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 $4.8 million
and diluted earnings per common share of $0.76 for the fourth
quarter ended December 31, 2022. This compares to net income of
$4.5 million and diluted earnings per common share of $0.71 for the
third quarter of 2022.
For the year ended December 31, 2022, unaudited consolidated net
income totaled $16.8 million and diluted earnings per common share
totaled $2.68. This compares to net income of $10.4 million and
diluted earnings per common share of $1.86 for the year ending
December 31, 2021.
FOURTH QUARTER HIGHLIGHTS
Key highlights of the fourth quarter ended December 31, 2022,
are as follows. Comparisons are to the linked quarterly period
ended September 30, 2022, unless otherwise stated:
- Return on average
assets was 1.37%
- Return on average
equity was 18.38%
- Net interest margin
improved to 3.70% from 3.58%
- Efficiency ratio
improved to 59.56% from 61.10%
- Loans increased
$14.0 million, or 6% annualized
- Nonperforming assets
totaled 0.21% of total assets
“First National Corporation continued to deliver excellent
financial results in the fourth quarter with 6% 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 record results for the
year reflect solid execution of recent strategic expansion
initiatives and we expect those initiatives to continue to build
long term value for our shareholders. The Company will remain
vigilant in its credit underwriting and portfolio management going
into a year of economic uncertainties. We believe the record
earnings for 2022 validate our strategy of organic growth built on
people and relationships, combined with strategic
acquisitions.”
NET INTEREST INCOME
For the fourth quarter of 2022, net interest income totaled
$12.0 million, an increase of $283 thousand from $11.7 million for
the third 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 a result of higher interest income and fees on loans and
interest on deposits in banks, which were partially offset by an
increase in interest expense on deposits. As a result, the net
interest margin expanded by 12 basis points to 3.70%. The yield on
earning assets increased 33-basis points, which exceeded the
21-basis point increase in the cost of funds. A change in the
composition of average earning assets contributed to the increase
in net interest income as average loans increased from 68% to 71%
of average earning assets, while average interest-bearing deposits
in banks decreased from 6% to 4% of average earning assets.
Net accretion of discounts on purchased loans was included in
interest income and fees on loans and totaled $117 thousand in the
fourth quarter of 2022 compared to $295 thousand in the third
quarter of 2022. There was no accretion of Paycheck Protection
Program (“PPP”) loan income, net of costs, for the fourth and third
quarters of 2022.
ASSET QUALITY
Overview
Nonperforming assets (“NPAs”) as a percentage of total assets
totaled 0.21% at December 31, 2022, compared to 0.15% at September
30, 2022, and 0.30% at December 31, 2021. Accruing past due loans
as a percentage of total loans totaled 0.17% at December 31, 2022,
which was a 10 basis point decrease compared to September 30, 2022
and was 22 basis points lower than at December 31, 2021. Net
charge-offs totaled $95 thousand for the fourth quarter of 2022.
The allowance for loan losses totaled $7.4 million, or 0.81% of
total loans at December 31, 2022, which was an increase from $6.3
million, or 0.69% of total loans at September 30, 2022, and $5.7
million, or 0.69%, of total loans at December 31, 2021.
Nonperforming Assets
NPAs totaled $2.9 million at December 31, 2022, $2.1 million at
September 30, 2022, and $4.2 million at December 31, 2021, which
represented 0.21%, 0.15% and 0.30% of total assets, respectively.
The following table shows a summary of NPA balances at the periods
(dollars in thousands):
|
December 31, 2022 |
September 30,2022 |
December 31, 2021 |
Nonaccrual loans |
$ |
2,673 |
$ |
566 |
$ |
2,304 |
Other real estate owned, net |
|
185 |
|
1,578 |
|
1,848 |
Total nonperforming assets |
$ |
2,858 |
$ |
2,144 |
$ |
4,152 |
Past Due Loans
Past due loans still accruing interest totaled $1.5 million, or
0.17%, of total loans at December 31, 2022, compared to $2.4
million, or 0.27%, of total loans at September 30, 2022, and $3.2
million, or 0.39%, of total loans at December 31, 2021. Of the
total past due loans still accruing interest, there were no loans
past due 90 days or more at December 31, 2022, $306 thousand, or
0.03%, of total loans were past due 90 days or more at September
30, 2022, and there were no loans past due 90 days or more at
December 31, 2021.
Net Charge-offs
Net charge-offs totaled $95 thousand for the quarter ended
December 31, 2022, compared to $111 thousand for the quarter ended
September 30, 2022, and $74 thousand for the fourth quarter of
2021.
Provision for Loan Losses
For the quarter ended December 31, 2022, the Company recorded a
provision for loan losses of $1.3 million, compared to $200
thousand for the third quarter of 2022, and $350 thousand for the
fourth quarter of 2021. The provision for loan losses for the
fourth quarter of 2022 resulted from an $888 thousand specific
reserve on impaired loans from one customer relationship, as well
as the impact of loan growth on the general reserve component of
the allowance for loan losses, changes in qualitative factors that
increased the general reserve, and net charge-offs. The changes in
qualitative factors were attributable to an increase in classified
loans in the commercial and industrial, and the construction and
land development loan categories.
Allowance for Loan Losses
At December 31, 2022, the allowance for loan losses totaled $7.4
million, which was a $1.1 million increase from $6.3 million as of
September 30, 2022. The increase in the allowance for loan losses
resulted from specific reserves on impaired loans from one customer
relationship, the impact of loan growth, and changes in qualitative
factors that impacted the general reserve component of the
allowance for loan losses.
The allowance for loan losses as a percentage of total loans
increased to 0.81% at December 31, 2022, compared to 0.69% at
September 30, 2022, and 0.69% at December 31, 2021. The net
discount on purchased loans totaled $2.5 million at December 31,
2022, compared to $2.7 million at September 30, 2022, and $3.7
million at December 31, 2021. The net discount on purchased loans
is not included in the allowance for loan losses.
NONINTEREST INCOME
Noninterest income totaled $4.1 million for the fourth quarter
of 2022, which was a $1.1 million increase compared to the third
quarter of 2022, primarily from a $3.3 million increase in other
operating income. The increase in other operating income resulted
from a $2.9 million gain on sale of an interest in a broker-dealer
of investments by First Bank Financial Services, Inc. and $556
thousand that was recovered from the full curtailment of a
purchased loan. First Bank Financial Services, Inc. is a wholly
owned subsidiary of the Bank.
The increases to other operating income were partially offset by
a $2.0 million net loss on the sale of securities available for
sale, which resulted from the sale of lower yielding securities, as
well as a $77 thousand decrease in ATM and check card fee income, a
$51 thousand decrease in brokered mortgage fee income, and a $46
thousand decrease in service charges on deposits. The decrease in
ATM and check card fee income was attributable to an annual payment
received and recorded in the third quarter of 2022.
NONINTEREST EXPENSE
Noninterest expense decreased $103 thousand, or 1%, to $9.0
million in the fourth quarter of 2022, compared to the third
quarter of 2022, primarily from a $187 thousand decrease in other
operating expense and a $203 thousand decrease in other real estate
owned (income) expense, net. Other operating expense decreased
primarily from higher expenses in the third quarter from director
fees related to annual equity compensation as well as an increase
in losses related to customer account fraud during the third
quarter. The decrease in other real estate owned (income) expense,
net, resulted from a gain on the sale of other real estate owned
during the fourth quarter.
The decreases in other operating expense and other real estate
owned (income) expense, net, were partially offset by increases in
several expense categories, including a $151 thousand increase in
salaries and employee benefits, a $56 thousand increase in ATM and
check card expense, and a $46 thousand increase in data processing
expense.
BALANCE SHEET
At December 31, 2022, assets totaled $1.4 billion, which was a
decrease of $14.2 million, or 1%, from September 30, 2022, and a
decrease of $20.1 million, or 1%, from December 31, 2021. Total
assets decreased from the prior quarter primarily due to a $6.8
million decrease in interest-bearing deposits in banks, a $15.2
million decrease in total securities, and a $2.2 million decrease
in other assets. The decreases were partially offset by a $12.9
million increase in loans, net of the allowance for loan
losses.
Loans totaled $920.5 million at December 31, 2022, an increase
of $14.0 million or 6% (annualized) from $906.5 million at
September 30, 2022. Average loans totaled $914.8 million for the
fourth quarter of 2022, an increase of $24.1 million or 11%
(annualized) from the prior quarter. At December 31, 2022, loans
increased $95.4 million, or 12%, from the prior year as of December
31, 2021, and quarterly average loans increased $95.4 million, or
12%, from the same period in the prior year.
At December 31, 2022, deposits totaled $1.2 billion, which was a
$24.7 million, or 2%, decrease from September 30, 2022.
Noninterest-bearing demand deposits decreased $11.0 million and
savings and interest-bearing demand deposits decreased $16.8
million, while time deposits increased $3.1 million. Average
deposits totaled $1.3 billion for the fourth quarter of 2022, a
decrease of $7.8 million compared to the third quarter of 2022.
Total deposits decreased $7.4 million, or 1%, compared to the
prior year as of December 31, 2021. Noninterest-bearing demand
deposits increased $14.2 million, while savings and
interest-bearing demand deposits decreased $12.9 million and time
deposits decreased $8.7 million. Average deposits increased $38.3
million, or 3%, comparing the fourth quarter of 2022 to the fourth
quarter of 2021.
The Company’s common equity to total assets capital ratio and
the tangible common equity to tangible assets capital ratio
increased during the fourth quarter compared to the prior quarter,
but were lower than the prior year, primarily due to the unrealized
losses on the available-for-sale securities portfolio recorded in
other comprehensive (loss) income due to market interest rate
increases during 2022.
During the fourth quarter of 2022, the Company declared and paid
cash dividends of $0.14 per common share, consistent with the third
quarter of 2022, and represented an increase of $0.02 per common
share compared to cash dividends of $0.12 per share for the fourth
quarter of 2021. The Bank was considered well-capitalized at
December 31, 2022.
The following table provides capital ratios at the quarters
ended:
|
December 31,2022 |
September 30,2022 |
December 31,2021 |
Total capital ratio (2) |
14.60 |
% |
14.18 |
% |
14.76 |
% |
Tier 1 capital ratio (2) |
13.82 |
% |
13.52 |
% |
14.09 |
% |
Common equity Tier 1 capital
ratio (2) |
13.82 |
% |
13.52 |
% |
14.09 |
% |
Leverage ratio (2) |
9.57 |
% |
9.27 |
% |
8.82 |
% |
Common equity to total assets
(5) |
7.91 |
% |
7.16 |
% |
8.42 |
% |
Tangible common equity to
tangible assets (5) (6) |
7.70 |
% |
6.95 |
% |
8.21 |
% |
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 $436 thousand, or $345 thousand,
net of tax, for the fourth quarter of 2022, and $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.
ACQUISITION OF THE BANK OF FINCASTLE
On July 1, 2021, the Company completed the acquisition of The
Bank of Fincastle (“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 fourth or third quarters of 2022. Merger
expenses totaled $1.3 million in the fourth 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 owns an interest in an entity
that provides title insurance services.
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 |
|
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
Income
Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
11,502 |
|
|
$ |
10,759 |
|
|
$ |
9,963 |
|
|
$ |
9,496 |
|
|
$ |
9,365 |
|
Interest on deposits in banks |
|
|
522 |
|
|
|
380 |
|
|
|
251 |
|
|
|
70 |
|
|
|
64 |
|
Interest on federal funds sold |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
Interest on securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable interest |
|
|
1,381 |
|
|
|
1,323 |
|
|
|
1,295 |
|
|
|
1,132 |
|
|
|
920 |
|
Tax-exempt interest |
|
|
308 |
|
|
|
307 |
|
|
|
309 |
|
|
|
305 |
|
|
|
299 |
|
Dividends |
|
|
27 |
|
|
|
23 |
|
|
|
21 |
|
|
|
21 |
|
|
|
23 |
|
Total interest income |
|
$ |
13,740 |
|
|
$ |
12,792 |
|
|
$ |
11,839 |
|
|
$ |
11,024 |
|
|
$ |
10,673 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on deposits |
|
$ |
1,593 |
|
|
$ |
927 |
|
|
$ |
413 |
|
|
$ |
340 |
|
|
$ |
355 |
|
Interest on subordinated debt |
|
|
69 |
|
|
|
70 |
|
|
|
69 |
|
|
|
69 |
|
|
|
155 |
|
Interest on junior subordinated debt |
|
|
68 |
|
|
|
68 |
|
|
|
67 |
|
|
|
67 |
|
|
|
68 |
|
Total interest expense |
|
$ |
1,730 |
|
|
$ |
1,065 |
|
|
$ |
549 |
|
|
$ |
476 |
|
|
$ |
578 |
|
Net interest income |
|
$ |
12,010 |
|
|
$ |
11,727 |
|
|
$ |
11,290 |
|
|
$ |
10,548 |
|
|
$ |
10,095 |
|
Provision for loan losses |
|
|
1,250 |
|
|
|
200 |
|
|
|
400 |
|
|
|
— |
|
|
|
350 |
|
Net interest income after
provision for loan losses |
|
$ |
10,760 |
|
|
$ |
11,527 |
|
|
$ |
10,890 |
|
|
$ |
10,548 |
|
|
$ |
9,745 |
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
$ |
662 |
|
|
$ |
708 |
|
|
$ |
698 |
|
|
$ |
609 |
|
|
$ |
625 |
|
ATM and check card fees |
|
|
838 |
|
|
|
915 |
|
|
|
797 |
|
|
|
750 |
|
|
|
894 |
|
Wealth management fees |
|
|
706 |
|
|
|
739 |
|
|
|
760 |
|
|
|
803 |
|
|
|
716 |
|
Fees for other customer services |
|
|
238 |
|
|
|
180 |
|
|
|
188 |
|
|
|
233 |
|
|
|
176 |
|
Brokered mortgage fees |
|
|
21 |
|
|
|
72 |
|
|
|
58 |
|
|
|
94 |
|
|
|
123 |
|
Income from bank owned life insurance |
|
|
155 |
|
|
|
166 |
|
|
|
131 |
|
|
|
144 |
|
|
|
152 |
|
Net (losses) on securities available for sale |
|
|
(2,004 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Other operating income |
|
|
3,516 |
|
|
|
247 |
|
|
|
148 |
|
|
|
78 |
|
|
|
275 |
|
Total noninterest income |
|
$ |
4,132 |
|
|
$ |
3,027 |
|
|
$ |
2,780 |
|
|
$ |
2,711 |
|
|
$ |
2,961 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
5,325 |
|
|
$ |
5,174 |
|
|
$ |
5,086 |
|
|
$ |
5,124 |
|
|
$ |
5,099 |
|
Occupancy |
|
|
562 |
|
|
|
539 |
|
|
|
545 |
|
|
|
572 |
|
|
|
510 |
|
Equipment |
|
|
575 |
|
|
|
546 |
|
|
|
620 |
|
|
|
559 |
|
|
|
527 |
|
Marketing |
|
|
228 |
|
|
|
211 |
|
|
|
223 |
|
|
|
151 |
|
|
|
179 |
|
Supplies |
|
|
144 |
|
|
|
117 |
|
|
|
131 |
|
|
|
136 |
|
|
|
168 |
|
Legal and professional fees |
|
|
339 |
|
|
|
361 |
|
|
|
381 |
|
|
|
333 |
|
|
|
731 |
|
ATM and check card expense |
|
|
388 |
|
|
|
332 |
|
|
|
347 |
|
|
|
303 |
|
|
|
317 |
|
FDIC assessment |
|
|
70 |
|
|
|
109 |
|
|
|
132 |
|
|
|
152 |
|
|
|
112 |
|
Bank franchise tax |
|
|
238 |
|
|
|
238 |
|
|
|
238 |
|
|
|
216 |
|
|
|
172 |
|
Data processing expense |
|
|
289 |
|
|
|
243 |
|
|
|
221 |
|
|
|
236 |
|
|
|
1271 |
|
Amortization expense |
|
|
4 |
|
|
|
5 |
|
|
|
5 |
|
|
|
5 |
|
|
|
4 |
|
Other real estate owned (income) expense, net |
|
|
(189 |
) |
|
|
14 |
|
|
|
41 |
|
|
|
28 |
|
|
|
12 |
|
Other operating expense |
|
|
1,007 |
|
|
|
1,194 |
|
|
|
948 |
|
|
|
829 |
|
|
|
924 |
|
Total noninterest expense |
|
$ |
8,980 |
|
|
$ |
9,083 |
|
|
$ |
8,918 |
|
|
$ |
8,644 |
|
|
$ |
10,026 |
|
Income before income
taxes |
|
$ |
5,912 |
|
|
$ |
5,471 |
|
|
$ |
4,752 |
|
|
$ |
4,615 |
|
|
$ |
2,680 |
|
Income tax expense |
|
|
1,132 |
|
|
|
1,017 |
|
|
|
917 |
|
|
|
886 |
|
|
|
497 |
|
Net income |
|
$ |
4,780 |
|
|
$ |
4,454 |
|
|
$ |
3,835 |
|
|
$ |
3,729 |
|
|
$ |
2,183 |
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
Common Share and Per
Common Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share,
basic |
|
$ |
0.76 |
|
|
$ |
0.71 |
|
|
$ |
0.61 |
|
|
$ |
0.60 |
|
|
$ |
0.35 |
|
Weighted average shares,
basic |
|
|
6,262,821 |
|
|
|
6,257,040 |
|
|
|
6,250,329 |
|
|
|
6,238,973 |
|
|
|
6,226,838 |
|
Earnings per common share,
diluted |
|
$ |
0.76 |
|
|
$ |
0.71 |
|
|
$ |
0.61 |
|
|
$ |
0.60 |
|
|
$ |
0.35 |
|
Weighted average shares,
diluted |
|
|
6,272,409 |
|
|
|
6,264,107 |
|
|
|
6,257,479 |
|
|
|
6,245,704 |
|
|
|
6,235,907 |
|
Shares outstanding at period
end |
|
|
6,264,912 |
|
|
|
6,262,381 |
|
|
|
6,252,147 |
|
|
|
6,249,784 |
|
|
|
6,228,176 |
|
Tangible book value at period
end (4) |
|
$ |
16.79 |
|
|
$ |
15.31 |
|
|
$ |
15.54 |
|
|
$ |
16.54 |
|
|
$ |
18.28 |
|
Cash dividends |
|
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.14 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
1.37 |
% |
|
|
1.27 |
% |
|
|
1.08 |
% |
|
|
1.06 |
% |
|
|
0.63 |
% |
Return on average equity |
|
|
18.38 |
% |
|
|
17.27 |
% |
|
|
15.04 |
% |
|
|
13.40 |
% |
|
|
7.44 |
% |
Net interest margin |
|
|
3.70 |
% |
|
|
3.58 |
% |
|
|
3.42 |
% |
|
|
3.19 |
% |
|
|
3.13 |
% |
Efficiency ratio (1) |
|
|
59.56 |
% |
|
|
61.10 |
% |
|
|
62.69 |
% |
|
|
64.36 |
% |
|
|
64.69 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
1,386,841 |
|
|
$ |
1,393,308 |
|
|
$ |
1,419,878 |
|
|
$ |
1,430,524 |
|
|
$ |
1,366,855 |
|
Average earning assets |
|
|
1,297,223 |
|
|
|
1,309,794 |
|
|
|
1,334,976 |
|
|
|
1,352,311 |
|
|
|
1,289,977 |
|
Average shareholders’
equity |
|
|
103,132 |
|
|
|
102,341 |
|
|
|
102,269 |
|
|
|
112,822 |
|
|
|
116,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan charge-offs |
|
$ |
135 |
|
|
$ |
181 |
|
|
$ |
107 |
|
|
$ |
106 |
|
|
$ |
185 |
|
Loan recoveries |
|
|
40 |
|
|
|
70 |
|
|
|
81 |
|
|
|
224 |
|
|
|
111 |
|
Net charge-offs
(recoveries) |
|
|
95 |
|
|
|
111 |
|
|
|
26 |
|
|
|
(118 |
) |
|
|
74 |
|
Non-accrual loans |
|
|
2,673 |
|
|
|
566 |
|
|
|
442 |
|
|
|
2,130 |
|
|
|
2,304 |
|
Other real estate owned,
net |
|
|
185 |
|
|
|
1,578 |
|
|
|
1,665 |
|
|
|
1,767 |
|
|
|
1,848 |
|
Nonperforming assets (3) |
|
|
2,858 |
|
|
|
2,144 |
|
|
|
2,107 |
|
|
|
3,897 |
|
|
|
4,152 |
|
Loans 30 to 89 days past due,
accruing |
|
|
1,532 |
|
|
|
2,117 |
|
|
|
1,572 |
|
|
|
2,105 |
|
|
|
3,235 |
|
Loans over 90 days past due,
accruing |
|
|
— |
|
|
|
306 |
|
|
|
91 |
|
|
|
52 |
|
|
|
— |
|
Troubled debt restructurings,
accruing |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Special mention loans |
|
|
1,959 |
|
|
|
3,183 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Substandard loans,
accruing |
|
|
301 |
|
|
|
304 |
|
|
|
308 |
|
|
|
311 |
|
|
|
315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital |
|
$ |
139,549 |
|
|
$ |
134,882 |
|
|
$ |
131,624 |
|
|
$ |
128,567 |
|
|
$ |
125,934 |
|
Tier 1 capital |
|
|
132,103 |
|
|
|
128,590 |
|
|
|
125,422 |
|
|
|
122,739 |
|
|
|
120,224 |
|
Common equity tier 1
capital |
|
|
132,103 |
|
|
|
128,590 |
|
|
|
125,422 |
|
|
|
122,739 |
|
|
|
120,224 |
|
Total capital to risk-weighted
assets |
|
|
14.60 |
% |
|
|
14.18 |
% |
|
|
14.23 |
% |
|
|
14.44 |
% |
|
|
14.76 |
% |
Tier 1 capital to
risk-weighted assets |
|
|
13.82 |
% |
|
|
13.52 |
% |
|
|
13.56 |
% |
|
|
13.79 |
% |
|
|
14.09 |
% |
Common equity tier 1 capital
to risk-weighted assets |
|
|
13.82 |
% |
|
|
13.52 |
% |
|
|
13.56 |
% |
|
|
13.79 |
% |
|
|
14.09 |
% |
Leverage ratio |
|
|
9.57 |
% |
|
|
9.27 |
% |
|
|
8.87 |
% |
|
|
8.61 |
% |
|
|
8.82 |
% |
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
Balance
Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
20,784 |
|
|
$ |
22,809 |
|
|
$ |
19,886 |
|
|
$ |
19,989 |
|
|
$ |
18,725 |
|
Interest-bearing deposits in
banks |
|
|
46,130 |
|
|
|
52,976 |
|
|
|
104,529 |
|
|
|
129,801 |
|
|
|
157,281 |
|
Securities available for sale,
at fair value |
|
|
162,907 |
|
|
|
176,403 |
|
|
|
264,750 |
|
|
|
284,893 |
|
|
|
289,495 |
|
Securities held to maturity,
at amortized cost |
|
|
153,158 |
|
|
|
154,894 |
|
|
|
77,151 |
|
|
|
81,640 |
|
|
|
33,441 |
|
Restricted securities, at
cost |
|
|
1,908 |
|
|
|
1,908 |
|
|
|
1,908 |
|
|
|
1,908 |
|
|
|
1,813 |
|
Loans, net of allowance for
loan losses |
|
|
913,076 |
|
|
|
900,222 |
|
|
|
873,887 |
|
|
|
830,595 |
|
|
|
819,408 |
|
Other real estate owned,
net |
|
|
185 |
|
|
|
1,578 |
|
|
|
1,665 |
|
|
|
1,767 |
|
|
|
1,848 |
|
Premises and equipment,
net |
|
|
21,876 |
|
|
|
21,693 |
|
|
|
22,118 |
|
|
|
22,278 |
|
|
|
22,403 |
|
Accrued interest
receivable |
|
|
4,543 |
|
|
|
4,247 |
|
|
|
4,154 |
|
|
|
4,056 |
|
|
|
3,903 |
|
Bank owned life insurance |
|
|
24,531 |
|
|
|
24,375 |
|
|
|
24,569 |
|
|
|
24,438 |
|
|
|
24,294 |
|
Goodwill |
|
|
3,030 |
|
|
|
3,030 |
|
|
|
3,030 |
|
|
|
3,030 |
|
|
|
3,030 |
|
Core deposit intangibles,
net |
|
|
136 |
|
|
|
140 |
|
|
|
145 |
|
|
|
150 |
|
|
|
154 |
|
Other assets |
|
|
17,119 |
|
|
|
19,320 |
|
|
|
16,898 |
|
|
|
13,117 |
|
|
|
13,641 |
|
Total assets |
|
$ |
1,369,383 |
|
|
$ |
1,383,595 |
|
|
$ |
1,414,690 |
|
|
$ |
1,417,662 |
|
|
$ |
1,389,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand
deposits |
|
$ |
427,344 |
|
|
$ |
438,306 |
|
|
$ |
431,292 |
|
|
$ |
417,776 |
|
|
$ |
413,188 |
|
Savings and interest-bearing
demand deposits |
|
|
677,139 |
|
|
|
693,970 |
|
|
|
731,125 |
|
|
|
734,051 |
|
|
|
689,998 |
|
Time deposits |
|
|
136,849 |
|
|
|
133,770 |
|
|
|
133,733 |
|
|
|
141,065 |
|
|
|
145,566 |
|
Total deposits |
|
$ |
1,241,332 |
|
|
$ |
1,266,046 |
|
|
$ |
1,296,150 |
|
|
$ |
1,292,892 |
|
|
$ |
1,248,752 |
|
Subordinated debt, net |
|
|
4,995 |
|
|
|
4,995 |
|
|
|
4,994 |
|
|
|
4,994 |
|
|
|
9,993 |
|
Junior subordinated debt |
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
Accrued interest payable and
other liabilities |
|
|
5,417 |
|
|
|
4,198 |
|
|
|
3,952 |
|
|
|
3,934 |
|
|
|
4,373 |
|
Total liabilities |
|
$ |
1,261,023 |
|
|
$ |
1,284,518 |
|
|
$ |
1,314,375 |
|
|
$ |
1,311,099 |
|
|
$ |
1,272,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Common stock |
|
|
7,831 |
|
|
|
7,828 |
|
|
|
7,815 |
|
|
|
7,812 |
|
|
|
7,785 |
|
Surplus |
|
|
32,716 |
|
|
|
32,620 |
|
|
|
32,398 |
|
|
|
32,298 |
|
|
|
31,966 |
|
Retained earnings |
|
|
90,284 |
|
|
|
86,382 |
|
|
|
82,804 |
|
|
|
79,845 |
|
|
|
76,990 |
|
Accumulated other
comprehensive (loss) income, net |
|
|
(22,471 |
) |
|
|
(27,753 |
) |
|
|
(22,702 |
) |
|
|
(13,392 |
) |
|
|
298 |
|
Total shareholders’
equity |
|
$ |
108,360 |
|
|
$ |
99,077 |
|
|
$ |
100,315 |
|
|
$ |
106,563 |
|
|
$ |
117,039 |
|
Total liabilities and
shareholders’ equity |
|
$ |
1,369,383 |
|
|
$ |
1,383,595 |
|
|
$ |
1,414,690 |
|
|
$ |
1,417,662 |
|
|
$ |
1,389,436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage real estate
loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development |
|
$ |
51,840 |
|
|
$ |
51,352 |
|
|
$ |
49,118 |
|
|
$ |
49,308 |
|
|
$ |
55,721 |
|
Secured by farmland |
|
|
3,343 |
|
|
|
3,432 |
|
|
|
3,169 |
|
|
|
3,555 |
|
|
|
3708 |
|
Secured by 1-4 family residential |
|
|
331,421 |
|
|
|
317,414 |
|
|
|
312,082 |
|
|
|
290,408 |
|
|
|
291,990 |
|
Other real estate loans |
|
|
415,112 |
|
|
|
414,072 |
|
|
|
397,868 |
|
|
|
380,635 |
|
|
|
361,213 |
|
Loans to farmers (except those
secured by real estate) |
|
|
900 |
|
|
|
745 |
|
|
|
769 |
|
|
|
937 |
|
|
|
985 |
|
Commercial and industrial
loans (except those secured by real estate) |
|
|
110,325 |
|
|
|
111,400 |
|
|
|
108,780 |
|
|
|
102,745 |
|
|
|
98,820 |
|
Consumer installment
loans |
|
|
4,128 |
|
|
|
4,192 |
|
|
|
4,230 |
|
|
|
4,602 |
|
|
|
4,963 |
|
Deposit overdrafts |
|
|
197 |
|
|
|
163 |
|
|
|
292 |
|
|
|
205 |
|
|
|
175 |
|
All other loans |
|
|
3,256 |
|
|
|
3,744 |
|
|
|
3,781 |
|
|
|
4,028 |
|
|
|
7,543 |
|
Total loans |
|
$ |
920,522 |
|
|
$ |
906,514 |
|
|
$ |
880,089 |
|
|
$ |
836,423 |
|
|
$ |
825,118 |
|
Allowance for loan losses |
|
|
(7,446 |
) |
|
|
(6,292 |
) |
|
|
(6,202 |
) |
|
|
(5,828 |
) |
|
|
(5,710 |
) |
Loans, net |
|
$ |
913,076 |
|
|
$ |
900,222 |
|
|
$ |
873,887 |
|
|
$ |
830,595 |
|
|
$ |
819,408 |
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
Reconciliation of
Tax-Equivalent Net Interest Income (7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income – loans |
|
$ |
11,502 |
|
|
$ |
10,759 |
|
|
$ |
9,963 |
|
|
$ |
9,496 |
|
|
$ |
9,365 |
|
Interest income – investments and other |
|
|
2,238 |
|
|
|
2,033 |
|
|
|
1,876 |
|
|
|
1,528 |
|
|
|
1,308 |
|
Interest expense – deposits |
|
|
(1,593 |
) |
|
|
(927 |
) |
|
|
(413 |
) |
|
|
(340 |
) |
|
|
(355 |
) |
Interest expense – subordinated debt |
|
|
(69 |
) |
|
|
(70 |
) |
|
|
(69 |
) |
|
|
(69 |
) |
|
|
(155 |
) |
Interest expense – junior subordinated debt |
|
|
(68 |
) |
|
|
(68 |
) |
|
|
(67 |
) |
|
|
(67 |
) |
|
|
(68 |
) |
Total net interest income |
|
$ |
12,010 |
|
|
$ |
11,727 |
|
|
$ |
11,290 |
|
|
$ |
10,548 |
|
|
$ |
10,095 |
|
Non-GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit realized on non-taxable interest income – loans |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
8 |
|
|
$ |
8 |
|
Tax benefit realized on non-taxable interest income – municipal
securities |
|
|
82 |
|
|
|
82 |
|
|
|
82 |
|
|
|
81 |
|
|
|
80 |
|
Total tax benefit realized on
non-taxable interest income |
|
$ |
82 |
|
|
$ |
82 |
|
|
$ |
82 |
|
|
$ |
89 |
|
|
$ |
88 |
|
Total tax-equivalent net
interest income |
|
$ |
12,092 |
|
|
$ |
11,809 |
|
|
$ |
11,372 |
|
|
$ |
10,637 |
|
|
$ |
10,183 |
|
FIRST NATIONAL CORPORATIONYear-to-Date
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
Income
Statement |
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
41,720 |
|
|
$ |
32,797 |
|
Interest on deposits in banks |
|
|
1,223 |
|
|
|
213 |
|
Interest on federal funds
sold |
|
|
— |
|
|
|
10 |
|
Interest on securities |
|
|
|
|
|
|
|
|
Taxable interest |
|
|
5,131 |
|
|
|
3,100 |
|
Tax-exempt interest |
|
|
1,229 |
|
|
|
936 |
|
Dividends |
|
|
92 |
|
|
|
88 |
|
Total interest income |
|
$ |
49,395 |
|
|
$ |
37,144 |
|
Interest expense |
|
|
|
|
|
|
|
|
Interest on deposits |
|
$ |
3,273 |
|
|
$ |
1,415 |
|
Interest on subordinated debt |
|
|
277 |
|
|
|
619 |
|
Interest on junior subordinated debt |
|
|
270 |
|
|
|
270 |
|
Total interest expense |
|
$ |
3,820 |
|
|
$ |
2,304 |
|
Net interest income |
|
$ |
45,575 |
|
|
$ |
34,840 |
|
Provision for (recovery of)
loan losses |
|
|
1,850 |
|
|
|
(650 |
) |
Net interest income after
provision for (recovery of) loan losses |
|
$ |
43,725 |
|
|
$ |
35,490 |
|
Noninterest income |
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
$ |
2,677 |
|
|
$ |
2,061 |
|
ATM and check card fees |
|
|
3,300 |
|
|
|
2,930 |
|
Wealth management fees |
|
|
3,008 |
|
|
|
2,712 |
|
Fees for other customer services |
|
|
839 |
|
|
|
787 |
|
Brokered mortgage fees |
|
|
245 |
|
|
|
539 |
|
Income from bank owned life insurance |
|
|
596 |
|
|
|
526 |
|
Net (losses) gains on securities available for sale |
|
|
(2,004 |
) |
|
|
37 |
|
Net gains on sale of loans |
|
|
— |
|
|
|
25 |
|
Other operating income |
|
|
3,989 |
|
|
|
570 |
|
Total noninterest income |
|
$ |
12,650 |
|
|
$ |
10,187 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
20,709 |
|
|
$ |
17,792 |
|
Occupancy |
|
|
2,218 |
|
|
|
1,856 |
|
Equipment |
|
|
2,300 |
|
|
|
1,910 |
|
Marketing |
|
|
813 |
|
|
|
666 |
|
Supplies |
|
|
528 |
|
|
|
509 |
|
Legal and professional fees |
|
|
1,414 |
|
|
|
2,537 |
|
ATM and check card expense |
|
|
1,370 |
|
|
|
1,145 |
|
FDIC assessment |
|
|
463 |
|
|
|
346 |
|
Bank franchise tax |
|
|
930 |
|
|
|
665 |
|
Data processing expense |
|
|
989 |
|
|
|
2,156 |
|
Amortization expense |
|
|
19 |
|
|
|
28 |
|
Other real estate owned (income) expense, net |
|
|
(106 |
) |
|
|
26 |
|
Other operating expense |
|
|
3,978 |
|
|
|
3,096 |
|
Total noninterest expense |
|
$ |
35,625 |
|
|
$ |
32,732 |
|
Income before income
taxes |
|
$ |
20,750 |
|
|
$ |
12,945 |
|
Income tax expense |
|
|
3,952 |
|
|
|
2,586 |
|
Net income |
|
$ |
16,798 |
|
|
$ |
10,359 |
|
FIRST NATIONAL CORPORATIONYear-to-Date
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
Common Share and Per
Common Share Data |
|
|
|
|
|
|
|
|
Earnings per common share,
basic |
|
$ |
2.69 |
|
|
$ |
1.87 |
|
Weighted average shares,
basic |
|
|
6,252,369 |
|
|
|
5,550,589 |
|
Earnings per common share,
diluted |
|
$ |
2.68 |
|
|
$ |
1.86 |
|
Weighted average shares,
diluted |
|
|
6,259,357 |
|
|
|
5,559,082 |
|
Shares outstanding at period
end |
|
|
6,264,912 |
|
|
|
6,228,176 |
|
Tangible book value at period
end |
|
$ |
16.79 |
|
|
$ |
18.28 |
|
Cash dividends |
|
$ |
0.56 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
Key Performance
Ratios |
|
|
|
|
|
|
|
|
Return on average assets |
|
|
1.19 |
% |
|
|
0.88 |
% |
Return on average equity |
|
|
15.87 |
% |
|
|
10.30 |
% |
Net interest margin |
|
|
3.71 |
% |
|
|
3.13 |
% |
Efficiency ratio (1) |
|
|
61.75 |
% |
|
|
64.44 |
% |
|
|
|
|
|
|
|
|
|
Average
Balances |
|
|
|
|
|
|
|
|
Average assets |
|
$ |
1,408,710 |
|
|
$ |
1,182,436 |
|
Average earning assets |
|
|
1,237,635 |
|
|
|
1,120,647 |
|
Average shareholders’
equity |
|
|
105,869 |
|
|
|
100,596 |
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
Loan charge-offs |
|
$ |
529 |
|
|
$ |
1,447 |
|
Loan recoveries |
|
|
415 |
|
|
|
322 |
|
Net charge-offs |
|
|
114 |
|
|
|
1,125 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Tax-Equivalent Net Interest Income (7) |
|
|
|
|
|
|
|
|
GAAP measures: |
|
|
|
|
|
|
|
|
Interest income – loans |
|
$ |
41,720 |
|
|
$ |
32,797 |
|
Interest income – investments and other |
|
|
7,675 |
|
|
|
4,347 |
|
Interest expense – deposits |
|
|
(3,273 |
) |
|
|
(1,415 |
) |
Interest expense – subordinated debt |
|
|
(277 |
) |
|
|
(619 |
) |
Interest expense – junior subordinated debt |
|
|
(270 |
) |
|
|
(270 |
) |
Total net interest income |
|
$ |
45,575 |
|
|
$ |
34,840 |
|
Non-GAAP measures: |
|
|
|
|
|
|
|
|
Tax benefit realized on non-taxable interest income – loans |
|
$ |
8 |
|
|
$ |
32 |
|
Tax benefit realized on non-taxable interest income – municipal
securities |
|
|
327 |
|
|
|
249 |
|
Total tax benefit realized on
non-taxable interest income |
|
$ |
335 |
|
|
$ |
281 |
|
Total tax-equivalent net
interest income |
|
$ |
45,910 |
|
|
$ |
35,121 |
|
(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 and gains and losses on other assets. 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) Capital ratios 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. 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.
(7) 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.
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