First National Corporation Reports Record Fourth Quarter and Annual 2025 Earnings



First National Corporation Reports Record Fourth Quarter and Annual 2025 Earnings

GlobeNewswire

January 29, 2026


STRASBURG, Va., Jan. 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 $5.5 million and basic and diluted earnings per common share of $0.61 for the fourth quarter of 2025. For the year ended December 31, 2025, the Company reported consolidated earnings of $17.7 million and basic and diluted earnings per common share of $1.97 and $1.96, respectively, and adjusted operating earnings(1) of $19.1 million and adjusted basic and diluted earnings per common share(1) of $2.13 and $2.12, respectively, for the year ended December 31, 2025.

“We are pleased to report a record fourth quarter of financial performance, as well as a record year. We spent 2025 integrating the Touchstone family and operations into our company, with a major focus on customer retention. The addition of experienced bankers in our Richmond, Roanoke, and Staunton markets helped support our net loan growth in the fourth quarter. We delivered a strong return to our shareholders as we increased our quarterly dividend in the fourth quarter 9.7% and grew our per share tangible book value 14% – all of which helped drive a stock price increase of 9.7% for the year. We are extremely pleased to deliver a double-digit return for our shareholders in 2025,” said Scott C. Harvard, President and Chief Executive Officer of First National.

FINANCIAL HIGHLIGHTS FOR FOURTH QUARTER 2025

â— Basic earnings per share of $0.61 per share, compared to $0.62 in the previous period, up from ($0.10) one year prior
â— Return on average assets of 1.06% compared to 1.09% in the previous period and (0.18%) one year prior
â— Return on average equity of 11.86% compared to 12.43% in the previous period and (2.35%) one year prior
â— Net interest margin, fully tax equivalent (“FTE”)(1) of 3.95%, up from 3.84% in the previous period and 3.83% one year prior
â— Asset quality improved with non-performing assets (“NPAs”) declining to 0.32% of total loans
â— Loan growth of $16.3 million for the quarter, a 4.6% annualized growth rate
â— Noninterest bearing deposits of $509.9 million, or 28% of deposits, contributing to our low funding cost


FINANCIAL HIGHLIGHTS FOR 2025

â— Basic earnings per share of $1.97 compared to $1.00 one year prior
â— Return on average assets of 0.87% compared to 0.44% one year prior
â— Return on average equity of 10.10% compared to 5.33% one year prior
â— Net interest margin (FTE)(1) of 3.88% compared to 3.51% one year prior


NET INTEREST INCOME

For the fourth quarter of 2025, the Company's net interest margin (FTE)(1) was 3.95%, compared to 3.84% for the third quarter of 2025 and 3.83% in the fourth quarter of 2024. The Company's net interest margin (FTE)(1) for the fourth quarter of 2025 includes the impact of acquisition accounting fair value adjustments. Net accretion income related to acquisition accounting was $201 thousand, a 4-basis point incremental increase to the net interest margin for the fourth quarter ended December 31, 2025. Net accretion income related to acquisition accounting was $1.1 million for the year ended December 31, 2025, a 6-basis point incremental increase to the net interest margin.

The quarterly impact of acquisition accretion and amortization in 2025 is reflected in the following table (dollars in thousands):

Loans Deposits Borrowings Total
For the quarter ended March 31, 2025 $ (194 ) $ 443 $ (285 ) $ (36 )
For the quarter ended June 30, 2025 930 163 (186 ) 907
For the quarter ended September 30, 2025 81 55 (93 ) 43
For the quarter ended December 31, 2025 283 (10 ) (72 ) 201
$ 1,100 $ 651 $ (636 ) $ 1,115

Earning asset yields for the fourth quarter of 2025 decreased 2-basis points to 5.24% compared to the third quarter of 2025. Loan accretion increased in the fourth quarter compared to the prior quarter. For the fourth quarter of 2025, net interest income was $19.0 million, an increase of $657 thousand from $18.3 million in the third quarter of 2025 due to a slight increase in net accretion income combined with a decrease in interest expense on average interest-bearing liabilities.

ALLOWANCE AND PROVISION FOR CREDIT LOSSES

The Company recorded a $951 thousand provision for credit losses in the fourth quarter of 2025, compared to $193 thousand for the third quarter of 2025. The fourth quarter provision was comprised of a $923 thousand provision for credit losses on loans and a $28 thousand provision for credit losses on unfunded commitments. Net charge-offs totaled $651 thousand in the fourth quarter of 2025, compared to net charge-offs of $939 thousand in the third quarter of 2025 and net charge-offs of $1.3 million in the fourth quarter of 2024.

The allowance for credit losses on loans totaled $14.7 million, or 1.02% of total loans on December 31, 2025, compared to $14.4 million, or 1.01% of total loans on September 30, 2025, and $16.4 million, or 1.12% of total loans on December 31, 2024. The increase in allowance for credit losses from the prior period is primarily due to increased pooled loan balances as well as three new loans with specific reserves on individually analyzed loans added in the fourth quarter. The decrease in allowance for credit losses from the fourth quarter of 2024 was driven by lower individually analyzed loans balances following charge-offs recorded in 2025. The allowance for credit losses to NPA coverage increased to 316% on December 31, 2025, compared to 253% on September 30, 2025, and to 231% on December 31, 2024.

NONINTEREST INCOME AND EXPENSE

Non-interest income increased $518 thousand to $5.0 million for the fourth quarter of 2025 from $4.5 million in the prior quarter. Non-interest income increased 11.5% in the fourth quarter primarily due to increases in other income from the $895 thousand recovery from an acquired loan that was charged off prior to the acquisition of Touchstone. This increase in other income was offset by decreases in ATM and check card income, decreases in fees for other customer services, and no bargain purchase gain recognized compared to the prior quarter.

Adjusted noninterest income(1), which excludes the bargain purchase gain ($304 thousand in the third quarter of 2025) and loan recovery ($895 thousand in the fourth quarter of 2025), decreased $73 thousand to $4.1 million for the fourth quarter of 2025 from $4.2 million in the prior quarter, due to nominal decreases in ATM and check card income and fees for other customer services.

Noninterest expense increased $343 thousand to $16.1 million for the fourth quarter of 2025 from $15.8 million in the prior quarter. Merger expense increased due to the one-time early lease termination for the now closed Raleigh loan production office acquired in the Touchstone merger. The Company is currently reviewing our total office footprint with plans to further improve operating leverage.

Adjusted operating noninterest expense(1), which excludes the Raleigh LPO lease termination ($127 thousand in the fourth quarter of 2025) and amortization of intangible assets ($442 thousand in the fourth quarter of 2025 and $442 thousand in the third quarter of 2025), increased $216 thousand to $15.6 million for the fourth quarter of 2025 from $15.3 million in the prior quarter, due to increases in equipment and other operating expense.

INCOME TAXES

Income tax expense was $1.39 million for the fourth quarter of 2025, compared to $1.27 million for the third quarter of 2025. The effective tax rate of 20.2% for the fourth quarter of 2025 increased from the 18.6% in the third quarter of 2025. This increased effective tax rate in the fourth quarter was driven by additional income tax expense of $78 thousand related to an adjustment to deferred tax assets related to the Touchstone acquisition partially offset by the final state tax refund for Touchstone. Tax expense and the related effective tax rate for the third quarter of 2025 were reduced due to the $304 thousand adjustment to the bargain purchase gain related to the final Touchstone federal tax filing.

BALANCE SHEET

On December 31, 2025, total assets were $2.039 billion, an increase of $7.9 million or 0.4% from September 30, 2025, and an increase of $28.4 million or 1.4% from December 31, 2024. Total assets were consistent with the prior quarter, and the increase from the prior year was driven by additional investment in securities available for sale.

On December 31, 2025, loans held for investment (“LHFI”) net of allowance totaled $1.435 billion, an increase of $16.3 million or 1.1% from $1.419 billion on September 30, 2025, and a decrease of $15.6 million or 1.1% from December 31, 2024. Loans grew by $17 million during the fourth quarter, the first quarter of net loan growth in 2025.

On December 31, 2025, total investments were $326.0 million, an increase of $20.5 million or 6.7% from September 30, 2025, and an increase of $48.7 million or 17.6% from December 31, 2024. Available for sale (“AFS”) securities totaled $217.5 million on December 31, 2025, and $196.5 million on September 30, 2025, and $163.8 million on December 31, 2024. The increases compared to the prior quarters were driven by security purchases exceeding portfolio cashflows. Total net unrealized losses on the AFS securities portfolio were $14.8 million on December 31, 2025, compared to $15.4 million on September 30, 2025, and $22.1 million on December 31, 2024. Held to maturity securities are carried at amortized cost and totaled $103.0 million on December 31, 2025, $104.6 million on September 30, 2025, and $109.8 million on December 31, 2024.

On December 31, 2025, total deposits were $1.800 billion, a decrease of $10.0 million or 0.6% from the prior quarter, and a decrease of $4.2 million or 0.2% from December 31, 2024. Overall, the deposit balances were consistent with the prior quarter and the prior year. There were $25.0 million in other borrowings with the Federal Home Loan Bank on December 31, 2025, compared to no other borrowings on September 30, 2025, or December 31, 2024.

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 $743.0 million on December 31, 2025, $676.1 million on September 30, 2025, and $770.0 million on December 31, 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 $538.2 million on December 31, 2025, $555.0 million on September 30, 2025, and $537.0 million on December 31, 2024. Excluding municipal deposits that have collateral pledged, the estimated amount of uninsured customer deposits totaled $448.8 million on December 31, 2025, $473.4 million on September 30, 2025, and $445.5 million on December 31, 2024.

ASSET QUALITY

Overall NPAs improved over the previous period and previous year as previously reserved loans were charged off in the fourth quarter of 2025. Management classifies NPAs as non-accrual loans and other real estate owned (“OREO”). NPAs as a percentage of total loans declined to 0.32% on December 31, 2025, down from 0.40% on September 30, 2025, and down from 0.48% on December 31, 2024. NPAs decreased by $1.0 million to $4.7 million on December 31, 2025, compared to $5.7 million on September 30, 2025, and $7.1 million on December 31, 2024.

There were no loans past due over 90 days or more and still accruing interest on December 31, 2025, compared to $388 thousand on September 30, 2025, and $365 thousand on December 31, 2024. Loans past-due 30-89 days and still accruing interest increased to $3.8 million, or 0.26% of total loans on December 31, 2025, compared to $3.6 million, or 0.25% of total loans on September 30, 2025, and $3.1 million, or 0.21%, of total loans on December 31, 2024. The health care provider portfolio continues to decline with $10.0 million in loan balances and $4.1 million in unamortized premiums, with $2.1 million on non-accrual which include specific reserves of $1.6 million.

CAPITAL

During the fourth quarter of 2025, the Company declared and paid cash dividends of $0.17 per common share, compared to $0.155 in the third quarter of 2025 and $0.155 in the fourth quarter of 2024. Tangible book value per share(1) grew to $18.83 at December 31, 2025, from $18.26 per share at September 30, 2025, and $16.55 at December 31, 2024 primarily due to earnings and improvements in unrealized losses on available for sale securities, less dividends and corporate expenses paid.

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

First National Corporation (2) Dec 31, 2025 Sep 30, 2025 Dec 31, 2024
Total risk-based capital ratio 14.53 % 15.15 % 14.57 %
Tier 1 risk-based capital ratio 12.93 % 12.83 % 11.98 %
Common equity Tier 1 capital ratio 12.30 % 12.20 % 11.35 %
Leverage ratio 9.29 % 9.24 % 8.59 %
Tangible common equity to tangible assets (1) 8.40 % 8.17 % 7.46 %
Tangible book value per share (1) $ 18.83 $ 18.26 $ 16.55
First Bank Dec 31, 2025 Sep 30, 2025 Dec 31, 2024
Total risk-based capital ratio (3) 13.64 % 13.40 % 12.34 %
Tier 1 risk-based capital ratio (3) 12.59 % 12.36 % 11.19 %
Common equity Tier 1 capital ratio (3) 12.59 % 12.36 % 11.19 %
Leverage ratio (3) 9.13 % 8.88 % 7.95 %
Tangible common equity to tangible assets (1) 8.51 % 8.18 % 7.14 %

During the fourth quarter of 2025, the Company redeemed $13 million in subordinated debt, at par, including redemptions on October 1, 2025 ($5 million) and November 15, 2025 ($8 million). There was no gain or loss recognized on these redemptions. These capital redemptions had minimal impact on the total risk-based capital ratio and should position the Company for improved profitability in future periods.

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 consumer and business mobile banking platforms, a network of ATMs located throughout its market area, two loan production offices, a customer service center in a retirement community, and thirty-three bank branch 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 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 operating non-interest income, 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,” “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 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) 545-7695 (540) 465-6130
sharvard@fbvirginia.com bschwartz@fbvirginia.com

FIRST NATIONAL CORPORATION
Performance Summary
(in thousands)
(unaudited)
For the Three Months Ended For the Year Ended
Dec 31, 2025 Sep 30, 2025 Dec 31, 2024 Dec 31, 2025 Dec 31, 2024
Income Statement
Interest and dividend income
Interest and fees on loans $ 21,513 $ 21,430 $ 21,516 $ 85,174 $ 63,483
Interest on deposits in banks 1,618 1,733 2,085 6,913 6,490
Interest on federal funds sold 1 1 189 41 189
Taxable interest on securities 1,734 1,562 1,284 5,923 4,733
Tax-exempt interest on securities 292 296 308 1,186 1,222
Dividends 66 65 104 260 202
Total interest and dividend income $ 25,224 $ 25,087 $ 25,486 $ 99,497 $ 76,319
Interest expense
Interest on deposits $ 5,929 $ 6,246 $ 6,415 $ 24,292 $ 20,964
Interest on federal funds purchased — — 1 — 1
Interest on subordinated debt 273 479 396 1,687 603
Interest on junior subordinated debt 67 67 68 266 270
Interest on other borrowings 3 — 247 6 2,029
Total interest expense $ 6,272 $ 6,792 $ 7,127 $ 26,251 $ 23,867
Net interest income $ 18,952 $ 18,295 $ 18,359 $ 73,246 $ 52,452
Provision for credit losses 951 193 4,750 2,887 7,850
Net interest income after provision for credit losses $ 18,001 $ 18,102 $ 13,609 $ 70,359 $ 44,602
Noninterest income
Service charges on deposit accounts $ 937 $ 985 $ 1,181 $ 3,955 $ 3,122
ATM and check card fees 1,124 1,336 792 4,584 3,305
Wealth management fees 936 910 903 3,611 3,617
Fees for other customer services 292 407 317 1,187 966
Brokered mortgage fees 190 166 90 649 252
Income from bank owned life insurance 383 284 264 1,144 755
Net (losses) on securities available for sale — — (154 ) — (115 )
Net gains on sale of loans held for sale 3 5 — 8 —
Bargain purchase gain — 304 2,920 304 2,920
Net gain on subordinated debt payoff — — — 80 —
Other operating income 1,153 103 131 1,496 1,558
Total noninterest income $ 5,018 $ 4,500 $ 6,444 $ 17,018 $ 16,380
Noninterest expense
Salaries and employee benefits $ 8,454 $ 8,487 $ 7,503 $ 33,663 $ 25,134
Occupancy 881 1,025 913 3,919 2,573
Equipment 1,282 1,056 1,123 4,420 3,131
Marketing 350 324 331 1,180 1,037
Supplies 207 158 186 780 489
Legal and professional fees 667 660 520 2,442 1,993
ATM and check card expense 570 569 385 2,115 1,508
FDIC assessment 258 305 285 1,292 860
Bank franchise tax 349 350 262 1,364 1,047
Data processing expense 501 495 684 2,262 1,404
Amortization expense 442 442 448 1,767 461
Other real estate owned expense (income), net — — 5 (7 ) 15
Net (gain) loss on disposal of premises and equipment — (7 ) — — 47
Merger expense 127 — 7,316 2,159 8,107
Other operating expense 2,037 1,918 1,968 8,077 5,128
Total noninterest expense $ 16,125 $ 15,782 $ 21,929 $ 65,433 $ 52,934
Income (loss) before income taxes $ 6,894 $ 6,820 $ (1,876 ) $ 21,944 $ 8,048
Income tax expense (benefit) 1,390 1,270 (943 ) 4,241 1,082
Net income (loss) $ 5,504 $ 5,550 $ (933 ) $ 17,703 $ 6,966

FIRST NATIONAL CORPORATION
Performance Summary
(in thousands, except share and per share data)
(unaudited)
For the Three Months Ended For the Year Ended
Dec 31, 2025 Sep 30, 2025 Dec 31, 2024 Dec 31, 2025 Dec 31, 2024
Common Share and Per Common Share Data
Earnings (loss) per common share, basic $ 0.61 $ 0.62 $ (0.10 ) $ 1.97 $ 1.00
Adjusted earnings per common share, basic (1) $ 0.62 $ 0.58 $ 0.66 $ 2.13 $ 2.10
Weighted average shares, basic 9,011,378 8,999,153 8,971,649 8,994,410 6,955,592
Earnings (loss) per common share, diluted $ 0.61 $ 0.62 $ (0.10 ) $ 1.96 $ 1.00
Adjusted earnings per common share, diluted (1) $ 0.62 $ 0.58 $ 0.66 $ 2.12 $ 2.10
Weighted average shares, diluted 9,030,437 9,023,185 8,994,315 9,015,480 6,971,089
Shares outstanding at period end 9,025,395 9,009,209 8,974,102 9,025,395 8,974,102
Tangible book value per share at period end (1) $ 18.83 $ 18.26 $ 16.55 $ 18.83 $ 16.55
Market price per share at period end $ 25.24 $ 22.68 $ 23.01 $ 25.24 $ 23.01
Cash dividends declared $ 0.170 $ 0.155 $ 0.155 $ 0.635 $ 0.605
Key Performance Ratios
Return on average assets (4) 1.06 % 1.09 % (0.18 %) 0.87 % 0.44 %
Adjusted return on average assets (1)(4) 1.08 % 1.03 % 1.15 % 0.94 % 0.92 %
Return on average equity (4) 11.86 % 12.43 % (2.35 %) 10.10 % 5.33 %
Adjusted return on average equity (1)(4) 12.08 % 11.75 % 15.01 % 10.92 % 11.19 %
Net interest margin (4) 3.93 % 3.83 % 3.83 % 3.86 % 3.51 %
Net interest margin fully tax-equivalent (1)(4) 3.95 % 3.84 % 3.83 % 3.88 % 3.51 %
Efficiency ratio (1) 64.66 % 67.97 % 63.97 % 68.18 % 66.73 %
Average Balances
Average assets $ 2,061,973 $ 2,022,958 $ 2,051,578 $ 2,026,527 $ 1,597,150
Average earning assets 1,914,802 1,897,328 1,919,864 1,898,424 1,504,946
Average noninterest deposits to total average deposits 29.28 % 29.13 % 29.20 % 29.12 % 30.83 %
Average shareholders' equity $ 184,167 $ 177,130 157,844 $ 175,264 130,715
Asset Quality
Allowance for credit losses on loans to nonperforming assets 316.27 % 253.37 % 230.63 % 316.27 % 230.63 %
Allowance for credit losses on loans to period end loans 1.02 % 1.01 % 1.12 % 1.02 % 1.12 %
Nonperforming assets to period end loans 0.32 % 0.40 % 0.48 % 0.32 % 0.48 %
Loan charge-offs $ 753 $ 1,027 $ 1,432 $ 4,805 $ 4,033
Loan recoveries 102 88 98 366 283
Net charge-offs 651 939 1,334 4,439 3,750
Non-accrual loans 4,654 5,702 7,058 4,654 7,058
Other real estate owned, net — — 53 — 53
Nonperforming assets 4,654 5,702 7,111 4,654 7,111
Loans 30 to 89 days past due, accruing 3,830 3,580 3,085 3,830 3,085
Loans over 90 days past due, accruing — 388 365 — 365
Capital Ratios (5)
Total capital $ 201,622 $ 194,910 $ 181,449 $ 201,622 $ 181,449
Tier 1 capital 186,193 179,781 164,454 186,193 164,454
Common equity Tier 1 capital 186,193 179,781 164,454 186,193 164,454
Total capital to risk-weighted assets (3) 13.64 % 13.40 % 12.34 % 13.64 % 12.34 %
Tier 1 capital to risk-weighted assets (3) 12.59 % 12.36 % 11.19 % 12.59 % 11.19 %
Common equity Tier 1 capital / risk-weighted assets (3) 12.59 % 12.36 % 11.19 % 12.59 % 11.19 %
Leverage ratio (3) 9.13 % 8.88 % 7.95 % 9.13 % 7.95 %

FIRST NATIONAL CORPORATION
Performance Summary
(in thousands)
(unaudited)
For the Period Ended
Dec 31, 2025 Sep 30, 2025 Jun 30, 2025 Mar 31, 2025 Dec 31, 2024
Balance Sheet
Cash and due from banks $ 20,836 $ 23,716 $ 34,435 $ 27,432 $ 24,916
Interest-bearing deposits in banks 140,074 165,601 159,880 178,600 137,958
Cash and cash equivalents $ 160,910 $ 189,317 $ 194,315 $ 206,032 $ 162,874
Securities available for sale, at fair value 217,538 196,476 187,579 160,976 163,847
Securities held to maturity, at amortized cost (net of allowance for credit losses) 102,872 104,608 106,430 108,292 109,741
Restricted securities, at cost 5,624 4,436 5,624 4,436 3,741
Loans, net of allowance for credit losses 1,435,026 1,418,750 1,428,251 1,435,895 1,450,604
Other real estate owned, net — — — — 53
Premises and equipment, net 34,561 34,107 34,530 34,609 34,824
Accrued interest receivable 6,430 6,238 6,143 6,126 6,020
Bank owned life insurance 38,577 38,652 38,367 38,136 37,873
Goodwill 3,030 3,030 3,030 3,030 3,030
Core deposit intangibles, net 13,219 13,661 14,102 14,544 14,986
Other assets 20,907 21,479 23,070 21,270 22,688
Total assets $ 2,038,694 $ 2,030,754 $ 2,041,441 $ 2,033,346 $ 2,010,281
Noninterest-bearing demand deposits $ 509,874 $ 511,482 $ 541,204 $ 540,387 $ 520,153
Savings and interest-bearing demand deposits 926,579 931,241 900,658 922,197 924,880
Time deposits 363,095 366,860 361,304 362,392 358,745
Total deposits $ 1,799,548 $ 1,809,583 $ 1,803,166 $ 1,824,976 $ 1,803,778
Other borrowings 25,000 — 25,000 — —
Subordinated debt, net 8,312 21,241 21,148 21,461 21,176
Junior subordinated debt 9,279 9,279 9,279 9,279 9,279
Accrued interest payable and other liabilities 10,359 9,442 9,316 8,955 9,517
Total liabilities $ 1,852,498 $ 1,849,545 $ 1,867,909 $ 1,864,671 $ 1,843,750
Common stock 11,282 11,262 11,236 11,233 11,218
Surplus 78,216 78,187 77,578 77,354 77,058
Retained earnings 108,937 104,964 100,810 97,152 96,947
Accumulated other comprehensive (loss), net (12,239 ) (13,204 ) (16,092 ) (17,064 ) (18,692 )
Total shareholders' equity $ 186,196 $ 181,209 $ 173,532 $ 168,675 $ 166,531
Total liabilities and shareholders' equity $ 2,038,694 $ 2,030,754 $ 2,041,441 $ 2,033,346 $ 2,010,281
Loan Portfolio
Real estate loans:
Construction and land development $ 88,424 $ 78,470 $ 78,169 $ 81,596 $ 84,480
Secured by farmland 11,879 12,812 12,514 12,314 14,133
Secured by 1-4 family residential 527,282 533,458 544,577 550,183 547,576
Other real estate loans 685,099 671,723 667,550 653,367 658,029
Commercial and industrial loans (except those secured by real estate) 117,256 117,047 119,910 131,539 140,393
Consumer installment loans 8,419 8,358 8,113 8,034 7,582
Deposit overdrafts 543 535 454 486 450
All other loans 10,843 10,794 12,150 13,111 14,361
Total loans $ 1,449,745 $ 1,433,197 $ 1,443,437 $ 1,450,630 $ 1,467,004
Allowance for credit losses (14,719 ) (14,447 ) (15,186 ) (14,735 ) (16,400 )
Loans, net $ 1,435,026 $ 1,418,750 $ 1,428,251 $ 1,435,895 $ 1,450,604

FIRST NATIONAL CORPORATION
Average Balances, Yields and Rates Paid
(in thousands)
(unaudited)
Three Months Ended
December 31, 2025 September 30, 2025 December 31, 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 $ 261,463 $ 1,735 2.63 % $ 242,797 $ 1,562 2.55 % $ 222,869 $ 1,284 2.29 %
Tax-exempt (1) 52,441 370 2.80 % 51,493 375 2.89 % 52,943 391 2.93 %
Restricted 4,449 66 5.88 % 4,436 65 5.80 % 3,773 104 10.96 %
Total securities $ 318,353 $ 2,171 2.70 % $ 298,726 $ 2,002 2.66 % $ 279,585 $ 1,779 2.53 %
Loans:
Taxable $ 1,431,171 $ 21,468 5.95 % $ 1,437,946 $ 21,386 5.90 % $ 1,446,432 $ 21,447 5.90 %
Tax-exempt (1) 3,565 57 6.32 % 3,473 55 6.29 % 5,193 88 6.74 %
Total loans $ 1,434,736 $ 21,525 5.95 % $ 1,441,419 $ 21,441 5.90 % $ 1,451,625 $ 21,535 5.90 %
Federal funds sold 33 — — 55 — — 16,963 188 4.42 %
Interest-bearing deposits with other institutions 161,680 1,618 3.97 % 157,128 1,734 4.38 % 171,692 2,085 4.83 %
Total earning assets $ 1,914,802 $ 25,314 5.24 % $ 1,897,328 $ 25,177 5.26 % $ 1,919,865 $ 25,587 5.30 %
Less: allowance for credit losses on loans (14,883 ) (15,378 ) (16,781 )
Total non-earning assets 162,054 141,008 148,495
Total assets $ 2,061,973 $ 2,022,958 $ 2,051,579
Liabilities and Shareholders' Equity
Interest bearing deposits:
Checking $ 401,385 $ 1,185 1.17 % $ 376,344 $ 1,256 1.32 % $ 369,546 $ 1,314 1.41 %
Regular savings 207,169 183 0.35 % 209,909 208 0.39 % 212,738 171 0.32 %
Money market accounts 331,288 1,656 1.98 % 330,115 1,882 2.26 % 359,708 2,320 2.57 %
Time deposits 365,961 2,905 3.15 % 363,702 2,900 3.16 % 355,181 2,610 2.92 %
Total interest-bearing deposits $ 1,305,803 $ 5,929 1.80 % $ 1,280,070 $ 6,246 1.94 % $ 1,297,173 $ 6,415 1.97 %
Federal funds purchased 1 — — — — — 6 — —
Subordinated debt 12,167 274 8.94 % 21,304 479 8.92 % 17,131 395 9.17 %
Junior subordinated debt 9,279 67 2.87 % 9,279 66 2.83 % 9,279 68 2.94 %
Other borrowings 272 3 3.93 % — — 0.00 % 20,109 248 4.90 %
Total interest-bearing liabilities $ 1,327,522 $ 6,273 1.87 % $ 1,310,653 $ 6,791 2.06 % $ 1,343,698 $ 7,126 2.11 %
Non-interest bearing liabilities
Demand deposits 540,640 526,240 534,951
Other liabilities 9,644 8,935 15,086
Total liabilities $ 1,877,806 $ 1,845,828 $ 1,893,735
Shareholders' equity 184,167 177,130 157,844
Total liabilities and Shareholders' equity $ 2,061,973 $ 2,022,958 $ 2,051,579
Net interest income (1) $ 19,041 $ 18,386 $ 18,461
Interest rate spread (1) 3.37 % 3.21 % 3.19 %
Cost of funds 1.33 % 1.47 % 1.51 %
Interest expense as a percent of average earning assets 1.30 % 1.42 % 1.48 %
Net interest margin FTE (1) 3.95 % 3.84 % 3.83 %

FIRST NATIONAL CORPORATION
Average Balances, Yields and Rates Paid
(in thousands)
(unaudited) Year Ended
December 31, 2025 December 31, 2024
Average Balance Interest Income/ Expense Yield / Rate (7) Average Balance Interest Income/ Expense Yield / Rate (7)
Assets
Securities:
Taxable $ 236,181 $ 5,923 2.51 % $ 221,611 $ 4,733 2.14 %
Tax-exempt (1) 51,613 1,502 2.91 % 53,289 1,547 2.90 %
Restricted 4,377 260 5.94 % 2,522 202 8.01 %
Total securities $ 292,171 $ 7,685 2.63 % $ 277,422 $ 6,482 2.34 %
Loans:
Taxable $ 1,441,319 $ 84,982 5.90 % $ 1,096,312 $ 63,320 5.78 %
Tax-exempt (1) 3,978 244 6.13 % 2,561 206 8.04 %
Total loans $ 1,445,297 $ 85,226 5.90 % $ 1,098,873 $ 63,526 5.78 %
Federal funds sold 892 40 4.52 % 4,244 189 4.44 %
Interest-bearing deposits with other institutions 160,064 6,913 4.32 % 124,407 6,490 5.22 %
Total earning assets $ 1,898,424 $ 99,864 5.26 % $ 1,504,946 $ 76,687 5.10 %
Less: allowance for credit losses on loans (15,437 ) (13,381 )
Total non-earning assets 143,540 105,585
Total assets $ 2,026,527 $ 1,597,150
Liabilities and Shareholders' Equity
Interest bearing deposits:
Checking $ 377,944 $ 4,880 1.29 % $ 278,558 $ 4,870 1.75 %
Regular savings 210,510 756 0.36 % 160,795 292 0.18 %
Money market accounts 332,467 7,370 2.22 % 294,818 8,265 2.80 %
Time deposits 363,641 11,286 3.10 % 239,590 7,537 3.15 %
Total interest-bearing deposits $ 1,284,562 $ 24,292 1.89 % $ 973,761 $ 20,964 2.15 %
Federal funds purchased 1 — — 2 — —
Subordinated debt 20,308 1,688 8.31 % 8,889 603 6.78 %
Junior subordinated debt 9,279 266 2.86 % 9,279 270 2.91 %
Other borrowings 137 6 4.28 % 42,486 2,029 4.78 %
Total interest-bearing liabilities $ 1,314,287 $ 26,252 2.00 % $ 1,034,417 $ 23,866 2.31 %
Non-interest bearing liabilities
Demand deposits 527,756 422,981
Other liabilities 9,220 9,037
Total liabilities $ 1,851,263 $ 1,466,435
Shareholders' equity 175,264 130,715
Total liabilities and Shareholders' equity $ 2,026,527 $ 1,597,150
Net interest income (1) $ 73,612 $ 52,821
Interest rate spread (1) 3.26 % 2.79 %
Cost of funds 1.43 % 1.64 %
Interest expense as a percent of average earning assets 1.38 % 1.59 %
Net interest margin FTE (1) 3.88 % 3.51 %

FIRST NATIONAL CORPORATION
Non-GAAP Reconciliation
(in thousands, except share and per share data)
(unaudited)
For the Three Months Ended For the Year Ended
Dec 31, 2025 Sep 30, 2025 Dec 31, 2024 Dec 31, 2025 Dec 31, 2024
Operating Net Income
Net income (GAAP) $ 5,504 $ 5,550 $ (933 ) $ 17,703 $ 6,966
Add: Merger-related expenses 127 — 7,316 2,159 8,107
Add: Day 2 Non-PCD Provision — — 3,931 — 3,931
Subtract: Bargain purchase gain — (304 ) (2,920 ) (304 ) (2,920 )
Subtract: Tax effect of adjustment (5) (27 ) 64 (1,439 ) (417 ) (1,463 )
Adjusted operating net income (non-GAAP) $ 5,604 $ 5,310 $ 5,955 $ 19,141 $ 14,621
Adjusted Earnings Per Share, Basic
Weighted average shares, basic 9,011,378 8,999,153 8,971,649 8,994,410 6,955,592
Basic earnings (loss) per share (GAAP) $ 0.61 $ 0.62 $ (0.10 ) $ 1.97 $ 1.00
Adjusted earnings per share, basic (non-GAAP) $ 0.62 $ 0.58 $ 0.66 $ 2.13 $ 2.10
Adjusted Earnings Per Share, Diluted
Weighted average shares, diluted 9,030,437 9,023,185 8,994,315 9,015,480 6,971,089
Diluted earnings (loss) per share (GAAP) $ 0.61 $ 0.62 $ (0.10 ) $ 1.96 $ 1.00
Adjusted diluted earnings per share (non-GAAP) $ 0.62 $ 0.58 $ 0.66 $ 2.12 $ 2.10
Adjusted Pre-Provision, Pre-Tax Earnings
Net interest income $ 18,952 $ 18,295 $ 18,359 $ 73,246 $ 52,452
Total noninterest income 5,018 4,500 6,444 17,018 16,380
Net revenue $ 23,970 $ 22,795 $ 24,803 $ 90,264 $ 68,832
Total noninterest expense 16,125 15,782 21,929 65,433 52,934
Pre-provision, pre-tax earnings $ 7,845 $ 7,013 $ 2,874 $ 24,831 $ 15,898
Add: Merger expenses 127 — 7,316 2,159 8,107
Add: Day 2 Non-PCD Provision — — 3,931 — 3,931
Subtract: Bargain purchase gain — (304 ) (2,920 ) (304 ) (2,920 )
Adjusted pre-provision, pre-tax earnings $ 7,972 $ 6,709 $ 11,201 $ 26,686 $ 25,016
Adjusted Performance Ratios
Average assets $ 2,061,973 $ 2,022,958 $ 2,051,578 $ 2,026,527 $ 1,597,150
Return on average assets (GAAP) 1.06 % 1.09 % (0.18 %) 0.87 % 0.44 %
Adjusted return on average assets (non-GAAP) 1.08 % 1.03 % 1.15 % 0.94 % 0.92 %
Average shareholders' equity $ 184,167 $ 177,130 $ 157,844 $ 175,264 $ 130,715
Return on average equity (GAAP) 11.86 % 12.43 % (2.35 %) 10.10 % 5.33 %
Adjusted return on average equity (non-GAAP) 12.08 % 11.75 % 15.01 % 10.92 % 11.19 %
Net Interest Margin
Net interest income $ 18,952 $ 18,295 $ 18,359 $ 73,246 $ 52,452
Tax-equivalent net interest income (non-GAAP) 19,041 18,385 18,461 73,612 52,821
Average earning assets 1,914,802 1,897,328 1,919,864 1,898,424 1,504,946
Net interest margin 3.93 % 3.83 % 3.80 % 3.86 % 3.49 %
Net interest margin fully tax equivalent (non-GAAP) 3.95 % 3.84 % 3.83 % 3.88 % 3.51 %

FIRST NATIONAL CORPORATION
Non-GAAP Reconciliation
(in thousands)
(unaudited)
For the Three Months Ended For the Year Ended
Dec 31, 2025 Sep 30, 2025 Dec 31, 2024 Dec 31, 2025 Dec 31, 2024
Adjusted Noninterest Income
Total noninterest income $ 5,018 $ 4,500 $ 6,444 $ 17,018 $ 16,380
Subtract: bargain purchase gain — (304 ) (2,920 ) (304 ) (2,920 )
Subtract: loan recovery (895 ) — — (895 ) —
Net revenue 4,123 4,196 $ 3,524 $ 15,819 $ 13,460
Adjusted Operating Noninterest Expense
Total noninterest expense $ 16,125 $ 15,782 $ 21,929 $ 65,433 $ 52,934
Subtract: merger expenses (127 ) — (7,316 ) (2,159 ) (8,107 )
Subtract: amortization expense (442 ) (442 ) (448 ) (1,767 ) (461 )
Adjusted operating noninterest expense $ 15,556 $ 15,340 $ 14,165 $ 61,507 $ 44,366
Efficiency Ratio
Total noninterest expense (GAAP) $ 16,125 $ 15,782 $ 21,929 $ 65,433 $ 52,934
Subtract/Add: other real estate owned (expense) income, net — — (5 ) 7 (15 )
Subtract: amortization of intangibles (442 ) (442 ) (448 ) (1,767 ) (461 )
Add/Subtract: gain (loss) on disposal of premises and equipment, net — 9 3 16 (47 )
Subtract: merger expenses (127 ) — (7,316 ) (2,159 ) (8,107 )
Adjusted operating non-interest expense (non-GAAP) $ 15,556 $ 15,349 $ 14,163 $ 61,530 $ 44,304
Tax-equivalent net interest income (non-GAAP) $ 19,041 $ 18,385 $ 18,461 $ 73,612 $ 52,821
Total noninterest income (GAAP) 5,018 4,500 6,444 17,018 16,380
Subtract: net gain on subordinated debt payoff — — — (80 ) —
Subtract: bargain purchase gain — (304 ) (2,920 ) (304 ) (2,920 )
Add/Subtract: securities losses (gains), net — — 154 — 115
Adjusted income for efficiency ratio (non-GAAP) $ 24,059 $ 22,581 $ 22,139 $ 90,246 $ 66,396
Efficiency ratio (non-GAAP) 64.66 % 67.97 % 63.97 % 68.18 % 66.73 %

FIRST NATIONAL CORPORATION
Non-GAAP Reconciliation
(in thousands, except share and per share data)
(unaudited)
For the Three Months Ended For the Year Ended
Dec 31, 2025 Sep 30, 2025 Dec 31, 2024 Dec 31, 2025 Dec 31, 2024
Tax-Equivalent Net Interest Income
GAAP measures:
Interest income – loans $ 21,513 $ 21,430 $ 21,516 $ 85,174 $ 63,483
Interest income – investments and other 3,711 3,657 3,970 14,323 12,836
Interest expense – deposits (5,929 ) (6,246 ) (6,415 ) (24,292 ) (20,964 )
Interest expense – federal funds purchased — — (1 ) — (1 )
Interest expense – subordinated debt (273 ) (479 ) (396 ) (1,687 ) (603 )
Interest expense – junior subordinated debt (67 ) (67 ) (68 ) (266 ) (270 )
Interest expense – other borrowings (3 ) — (247 ) (6 ) (2,029 )
Net interest income $ 18,952 $ 18,295 $ 18,359 $ 73,246 $ 52,452
Non-GAAP measures:
Add: Tax benefit realized on non-taxable interest income – loans (6) $ 12 $ 11 $ 18 $ 51 $ 43
Add: Tax benefit realized on non-taxable interest income – municipal securities (6) 77 79 84 315 326
Tax benefit realized on non-taxable interest income $ 89 $ 90 $ 102 $ 366 $ 369
Tax-equivalent net interest income $ 19,041 $ 18,385 $ 18,461 $ 73,612 $ 52,821
Tangible Common Equity and Tangible Assets
Total assets (GAAP) $ 2,038,694 $ 2,030,754 $ 2,010,281 $ 2,038,694 $ 2,010,281
Subtract: goodwill (3,030 ) (3,030 ) (3,030 ) (3,030 ) (3,030 )
Subtract: core deposit intangibles, net (13,219 ) (13,661 ) (14,986 ) (13,219 ) (14,986 )
Tangible assets (Non-GAAP) $ 2,022,445 $ 2,014,063 $ 1,992,265 $ 2,022,445 $ 1,992,265
Total shareholders' equity (GAAP) $ 186,196 $ 181,209 $ 166,531 $ 186,196 $ 166,531
Subtract: goodwill (3,030 ) (3,030 ) (3,030 ) (3,030 ) (3,030 )
Subtract: core deposit intangibles, net (13,219 ) (13,661 ) (14,986 ) (13,219 ) (14,986 )
Tangible common equity (Non-GAAP) $ 169,947 $ 164,518 $ 148,515 $ 169,947 $ 148,515
Tangible common equity to tangible assets ratio (non-GAAP) 8.40 % 8.17 % 7.45 % 8.40 % 7.45 %
Tangible Book Value Per Share
Tangible common equity (non-GAAP) $ 169,947 $ 164,518 $ 148,515 $ 169,947 $ 148,515
Common shares outstanding, ending 9,025,395 9,009,209 8,974,102 9,025,395 8,974,102
Tangible book value per share (non-GAAP) $ 18.83 $ 18.26 $ 16.55 $ 18.83 $ 16.55

(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 above, along with the Company's capital ratios as determined under those regulations.
(3) All ratios on December 31, 2025, 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%


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