INVESTOR RELATIONS
Contact information
First National Corporation,
112 West King Street
Strasburg, VA 22657
(540) 465-9121

Investor Relations Contact
Mr. M. Shane Bell
(540) 465-6130
sbell@fbvirginia.com

Transfer Agent
Broadridge Corporate Issuer Solutions
P.O. Box 1342
Brentwood, NY 11717
Phone: 1-800-685-4509
Fax: 215-553-5402
shareholder@broadridge.com

First National Corporation Announces Fourth Quarter and Full Year Results

Company Release - 1/23/2019 9:22 PM ET

STRASBURG, Va., Jan. 23, 2019 (GLOBE NEWSWIRE) -- First National Corporation (the “Company” or “First National”) (OTC: FXNC) reported net income of $2.3 million, or $0.47 per diluted share, for the fourth quarter of 2018.  This was a $1.0 million, or 76%, increase when compared to net income for the fourth quarter of 2017, which totaled $1.3 million or $0.27 per diluted share.  The increase in net income resulted primarily from a $560 thousand, or 8%, increase in net interest income and a $981 thousand decrease in income tax expense, which were partially offset by a $400 thousand increase in provision for loan losses.

For the year ended December 31, 2018, the Company achieved record net income of $10.1 million or $2.05 per share.  This was a $3.7 million, or 57%, increase compared to net income for the prior year, which totaled $6.4 million or $1.30 per share.  The increase in net income resulted from a $2.4 million, or 9%, increase in net interest income, an $865 thousand, or 10%, increase in noninterest income, and a $1.4 million decrease in income tax expense, which were partially offset by a $500 thousand increase in the provision for loan losses and a $477 thousand, or 2%, increase in noninterest expense.

2018 Key Accomplishments:

  • Record year of net income totaling $10.1 million
  • Return on average equity of 16.36%
  • Return on average assets of 1.34%
  • Efficiency ratio improved for third consecutive year to 63.05%
  • Net interest margin increased for third consecutive year to 3.93%
  • Pre-provision pre-tax earnings increased 27%

“Last year’s earnings were an all-time record for our Company,” said Scott Harvard, president and chief executive officer of First National. Harvard added, “We are extremely pleased with the Company’s performance for 2018 as pressure continued to build on funding costs while competitors engaged in aggressive lending structures at what we believe is late in the economic cycle. In the 2018 economic environment, we chose to forego overly ambitious growth in order to continue to manage interest margin and asset quality. We continue to focus on deepening relationships and growing non-interest and non-maturity deposits, while working hard to enhance the quality of life in the communities we serve.”

BALANCE SHEET

Total assets of First National increased $13.9 million to $753.0 million, compared to $739.1 million at December 31, 2017. The earning asset composition changed favorably as loans, net of the allowance for loan losses, increased $21.0 million, or 4%, while securities and interest-bearing deposits in banks decreased $7.5 million, or 4%, when comparing the periods.

Total deposits increased $5.6 million to $670.6 million, compared to $665.0 million at December 31, 2017. The deposit portfolio composition remained stable as noninterest-bearing deposits were unchanged at 27% of total deposits at December 31, 2018 and 2017.

Shareholders’ equity increased $8.5 million to $66.7 million at December 31, 2018, compared to $58.2 million one year ago, primarily from an increase in retained earnings. Tangible common equity totaled $66.2 million at the end of the year, an increase of 16% compared to $57.2 million at December 31, 2017. The Company’s wholly-owned banking subsidiary, First Bank, was considered well-capitalized based on regulatory requirements at the end of the year.

ANALYSIS OF THE THREE MONTH PERIOD

Net interest income increased $560 thousand, or 8%, to $7.2 million for the quarter ended December 31, 2018, compared to $6.6 million for the fourth quarter of 2017. The increase resulted from a higher net interest margin and higher average earning asset balances. Average earning asset balances increased 2%, and the net interest margin increased 19 basis points to 4.05% for the quarter ended December 31, 2018, compared to 3.86% for the same period in 2017. The increase in the net interest margin resulted from a 37 basis point increase in the yield on average earning assets, which was partially offset by an 18 basis point increase in interest expense as a percent of average earning assets.

The higher yield on average earning assets was primarily attributable to an increase in yields on loans, securities and interest-bearing deposits in banks.  The increase in interest expense was primarily attributable to higher interest rates paid on deposits, as the cost of total interest-bearing deposits increased by 25 basis points, which compared favorably to increases of 100 basis points in the target federal funds rate during 2018.

Noninterest income decreased $77 thousand to $2.3 million, compared to $2.4 million for the same period of 2017. The decrease was primarily attributable to a $311 thousand decrease in bank owned life insurance.  The decrease in bank owned life insurance revenue was a result of death benefits recorded in the fourth quarter of the prior year that totaled $305 thousand. The decrease in bank owned life insurance revenue was partially offset by a $36 thousand, or 5%, increase in service charges on deposits, a $46 thousand, or 8%, increase in ATM and check card revenue, and a $57 thousand, or 15%, increase in wealth management revenue.

Noninterest expense increased $60 thousand, or 1%, to $6.1 million for the fourth quarter, compared to the same period one year ago.  Legal and professional fees increased $115 thousand, which resulted primarily from an increase in investment advisory costs of the wealth management department, and consulting and audit fees related to new requirements for internal controls over financial reporting.  The increase in investment advisory expense correlated with the increase in wealth management revenue when comparing the periods. These increases were partially offset by decreases in expense categories, including amortization expense, salaries and employee benefits, ATM and check card expense, and telecommunications expense.

Income tax expense decreased $981 thousand to $542 thousand for the fourth quarter, compared to $1.5 million for the same period of 2017.  The decrease was attributable to a $752 thousand charge to income tax expense in the fourth quarter of 2017 for the re-measurement of net deferred tax assets, which resulted from the new 21% federal corporate income tax rate established by the Tax Cuts and Jobs Act enacted in December 2017.  Income tax expense also decreased when comparing the quarterly periods from the lower 21% federal corporate income tax rate that was effective for the fourth quarter of 2018, compared to the 34% income tax rate that was applicable for the fourth quarter of 2017.

ANALYSIS OF THE TWELVE MONTH PERIOD

For the year ended December 31, 2018, net interest income increased $2.4 million, or 9%, to $27.6 million, compared to $25.3 million for the same period in 2017. The increase resulted from a higher net interest margin and higher average earning asset balances. Average earning asset balances increased 4%, and the net interest margin increased 16 basis points to 3.93% for the year ended December 31, 2018, compared to 3.77% for the same period in 2017. The increase in the net interest margin resulted from a 31 basis point increase in the yield on total earning assets, which was partially offset by a 15 basis point increase in interest expense as a percent of average earning assets.

The higher yield on earning assets was primarily attributable to an increase in yields on loans, securities and interest-bearing deposits in banks.  The increase in interest expense was primarily attributable to higher interest rates paid on deposits, as the cost of total interest-bearing deposits increased by 20 basis points, which compared favorably to increases of 100 basis points in the target federal funds rate during the year.

Noninterest income increased $865 thousand, or 10%, to $9.2 million, compared to $8.3 million for the same period of 2017. This was primarily a result of a $235 thousand, or 16%, increase in wealth management fees, a $210 thousand increase in other operating income, a $150 thousand, or 5%, increase in service charges on deposits, and a $120 thousand increase in bank owned life insurance.  These increases were partially offset by an $86 thousand decrease in net gains on sale of loans.

Noninterest expense increased $477 thousand, or 2%, to $23.8 million. This was primarily a result of a $364 thousand, or 3%, increase in salaries and employee benefits, a $258 thousand, or 13%, increase in other operating expenses, and a $116 thousand, or 8%, increase in occupancy expense.  These increases were partially offset by a $250 thousand decrease in net loss on disposal of premises and equipment, a $163 thousand decrease in amortization expense, and a $120 thousand decrease in telecommunications expense.

Income tax expense decreased $1.4 million to $2.3 million for the year, compared to $3.7 million for the same period of 2017.  The decrease in income tax expense was a result of a lower federal corporate income tax rate of 21% for the year ended December 31, 2018, compared to 34% for the prior year.  There was also a $752 thousand charge to income tax expense in the fourth quarter of 2017 related to the re-measurement of net deferred tax assets, which resulted from the new 21% federal corporate income tax rate established by the Tax Cuts and Jobs Act enacted in December 2017.

ASSET QUALITY/LOAN LOSS PROVISION

The provision for loan losses totaled $500 thousand for the fourth quarter of 2018, compared to $100 thousand for the fourth quarter 2017.  Net charge-offs totaled $292 thousand for the fourth quarter of 2018 compared to $75 thousand for the same period of 2017.  Nonperforming assets totaled $3.2 million, or 0.42% of total assets at year-end, compared to $1.3 million, or 0.17% of total assets, one year ago. The allowance for loan losses totaled $5.0 million, or 0.92% of total loans, and $5.3 million, or 1.02% of total loans, at December 31, 2018 and 2017, respectively.

The provision for loan losses totaled $600 thousand for the year ended December 31, 2018, compared to $100 thousand for the prior year.  Net charge-offs totaled $917 thousand for 2018 compared to $95 thousand for 2017.

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. For details on 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, 2017, and other filings with the Securities and Exchange Commission.

ABOUT FIRST NATIONAL CORPORATION

First National Corporation (OTC: 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 15 bank branch office locations located throughout the Shenandoah Valley and central regions of Virginia. 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
President and CEO
(540) 465-9121
sharvard@fbvirginia.com
                                                                   M. Shane Bell
Executive Vice President and CFO
(540) 465-9121
sbell@fbvirginia.com
   

FIRST NATIONAL CORPORATION
Quarterly Performance Summary
(in thousands, except share and per share data)

 (unaudited)
For the Quarter Ended
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
 2017
Income Statement         
Interest income         
Interest and fees on loans$7,106  $6,917  $6,546  $6,305  $6,365 
Interest on deposits in banks105  88  186  160  96 
Interest on securities         
Taxable interest771  797  776  680  636 
Tax-exempt interest153  156  156  145  147 
Dividends on restricted securities24  23  22  22  21 
Total interest income$8,159  $7,981  $7,686  $7,312  $7,265 
Interest expense         
Interest on deposits$798  $702  $665  $590  $489 
Interest on subordinated debt91  91  89  89  91 
Interest on junior subordinated debt105  105  101  86  80 
Total interest expense$994  $898  $855  $765  $660 
Net interest income$7,165  $7,083  $6,831  $6,547  $6,605 
Provision for loan losses500      100  100 
Net interest income after provision for loan losses$6,665  $7,083  $6,831  $6,447  $6,505 
Noninterest income         
Service charges on deposit accounts$814  $818  $784  $762  $778 
ATM and check card fees642  540  555  519  596 
Wealth management fees443  423  409  407  386 
Fees for other customer services154  143  151  153  162 
Income from bank owned life insurance97  107  77  559  408 
Net gains (losses) on sales of securities(1)       (114)
Net gains on sale of loans23  39  15  9  51 
Other operating income107  108  76  224  89 
Total noninterest income$2,279  $2,178  $2,067  $2,633  $2,356 
Noninterest expense         
Salaries and employee benefits$3,306  $3,371  $3,227  $3,383  $3,338 
Occupancy424  387  387  400  388 
Equipment410  396  420  423  428 
Marketing155  123  161  109  166 
Supplies91  75  88  80  88 
Legal and professional fees343  229  223  191  228 
ATM and check card expense178  217  211  203  209 
FDIC assessment68  78  66  82  76 
Bank franchise tax117  118  118  115  111 
Telecommunications expense79  83  98  36  103 
Data processing expense173  168  170  162  165 
Postage expense51  42  42  61  14 
Amortization expense99  108  120  131  141 
Other real estate owned expense (income), net  2  1  (23) (192)
Net loss on disposal of premises and equipment  2      252 
Other operating expense587  551  532  513  506 
Total noninterest expense$6,081  $5,950  $5,864  $5,866  $6,021 
Income before income taxes$2,863  $3,311  $3,034  $3,214  $2,840 
Income tax expense542  635  583  527  1,523 
Net income$2,321  $2,676  $2,451  $2,687  $1,317 
                    

FIRST NATIONAL CORPORATION
Quarterly Performance Summary
(in thousands, except share and per share data)

 (unaudited)
For the Quarter Ended
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
 2017
Common Share and Per Common Share Data         
Net income, basic$0.47  $0.54  $0.49  $0.54  $0.27 
Weighted average shares, basic4,957,055  4,955,162  4,952,712  4,949,112  4,945,175 
Net income, diluted$0.47  $0.54  $0.49  $0.54  $0.27 
Weighted average shares, diluted4,960,597  4,958,162  4,954,265  4,952,373  4,948,981 
Shares outstanding at period end4,957,694  4,956,925  4,953,356  4,952,575  4,945,702 
Tangible book value at period end$13.35  $12.72  $12.31  $11.89  $11.57 
Cash dividends$0.05  $0.05  $0.05  $0.05  $0.035 
          
Key Performance Ratios         
Return on average assets1.22% 1.41% 1.29% 1.45% 0.71%
Return on average equity14.15% 16.89% 16.23% 18.47% 9.01%
Net interest margin4.05% 4.02% 3.86% 3.79% 3.86%
Efficiency ratio (1)62.99% 62.68% 64.17% 62.39% 63.48%
          
Average Balances         
Average assets$753,112  $750,619  $762,626  $751,164  $736,745 
Average earning assets706,323  703,894  715,163  704,947  689,338 
Average shareholders’ equity65,077  62,882  60,592  58,979  57,973 
          
Asset Quality         
Loan charge-offs$374  $295  $294  $206  $223 
Loan recoveries82  57  61  52  148 
Net charge-offs292  238  233  154  75 
Non-accrual loans3,172  2,738  2,330  682  937 
Other real estate owned, net    68    326 
Nonperforming assets3,172  2,738  2,398  682  1,263 
Loans 30 to 89 days past due, accruing1,446  2,707  3,408  2,602  4,223 
Loans over 90 days past due, accruing235  261  549  773  183 
Troubled debt restructurings, accruing264  269  273  278  282 
Special mention loans2,078  2,718  3,988  5,365  5,225 
Substandard loans, accruing3,522  1,216  3,798  9,003  8,863 
          
Capital Ratios (2)         
Total capital$74,697  $72,807  $71,026  $69,435  $67,624 
Tier 1 capital69,688  68,006  65,987  64,163  62,298 
Common equity tier 1 capital69,688  68,006  65,987  64,163  62,298 
Total capital to risk-weighted assets13.62% 13.25% 13.47% 13.52% 13.12%
Tier 1 capital to risk-weighted assets12.71% 12.38% 12.52% 12.50% 12.09%
Common equity tier 1 capital to risk-weighted assets12.71% 12.38% 12.52% 12.50% 12.09%
Leverage ratio9.26% 9.07% 8.66% 8.55% 8.46%
               

FIRST NATIONAL CORPORATION
Quarterly Performance Summary
(in thousands, except share and per share data)

 (unaudited)
For the Quarter Ended
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
 2017
Balance Sheet         
Cash and due from banks$13,378  $11,370  $13,501  $11,185  $11,358 
Interest-bearing deposits in banks15,240  10,068  27,762  58,092  28,628 
Securities available for sale, at fair value99,857  102,748  106,707  93,699  89,255 
Securities held to maturity, at carrying value43,408  44,239  45,701  46,791  48,208 
Restricted securities, at cost1,688  1,590  1,590  1,590  1,570 
Loans held for sale419  516  1,195  68  438 
Loans, net of allowance for loan losses537,847  535,020  525,894  515,664  516,875 
Other real estate owned, net of valuation allowance    68    326 
Premises and equipment, net20,066  19,557  19,633  19,833  19,891 
Accrued interest receivable2,113  2,138  2,073  1,869  1,916 
Bank owned life insurance13,991  13,894  13,787  13,711  13,967 
Core deposit intangibles, net472  571  679  799  930 
Other assets4,490  4,743  4,774  4,553  5,748 
Total assets$752,969  $746,454  $763,364  $767,854  $739,110 
          
Noninterest-bearing demand deposits$181,964  $186,293  $196,839  $189,460  $180,912 
Savings and interest-bearing demand deposits369,383  360,988  367,399  378,330  361,417 
Time deposits119,219  119,823  122,291  125,035  122,651 
Total deposits$670,566  $667,104  $686,529  $692,825  $664,980 
Subordinated debt4,965  4,961  4,956  4,952  4,948 
Junior subordinated debt9,279  9,279  9,279  9,279  9,279 
Accrued interest payable and other liabilities1,485  1,459  952  1,105  1,749 
Total liabilities$686,295  $682,803  $701,716  $708,161  $680,956 
          
Preferred stock$  $  $  $  $ 
Common stock6,197  6,196  6,192  6,191  6,182 
Surplus7,471  7,438  7,346  7,312  7,260 
Retained earnings54,814  52,741  50,313  48,109  45,670 
Accumulated other comprehensive loss, net(1,808) (2,724) (2,203) (1,919) (958)
Total shareholders’ equity$66,674  $63,651  $61,648  $59,693  $58,154 
Total liabilities and shareholders’ equity$752,969  $746,454  $763,364  $767,854  $739,110 
          
Loan Data         
Mortgage loans on real estate:         
Construction and land development$45,867  $42,982  $37,350  $33,941  $35,927 
Secured by farm land880  942  975  848  646 
Secured by 1-4 family residential215,945  211,938  211,101  208,338  208,177 
Other real estate loans218,673  223,961  223,387  221,504  221,610 
Loans to farmers (except those secured by real estate)1,035  937  476  403  822 
Commercial and industrial loans (except those secured by real estate)43,570  41,924  40,467  38,850  37,941 
Consumer installment loans12,061  12,301  12,315  12,140  12,101 
Deposit overdrafts275  249  231  222  232 
All other loans4,550  4,587  4,631  4,690  4,745 
Total loans$542,856  $539,821  $530,933  $520,936  $522,201 
Allowance for loan losses(5,009) (4,801) (5,039) (5,272) (5,326)
Loans, net$537,847  $535,020  $525,894  $515,664  $516,875 
                    

FIRST NATIONAL CORPORATION
Quarterly Performance Summary
(in thousands, except share and per share data)

 (unaudited)
For the Quarter Ended
 December 31,
2018
 September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
 2017
Reconciliation of Tax-Equivalent Net Interest Income        
GAAP measures:         
Interest income – loans$7,106  $6,917  $6,546  $6,305  $6,365 
Interest income – investments and other1,053  1,064  1,140  1,007  900 
Interest expense – deposits(798) (702) (665) (590) (489)
Interest expense – subordinated debt(91) (91) (89) (89) (91)
Interest expense – junior subordinated debt(105) (105) (101) (86) (80)
Total net interest income$7,165  $7,083  $6,831  $6,547  $6,605 
Non-GAAP measures:         
Tax benefit realized on non-taxable interest income – loans$11  $12  $11  $10  $17 
Tax benefit realized on non-taxable interest income – municipal securities42  41  41  39  76 
Total tax benefit realized on non-taxable interest income$53  $53  $52  $49  $93 
Total tax-equivalent net interest income$7,218  $7,136  $6,883  $6,596  $6,698 
                    

FIRST NATIONAL CORPORATION
Year-to-Date Performance Summary
(in thousands, except share and per share data)

 (unaudited)
For the Year Ended
 December 31, 2018 December 31, 2017
Income Statement   
Interest income   
Interest and fees on loans$26,874  $24,082 
Interest on deposits in banks539  335 
Interest on securities   
Taxable interest3,024  2,569 
Tax-exempt interest610  583 
Dividends on restricted securities91  83 
Total interest income$31,138  $27,652 
Interest expense   
Interest on deposits$2,755  $1,723 
Interest on subordinated debt360  360 
Interest on junior subordinated debt397  303 
Total interest expense$3,512  $2,386 
Net interest income$27,626  $25,266 
Provision for loan losses600  100 
Net interest income after provision for loan losses$27,026  $25,166 
Noninterest income   
Service charges on deposit accounts$3,178  $3,028 
ATM and check card fees2,256  2,140 
Wealth management fees1,682  1,447 
Fees for other customer services601  570 
Income from bank owned life insurance840  720 
Net gains (losses) on sales of securities(1) (90)
Net gains on sale of loans86  172 
Other operating income515  305 
Total noninterest income$9,157  $8,292 
Noninterest expense   
Salaries and employee benefits$13,287  $12,923 
Occupancy1,598  1,482 
Equipment1,649  1,636 
Marketing548  576 
Supplies334  365 
Legal and professional fees986  886 
ATM and check card expense809  805 
FDIC assessment294  316 
Bank franchise tax468  436 
Telecommunications expense296  416 
Data processing expense673  620 
Postage expense196  211 
Amortization expense458  621 
Other real estate owned expense (income), net(20) (186)
Net loss on disposal of premises and equipment2  252 
Other operating expense2,183  1,925 
Total noninterest expense$23,761  $23,284 
Income before income taxes$12,422  $10,174 
Income tax expense2,287  3,726 
Net income$10,135  $6,448 
        

FIRST NATIONAL CORPORATION
Year-to-Date Performance Summary
(in thousands, except share and per share data)        

 (unaudited)
For the Year Ended
 December 31, 2018 December 31, 2017
Common Share and Per Common Share Data   
Net income, basic$2.05  $1.30 
Weighted average shares, basic4,953,537  4,941,233 
Net income, diluted$2.04  $1.30 
Weighted average shares, diluted4,956,375  4,943,898 
Shares outstanding at period end4,957,694  4,945,702 
Tangible book value at period end$13.35  $11.57 
Cash dividends$0.20  $0.14 
    
Key Performance Ratios   
Return on average assets1.34% 0.89%
Return on average equity16.36% 11.57%
Net interest margin3.93% 3.77%
Efficiency ratio (1)63.05% 66.42%
    
Average Balances   
Average assets$754,457  $727,932 
Average earning assets707,575  680,178 
Average shareholders’ equity61,933  55,742 
    
Asset Quality   
Loan charge-offs$1,169  $733 
Loan recoveries252  638 
Net charge-offs917  95 
    
Reconciliation of Tax-Equivalent Net Interest Income  
GAAP measures:   
Interest income – loans$26,874  $24,082 
Interest income – investments and other4,264  3,570 
Interest expense – deposits(2,755) (1,723)
Interest expense – subordinated debt(360) (360)
Interest expense – junior subordinated debt(397) (303)
Total net interest income$27,626  $25,266 
Non-GAAP measures:   
Tax benefit realized on non-taxable interest income – loans$44  $72 
Tax benefit realized on non-taxable interest income – municipal securities163  300 
Total tax benefit realized on non-taxable interest income$207  $372 
Total tax-equivalent net interest income$27,833  $25,638 
        

(1) The efficiency ratio is computed by dividing noninterest expense excluding other real estate owned income/expense, amortization of intangibles, and gains and losses on disposal of premises and equipment 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% for 2018 and 34% for 2017. 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.

First National Corporation logo

Source: First National Corporation