First National Corporation

What they do

First National Corporation operates through its wholly owned subsidiary, First Bank, a Virginia-chartered commercial bank. The Bank offers loan products (consumer, residential mortgage, home equity, and commercial), deposit products (checking, savings, money market, CDs, IRAs), and wealth management services (estate planning, trust administration). It serves small and medium-sized businesses, individuals, estates, and local government entities through 33 branch offices and one loan production office.

Revenue drivers

• Net interest income — Interest earned on loans and securities minus interest paid on deposits and borrowings; largest component of total revenue.
• Noninterest income — Primarily service charges on deposits, wealth management fee income, and ATM/check card fees.
• Wealth management services — Estate planning, investment management, and trustee services; a growing fee-based revenue source.

Recent performance

In Q2 2026, the Company reported net income of $5.7 million and diluted EPS of $0.63. Tax-equivalent net interest margin expanded to 4.15%, up from 3.95% a year prior. Net loans grew $22.7 million during the quarter (6.3% annualized). Non-performing assets were 0.23% of total assets as of June 30, 2026. Full-year 2025 net income was $17.7 million, with diluted EPS of $1.96.

Strategy

Management describes an 'intentional, profitable growth strategy' focused on growing average loan and deposit balances, particularly through new and legacy banking teams deepening customer relationships. The Company continues a branch optimization initiative, including the pending sale of its North Carolina branches, expected to close in Q4 2026. Regulatory approvals for that sale have been received. Prior branch closures and subsidiary liquidations were completed in 2025 with no material financial impact.

Risks

• Interest rate sensitivity — Changes in interest rates could negatively impact net interest income and the value of the securities portfolio.
• Real estate concentration — A significant portion of the loan portfolio is secured by real estate; adverse real estate market conditions could increase credit losses.
• Subordinated debt obligations — Holders of subordinated debt have claims senior to common stock, which could limit future dividend payments.
• Branch sale execution — The pending sale of North Carolina branches may not close as planned or achieve expected cost savings.

Outlook

Management expects the North Carolina branch sale to close early in Q4 2026, completing another step in its branch optimization initiative. The Company aims to maintain a net interest margin above 4% and continue asset quality discipline. Forward-looking statements cite risks from economic conditions, competition, technology changes, and regulatory actions.