Last10K.com

First National Corp (FXNC) SEC Filing 8-K Material Event for the period ending Thursday, July 29, 2021

SEC Filings

First National Corp

CIK: 719402 Ticker: FXNC

Exhibit 99.1

logo.jpg

 

First National Corporation Reports Second Quarter 2021 Financial Results

 

STRASBURG, Va., July 29, 2021 --- 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 $3.3 million, or $0.69 per diluted share, for the second quarter of 2021, which resulted in return on average assets of 1.31% and return on average equity of 15.33%. This compares to net income of $2.2 million, or $0.46 per diluted share, and return on average assets of 1.00% and return on average equity of 11.30% for the second quarter of 2020.

 

During the second quarter of 2021, the Company incurred merger related expenses totaling $277 thousand related to the acquisition of The Bank of Fincastle (the “Merger”), which was completed on July 1, 2021. Merger related expenses were comprised primarily of legal and professional fees. Also included in earnings in the second quarter of 2021 was a recovery of loan losses totaling $1.0 million, compared to a provision for loan losses of $800 thousand in the same period of 2020. 

 

Key highlights of the second quarter of 2021 are as follows. Comparisons are to the corresponding period in the prior year unless otherwise stated:

 

 

Return on average assets of 1.31%
  Return on average equity of 15.33%
  Efficiency ratio of 63.65%
  Noninterest income increased 37% to $2.4 million
  Nonperforming assets decreased to 0.21% of total assets
 

Recovery of loan losses totaled $1.0 million
 

Merger related expenses totaled $277 thousand

 

“We are especially pleased with the Company’s financial performance for the second quarter while our team worked to complete the Merger with The Bank of Fincastle on July 1,” said Scott Harvard, president and chief executive officer.  Harvard continued. “In addition to a return to superior asset quality metrics, which resulted in a recovery of loan losses, the Bank experienced a 37% increase in noninterest income that was primarily from revenue growth from all banking services. Fee income earned from deposit accounts, wealth management, and other customer services increased, all with double digit growth percentages. The Company also absorbed $277 thousand of merger related expenses during the period. We are delighted with the team of associates who have joined the Bank through the Merger and we are optimistic about prospects for the future.”

 

COVID-19 PANDEMIC UPDATE

 

Operations

 

During the second quarter of 2021, the Bank continued to follow its Pandemic Plan that strives to protect the health of its employees and customers, while continuing to deliver banking services. In response to vaccinations that continued to be provided to thousands of people in our market areas, and the decrease in the number of COVID-19 cases in our communities, the Bank entered phase two of its plan in late March 2021 after operating in phase one since early December 2020. After operating for almost four months primarily through branch drive throughs, ATMs, and mobile and internet banking platforms, lobbies re-opened in March for walk-in customers to conduct their banking business.

 

Paycheck Protection Program

 

The Bank continued to participate as a lender in the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) to support local small businesses and non-profit organizations by providing forgivable loans. During the second and third quarters of 2020, the Bank originated $76.6 million of PPP loans, received $2.5 million of loan fees from the SBA, and incurred $535 thousand of loan origination costs. The PPP stopped accepting applications in August of 2020. The loan fees continue to be accreted into earnings evenly over the life of the loans, net of loan origination costs, through interest and fees on loans. PPP loans that were originated in 2020 totaled $26.1 million at June 30, 2021 and are scheduled to mature in the second and third quarters of 2022.

 

 

 

Congress revived the PPP as part of the COVID-19 relief bill that was signed into law on December 27, 2020. The Bank began participating again as a lender in the PPP in January of 2021. During the first and second quarters of 2021, the Bank originated $26.2 million of PPP loans, received $1.4 million of loan fees from the SBA, and incurred $65 thousand of loan origination costs. Like the PPP loans originated in 2020, loan fees are being accreted into earnings evenly over the life of the loans, net of loan origination costs, through interest and fees on loans. PPP loans that were originated in 2021 totaled $25.0 million at June 30, 2021 and are scheduled to mature in the first and second quarters of 2026. 

 

Asset Quality Impact

 

The pandemic has negatively impacted the financial condition of certain loan customers. The Bank expects customers in certain sectors of its commercial real estate loan portfolio, including retail shopping, lodging and leisure, may experience elevated financial pressure in future periods. Those sectors comprised 5%, 4% and 1% of the loan portfolio, respectively, excluding PPP loans, at June 30, 2021. The Bank also expects that loans in those same sectors of its commercial and industrial loan portfolio may also experience financial pressure in future periods. The magnitude of the potential decline in the Bank’s loan quality in future periods will likely depend on the duration of the pandemic and the extent that the Bank’s customers experience business interruptions.

 

Loan Modifications

 

In response to the unknown impact of the pandemic on the economy and its customers, the Bank created and implemented a loan payment deferral program for individual and business customers beginning in the first quarter of 2020, which provided them the opportunity to defer monthly payments for 90 days. By June 30, 2020, loans participating in the program reached $182.6 million. The majority of these loans resumed regular payments during the second half of 2020 after their deferral periods ended. There were no loans remaining in the loan payment deferral program at June 30, 2021.

 

During the fourth quarter of 2020, and during the first half of 2021, the Bank modified terms of certain loans for customers that continued to be negatively impacted by the pandemic by lowering borrower’s loan payments with interest only payments for periods ranging between 6 and 24 months. Modified loans totaled $13.4 million at June 30, 2021, with $13.2 million in the Bank’s commercial real estate loan portfolio and $158 thousand in the commercial and industrial loans portfolio. The loans were comprised of $11.7 million in the lodging sector and $1.7 million in the leisure sector. All modified loans were either performing under their modified terms or resumed regular loan payments as of June 30, 2021.

 

Capital

 

The Company issued $5.0 million of subordinated debt in June 2020 as a result of its risk management program and capital planning. The purpose of the issuance was primarily to further strengthen holding company liquidity and to remain a source of strength for the Bank in the event of a severe economic downturn. The Company may also use the proceeds of the issuance for general corporate purposes, including the potential repayment of the Company’s subordinated debt that was issued in 2015 and became callable on a quarterly basis beginning January 1, 2021. The Company issued the debt with a 5.50% fixed-to-floating rate subordinated note due 2030 to an institutional investor and was structured to qualify as Tier 2 capital under bank regulatory guidelines.

 

After being suspended for most of 2020, the Company’s stock repurchase plan ended on December 31, 2020. The Company has not authorized another stock repurchase plan due to certain factors, which include the continued uncertainty and potential impact of the pandemic on the economy and the Bank’s customers. The Company continued to pay cash dividends on common stock of $0.11 per share throughout 2020, and in February 2021, it declared a quarterly cash dividend of $0.12 per share, which was a 9% increase. In May 2021, the Company declared another quarterly cash dividend of $0.12 per share.

 

BALANCE SHEET

 

Total assets of First National increased $82.5 million, or 9%, to $1.0 billion at June 30, 2021, compared to $942.1 million at June 30, 2020. The increase was primarily attributable to a $23.8 million, or 26%, increase in interest-bearing deposits in banks, a $93.5 million, or 66%, increase in total securities, which were partially offset by a $33.3 million, or 5%, decrease in loans, net of the allowance for loan losses. The decrease in the loan portfolio included PPP loan balances that decreased $22.2 million, comparing the same periods. 

 

 

 

Total liabilities increased $74.6 million, or 9%, to $935.9 million at June 30, 2021, compared to $861.3 million one year ago. The increase in total liabilities was primarily attributable to growth in deposits. Total deposits increased $75.3 million, or 9%, to $914.3 million. Noninterest-bearing demand deposits increased $36.6 million, or 14%, savings and interest-bearing demand deposits increased $57.2 million, or 12%, while time deposits decreased $18.5 million, or 16%. The origination of PPP loans during the first six months of 2021 contributed to the deposit growth as many customers deposited proceeds of the loans in their deposit accounts at the Bank. Although proceeds from PPP loan originations contributed to the increase in deposits, the Bank also experienced a significant amount of deposit growth that was not related to proceeds from PPP loan originations.

 

Shareholders’ equity increased $7.9 million, or 10%, to $88.7 million at June 30, 2021, compared to one year ago, primarily from an increase in retained earnings. The Bank was considered well-capitalized at June 30, 2021.

 

PERFORMANCE ANALYSIS OF THE THREE-MONTH PERIOD

 

Net income totaled $3.3 million, or $0.69 per diluted share, for the second quarter of 2021, which resulted in return on average assets of 1.31% and return on average equity of 15.33%. This compares to net income of $2.2 million, or $0.46 per diluted share, and return on average assets of 1.00% and return on average equity of 11.30% for the second quarter of 2020.

 

Net interest income increased $84 thousand, or 1%, to $7.5 million for the second quarter of 2021, compared to the same period of 2020. The increase resulted from a $284 thousand, or 34%, decrease in total interest expense, which was partially offset by a $200 thousand decrease in total interest and dividend income. The net interest margin decreased 49 basis points to 3.10%. The decrease in the net interest margin was offset by growth in average earning assets of $140.1 million, or 17%, and resulted in an increase in net interest income. 

 

The $284 thousand decrease in total interest expense was primarily a result of a $348 thousand, or 51%, decrease in interest expense on deposits, which was partially offset by a $63 thousand increase in interest expense on subordinated debt.  The decrease in interest expense on deposits was attributable to reduced interest rates paid on deposits and the increase in interest expense on subordinated debt resulted from a $4.9 million increase in the average balance of subordinated debt.

 

The $200 thousand decrease in total interest and dividend income was primarily a result of a $342 thousand, or 5%, decrease in interest and fees on loans, which was partially offset by a $121 thousand, or 15%, increase in interest income and dividends on securities.  The decrease in interest income on loans was attributable to a 22-basis point decrease in the loan yield, while the increase in interest income on securities resulted from a $47.9 million increase in the average balance of securities. 

 

Noninterest income increased $662 thousand, or 37%, to $2.4 million compared to the same period of 2020. Service charges on deposits increased $99 thousand, or 28%, ATM and check card fees increased $132 thousand, or 24%, wealth management fees increased $145 thousand, or 28%, fees for other customer services increased $70 thousand, or 30%, and other operating income increased $223 thousand. The increase in service charges on deposits resulted from an increase in overdraft fee income, ATM and check card fees increased from an increase in card use by customers, wealth management increased from a higher amount of assets under management, and fees for other customer services increased primarily from fee revenue earned on brokered mortgage loans sold in the secondary market. Other operating income increased primarily from income earned on investments in Small Business Investment Companies.

 

Noninterest expense increased $1.0 million, or 18%, to $6.6 million, compared to the same period one year ago. The increase was primarily attributable to a $671 thousand increase in salaries and employee benefits and a $182 thousand increase in legal and professional fees. The increase in salaries and employee benefits resulted primarily from $520 thousand of deferred PPP loan origination costs in the prior year.  The increase in legal and professional fees was attributable to merger related expenses. Merger related expenses totaled $277 thousand in the second quarter of 2021.

 

PERFORMANCE ANALYSIS OF THE SIX-MONTH PERIOD

 

Net income totaled $5.8 million, or $1.19 per diluted share, for the six months ended June 30, 2021, which resulted in return on average assets of 1.15% and return on average equity of 13.44%. This compares to net income of $3.9 million, or $0.81 per diluted share, and return on average assets of 0.93% and return on average equity of 10.01% for the same period of 2020.

 

 

 

Net interest income increased $570 thousand, or 4%, to $15.0 million for the six months ended June 30, 2021, compared to the same period of 2020. The increase resulted from a $843 thousand, or 43%, decrease in total interest expense, which was partially offset by a $273 thousand decrease in total interest and dividend income. The net interest margin decreased 48 basis points to 3.19%. The decrease in the net interest margin was offset by growth in average earning assets of $161.2 million, or 20%, and resulted in an increase in net interest income. 

 

The $843 thousand decrease in total interest expense was primarily a result of a $947 thousand, or 58%, decrease in interest expense on deposits, which was partially offset by a $127 thousand increase in interest expense on subordinated debt.  The decrease in interest expense on deposits was attributable to reduced interest rates paid on deposits, and the increase in interest expense on subordinated debt resulted from a $5.0 million increase in the average balance of subordinated debt.

 

The $273 thousand decrease in total interest and dividend income was primarily a result of a $402 thousand, or 3%, decrease in interest and fees on loans and a $64 thousand, or 48%, decrease in interest on deposits in banks.  These increases were partially offset by a $193 thousand, or 12%, increase in interest income and dividends on securities.  The decrease in interest income on loans was attributable to a 33-basis point decrease in the yield on loans and the decrease in interest on deposits in banks resulted from a 45-basis point decrease in the yield on deposits in banks, while the increase in interest income on securities resulted from a $32.7 million increase in the average balance of securities. 

 

Noninterest income increased $706 thousand, or 18%, to $4.6 million compared to the same period of 2020. ATM and check card fees increased $214 thousand, or 20%, wealth management fees increased $263 thousand, or 25%, fees for other customer services increased $149 thousand, or 34%, and other operating income increased $216 thousand. The increase in ATM and check card fees increased from an increase in card use by customers, wealth management increased from a higher amount of assets under management, and fees for other customer services increased primarily from fee revenue earned on brokered mortgage loans sold in the secondary market. Other operating income increased primarily from income earned on investments in Small Business Investment Companies. The increases were partially offset by a $140 thousand decrease in service charges on deposit accounts, which was a result of a decrease in overdraft fee income. 

 

Noninterest expense increased $1.5 million, or 13%, to $13.3 million, compared to the same period one year ago. The increase was primarily attributable to a $637 thousand increase in salaries and employee benefits and a $640 thousand increase in legal and professional fees. The increase in salaries and employee benefits resulted primarily from $520 thousand of deferred PPP loan origination costs in the prior year.  The increase in legal and professional fees was attributable to merger related expenses.  Merger related expenses totaled $682 thousand for the six months ended June 30, 2021.

 

ASSET QUALITY / LOAN LOSS PROVISION

 

Recovery of loan losses totaled $1.0 million for the second quarter of 2021, which was attributable to a $2.1 million decrease in the specific reserve component of the allowance for loan losses, and was partially offset by net charge-offs of $1.0 million. The general reserve component of the allowance for loan losses increased by $89 thousand during the second quarter of 2021 from an increase in the historical loss reserve that was partially offset by an upgrade to the asset quality qualitative factor. The allowance for loan losses totaled $5.5 million, or 0.89% of total loans at June 30, 2021. Excluding PPP loans, the allowance for loan losses totaled 0.97% of total loans. Provision for loan losses totaled $800 thousand for the same period of 2020, and the allowance for loan losses totaled $6.3 million, or 0.97% of total loans at June 30, 2020.

 

Recovery of loan losses totaled $1.0 million for the six months ended June 30, 2021, which was also attributable to a $2.1 million decrease in the specific reserve component of the allowance for loan losses, and was partially offset by net charge-offs of $1.0 million for the six month period compared to net charge-offs of $338 thousand for the same period one year ago. Provision for loan losses totaled $1.7 million for the six months ended June 30, 2020.

 

Loans 30 to 89 days past due and accruing totaled $550 thousand, or 0.09% of total loans at June 30, 2021 compared to $1.1 million, or 0.17% of total loans one year ago. Accruing substandard loans totaled $322 thousand at June 30, 2021 and $8.6 million at June 30, 2020. Nonperforming assets consisted only of non-accrual loans and totaled $2.1 million, or 0.21% of total assets at June 30, 2021, compared to $6.8 million, or 0.66% of total assets at March 31, 2021, and $1.5 million, or 0.16% of total assets at June 30, 2020.  The decrease in non-accrual loans during the second quarter was primarily attributable to the resolution of a $4.3 million loan that was partially charged-off. 

 

 

 

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.  Fincastle was merged with and into First Bank at the time of the Merger. With the addition of Fincastle, the Company would have had approximately $1.3 billion in assets, $811.8 million in total gross loans outstanding and $1.2 billion in total deposits on a combined basis at June 30, 2021. The former Fincastle branches will continue to operate as The Bank of Fincastle, a division of First Bank, until the systems conversion, which is expected to be completed in October 2021. For the three-month and six-month periods ended June 30, 2021, the Company recorded merger related expenses of $277 thousand and $682 thousand, respectively, in connection with the acquisition of Fincastle. The Company estimates that it will incur aggregate merger related costs of $4.2 million, with the remaining $3.5 million expected to be recorded in the second half of 2021. 

 

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, 2020, and other filings with the Securities and Exchange Commission.

 

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, one 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 city of Richmond and the Roanoke market area. 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.

 

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 CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)

 

   

(unaudited)

 
   

For the Quarter Ended

 
   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

June 30,

 
   

2021

   

2021

   

2020

   

2020

   

2020

 

Income Statement

                                       

Interest income

                                       

Interest and fees on loans

  $ 7,074     $ 7,143     $ 7,310     $ 7,568     $ 7,416  

Interest on deposits in banks

    37       33       31       25       16  

Interest on securities

                                       

Taxable interest

    697       717       567       575       636  

Tax-exempt interest

    215       180       163       152       151  

Dividends

    22       22       24       23       26  

Total interest income

  $ 8,045     $ 8,095     $ 8,095     $ 8,343     $ 8,245  

Interest expense

                                       

Interest on deposits

  $ 328     $ 363     $ 410     $ 541     $ 676  

Interest on subordinated debt

    154       154       160       160       91  

Interest on junior subordinated debt

    68       66       68       68       67  

Total interest expense

  $ 550     $ 583     $ 638     $ 769     $ 834  

Net interest income

  $ 7,495     $ 7,512     $ 7,457     $ 7,574     $ 7,411  

Provision for (recovery of) loan losses

    (1,000 )           (200 )     1,500       800  

Net interest income after provision for (recovery of) loan losses

  $ 8,495     $ 7,512     $ 7,657     $ 6,074     $ 6,611  

Noninterest income

                                       

Service charges on deposit accounts

  $ 447     $ 442     $ 553     $ 446     $ 348  

ATM and check card fees

    682       601       576       669       550  

Wealth management fees

    657       643       598       573       512  

Fees for other customer services

    307       286       216       323       237  

Income from bank owned life insurance

    100       113       124       131       99  

Net gains on securities

          37       2       38        

Net gains on sale of loans

    18       7       10       3       26  

Other operating income

    224       14       73       18       1  

Total noninterest income

  $ 2,435     $ 2,143     $ 2,152     $ 2,201     $ 1,773  

Noninterest expense

                                       

Salaries and employee benefits

  $ 3,693     $ 3,555     $ 3,212     $ 3,498     $ 3,022  

Occupancy

    399       447       422       433       409  

Equipment

    433       431       440       439       418  

Marketing

    138       106       112       63       74  

Supplies

    77       88       90       112       103  

Legal and professional fees

    483       737       310       262       301  

ATM and check card expense

    268       231       253       259       223  

FDIC assessment

    78       69       105       52       60  

Bank franchise tax

    172       168       161       162       161  

Data processing expense

    216       204       196       191       188  

Amortization expense

    5       14       24       33       42  

Other real estate owned expense (income), net

                             

Other operating expense

    668       600       569       631       612  

Total noninterest expense

  $ 6,630     $ 6,650     $ 5,894     $ 6,135     $ 5,613  

Income before income taxes

  $ 4,300     $ 3,005     $ 3,915     $ 2,140     $ 2,771  

Income tax expense

    958       569       759       386       528  

Net income

  $ 3,342     $ 2,436     $ 3,156     $ 1,754     $ 2,243  

 

 

 

 

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)

 

   

(unaudited)

 
   

For the Quarter Ended

 
   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

June 30,

 
   

2021

   

2021

   

2020

   

2020

   

2020

 

Common Share and Per Common Share Data

                                       

Net income, basic

  $ 0.69     $ 0.50     $ 0.65     $ 0.36     $ 0.46  

Weighted average shares, basic

    4,868,901       4,863,823       4,858,288       4,854,144       4,849,719  

Net income, diluted

  $ 0.69     $ 0.50     $ 0.65     $ 0.36     $ 0.46  

Weighted average shares, diluted

    4,873,286       4,872,097       4,861,208       4,854,649       4,849,719  

Shares outstanding at period end

    4,870,459       4,868,462       4,860,399       4,858,217       4,852,187  

Tangible book value at period end

  $ 18.21     $ 17.65     $ 17.47     $ 16.92     $ 16.63  

Cash dividends

  $ 0.12     $ 0.12     $ 0.11     $ 0.11     $ 0.11  
                                         

Key Performance Ratios

                                       

Return on average assets

    1.31 %     1.00 %     1.31 %     0.74 %     1.00 %

Return on average equity

    15.33 %     11.53 %     15.03 %     8.52 %     11.30 %

Net interest margin

    3.10 %     3.27 %     3.30 %     3.41 %     3.59 %

Efficiency ratio (1)

    63.65 %     64.53 %     61.00 %     62.35 %     60.34 %
                                         

Average Balances

                                       

Average assets

  $ 1,026,583     $ 988,324     $ 954,810     $ 944,390     $ 899,301  

Average earning assets

    976,842       937,199       904,511       889,127       836,741  

Average shareholders’ equity

    87,442       85,708       83,545       81,894       79,845  
                                         

Asset Quality

                                       

Loan charge-offs

  $ 1,085     $ 66     $ 165     $ 115     $ 176  

Loan recoveries

    64       67       73       96       88  

Net charge-offs (recoveries)

    1,021       (1 )     92       19       88  

Non-accrual loans

    2,102       6,814       6,714       6,974       1,480  

Other real estate owned, net

                             

Nonperforming assets

    2,102       6,814       6,714       6,974       1,480  

Loans 30 to 89 days past due, accruing

    550       906       996       885       1,094  

Loans over 90 days past due, accruing

    5             302       6       1  

Troubled debt restructurings, accruing

                            4,313  

Special mention loans

                      510       2,034  

Substandard loans, accruing

    322       1,343       1,394       3,804       8,616  
                                         

Capital Ratios (2)

                                       

Total capital

  $ 95,856     $ 94,044     $ 91,243     $ 89,155     $ 88,109  

Tier 1 capital

    90,391       86,717       84,032       81,883       81,813  

Common equity tier 1 capital

    90,391       86,717       84,032       81,883       81,813  

Total capital to risk-weighted assets

    16.25 %     16.05 %     15.82 %     15.34 %     15.20 %

Tier 1 capital to risk-weighted assets

    15.32 %     14.80 %     14.57 %     14.09 %     14.11 %

Common equity tier 1 capital to risk-weighted assets

    15.32 %     14.80 %     14.57 %     14.09 %     14.11 %

Leverage ratio

    8.78 %     8.78 %     8.80 %     8.67 %     9.08 %

 

 

 

 

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)

 

   

(unaudited)

 
   

For the Quarter Ended

 
   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

June 30,

 
   

2021

   

2021

   

2020

   

2020

   

2020

 

Balance Sheet

                                       

Cash and due from banks

  $ 13,913     $ 11,940     $ 13,115     $ 13,349     $ 17,717  

Interest-bearing deposits in banks

    114,334       164,322       114,182       108,857       90,562  

Securities available for sale, at fair value

    222,236       159,742       140,225       117,132       123,193  

Securities held to maturity, at amortized cost

    10,898       13,424       14,234       15,101       16,211  

Restricted securities, at cost

    1,631       1,631       1,875       1,848       1,848  

Loans held for sale

                245             170  

Loans, net of allowance for loan losses

    611,883       630,716       622,429       640,591       645,220  

Premises and equipment, net

    18,876       19,087       19,319       19,548       19,792  

Accrued interest receivable

    2,662       2,609       2,717       3,156       3,863  

Bank owned life insurance

    18,128       18,029       17,916       17,792       17,661  

Core deposit intangibles, net

          5       19       43       76  

Other assets

    10,032       6,625       4,656       5,316       5,777  

Total assets

  $ 1,024,593     $ 1,028,130     $ 950,932     $ 942,733     $ 942,090  
                                         

Noninterest-bearing demand deposits

  $ 290,571     $ 292,280     $ 263,229     $ 256,733     $ 253,974  

Savings and interest-bearing demand deposits

    528,002       526,012       479,035       480,017       470,764  

Time deposits

    95,732       97,765       100,197       101,645       114,277  

Total deposits

  $ 914,305     $ 916,057     $ 842,461     $ 838,395     $ 839,015  

Subordinated debt

    9,992       9,992       9,991       9,987       9,982  

Junior subordinated debt

    9,279       9,279       9,279       9,279       9,279  

Accrued interest payable and other liabilities

    2,335       6,876       4,285       2,816       3,026  

Total liabilities

  $ 935,911     $ 942,204     $ 866,016     $ 860,477     $ 861,302  
                                         

Preferred stock

  $     $     $     $     $  

Common stock

    6,088       6,086       6,075       6,073       6,065  

Surplus

    6,295       6,214       6,151       6,081       5,967  

Retained earnings

    73,901       71,144       69,292       66,670       65,451  

Accumulated other comprehensive income, net

    2,398       2,482       3,398       3,432       3,305  

Total shareholders’ equity

  $ 88,682     $ 85,926     $ 84,916     $ 82,256     $ 80,788  

Total liabilities and shareholders’ equity

  $ 1,024,593     $ 1,028,130     $ 950,932     $ 942,733     $ 942,090  
                                         

Loan Data

                                       

Mortgage loans on real estate:

                                       

Construction and land development

  $ 25,035     $ 25,720     $ 27,328     $ 27,472     $ 31,981  

Secured by farmland

    495       507       521       533       872  

Secured by 1-4 family residential

    235,158       236,870       235,814       234,198       234,188  

Other real estate loans

    244,960       248,357       246,362       249,786       247,623  

Loans to farmers (except those secured by real estate)

    232       436       637       1,120       711  

Commercial and industrial loans (except those secured by real estate)

    102,734       117,109       109,201       124,157       123,995  

Consumer installment loans

    5,179       5,684       6,458       7,378       8,401  

Deposit overdrafts

    174       112       143       194       170  

All other loans

    3,381       3,407       3,450       3,530       3,575  

Total loans

  $ 617,348     $ 638,202     $ 629,914     $ 648,368     $ 651,516  

Allowance for loan losses

    (5,465 )     (7,486 )     (7,485 )     (7,777 )     (6,296 )

Loans, net

  $ 611,883     $ 630,716     $ 622,429     $ 640,591     $ 645,220  

 

 

 

 

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)

 

   

(unaudited)

 
   

For the Quarter Ended

 
   

June 30,

   

March 31,

   

December 31,

   

September 30,

   

June 30,

 
   

2021

   

2021

   

2020

   

2020

   

2020

 

Reconciliation of Tax-Equivalent Net Interest Income

                                       

GAAP measures:

                                       

Interest income – loans

  $ 7,074     $ 7,143     $ 7,310     $ 7,568     $ 7,416  

Interest income – investments and other

    971       952       785       775       829  

Interest expense – deposits

    (328 )     (363 )     (410 )     (541 )     (676 )

Interest expense – subordinated debt

    (154 )     (154 )     (160 )     (160 )     (91 )

Interest expense – junior subordinated debt

    (68 )     (66 )     (68 )     (68 )     (67 )

Total net interest income

  $ 7,495     $ 7,512     $ 7,457     $ 7,574     $ 7,411  

Non-GAAP measures:

                                       

Tax benefit realized on non-taxable interest income – loans

  $ 8     $ 8     $ 8     $ 8     $ 8  

Tax benefit realized on non-taxable interest income – municipal securities

    57       48       43       41       40  

Total tax benefit realized on non-taxable interest income

  $ 65     $ 56     $ 51     $ 49     $ 48  

Total tax-equivalent net interest income

  $ 7,560     $ 7,568     $ 7,508     $ 7,623     $ 7,459  

 

 

 

FIRST NATIONAL CORPORATION

Year-to-Date Performance Summary

(in thousands, except share and per share data)

 

   

(unaudited)

 
   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2021

   

2020

 

Income Statement

               

Interest income

               

Interest and fees on loans

  $ 14,217     $ 14,619  

Interest on deposits in banks

    70       134  

Interest on securities

               

Taxable interest

    1,414       1,306  

Tax-exempt interest

    395       302  

Dividends

    44       52  

Total interest income

  $ 16,140     $ 16,413  

Interest expense

               

Interest on deposits

  $ 691     $ 1,638  

Interest on federal funds purchased

           

Interest on subordinated debt

    308       181  

Interest on junior subordinated debt

    134       157  

Interest on other borrowings

           

Total interest expense

  $ 1,133     $ 1,976  

Net interest income

  $ 15,007     $ 14,437  

Provision for (recovery of) loan losses

    (1,000 )     1,700  

Net interest income after provision for loan losses

  $ 16,007     $ 12,737  

Noninterest income

               

Service charges on deposit accounts

  $ 889     $ 1,029  

ATM and check card fees

    1,283       1,069  

Wealth management fees

    1,300       1,037  

Fees for other customer services

    593       444  

Income from bank owned life insurance

    213       214  

Net gains (losses) on securities

    37        

Net gains on sale of loans

    25       57  

Other operating income

    238       22  

Total noninterest income

  $ 4,578     $ 3,872  

Noninterest expense

               

Salaries and employee benefits

  $ 7,248     $ 6,611  

Occupancy

    846       811  

Equipment

    864       828  

Marketing

    244       180  

Supplies

    165       192  

Legal and professional fees

    1,220       580  

ATM and check card expense

    499       468  

FDIC assessment

    147       90  

Bank franchise tax

    340       314  

Data processing expense

    420       372  

Amortization expense

    19       94  

Other real estate owned expense (income), net

           

Other operating expense

    1,268       1,217  

Total noninterest expense

  $ 13,280     $ 11,757  

Income before income taxes

  $ 7,305     $ 4,852  

Income tax expense

    1,527       904  

Net income

  $ 5,778     $ 3,948  

 

 

 

FIRST NATIONAL CORPORATION

Year-to-Date Performance Summary

(in thousands, except share and per share data)

 

   

(unaudited)

 
   

For the Six Months Ended

 
   

June 30,

   

June 30,

 
   

2021

   

2020

 

Common Share and Per Common Share Data

               

Net income, basic

  $ 1.19     $ 0.81  

Weighted average shares, basic

    4,866,376       4,900,303  

Net income, diluted

  $ 1.19     $ 0.81  

Weighted average shares, diluted

    4,872,706       4,902,845  

Shares outstanding at period end

    4,870,459       4,852,187  

Tangible book value at period end

  $ 18.21     $ 16.63  

Cash dividends

  $ 0.24     $ 0.22  
                 

Key Performance Ratios

               

Return on average assets

    1.15 %     0.93 %

Return on average equity

    13.44 %     10.01 %

Net interest margin

    3.19 %     3.67 %

Efficiency ratio (1)

    64.09 %     63.41 %
                 

Average Balances

               

Average assets

  $ 1,009,630     $ 852,866  

Average earning assets

    957,176       795,957  

Average shareholders’ equity

    86,668       79,356  
                 

Asset Quality

               

Loan charge-offs

  $ 1,151     $ 504  

Loan recoveries

    131       166  

Net charge-offs

    1,020       338  
                 

Reconciliation of Tax-Equivalent Net Interest Income

               

GAAP measures:

               

Interest income – loans

  $ 14,217     $ 14,619  

Interest income – investments and other

    1,923       1,794  

Interest expense – deposits

    (691 )     (1,638 )

Interest expense – federal funds purchased

           

Interest expense – subordinated debt

    (308 )     (181 )

Interest expense – junior subordinated debt

    (134 )     (157 )

Interest expense – other borrowings

           

Total net interest income

  $ 15,007     $ 14,437  

Non-GAAP measures:

               

Tax benefit realized on non-taxable interest income – loans

  $ 16     $ 18  

Tax benefit realized on non-taxable interest income – municipal securities

    105       80  

Total tax benefit realized on non-taxable interest income

  $ 121     $ 98  

Total tax-equivalent net interest income

  $ 15,128     $ 14,535  

 

 

(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.

 

 

View differences made from one to another to evaluate First National Corp's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by First National Corp.

Continue

Assess how First National Corp's management team is paid from their Annual Proxy

Definitive Proxy Statement (Form DEF 14A)
Screenshot example of actual Proxy Statement

First National Corp's Definitive Proxy Statement (Form DEF 14A) filed after their 2021 10-K Annual Report includes:

  • Voting Procedures
  • Board Members
  • Executive Team
  • Salaries, Bonuses, Perks
  • Peers / Competitors

Continue

SEC Filing Tools

Financial Statements, Disclosures and Schedules

Inside this 8-K Corporate News

Material Contracts, Statements, Certifications & more

First National Corp provided additional information to their SEC Filing as exhibits

Ticker: FXNC
CIK: 719402
Form Type: 8-K Corporate News
Accession Number: 0001437749-21-018508
Submitted to the SEC: Wed Aug 04 2021 3:40:01 PM EST
Accepted by the SEC: Wed Aug 04 2021
Period: Thursday, July 29, 2021
Industry: State Commercial Banks
Events:
  1. Earnings Release
  2. Financial Exhibit

External Resources:
Stock Quote
Social Media

Bookmark the Permalink:
https://last10k.com/sec-filings/fxnc/0001437749-21-018508.htm