Company Summary - First National Corporation

Overview:
First National Corporation (the Company) is a Virginia-registered bank holding company that primarily owns and operates First Bank, a commercial bank chartered under Virginia law with membership in the Federal Reserve System. The Company’s subsidiaries include First Bank, First Bank Financial Services, Inc., Shen-Valley Land Holdings, LLC, Bank of Fincastle Services, Inc. (dissolved in 2025), ESF, LLC (closed in 2025), McKenney Group, LLC, and two statutory trusts for issuing trust preferred securities.

Business Operations & Market Focus

• Founded: 1983 (incorporated in Virginia)
• Main Banking Subsidiary: First Bank, which originally opened in 1907.
• Branches: Operates 33 branches across Virginia (Shenandoah Valley, Roanoke Valley, south-central Virginia, Richmond MSA), North Carolina, and two additional in North Carolina acquired through a merger.
• Loan & Deposit Focus: Serves small and medium-sized businesses, individuals, non-profit organizations, and local government entities.
• Customer Base: Approximately 8.99 million shares outstanding as of March 21, 2025; around 1,600 beneficial owners and 1,406 shareholders of record.
• Employees: 303 full-time employees as of December 31, 2024.
• Revenue Sources:
  • Net interest income from interest on loans, securities, and other interest-earning assets (~50-60% of total revenue).
  • Noninterest income from service charges, wealth management, ATM, check card fees, and other customer services.

Financial Performance (2024 vs. 2023)

• Total Assets: Increased by approximately $591 million to $2.01 billion.
• Net Income:
  • $7.0 million in 2024 (diluted earnings per share of $1.00)
  • Compared to $9.6 million in 2023 (diluted EPS of $1.53).
• Return on Average Assets:
  • 2024: 0.44%
  • 2023: 0.71%.
• Return on Average Equity:
  • 2024: 5.33%
  • 2023: 8.59%.
• Loans (Net): Grew $493.1 million to $1.45 billion.
• Deposits: Increased $570.1 million to $1.80 billion, including $555.4 million acquired from Touchstone.
• Interest Income:
  • $76.3 million in 2024, up from $57.7 million in 2023.
• Interest Expense:
  • $23.9 million in 2024, up from $14.3 million in 2023.
• Net Interest Margin:
  • Increased to 3.51% in 2024 from 3.41% in 2023.
• Noninterest Income:
  • Risen 39% to $16.4 million (from $11.8 million in 2023), aided by a bargain purchase gain of $2.9 million and loan recoveries.
• Noninterest Expenses:
  • Increased 42% to $52.9 million, mainly due to merger expenses of $8.1 million and amortization of intangibles.

Key Details

• Number of Shares Outstanding: 8,986,696 (as of March 21, 2025).
• Market Capitalization (June 2024): Approximately $77.2 million.
• Revenue Composition: Primarily from net interest income and service charges, fee income, wealth management, and ATM fees.
• Profitability: Income declined mainly due to merger expenses and increased credit provisions but was partially offset by higher net interest and fee income.
• Regulatory & Operational Focus: The Company is heavily regulated, with strategic emphasis on asset quality, diversified lending (including real estate, commercial, and consumer loans), and maintaining adequate capital levels.

Summary

First National Corporation is a Virginia-based bank holding company with 33 branches and a focus on community-based financial services in Virginia and North Carolina. It provides a full range of banking products including business and consumer loans, deposit accounts, and wealth management. In 2024, it expanded its asset base significantly through the acquisition of Touchstone Bankshares, while reporting net income of $7 million on total assets of $2 billion. The company employs 303 staff and serves a broad local customer base, with revenues primarily derived from interest and related fees.