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First National Corp (FXNC) SEC Filing 10-K Annual report for the fiscal year ending Tuesday, December 31, 2019

SEC Filings

First National Corp

CIK: 719402 Ticker: FXNC

Exhibit 99.1

 

First National Corporation Reports 17% Increase in Fourth Quarter 2019 Net Income

 

STRASBURG, Va., January 28, 2020 --- First National Corporation (the “Company” or “First National”) (NASDAQ:FXNC) reported net income of $2.7 million, or $0.55 per diluted share, for the fourth quarter of 2019, which resulted in a return on average assets of 1.36% and a return on average equity of 14.10%. This was a $395 thousand, or 17%, increase compared to net income for the fourth quarter of 2018, which totaled $2.3 million or $0.47 per diluted share, and a return on average assets of 1.22% and a return on average equity of 14.15%.

 

For the year ended December 31, 2019, net income totaled $9.6 million, or $1.92 per diluted share, which resulted in return on assets of 1.23% and return on equity of 13.19%. This compares to net income of $10.1 million, or $2.04 per diluted share, for the year ended December 31, 2018.

 

Highlights for the fourth quarter of 2019:

 

 

Return on average equity of 14.10%
 

Return on average assets of 1.36%
 

Wealth management revenue increased $53 thousand, or 12%

  Net gains on sale of loans increased $66 thousand
 

Total assets increased 6% to $800.0 million at year end

 

Nonperforming assets decreased to 0.18% of assets

 

“First National Corporation produced strong results in the fourth quarter of 2019 to finish a year of solid performance for the Company,” said Scott C. Harvard, President and CEO of First National. Harvard added, “Although lower market rates and a flat yield curve caused net interest margin compression, we are pleased with six percent loan growth and five percent deposit growth during the year. In addition, wealth management revenue has consistently increased from growth in the number of accounts under management and their market values. Going forward, we plan to focus on operating efficiently and expanding our customer portfolios by offering the latest banking products and delivering superior service.”

 

BALANCE SHEET

 

Total assets of First National increased $47.1 million, or 6%, to $800.0 million at December 31, 2019, compared to $753.0 million at December 31, 2018. The earning asset composition was unchanged as loans, net of the allowance for loan losses, increased $31.6 million, or 6%, and securities and interest-bearing deposits in banks increased $16.3 million, or 10%.

 

Total deposits increased $35.9 million, or 5%, to $706.4 million at December 31, 2019, compared to $670.6 million at December 31, 2018. There was a slight change in the deposit composition as noninterest-bearing deposits was unchanged at 27% of total deposits, while savings and interest-bearing demand deposits increased from 55% to 57% of total deposits and time deposits decreased from 18% to 16% of total deposits.

 

Shareholders’ equity increased $10.5 million to $77.2 million at December 31, 2019, compared to $66.7 million one year ago, primarily from a $7.8 million increase in retained earnings and a $2.5 million increase in accumulated other comprehensive income. Tangible common equity totaled $77.0 million at the end of the fourth quarter, an increase of 16% compared to $66.2 million one year ago. The Company’s wholly owned subsidiary, First Bank (the “Bank”), was considered well capitalized at December 31, 2019.

 

ANALYSIS OF THE THREE-MONTH PERIOD

 

Net interest income decreased $90 thousand, or 1%, to $7.1 million for the fourth quarter of 2019, compared to the same period of 2018. The decrease resulted from a 26 basis point decrease in net interest margin, which was partially offset by a 6% increase in average earning assets. The decrease in the net interest margin resulted from a 10 basis point increase in interest expense as a percent of average earning assets and a 16 basis point decrease in the yield on average earning assets.

 

The lower yield on average earning assets was primarily attributable to a 14 basis point decrease in the yield on loans. The increase in interest expense was primarily attributable to higher interest rates paid on deposits, as the cost of total interest-bearing deposits increased 16 basis points.

 

Noninterest income increased $62 thousand, or 3%, to $2.3 million, compared to the same period of 2018. Wealth management fees increased $53 thousand, or 12%, fees for other customer services increased $27 thousand, or 18%, income from bank owned life insurance increased $26 thousand, or 27%, and net gains on sale of loans increased $66 thousand. These increases were partially offset by a $61 thousand, or 7%, decrease in service charges on deposits, and a $63 thousand decrease in other operating income.

 

Noninterest expense decreased $277 thousand, or 5%, to $5.8 million, compared to the same period one year ago. The decrease was primarily attributable to a $113 thousand, or 3%, decrease in salaries and employee benefits, a $27 thousand, or 17%, decrease in marketing expense, a $32 thousand, or 9%, decrease in legal and professional fees, a $121 thousand decrease in FDIC assessment, and a $38 thousand decrease in amortization expense of core deposit intangibles. These decreases were partially offset by a $53 thousand, or 30%, increase in ATM and check card expense.

 

 

The following information was filed by First National Corp (FXNC) on Wednesday, January 29, 2020 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Document And Entity Information
Consolidated Balance Sheets
Consolidated Balance Sheets (Parentheticals)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Changes In Shareholders' Equity
Consolidated Statements Of Changes In Shareholders' Equity (Parentheticals)
Consolidated Statements Of Comprehensive Income
Consolidated Statements Of Comprehensive Income (Parentheticals)
Consolidated Statements Of Income
Note 1 - Nature Of Banking Activities And Significant Accounting Policies
Note 1 - Nature Of Banking Activities And Significant Accounting Policies (Details Textual)
Note 10 - Junior Subordinated Debt
Note 10 - Junior Subordinated Debt (Details Textual)
Note 11 - Income Taxes
Note 11 - Income Taxes (Tables)
Note 11 - Income Taxes - Income Tax Expense (Details)
Note 11 - Income Taxes - Income Tax Rate Reconciliation (Details)
Note 11 - Income Taxes - Net Deferred Tax Assets (Details)
Note 12 - Funds Restrictions And Reserve Balance
Note 12 - Funds Restrictions And Reserve Balance (Details Textual)
Note 13 - Benefit Plans
Note 13 - Benefit Plans (Details Textual)
Note 13 - Benefit Plans (Tables)
Note 13 - Benefit Plans - Amounts Recognized In Accumulated Other Comprehensive Loss (Details)
Note 13 - Benefit Plans - Assumptions (Details)
Note 13 - Benefit Plans - Changes In Plan Benefit Obligation And Fair Value Of Assets (Details)
Note 13 - Benefit Plans - Components Of Net Periodic Benefit Cost (Details)
Note 14 - Earnings Per Common Share
Note 14 - Earnings Per Common Share (Tables)
Note 14 - Earnings Per Common Share - Basic And Diluted Earnings Per Share (Details)
Note 15 - Commitments And Unfunded Credits
Note 15 - Commitments And Unfunded Credits (Details Textual)
Note 15 - Commitments And Unfunded Credits (Tables)
Note 15 - Commitments And Unfunded Credits - Financial Instruments Representing Credit Risk (Details)
Note 16 - Transactions With Related Parties
Note 16 - Transactions With Related Parties (Details Textual)
Note 17 - Lease Commitments
Note 17 - Lease Commitments (Details Textual)
Note 17 - Lease Commitments (Tables)
Note 17 - Lease Commitments - Operating Lease Right-Of-Use Asset And Operating Lease Liability (Details)
Note 17 - Lease Commitments - Schedule Of Lease Cost And Additional Information Related To Operating Leases (Details)
Note 17 - Lease Commitments - Schedule Of Undiscounted Cash Flows That Contribute To The Operating Lease Liability (Details)
Note 18 - Dividend Reinvestment Plan
Note 18 - Dividend Reinvestment Plan (Details Textual)
Note 19 - Fair Value Measurements
Note 19 - Fair Value Measurements (Details Textual)
Note 19 - Fair Value Measurements (Tables)
Note 19 - Fair Value Measurements - Assets Measured At Fair Value On A Nonrecurring Basis (Details)
Note 19 - Fair Value Measurements - Balances Of Assets Measured At Fair Value On Recurring Basis (Details)
Note 19 - Fair Value Measurements - Carrying Values And Estimated Values Of Financial Instruments (Details)
Note 19 - Fair Value Measurements - Quantitative Information About Level 3 Fair Value Measurements (Details)
Note 2 - Securities
Note 2 - Securities (Details Textual)
Note 2 - Securities (Tables)
Note 2 - Securities - Amortized Cost And Fair Value Of Securities (Details)
Note 2 - Securities - Composition Of Restricted Securities (Details)
Note 2 - Securities - Investments In An Unrealized Loss Position That Were Temporarily Impaired (Details)
Note 2 - Securities - Summary Of Amortized Costs And Fair Values Of Securities (Details)
Note 20 - Regulatory Matters
Note 20 - Regulatory Matters (Details Textual)
Note 20 - Regulatory Matters (Tables)
Note 20 - Regulatory Matters - Comparison Of Capital Of Company And Bank With Minimum Regulatory Guidelines (Details)
Note 21 - Accumulated Other Comprehensive Income (Loss)
Note 21 - Accumulated Other Comprehensive Income (Loss) (Tables)
Note 21 - Accumulated Other Comprehensive Income (Loss) - Changes In Each Component Of Accumulated Other Comprehensive Income (Loss) (Details)
Note 21 - Accumulated Other Comprehensive Income (Loss) - Changes In Each Component Of Accumulated Other Comprehensive Income (Loss) (Details) (Parentheticals)
Note 21 - Accumulated Other Comprehensive Income (Loss) - Reclassifications From Accumulated Other Comprehensive Loss (Details)
Note 22 - Stock Compensation Plan - Summary Of Restricted Stock Unit Activity (Details)
Note 22 - Stock Compensation Plans
Note 22 - Stock Compensation Plans (Details Textual)
Note 22 - Stock Compensation Plans (Tables)
Note 23 - Revenue Recognition
Note 23 - Revenue Recognition (Tables)
Note 23 - Revenue Recognition - Disaggregation Of Revenue (Details)
Note 24 - Parent Company Only Financial Statements
Note 24 - Parent Company Only Financial Statements (Tables)
Note 24 - Parent Company Only Financial Statements - Balance Sheet (Details)
Note 24 - Parent Company Only Financial Statements - Statements Of Cash Flows (Details)
Note 24 - Parent Company Only Financial Statements - Statemetns Of Income (Details)
Note 3 - Loans
Note 3 - Loans (Details Textual)
Note 3 - Loans (Tables)
Note 3 - Loans - Analysis Of The Credit Risk Profile Of Each Loan Class (Details)
Note 3 - Loans - Summary Of Loan Classes And An Aging Of Past Due Loans (Details)
Note 3 - Loans - Summary Of Loans (Details)
Note 4 - Allowance For Loan Losses
Note 4 - Allowance For Loan Losses (Details Textual)
Note 4 - Allowance For Loan Losses (Tables)
Note 4 - Allowance For Loan Losses - Allowance By Impairment Methodology And Loans By Impairment Methodology (Details)
Note 4 - Allowance For Loan Losses - Impaired Loans And Related Allowances (Details)
Note 5 - Other Real Estate Owned
Note 5 - Other Real Estate Owned (Details Textual)
Note 5 - Other Real Estate Owned (Tables)
Note 5 - Other Real Estate Owned - Changes In The Balance For Oreo (Details)
Note 6 - Premises And Equipment
Note 6 - Premises And Equipment (Details Textual)
Note 6 - Premises And Equipment (Tables)
Note 6 - Premises And Equipment - Premises And Equipment (Details)
Note 7 - Deposits
Note 7 - Deposits (Details Textual)
Note 7 - Deposits (Tables)
Note 7 - Deposits - Scheduled Maturities Of Time Deposits (Details)
Note 8 - Other Borrowings
Note 8 - Other Borrowings (Details Textual)
Note 9 - Subordinated Debt
Note 9 - Subordinated Debt (Details Textual)
Significant Accounting Policies (Policies)
Ticker: FXNC
CIK: 719402
Form Type: 10-K Annual Report
Accession Number: 0001437749-20-005188
Submitted to the SEC: Fri Mar 13 2020 5:21:11 PM EST
Accepted by the SEC: Fri Mar 13 2020
Period: Tuesday, December 31, 2019
Industry: State Commercial Banks

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