First National Corporation (the “Company” or “First National”)
(NASDAQ: FXNC), the bank holding company of First Bank (the
“Bank”), reported unaudited consolidated net income of $4.5 million
and basic and diluted earnings per common share of $0.71 for the
third quarter ended September 30, 2022. This compares to net income
of $3.8 million and basic and diluted earnings per common share of
$0.61 for the second quarter of 2022.
THIRD QUARTER HIGHLIGHTS
Key highlights of the third quarter ending September 30, 2022,
are as follows. Comparisons are to the linked quarterly period
ending June 30, 2022, unless otherwise stated:
- Net income increased $619 thousand, or 16%, to $4.5
million
- Return on average assets was 1.27%
- Return on average equity was 17.27%
- Net interest margin improved to 3.58% from 3.42%
- Efficiency ratio improved to 61.10% from 62.69%
- Loans increased $26.4 million, or 12%, annualized
- Net interest income increased $437 thousand, or 15%
annualized
- Non-performing assets were unchanged at 0.15% of total
assets
“First National Corporation delivered excellent third quarter
results with 12% annualized loan growth, strong credit metrics, and
an improved net interest margin and efficiency ratio,” said Scott
C. Harvard, president and chief executive officer of First
National. “The Company benefited from recent strategic expansion
initiatives, loan growth and a higher net interest margin. We
believe diversifying with employees and customers in attractive
Virginia markets is building long term value for our shareholders.
As we move forward, the Company will remain mindful of current
economic uncertainties as our team continues to be disciplined in
underwriting loans and managing to our long-term risk
appetite.”
STOCK REPURCHASE PLAN
The Company also announced today that its board of directors
authorized a stock repurchase plan on October 12, 2022, pursuant to
which First National may repurchase up to $5.0 million of the
Company’s common stock. First National intends to purchase shares
periodically through privately negotiated transactions or in the
open market in accordance with Securities and Exchange Commission
rules. The Company’s board of directors authorized the purchase
plan to run through December 31, 2023, unless the entire amount
authorized to be repurchased has been acquired before that date.
First National intends to fund the repurchase plan with a
combination of cash on hand and cash generated from ongoing
operations.
There is no guarantee as to the exact number of, or value of,
shares that may be repurchased by First National, and First
National may discontinue repurchases at any time that management
determines additional repurchases are not warranted. The timing and
amount of share repurchases under the stock repurchase plan will
depend on a number of factors, including First National’s stock
price performance, ongoing capital planning considerations, general
market conditions, and applicable legal requirements.
NET INTEREST INCOME
For the third quarter of 2022, net interest income totaled $11.7
million, an increase of $437 thousand from $11.3 million for the
second quarter of 2022 and was positively impacted by a higher
interest rate environment and a continued change in the Company’s
earning asset composition. The increase in net interest income was
primarily driven by higher interest income from loan growth during
the third quarter and increases in loan yields due to higher market
interest rates. The favorable impact of the increase in loan yields
was partially offset by an increase in deposit costs. The net
interest margin expanded by 16 basis points during the third
quarter to 3.58% from the previous quarter due to a 4% increase in
net interest income and a 2% decrease in average earning assets.
The impact of net interest margin expansion was greater than the
impact of lower average earning assets in the third quarter. The
yield on earning assets increased 32-basis points, which exceeded
the 16-basis point increase in the cost of funds. A change in the
composition of average earning assets also contributed to the
increase in net interest income as average loans to average earning
assets increased from 64% to 68%, while average interest-bearing
deposits in banks to total average assets decreased from 9% to
6%.
Net accretion of discounts on purchased loans was included in
interest and fees on loans and totaled $295 thousand in the third
quarter of 2022 compared to $351 thousand in the second quarter of
2022. Accretion of Paycheck Protection Program (“PPP”) loan income,
net of costs is also included in interest and fees on loans. Net
accretion of PPP income totaled $0 in the third quarter of 2022
compared to $35 thousand in the second quarter of 2022.
ASSET QUALITY
OverviewDuring the third quarter of 2022,
nonperforming assets (“NPAs”) as a percentage of total assets
remained low at 0.15% at September 30, 2022. Accruing past due loan
levels as a percentage of total loans totaled 0.27% at September
30, 2022, which was an 8-basis point increase as compared to June
30, 2022 and was 6 basis points lower than at September 30, 2021.
Net charge-off levels remained low at 0.01% of total average loans
for the third quarter of 2022. The allowance for loan losses
totaled $6.3 million at September 30, 2022, which was a slight
increase from $6.2 million at June 30, 2022.
Nonperforming Assets
NPAs totaled $2.1 million at September 30, 2022 and June 30,
2022, compared to $4.0 million at September 30, 2021. The following
table shows a summary of NPA balances at the quarter ended (dollars
in thousands):
|
September 30, 2022 |
June 30,2022 |
September 30, 2021 |
Nonaccrual loans |
$ |
566 |
$ |
442 |
$ |
2,158 |
Other real estate owned,
net |
|
1,578 |
|
1,665 |
|
1,848 |
Total nonperforming
assets |
$ |
2,144 |
$ |
2,107 |
$ |
4,006 |
Past Due Loans
Past due loans still accruing interest totaled $2.4 million or
0.27% of total loans at September 30, 2022, compared to $1.7
million or 0.19% of total loans at June 30, 2022, and $2.7 million
or 0.33% of total loans at September 30, 2021. Of the total past
due loans still accruing interest, $306 thousand or 0.03% of total
loans were loans past due 90 days or more at September 30, 2022,
compared to $91 thousand or 0.01% of total loans at June 30, 2022,
and $7 thousand or 0.00% of total loans at September 30, 2021.
Net Charge-offs
Net charge-offs were $111 thousand or 0.05% of total average
loans on an annualized basis for the quarter ended September 30,
2022, compared to net charge-offs of 0.01% for the second quarter
of 2022 and 0.02% for the third quarter of 2021. On a year-to-date
basis through September 30, 2022, net charge-offs were $19 thousand
or 0.00% of total average loans (annualized).
Provision for Loan Losses
For the quarter ended September 30, 2022, the Company recorded a
provision for loan losses of $200 thousand, compared to a provision
for loan losses of $400 thousand in the previous quarter, and a no
provision for loan losses during the third quarter of 2021. The
provision for loan losses for the third quarter of 2022 resulted
from the impact of loan growth on the general reserve component of
the allowance for loan losses and net charge-offs of $111
thousand.
Allowance for Loan Losses
At September 30, 2022, the allowance for loan losses totaled
$6.3 million, which was a $90 thousand increase from $6.2 million
as of June 30, 2022. The increase in the allowance for loan losses
resulted from the impact of loan growth in during the quarter and
was partially offset by the impact of improved qualitative factors
related to the reduction of modified loans. The Bank modified terms
of certain loans for customers negatively impacted by the pandemic
during the fourth quarter of 2020 and the first half of 2021. The
modifications lowered borrower’s loan payments by providing
interest only payments for periods ranging between 6 and 24 months.
As borrowers resumed regular principal and interest loan payments,
modified loan balances decreased to $0 at September 30, 2022,
compared to $4.7 million at June 30, 2022, and $13.3 million at
September 30, 2021.
The allowance for loan losses as a percentage of total loans
decreased slightly to 0.69% at September 30, 2022, compared to
0.70% at June 30, 2022, and increased slightly from 0.66% at
September 30, 2021. The net discount on purchased loans totaled
$2.7 million at September 30, 2022, compared to $2.9 million at
June 30, 2022, and $3.8 million at September 30, 2021. The net
discount on purchased loans is not included in the allowance for
loan losses.
NONINTEREST INCOME
Noninterest income increased $247 thousand, or 9%, to $3.0
million in the third quarter of 2022 compared to the second quarter
of 2022 primarily from higher ATM and check card fee income,
bank-owned life insurance income and other operating income. ATM
and check card fees increased $118 thousand, or 15%, from an annual
payment received from the Bank’s check card vendor in during the
quarter. Other operating income increased $99 thousand, primarily
from a death benefit payment received during the quarter from a
life insurance policy.
NONINTEREST EXPENSE
Noninterest expense increased $165 thousand, or 2%, to $9.1
million in the third quarter of 2022, compared to the second
quarter of 2022 primarily from higher other operating expense,
which was partially offset by lower equipment expense. Other
operating expense was higher in the third quarter primarily from an
increase in director fees related to annual equity compensation as
well as an increase in losses related to customer account fraud.
Equipment expense was lower in the third quarter when compared to
the prior quarter primarily from higher costs incurred in the
second quarter of 2022 from expenses related to the transition of
The Bank of Fincastle customer accounts to First Bank’s operating
systems.
BALANCE SHEET
At September 30, 2022, assets totaled $1.4 billion, which was a
decrease of $31.1 million, or 9% (annualized) from June 30, 2022,
and an increase of $27.8 million, or 2%, from September 30, 2021.
Total assets declined from the prior quarter primarily due to a
$51.5 million decrease in interest-bearing deposits in banks and a
$10.6 million decrease in total securities. The decreases were
partially offset by a $26.3 million increase in loans, net of the
allowance for loan losses.
At September 30, 2022, loans totaled $906.5 million, an increase
of $26.4 million or 12% (annualized) from $880.1 million at June
30, 2022. Average loans totaled $890.7 million for the third
quarter of 2022, an increase of $32.7 million or 15% (annualized)
from the prior quarter. At September 30, 2022, loans increased
$84.1 million, or 10%, from the prior year as of September 30,
2021, and quarterly average loans increased $124.7 million, or 16%,
from the same period in the prior year.
At September 30, 2022, total deposits were $1.3 billion, a
decrease of $30.1 million or 9% (annualized) from June 30, 2022.
Average deposits totaled $1.3 billion for the third quarter of
2022, a decrease of $27.2 million, or 8%, (annualized) from the
prior quarter. The decline in deposits was primarily the result of
a decrease in the balance of an internal money market account used
by the Bank’s wealth management department for its clients. At
September 30, 2022, deposits increased $53.5 million, or 4%, from
the prior year as of September 30, 2021, and quarterly average
deposits increased $69.2 million, or 6%, from the same period in
the prior year.
The following table provides capital ratios at the quarters
ended:
|
September 30,2022 |
June 30,2022 |
September 30, 2021 |
Total capital ratio (2) |
14.18% |
14.23% |
14.42% |
Tier 1 capital ratio (2) |
13.52% |
13.56% |
13.81% |
Common equity Tier 1 capital
ratio (2) |
13.52% |
13.56% |
13.81% |
Leverage ratio (2) |
9.27% |
8.87% |
9.22% |
Common equity to total assets
(5) |
7.16% |
7.09% |
8.62% |
Tangible common equity to
tangible assets (5) (6) |
6.95% |
6.88% |
8.34% |
For the quarter ended September 30, 2022, the Company’s common
equity to total assets capital ratio and the tangible common equity
to tangible assets capital ratio increased from the prior quarter,
but decreased from the prior year, primarily due to the unrealized
losses on the available-for-sale securities portfolio recorded in
other comprehensive loss due to market interest rate increases
during 2022.
During the third quarter of 2022, the Company declared and paid
cash dividends of $0.14 per common share, consistent with the
second quarter of 2022, and represented an increase of $0.02 per
common share compared to cash dividends of $0.12 per share for the
third quarter of 2021. The Bank was considered well-capitalized at
September 30, 2022. TRANSFER OF SECURITIES FROM
AVAILABLE FOR SALE TO HELD TO MATURITY
On September 1, 2022, the Bank transferred 24 securities
designated as available for sale with a combined book value of
$82.2 million, market value of $74.4 million, and unrealized loss
of $7.8 million, to securities designated held to maturity. The
unrealized loss is being amortized monthly over the life of the
securities with an increase to the carrying value of securities and
a decrease to the related accumulated other comprehensive loss,
which is included in the shareholders’ equity section of the
Company’s balance sheet. The amortization of the unrealized loss on
the transferred securities totaled $157 thousand, or $124 thousand
net of tax, for the third quarter of 2022. The securities selected
for transfer had
larger potential decreases in their fair market values in higher
interest rate environments than most other securities in the
available-for-sale portfolio. Securities transferred included U.S.
Treasury, agency, municipal and commercial mortgage-backed
securities. The securities were transferred to mitigate the
potential unfavorable impact that higher market interest rates may
have on the carrying value of the securities and on the related
accumulated other comprehensive loss. Securities designated as held
to maturity are carried on the balance sheet at amortized cost,
while securities designated as available for sale are carried at
fair market value.
SUBSEQUENT EVENT
On October 3, 2022, First Bank Financial Services, Inc., a
wholly owned subsidiary of the Bank, received proceeds totaling
$3.0 million from the sale of its interest in a broker-dealer of
investments. First Bank Financial Services, Inc. recorded a gain on
the sale of the investment totaling $2.9 million in the fourth
quarter of 2022. The gain has not been reflected on the Company’s
income statement for three or nine months ended September 30,
2022.
ACQUISITION OF THE SMARTBANK LOAN PORTFOLIO
On September 30, 2021, the Bank acquired $82.6 million of loans
and certain branch assets from SmartBank related to their Richmond
area branch, located in Glen Allen, Virginia. Additionally, an
experienced team of bankers based out of the SmartBank location
transitioned to become employees of First Bank in the fourth
quarter of 2021. First Bank did not assume any deposit liabilities
from SmartBank in connection with the transaction and SmartBank
closed their branch operation on December 31, 2021. The Bank
continued to operate its loan production office from the former
branch location.
ACQUISITION OF THE BANK OF FINCASTLE
On July 1, 2021, the Company completed the acquisition of The
Bank of Fincastle for an aggregate purchase price of $33.8 million
of cash and stock (the “Merger”). Fincastle was merged with and
into First Bank. The former Fincastle branches operated as The
Bank of Fincastle, a division of First Bank, until their systems
were converted on October 16, 2021. There were no merger expenses
in the third or second quarters of 2022, compared to merger
expenses of $1.3 million in the third quarter of 2021.
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, a loan production office, a
customer service center in a retirement community, and 20 bank
branch office locations located throughout the Shenandoah Valley,
the central regions of Virginia, the Roanoke Valley, and in the
city of Richmond. 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 invests in entities that provide
investment services and title insurance.
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 future operations and are
generally identified by phrases such as “the Company expects,” “the
Company believes” or words of similar import. 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 of the
Company will not differ materially from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements involve a
number of risks and uncertainties, including the rapidly changing
uncertainties related to the COVID-19 pandemic and its potential
adverse effect on the economy, our employees and customers, and our
financial performance. For details on other factors that could
affect expectations, see the risk factors and other cautionary
language included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2021, and other filings with the
Securities and Exchange Commission.
CONTACTS
Scott C. Harvard |
|
M. Shane Bell |
President and CEO |
|
Executive Vice President and CFO |
(540) 465-9121 |
|
(540) 465-9121 |
sharvard@fbvirginia.com |
|
sbell@fbvirginia.com |
|
|
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
Income Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
10,759 |
|
|
$ |
9,963 |
|
|
$ |
9,496 |
|
|
$ |
9,365 |
|
|
$ |
9,215 |
|
Interest on deposits in banks |
|
|
380 |
|
|
|
251 |
|
|
|
70 |
|
|
|
64 |
|
|
|
79 |
|
Interest on federal funds sold |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
8 |
|
Interest on securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable interest |
|
|
1,323 |
|
|
|
1,295 |
|
|
|
1,132 |
|
|
|
920 |
|
|
|
766 |
|
Tax-exempt interest |
|
|
307 |
|
|
|
309 |
|
|
|
305 |
|
|
|
299 |
|
|
|
242 |
|
Dividends |
|
|
23 |
|
|
|
21 |
|
|
|
21 |
|
|
|
23 |
|
|
|
21 |
|
Total interest income |
|
$ |
12,792 |
|
|
$ |
11,839 |
|
|
$ |
11,024 |
|
|
$ |
10,673 |
|
|
$ |
10,331 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on deposits |
|
$ |
927 |
|
|
$ |
413 |
|
|
$ |
340 |
|
|
$ |
355 |
|
|
$ |
369 |
|
Interest on subordinated debt |
|
|
70 |
|
|
|
69 |
|
|
|
69 |
|
|
|
155 |
|
|
|
156 |
|
Interest on junior subordinated debt |
|
|
68 |
|
|
|
67 |
|
|
|
67 |
|
|
|
68 |
|
|
|
68 |
|
Total interest expense |
|
$ |
1,065 |
|
|
$ |
549 |
|
|
$ |
476 |
|
|
$ |
578 |
|
|
$ |
593 |
|
Net interest income |
|
$ |
11,727 |
|
|
$ |
11,290 |
|
|
$ |
10,548 |
|
|
$ |
10,095 |
|
|
$ |
9,738 |
|
Provision for loan losses |
|
|
200 |
|
|
|
400 |
|
|
|
— |
|
|
|
350 |
|
|
|
— |
|
Net interest income after
provision for loan losses |
|
$ |
11,527 |
|
|
$ |
10,890 |
|
|
$ |
10,548 |
|
|
$ |
9,745 |
|
|
$ |
9,738 |
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
$ |
708 |
|
|
$ |
698 |
|
|
$ |
609 |
|
|
$ |
625 |
|
|
$ |
547 |
|
ATM and check card fees |
|
|
915 |
|
|
|
797 |
|
|
|
750 |
|
|
|
894 |
|
|
|
753 |
|
Wealth management fees |
|
|
739 |
|
|
|
760 |
|
|
|
803 |
|
|
|
716 |
|
|
|
696 |
|
Fees for other customer services |
|
|
180 |
|
|
|
188 |
|
|
|
233 |
|
|
|
176 |
|
|
|
279 |
|
Brokered mortgage fees |
|
|
72 |
|
|
|
58 |
|
|
|
94 |
|
|
|
123 |
|
|
|
155 |
|
Income from bank owned life insurance |
|
|
166 |
|
|
|
131 |
|
|
|
144 |
|
|
|
152 |
|
|
|
161 |
|
Other operating income |
|
|
247 |
|
|
|
148 |
|
|
|
78 |
|
|
|
275 |
|
|
|
57 |
|
Total noninterest income |
|
$ |
3,027 |
|
|
$ |
2,780 |
|
|
$ |
2,711 |
|
|
$ |
2,961 |
|
|
$ |
2,648 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
5,174 |
|
|
$ |
5,086 |
|
|
$ |
5,124 |
|
|
$ |
5,099 |
|
|
$ |
5,446 |
|
Occupancy |
|
|
539 |
|
|
|
545 |
|
|
|
572 |
|
|
|
510 |
|
|
|
500 |
|
Equipment |
|
|
546 |
|
|
|
620 |
|
|
|
559 |
|
|
|
527 |
|
|
|
519 |
|
Marketing |
|
|
211 |
|
|
|
223 |
|
|
|
151 |
|
|
|
179 |
|
|
|
243 |
|
Supplies |
|
|
117 |
|
|
|
131 |
|
|
|
136 |
|
|
|
168 |
|
|
|
176 |
|
Legal and professional fees |
|
|
361 |
|
|
|
381 |
|
|
|
333 |
|
|
|
731 |
|
|
|
586 |
|
ATM and check card expense |
|
|
332 |
|
|
|
347 |
|
|
|
303 |
|
|
|
317 |
|
|
|
329 |
|
FDIC assessment |
|
|
109 |
|
|
|
132 |
|
|
|
152 |
|
|
|
112 |
|
|
|
87 |
|
Bank franchise tax |
|
|
238 |
|
|
|
238 |
|
|
|
216 |
|
|
|
172 |
|
|
|
153 |
|
Data processing expense |
|
|
243 |
|
|
|
221 |
|
|
|
236 |
|
|
|
1,271 |
|
|
|
465 |
|
Amortization expense |
|
|
5 |
|
|
|
5 |
|
|
|
5 |
|
|
|
4 |
|
|
|
5 |
|
Other real estate owned expense, net |
|
|
14 |
|
|
|
41 |
|
|
|
28 |
|
|
|
12 |
|
|
|
14 |
|
Other operating expense |
|
|
1,194 |
|
|
|
948 |
|
|
|
829 |
|
|
|
924 |
|
|
|
903 |
|
Total noninterest expense |
|
$ |
9,083 |
|
|
$ |
8,918 |
|
|
$ |
8,644 |
|
|
$ |
10,026 |
|
|
$ |
9,426 |
|
Income before income
taxes |
|
$ |
5,471 |
|
|
$ |
4,752 |
|
|
$ |
4,615 |
|
|
$ |
2,680 |
|
|
$ |
2,960 |
|
Income tax expense |
|
|
1,017 |
|
|
|
917 |
|
|
|
886 |
|
|
|
497 |
|
|
|
562 |
|
Net income |
|
$ |
4,454 |
|
|
$ |
3,835 |
|
|
$ |
3,729 |
|
|
$ |
2,183 |
|
|
$ |
2,398 |
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
Common Share and Per Common Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share,
basic |
|
$ |
0.71 |
|
|
$ |
0.61 |
|
|
$ |
0.60 |
|
|
$ |
0.35 |
|
|
$ |
0.39 |
|
Weighted average shares,
basic |
|
|
6,257,040 |
|
|
|
6,250,329 |
|
|
|
6,238,973 |
|
|
|
6,226,838 |
|
|
|
6,220,456 |
|
Earnings per common share,
diluted |
|
$ |
0.71 |
|
|
$ |
0.61 |
|
|
$ |
0.60 |
|
|
$ |
0.35 |
|
|
$ |
0.38 |
|
Weighted average shares,
diluted |
|
|
6,264,107 |
|
|
|
6,257,479 |
|
|
|
6,245,704 |
|
|
|
6,235,907 |
|
|
|
6,229,524 |
|
Shares outstanding at period
end |
|
|
6,262,381 |
|
|
|
6,252,147 |
|
|
|
6,249,784 |
|
|
|
6,228,176 |
|
|
|
6,226,418 |
|
Tangible book value at period
end (4) |
|
$ |
15.31 |
|
|
$ |
15.54 |
|
|
$ |
16.54 |
|
|
$ |
18.28 |
|
|
$ |
18.11 |
|
Cash dividends |
|
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
1.27 |
% |
|
|
1.08 |
% |
|
|
1.06 |
% |
|
|
0.63 |
% |
|
|
0.71 |
% |
Return on average equity |
|
|
17.27 |
% |
|
|
15.04 |
% |
|
|
13.40 |
% |
|
|
7.44 |
% |
|
|
8.64 |
% |
Net interest margin |
|
|
3.58 |
% |
|
|
3.42 |
% |
|
|
3.19 |
% |
|
|
3.13 |
% |
|
|
3.06 |
% |
Efficiency ratio (1) |
|
|
61.10 |
% |
|
|
62.69 |
% |
|
|
64.36 |
% |
|
|
64.69 |
% |
|
|
64.86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
1,393,308 |
|
|
$ |
1,419,878 |
|
|
$ |
1,430,524 |
|
|
$ |
1,366,855 |
|
|
$ |
1,337,247 |
|
Average earning assets |
|
|
1,309,794 |
|
|
|
1,334,976 |
|
|
|
1,352,311 |
|
|
|
1,289,977 |
|
|
|
1,272,969 |
|
Average shareholders’
equity |
|
|
102,341 |
|
|
|
102,269 |
|
|
|
112,822 |
|
|
|
116,511 |
|
|
|
110,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan charge-offs |
|
$ |
181 |
|
|
$ |
107 |
|
|
$ |
106 |
|
|
$ |
185 |
|
|
$ |
111 |
|
Loan recoveries |
|
|
70 |
|
|
|
81 |
|
|
|
224 |
|
|
|
111 |
|
|
|
80 |
|
Net charge-offs
(recoveries) |
|
|
111 |
|
|
|
26 |
|
|
|
(118 |
) |
|
|
74 |
|
|
|
31 |
|
Non-accrual loans |
|
|
566 |
|
|
|
442 |
|
|
|
2,130 |
|
|
|
2,304 |
|
|
|
2,158 |
|
Other real estate owned,
net |
|
|
1,578 |
|
|
|
1,665 |
|
|
|
1,767 |
|
|
|
1,848 |
|
|
|
1,848 |
|
Nonperforming assets (3) |
|
|
2,144 |
|
|
|
2,107 |
|
|
|
3,897 |
|
|
|
4,152 |
|
|
|
4,006 |
|
Loans 30 to 89 days past due,
accruing |
|
|
2,117 |
|
|
|
1,572 |
|
|
|
2,105 |
|
|
|
3,235 |
|
|
|
2,707 |
|
Loans over 90 days past due,
accruing |
|
|
306 |
|
|
|
91 |
|
|
|
52 |
|
|
|
— |
|
|
|
7 |
|
Troubled debt restructurings,
accruing |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Special mention loans |
|
|
3,183 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Substandard loans,
accruing |
|
|
304 |
|
|
|
308 |
|
|
|
311 |
|
|
|
315 |
|
|
|
319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital |
|
$ |
134,882 |
|
|
$ |
131,624 |
|
|
$ |
128,567 |
|
|
$ |
125,934 |
|
|
$ |
128,197 |
|
Tier 1 capital |
|
|
128,590 |
|
|
|
125,422 |
|
|
|
122,739 |
|
|
|
120,224 |
|
|
|
122,763 |
|
Common equity tier 1
capital |
|
|
128,590 |
|
|
|
125,422 |
|
|
|
122,739 |
|
|
|
120,224 |
|
|
|
122,763 |
|
Total capital to risk-weighted
assets |
|
|
14.18 |
% |
|
|
14.23 |
% |
|
|
14.44 |
% |
|
|
14.76 |
% |
|
|
14.42 |
% |
Tier 1 capital to
risk-weighted assets |
|
|
13.52 |
% |
|
|
13.56 |
% |
|
|
13.79 |
% |
|
|
14.09 |
% |
|
|
13.81 |
% |
Common equity tier 1 capital
to risk-weighted assets |
|
|
13.52 |
% |
|
|
13.56 |
% |
|
|
13.79 |
% |
|
|
14.09 |
% |
|
|
13.81 |
% |
Leverage ratio |
|
|
9.27 |
% |
|
|
8.87 |
% |
|
|
8.61 |
% |
|
|
8.82 |
% |
|
|
9.22 |
% |
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
22,809 |
|
|
$ |
19,886 |
|
|
$ |
19,989 |
|
|
$ |
18,725 |
|
|
$ |
19,182 |
|
Interest-bearing deposits in
banks |
|
|
52,976 |
|
|
|
104,529 |
|
|
|
129,801 |
|
|
|
157,281 |
|
|
|
95,459 |
|
Federal funds sold |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
80,589 |
|
Securities available for sale,
at fair value |
|
|
176,403 |
|
|
|
264,750 |
|
|
|
284,893 |
|
|
|
289,495 |
|
|
|
266,600 |
|
Securities held to maturity,
at amortized cost |
|
|
154,894 |
|
|
|
77,151 |
|
|
|
81,640 |
|
|
|
33,441 |
|
|
|
10,046 |
|
Restricted securities, at
cost |
|
|
1,908 |
|
|
|
1,908 |
|
|
|
1,908 |
|
|
|
1,813 |
|
|
|
1,813 |
|
Loans, net of allowance for
loan losses |
|
|
900,222 |
|
|
|
873,887 |
|
|
|
830,595 |
|
|
|
819,408 |
|
|
|
816,977 |
|
Other real estate owned,
net |
|
|
1,578 |
|
|
|
1,665 |
|
|
|
1,767 |
|
|
|
1,848 |
|
|
|
1,848 |
|
Premises and equipment,
net |
|
|
21,693 |
|
|
|
22,118 |
|
|
|
22,278 |
|
|
|
22,403 |
|
|
|
22,401 |
|
Accrued interest
receivable |
|
|
4,247 |
|
|
|
4,154 |
|
|
|
4,056 |
|
|
|
3,903 |
|
|
|
3,823 |
|
Bank owned life insurance |
|
|
24,375 |
|
|
|
24,569 |
|
|
|
24,438 |
|
|
|
24,294 |
|
|
|
24,141 |
|
Goodwill |
|
|
3,030 |
|
|
|
3,030 |
|
|
|
3,030 |
|
|
|
3,030 |
|
|
|
4,011 |
|
Core deposit intangibles,
net |
|
|
140 |
|
|
|
145 |
|
|
|
150 |
|
|
|
154 |
|
|
|
159 |
|
Other assets |
|
|
19,320 |
|
|
|
16,898 |
|
|
|
13,117 |
|
|
|
13,641 |
|
|
|
8,740 |
|
Total assets |
|
$ |
1,383,595 |
|
|
$ |
1,414,690 |
|
|
$ |
1,417,662 |
|
|
$ |
1,389,436 |
|
|
$ |
1,355,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand
deposits |
|
$ |
438,306 |
|
|
$ |
431,292 |
|
|
$ |
417,776 |
|
|
$ |
413,188 |
|
|
$ |
411,527 |
|
Savings and interest-bearing
demand deposits |
|
|
693,970 |
|
|
|
731,125 |
|
|
|
734,051 |
|
|
|
689,998 |
|
|
|
652,624 |
|
Time deposits |
|
|
133,770 |
|
|
|
133,733 |
|
|
|
141,065 |
|
|
|
145,566 |
|
|
|
148,419 |
|
Total deposits |
|
$ |
1,266,046 |
|
|
$ |
1,296,150 |
|
|
$ |
1,292,892 |
|
|
$ |
1,248,752 |
|
|
$ |
1,212,570 |
|
Subordinated debt, net |
|
|
4,995 |
|
|
|
4,994 |
|
|
|
4,994 |
|
|
|
9,993 |
|
|
|
9,993 |
|
Junior subordinated debt |
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
Accrued interest payable and
other liabilities |
|
|
4,198 |
|
|
|
3,952 |
|
|
|
3,934 |
|
|
|
4,373 |
|
|
|
7,041 |
|
Total liabilities |
|
$ |
1,284,518 |
|
|
$ |
1,314,375 |
|
|
$ |
1,311,099 |
|
|
$ |
1,272,397 |
|
|
$ |
1,238,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Common stock |
|
|
7,828 |
|
|
|
7,815 |
|
|
|
7,812 |
|
|
|
7,785 |
|
|
|
7,783 |
|
Surplus |
|
|
32,620 |
|
|
|
32,398 |
|
|
|
32,298 |
|
|
|
31,966 |
|
|
|
31,889 |
|
Retained earnings |
|
|
86,382 |
|
|
|
82,804 |
|
|
|
79,845 |
|
|
|
76,990 |
|
|
|
75,554 |
|
Accumulated other
comprehensive (loss) income, net |
|
|
(27,753 |
) |
|
|
(22,702 |
) |
|
|
(13,392 |
) |
|
|
298 |
|
|
|
1,680 |
|
Total shareholders’
equity |
|
$ |
99,077 |
|
|
$ |
100,315 |
|
|
$ |
106,563 |
|
|
$ |
117,039 |
|
|
$ |
116,906 |
|
Total liabilities and
shareholders’ equity |
|
$ |
1,383,595 |
|
|
$ |
1,414,690 |
|
|
$ |
1,417,662 |
|
|
$ |
1,389,436 |
|
|
$ |
1,355,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage real estate
loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development |
|
$ |
51,352 |
|
|
$ |
49,118 |
|
|
$ |
49,308 |
|
|
$ |
55,721 |
|
|
$ |
45,120 |
|
Secured by farmland |
|
|
3,432 |
|
|
|
3,169 |
|
|
|
3,555 |
|
|
|
3,708 |
|
|
|
3748 |
|
Secured by 1-4 family residential |
|
|
317,414 |
|
|
|
312,082 |
|
|
|
290,408 |
|
|
|
291,990 |
|
|
|
294,216 |
|
Other real estate loans |
|
|
414,072 |
|
|
|
397,868 |
|
|
|
380,635 |
|
|
|
361,213 |
|
|
|
358,895 |
|
Loans to farmers (except those
secured by real estate) |
|
|
745 |
|
|
|
769 |
|
|
|
937 |
|
|
|
985 |
|
|
|
857 |
|
Commercial and industrial
loans (except those secured by real estate) |
|
|
111,400 |
|
|
|
108,780 |
|
|
|
102,745 |
|
|
|
98,820 |
|
|
|
104,807 |
|
Consumer installment
loans |
|
|
4,192 |
|
|
|
4,230 |
|
|
|
4,602 |
|
|
|
4,963 |
|
|
|
6,577 |
|
Deposit overdrafts |
|
|
163 |
|
|
|
292 |
|
|
|
205 |
|
|
|
175 |
|
|
|
172 |
|
All other loans |
|
|
3,744 |
|
|
|
3,781 |
|
|
|
4,028 |
|
|
|
7,543 |
|
|
|
8,019 |
|
Total loans |
|
$ |
906,514 |
|
|
$ |
880,089 |
|
|
$ |
836,423 |
|
|
$ |
825,118 |
|
|
$ |
822,411 |
|
Allowance for loan losses |
|
|
(6,292 |
) |
|
|
(6,202 |
) |
|
|
(5,828 |
) |
|
|
(5,710 |
) |
|
|
(5,434 |
) |
Loans, net |
|
$ |
900,222 |
|
|
$ |
873,887 |
|
|
$ |
830,595 |
|
|
$ |
819,408 |
|
|
$ |
816,977 |
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
Reconciliation of Tax-Equivalent Net Interest Income
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income – loans |
|
$ |
10,759 |
|
|
$ |
9,963 |
|
|
$ |
9,496 |
|
|
$ |
9,365 |
|
|
$ |
9,215 |
|
Interest income – investments and other |
|
|
2,033 |
|
|
|
1,876 |
|
|
|
1,528 |
|
|
|
1,308 |
|
|
|
1,116 |
|
Interest expense – deposits |
|
|
(927 |
) |
|
|
(413 |
) |
|
|
(340 |
) |
|
|
(355 |
) |
|
|
(369 |
) |
Interest expense – subordinated debt |
|
|
(70 |
) |
|
|
(69 |
) |
|
|
(69 |
) |
|
|
(155 |
) |
|
|
(156 |
) |
Interest expense – junior subordinated debt |
|
|
(68 |
) |
|
|
(67 |
) |
|
|
(67 |
) |
|
|
(68 |
) |
|
|
(68 |
) |
Total net interest income |
|
$ |
11,727 |
|
|
$ |
11,290 |
|
|
$ |
10,548 |
|
|
$ |
10,095 |
|
|
$ |
9,738 |
|
Non-GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit realized on non-taxable interest income – loans |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
8 |
|
|
$ |
8 |
|
|
$ |
8 |
|
Tax benefit realized on non-taxable interest income – municipal
securities |
|
|
82 |
|
|
|
82 |
|
|
|
81 |
|
|
|
80 |
|
|
|
64 |
|
Total tax benefit realized on
non-taxable interest income |
|
$ |
82 |
|
|
$ |
82 |
|
|
$ |
89 |
|
|
$ |
88 |
|
|
$ |
72 |
|
Total tax-equivalent net
interest income |
|
$ |
11,809 |
|
|
$ |
11,372 |
|
|
$ |
10,637 |
|
|
$ |
10,183 |
|
|
$ |
9,810 |
|
FIRST NATIONAL
CORPORATIONYear-to-Date Performance
Summary(in thousands, except share and per share data)
|
|
(unaudited) |
|
|
|
For the Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2021 |
|
Income Statement |
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
30,218 |
|
|
$ |
23,432 |
|
Interest on deposits in banks |
|
|
701 |
|
|
|
149 |
|
Interest on securities |
|
|
|
|
|
|
|
|
Taxable interest |
|
|
3,750 |
|
|
|
2,180 |
|
Tax-exempt interest |
|
|
921 |
|
|
|
637 |
|
Dividends |
|
|
65 |
|
|
|
65 |
|
Total interest income |
|
$ |
35,655 |
|
|
$ |
26,471 |
|
Interest expense |
|
|
|
|
|
|
|
|
Interest on deposits |
|
$ |
1,680 |
|
|
$ |
1,060 |
|
Interest on subordinated debt |
|
|
208 |
|
|
|
464 |
|
Interest on junior subordinated debt |
|
|
202 |
|
|
|
202 |
|
Total interest expense |
|
$ |
2,090 |
|
|
$ |
1,726 |
|
Net interest income |
|
$ |
33,565 |
|
|
$ |
24,745 |
|
Provision for (recovery of)
loan losses |
|
|
600 |
|
|
|
(1,000 |
) |
Net interest income after
provision for (recovery of) loan losses |
|
$ |
32,965 |
|
|
$ |
25,745 |
|
Noninterest income |
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
$ |
2,015 |
|
|
$ |
1,436 |
|
ATM and check card fees |
|
|
2,462 |
|
|
|
2,036 |
|
Wealth management fees |
|
|
2,302 |
|
|
|
1,996 |
|
Fees for other customer services |
|
|
601 |
|
|
|
611 |
|
Brokered mortgage fees |
|
|
224 |
|
|
|
416 |
|
Income from bank owned life insurance |
|
|
441 |
|
|
|
374 |
|
Net gains on securities available for sale |
|
|
— |
|
|
|
37 |
|
Net gains on sale of loans |
|
|
— |
|
|
|
25 |
|
Other operating income |
|
|
473 |
|
|
|
295 |
|
Total noninterest income |
|
$ |
8,518 |
|
|
$ |
7,226 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
15,384 |
|
|
$ |
12,694 |
|
Occupancy |
|
|
1,656 |
|
|
|
1,346 |
|
Equipment |
|
|
1,725 |
|
|
|
1,383 |
|
Marketing |
|
|
585 |
|
|
|
487 |
|
Supplies |
|
|
384 |
|
|
|
341 |
|
Legal and professional fees |
|
|
1,075 |
|
|
|
1,806 |
|
ATM and check card expense |
|
|
982 |
|
|
|
828 |
|
FDIC assessment |
|
|
393 |
|
|
|
234 |
|
Bank franchise tax |
|
|
692 |
|
|
|
493 |
|
Data processing expense |
|
|
700 |
|
|
|
885 |
|
Amortization expense |
|
|
15 |
|
|
|
24 |
|
Other real estate owned expense, net |
|
|
83 |
|
|
|
14 |
|
Other operating expense |
|
|
2,971 |
|
|
|
2,171 |
|
Total noninterest expense |
|
$ |
26,645 |
|
|
$ |
22,706 |
|
Income before income
taxes |
|
$ |
14,838 |
|
|
$ |
10,265 |
|
Income tax expense |
|
|
2,820 |
|
|
|
2,089 |
|
Net income |
|
$ |
12,018 |
|
|
$ |
8,176 |
|
FIRST NATIONAL CORPORATIONYear-to-Date
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2022 |
|
|
2021 |
|
Common Share and Per Common Share Data |
|
|
|
|
|
|
|
|
Net income, basic |
|
$ |
1.92 |
|
|
$ |
1.54 |
|
Weighted average shares,
basic |
|
|
6,248,847 |
|
|
|
5,322,696 |
|
Net income, diluted |
|
$ |
1.92 |
|
|
$ |
1.53 |
|
Weighted average shares,
diluted |
|
|
6,254,968 |
|
|
|
5,329,939 |
|
Shares outstanding at period
end |
|
|
6,262,381 |
|
|
|
6,226,418 |
|
Tangible book value at period
end |
|
$ |
15.31 |
|
|
$ |
18.11 |
|
Cash dividends |
|
$ |
0.42 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
Key Performance
Ratios |
|
|
|
|
|
|
|
|
Return on average assets |
|
|
1.14 |
% |
|
|
0.97 |
% |
Return on average equity |
|
|
15.12 |
% |
|
|
11.40 |
% |
Net interest margin |
|
|
3.57 |
% |
|
|
3.13 |
% |
Efficiency ratio (1) |
|
|
62.66 |
% |
|
|
64.34 |
% |
|
|
|
|
|
|
|
|
|
Average
Balances |
|
|
|
|
|
|
|
|
Average assets |
|
$ |
1,415,169 |
|
|
$ |
1,121,225 |
|
Average earning assets |
|
|
1,265,509 |
|
|
|
1,063,597 |
|
Average shareholders’
equity |
|
|
106,285 |
|
|
|
95,861 |
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
Loan charge-offs |
|
$ |
394 |
|
|
$ |
1,262 |
|
Loan recoveries |
|
|
375 |
|
|
|
211 |
|
Net charge-offs |
|
|
19 |
|
|
|
1,051 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Tax-Equivalent Net Interest Income (1) |
|
|
|
|
|
|
|
|
GAAP measures: |
|
|
|
|
|
|
|
|
Interest income – loans |
|
$ |
30,218 |
|
|
$ |
23,432 |
|
Interest income – investments and other |
|
|
5,437 |
|
|
|
3,039 |
|
Interest expense – deposits |
|
|
(1,680 |
) |
|
|
(1,060 |
) |
Interest expense – subordinated debt |
|
|
(208 |
) |
|
|
(464 |
) |
Interest expense – junior subordinated debt |
|
|
(202 |
) |
|
|
(202 |
) |
Total net interest income |
|
$ |
33,565 |
|
|
$ |
24,745 |
|
Non-GAAP measures: |
|
|
|
|
|
|
|
|
Tax benefit realized on non-taxable interest income – loans |
|
$ |
8 |
|
|
$ |
24 |
|
Tax benefit realized on non-taxable interest income – municipal
securities |
|
|
245 |
|
|
|
169 |
|
Total tax benefit realized on
non-taxable interest income |
|
$ |
253 |
|
|
$ |
193 |
|
Total tax-equivalent net
interest income |
|
$ |
33,818 |
|
|
$ |
24,938 |
|
(1) The efficiency ratio is computed by dividing
noninterest expense excluding other real estate owned
income/expense, amortization of intangibles, gains and losses on
disposal of premises and equipment, and merger related
expenses by the sum of net interest income on a tax-equivalent
basis and noninterest income, excluding gains and losses on sales
of securities. Tax-equivalent net interest income is calculated by
adding the tax benefit realized from interest income that is
nontaxable to total interest income then subtracting total interest
expense. The tax rate utilized in calculating the tax benefit is
21%. See the tables above for tax-equivalent net interest income
and reconciliations of net interest income to tax-equivalent net
interest income. The efficiency ratio is a non-GAAP financial
measure that management believes provides investors with important
information regarding operational efficiency. Such information is
not prepared in accordance with U.S. generally accepted accounting
principles (GAAP) and should not be construed as such. Management
believes; however, such financial information is meaningful to the
reader in understanding operational performance, but cautions that
such information not be viewed as a substitute for GAAP.
(2) All capital ratios reported are for First Bank.
(3) Nonperforming assets are comprised of nonaccrual loans and
other real estate owned, net of selling costs.
(4) Tangible book value is calculated by subtracting
goodwill and other intangibles from total shareholders' equity.
(5) Capital ratios presented are for First National
Corporation.
(6) The ratio of tangible common equity to tangible
assets, or TCE ratio, is calculated by dividing consolidated total
common shareholders’ equity by consolidated total assets, after
reducing both amounts by goodwill and other intangible assets net
of related deferred taxes. The TCE ratio is not required by GAAP or
by bank regulations, but is a metric used by management to evaluate
the adequacy of the Company’s capital levels. Since there is no
authoritative requirement to calculate the TCE ratio, our TCE ratio
is not necessarily comparable to similar capital measures disclosed
or used by other companies in the financial services industry.
Tangible common equity and tangible assets are non-GAAP
financial measures and should be considered in addition to, not as
a substitute for or superior to, financial measures determined in
accordance with GAAP.
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