losses)			106,430				108,292				109,741				121,425				123,497
Restricted securities, at cost			5,624				4,436				3,741				2,112				2,112
Loans, net of allowance for credit losses			1,428,251				1,435,895				1,450,604				982,016				977,423
Other real estate owned, net			—				—				53				56				—
Premises and equipment, net			34,530				34,609				34,824				22,960				22,205
Accrued interest receivable			6,143				6,126				6,020				4,794				4,916
Bank owned life insurance			38,367				38,136				37,873				24,992				24,802
Goodwill			3,030				3,030				3,030				3,030				3,030
Core deposit intangibles, net			14,102				14,544				14,986				104				108
Other assets			23,070				21,270				22,688				16,698				18,984
Total assets		$	2,041,441			$	2,033,346			$	2,010,281			$	1,450,716			$	1,457,528
Noninterest-bearing demand deposits		$	541,204			$	540,387			$	520,153			$	383,400			$	397,770
Savings and interest-bearing demand deposits			900,658				922,197				924,880				663,925				665,208
Time deposits			361,304				362,392				358,745				205,930				202,818
Total deposits		$	1,803,166			$	1,824,976			$	1,803,778			$	1,253,255			$	1,265,796
Other borrowings			25,000				—				—				50,000				50,000
Subordinated debt, net			21,148				21,461				21,176				4,999				4,998
Junior subordinated debt			9,279				9,279				9,279				9,279				9,279
Accrued interest payable and other liabilities			9,316				8,955				9,517				8,068				7,564
Total liabilities		$	1,867,909			$	1,864,671			$	1,843,750			$	1,325,601			$	1,337,637
Common stock			11,236				11,233				11,218				7,871				7,851
Surplus			77,578				77,354				77,058				33,409				33,116
Retained earnings			100,810				97,152				96,947				99,270				97,966
Accumulated other comprehensive (loss), net			(16,092	)			(17,064	)			(18,692	)			(15,435	)			(19,042	)
Total shareholders' equity		$	173,532			$	168,675			$	166,531			$	125,115			$	119,891
Total liabilities and shareholders' equity		$	2,041,441			$	2,033,346			$	2,010,281			$	1,450,716			$	1,457,528
Loan Data
Real estate loans:
Construction and land development		$	78,169			$	81,596			$	84,480			$	61,446			$	60,919
Secured by farmland			12,514				12,314				14,133				9,099				8,911
Secured by 1-4 family residential			544,577				550,183				547,576				351,004				346,976
Other real estate loans			667,550				653,367				658,029				440,648				440,857
Loans to farmers (except those secured by real estate)			790				858				940				633				349
Commercial and industrial loans (except those secured by real estate)			119,910				131,539				140,393				114,190				115,951
Consumer installment loans			8,113				8,034				7,582				5,396				5,068
Deposit overdrafts			454				486				450				253				365
All other loans			11,360				12,253				13,421				12,051				10,580
Total loans		$	1,443,437			$	1,450,630			$	1,467,004			$	994,720			$	989,976
Allowance for credit losses			(15,186	)			(14,735	)			(16,400	)			(12,704	)			(12,553	)
Loans, net		$	1,428,251			$	1,435,895			$	1,450,604			$	982,016			$	977,423

FIRST NATIONAL CORPORATION

Average Balances, Yields and Rates Paid

(in thousands)

(unaudited)

	Three Months Ended
	June 30, 2025										March 31, 2025										June 30, 2024
	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	$	220,100		$	1,313			2.39	%		$	219,815		$	1,314			2.42	%		$	216,079		$	1,134			2.11	%
Tax-exempt		50,871			377			2.98	%			51,935			380			2.97	%			53,162			387			2.93	%
Restricted		4,449			70			6.27	%			4,171			60			5.78	%			2,112			32			6.18	%
Total securities	$	275,420		$	1,760			2.56	%		$	275,921		$	1,754			2.58	%		$	271,353		$	1,553			2.30	%
Loans:
Taxable	$	1,441,800		$	21,551			6.00	%		$	1,454,653		$	20,575			5.74	%		$	980,226		$	13,959			5.73	%
Tax-exempt		4,095			54			5.26	%			4,798			79			6.62	%			1,730			57			13.32	%
Total loans	$	1,445,895		$	21,605			5.99	%		$	1,459,451		$	20,654			5.74	%		$	981,956		$	14,016			5.74	%
Federal funds sold		1			—			0.00	%			3,527			39			4.53	%			1			—			0.00	%
Interest-bearing deposits with other institutions		171,817			1,891			4.41	%			149,529			1,671			4.55	%			116,762			1,579			5.44	%
Total earning assets	$	1,893,133		$	25,256			5.35	%		$	1,888,428		$	24,118			5.18	%		$	1,370,072		$	17,148			5.03	%
Less: allowance for credit losses on loans		(14,888	)									(16,620	)									(12,588	)
Total non-earning assets		141,099										145,150										90,995
Total assets	$	2,019,344									$	2,016,958									$	1,448,479
Liabilities and Shareholders' Equity
Interest bearing deposits:
Checking	$	364,686		$	1,208			1.33	%		$	369,023		$	1,232			1.35	%		$	225,967		$	1,133			2.02	%
Regular savings		212,433			191			0.36	%			212,594			175			0.33	%			143,588			40			0.11	%
Money market accounts		329,273			1,869			2.28	%			339,306			1,962			2.34	%			293,137			2,005			2.75	%
Time deposits		361,571			2,812			3.12	%			363,301			2,669			2.98	%			200,756			1,642			3.29	%
Total interest-bearing deposits	$	1,267,963		$	6,080			1.92	%		$	1,284,224		$	6,038			1.91	%		$	863,448		$	4,820			2.24	%
Federal funds purchased		2			—			0.00	%			1			—			0.00	%			2			—			0.00	%
Subordinated debt		21,304			468			8.80	%			21,247			467			8.91	%			4,998			69			5.57	%
Junior subordinated debt		9,279			66			2.86	%			9,279			66			2.88	%			9,279			66			2.88	%
Other borrowings		275			3			4.63	%			—			—			0.00	%			50,000			606			4.88	%
Total interest-bearing liabilities	$	1,298,823		$	6,617			2.04	%		$	1,314,751		$	6,571			2.03	%		$	927,727		$	5,561			2.41	%
Non-interest bearing liabilities
Demand deposits		540,377										524,908										396,014
Other liabilities		9,224										9,054										6,483
Total liabilities	$	1,848,424									$	1,848,713									$	1,330,224
Shareholders' equity		170,920										168,245										118,255
Total liabilities and Shareholders' equity	$	2,019,344									$	2,016,958									$	1,448,479
Net interest income (1)				$	18,639									$	17,547									$	11,587
Interest rate spread (1)								3.31	%									3.15	%									2.62	%
Cost of funds								1.44	%									1.45	%									1.69	%
Interest expense as a percent of average earning assets								1.40	%									1.41	%									1.63	%
Net interest margin FTE (1)								3.95	%									3.77	%									3.40	%

FIRST NATIONAL CORPORATION

Average Balances, Yields and Rates Paid

(in thousands)

(unaudited)

	Six Months Ended
	June 30, 2025												June 30, 2024
	Average Balance				Interest Income/ Expense				Yield / Rate (7)				Average Balance				Interest Income/ Expense				Yield / Rate (7)
Assets
Securities:
Taxable	$	219,990			$	2,627				2.41	%		$	224,656			$	2,358				2.11	%
Tax-exempt		51,323				757				2.98	%			53,634				773				2.90	%
Restricted		4,311				129				6.04	%			2,098				65				6.23	%
Total securities	$	275,624			$	3,513				2.57	%		$	280,388			$	3,196				2.29	%
Loans:
Taxable	$	1,448,191			$	42,127				5.87	%		$	975,420			$	27,443				5.66	%
Tax-exempt		4,445				132				5.99	%			865				57				13.32	%
Total loans	$	1,452,636			$	42,259				5.87	%		$	976,285			$	27,500				5.66	%
Federal funds sold		1,755				39				4.53	%			5				—				5.49	%
Interest-bearing deposits with other institutions		160,734				3,562				4.47	%			106,009				2,867				5.44	%
Total earning assets	$	1,890,749			$	49,373				5.27	%		$	1,362,687			$	33,563				4.95	%
Less: allowance for credit losses on loans		(15,749	)											(12,284	)
Total non-earning assets		145,425												87,816
Total assets	$	2,020,425											$	1,438,219
Liabilities and Shareholders' Equity
Interest bearing deposits:
Checking	$	366,843			$	2,439				1.34	%		$	254,248			$	2,455				1.94	%
Regular savings		212,513				366				0.35	%			145,763				82				0.11	%
Money market accounts		334,261				3,831				2.31	%			267,797				3,847				2.89	%
Time deposits		362,431				5,481				3.05	%			198,910				3,207				3.24	%
Total interest-bearing deposits	$	1,276,048			$	12,117				1.91	%		$	866,718			$	9,591				2.23	%
Federal funds purchased		1				—				0.00	%			1				—				0.00	%
Subordinated debt		22,500				935				8.38	%			4,998				138				5.57	%
Junior subordinated debt		9,279				132				2.87	%			9,279				134				2.90	%
Other borrowings		138				3				4.63	%			50,000				1,182				4.75	%
Total interest-bearing liabilities	$	1,307,966			$	13,187				2.03	%		$	930,996			$	11,045				2.39	%
Non-interest bearing liabilities
Demand deposits		533,596												383,956
Other liabilities		9,150												5,879
Total liabilities	$	1,850,712											$	1,320,831
Shareholders' equity		169,713												117,388
Total liabilities and Shareholders' equity	$	2,020,425											$	1,438,219
Net interest income (1)					$	36,186											$	22,518
Interest rate spread (1)										3.23	%											2.55	%
Cost of funds										1.44	%											1.69	%
Interest expense as a percent of average earning assets										1.41	%											1.62	%
Net interest margin FTE (1)										3.86	%											3.31	%

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, 2025				Mar 31, 2025				Jun 30, 2024				Jun 30, 2025				Jun 30, 2024
Operating Net Income
Net income (GAAP)		$	5,051			$	1,598			$	2,442			$	6,649			$	5,651
Add: Merger-related expenses			92				1,940				571				2,032				571
Subtract: Tax effect of adjustment (5)			(10	)			(381	)			(5	)			(391	)			(5	)
Adjusted operating net income (non-GAAP)		$	5,133			$	3,157			$	3,008			$	8,290			$	6,217
Adjusted Earnings Per Share, Basic
Weighted average shares, basic			8,987,179				8,979,527				6,278,113				8,983,374				6,273,952
Basic earnings per share (GAAP)		$	0.56			$	0.18			$	0.39			$	0.74			$	0.90
Adjusted earnings per share, basic (non-GAAP)		$	0.57			$	0.35			$	0.48			$	0.92			$	0.99
Adjusted Earnings Per Share, Diluted
Weighted average shares, diluted			9,001,972				9,005,923				6,289,405				9,003,969				6,285,970
Diluted earnings per share (GAAP)		$	0.56			$	0.18			$	0.39			$	0.74			$	0.90
Adjusted diluted earnings per share (non-GAAP)		$	0.57			$	0.35			$	0.48			$	0.92			$	0.99
Adjusted Pre-Provision, Pre-Tax Earnings
Net interest income		$	18,548			$	17,451			$	11,494			$	35,999			$	22,344
Total noninterest income			3,889				3,611				2,686				7,500				6,733
Net revenue		$	22,437			$	21,062			$	14,180			$	43,499			$	29,077
Total noninterest expense			15,191				18,335				10,659				33,526				20,546
Pre-provision, pre-tax earnings		$	7,246			$	2,727			$	3,521			$	9,973			$	8,531
Add: Merger expenses			92				1,940				571				2,032				571
Adjusted pre-provision, pre-tax, earnings		$	7,338			$	4,667			$	4,092			$	12,005			$	9,102
Adjusted Performance Ratios
Average assets		$	2,019,344			$	2,016,958			$	1,448,478			$	2,020,425			$	1,438,219
Return on average assets (GAAP)			1.00	%			0.32	%			0.68	%			0.66	%			0.79	%
Adjusted return on average assets (non-GAAP)			1.02	%			0.63	%			0.84	%			0.83	%			0.86	%
Average shareholders' equity		$	170,920			$	168,245			$	118,255			$	169,713			$	117,388
Return on average equity (GAAP)			11.85	%			3.85	%			8.31	%			7.90	%			9.68	%
Adjusted return on average equity (non-GAAP)			12.05	%			7.61	%			10.23	%			11.19	%			10.65	%
Pre-provision, pre-tax return on average assets (non-GAAP)			1.44	%			0.54	%			0.97	%			0.99	%			1.19	%
Adjusted pre-provision, pre-tax return on average assets (non-GAAP)			1.45	%			0.93	%			1.13	%			1.19	%			1.27	%
Adjusted Net Interest Margin
Net interest income		$	18,548			$	17,451			$	11,494			$	35,999			$	22,344
Tax-equivalent net interest income (non-GAAP)			18,639				17,547				11,587				36,186				22,518
Average earning assets			1,893,133				1,888,428				1,370,072				1,890,749				1,362,687
Net interest margin			3.93	%			3.75	%			3.37	%			3.84	%			3.30	%
Net interest margin fully tax equivalent (non-GAAP)			3.95	%			3.77	%			3.40	%			3.86	%			3.31	%

FIRST NATIONAL CORPORATION

Non-GAAP Reconciliation

(in thousands)

(unaudited)

		For the Three Months Ended												For the Six Months Ended
		Jun 30, 2025				Mar 31, 2025				Jun 30, 2024				Jun 30, 2025				Jun 30, 2024
Efficiency Ratio
Total noninterest expense (GAAP)		$	15,191			$	18,335			$	10,659			$	33,526			$	20,546
Add: other real estate owned income, net			3				8				—				11				—
Subtract: amortization of intangibles			(441	)			(442	)			(5	)			(883	)			(9	)
Subtract: loss on disposal of premises and equipment, net			7				—				—				7				(49	)
Subtract: merger expenses			(92	)			(1,940	)			(571	)			(2,032	)			(571	)
Adjusted operating non-interest expense (non-GAAP)		$	14,668			$	15,961			$	10,083			$	30,629			$	19,917
Tax-equivalent net interest income (non-GAAP)		$	18,639			$	17,547			$	11,587			$	36,186			$	22,518
Total noninterest income (GAAP)			3,889				3,611				2,686				7,500				6,733
Adjusted income for efficiency ratio (non-GAAP)		$	22,528			$	21,158			$	14,273			$	43,686			$	29,251
Efficiency ratio (non-GAAP)			65.11	%			75.44	%			70.64	%			70.11	%			68.09	%

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, 2025				Mar 31, 2025				Jun 30, 2024				Jun 30, 2025				Jun 30, 2024
Tax-Equivalent Net Interest Income
GAAP measures:
Interest income – loans		$	21,594			$	20,639			$	14,004			$	42,231			$	27,488
Interest income – investments and other			3,571				3,383				3,051				6,956				5,901
Interest expense – deposits			(6,080	)			(6,038	)			(4,820	)			(12,118	)			(9,591	)
Interest expense – federal funds purchased			—				—				—				—				—
Interest expense – subordinated debt			(468	)			(467	)			(69	)			(935	)			(138	)
Interest expense – junior subordinated debt			(66	)			(66	)			(66	)			(132	)			(134	)
Interest expense – other borrowings			(3	)			—				(606	)			(3	)			(1,182	)
Net interest income		$	18,548			$	17,451			$	11,494			$	35,999			$	22,344
Non-GAAP measures:
Add: Tax benefit realized on non-taxable interest income – loans (6)		$	12			$	16			$	12			$	28			$	12
Add: Tax benefit realized on non-taxable interest income – municipal securities (6)			79				80				81				159				162
Tax benefit realized on non-taxable interest income		$	91			$	96			$	93			$	187			$	174
Tax-equivalent net interest income		$	18,639			$	17,547			$	11,587			$	36,186			$	22,518
Tangible Common Equity and Tangible Assets
Total assets (GAAP)		$	2,041,441			$	2,033,346			$	1,457,528			$	2,041,441			$	1,457,528
Subtract: goodwill			(3,030	)			(3,030	)			(3,030	)			(3,030	)			(3,030	)
Subtract: core deposit intangibles, net			(14,102	)			(14,544	)			(108	)			(14,102	)			(108	)
Tangible assets (Non-GAAP)		$	2,024,309			$	2,015,772			$	1,454,390			$	2,024,309			$	1,454,390
Total shareholders' equity (GAAP)		$	173,532			$	168,675			$	119,891			$	173,532			$	119,891
Subtract: goodwill			(3,030	)			(3,030	)			(3,030	)			(3,030	)			(3,030	)
Subtract: core deposit intangibles, net			(14,102	)			(14,544	)			(108	)			(14,102	)			(108	)
Tangible common equity (Non-GAAP)		$	156,400			$	151,101			$	116,753			$	156,400			$	116,753
Tangible common equity to tangible assets ratio (non-GAAP)			7.73	%			7.50	%			8.03	%			7.73	%			8.03	%
Tangible Book Value Per Share
Tangible common equity (non-GAAP)		$	156,400			$	151,101			$	116,753			$	156,400			$	116,753
Common shares outstanding, ending			8,989,138				8,986,696				6,280,406				8,989,138				6,280,406
Tangible book value per share (non-GAAP)		$	17.40			$	16.81			$	18.59			$	17.40			$	18.59

(1)	Non-GAAP financial measure. See "Non-GAAP Financial Measures" and "Non-GAAP Reconciliation" tables for additional information and detailed calculations of adjustments.
(2)	All ratios at June 30, 2025 are estimates and subject to change pending the Bank's filing of its Call Report. All other periods are presented as filed.
(3)	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 above, along with the Company's capital ratios as determined under those regulations.
(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%.