First National Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated net income for the three months ended September 30, 2026, was $6.9 million, compared to $5.55 million in the prior year quarter; basic and diluted EPS were $0.76, up from $0.62 year-over-year.
• Year-to-date net income through September 30, 2026, was $17.5 million, compared to $12.2 million for the same period in 2025; basic and diluted EPS were $1.94 and $1.93, respectively, versus $1.36 and $1.35 in the prior year.
• Net interest income (FTE) for the quarter was $21.3 million, an increase of $1.2 million from the second quarter of 2026.
• Tax-equivalent net interest margin (FTE) was 4.38% for the quarter, up from 3.84% in the prior year quarter and 4.15% in the previous quarter.
• Total noninterest income was $4.1 million for the quarter, up $66 thousand from the prior quarter.
• Total noninterest expense was $16.7 million for the quarter, an increase of $259 thousand from the prior quarter.
• Non-performing assets were $5.4 million (0.26% of total assets) on September 30, 2026, down from $5.7 million in the prior year quarter.
• Allowance for credit losses on loans was $14.4 million (0.96% of total loans) on September 30, 2026, compared to 1.01% in the prior year quarter.
• Net charge-offs were $594 thousand for the quarter, compared to $939 thousand in the prior year quarter.
• Total assets were $2.075 billion on September 30, 2026, an increase of $44.1 million (2.2%) from the prior year.
• Loans held for investment net of allowance were $1.486 billion, up $67.3 million (4.7%) from the prior year.
• Total deposits were $1.829 billion on September 30, 2026, an increase of $19.2 million (1.1%) from the prior year.
• Return on average assets was 1.32% for the quarter, up from 1.09% in the prior year quarter.
• Return on average equity was 14.02% for the quarter, up from 12.43% in the prior year quarter.
• Tangible book value per share was $19.94 on September 30, 2026, up from $18.26 in the prior year quarter.

Guidance and Future Outlook:

• Management anticipates booking a gain in the fourth quarter of 2026 related to the sale of two North Carolina banking offices completed in early October.
• The company expects branch optimization actions, including the sale of two offices and consolidation of three others, to reduce the total number of banking offices from 33 to 28 by year-end.
• These optimization initiatives aim to streamline operations, improve future profitability, and allocate resources to faster-growing markets.

Business Segments and Product Lines:

• Organic loan growth continued in the third quarter with strong new loan production across all markets.
• Net loan growth was $13.6 million for the quarter, representing a 3.7% annualized growth rate.
• Year-to-date net loan growth was $67.3 million, representing a 4.7% growth rate.
• Noninterest-bearing deposits totaled $520.1 million, or 28% of total deposits, contributing to low funding costs.
• Wealth management fees increased in the third quarter compared to the prior quarter.
• The healthcare provider portfolio balance continues to decline, with $7.9 million in loan balances and $3.0 million in remaining unamortized premiums.
• The company operates a wealth management division under the name First Bank Wealth Management.

Market and Competitive Landscape:

• The company serves the Shenandoah Valley, the Roanoke Valley, the Richmond MSA, and south-central regions of Virginia.
• Earning asset yields increased 24 basis points to 5.55% in the third quarter of 2026 compared to the second quarter.
• Net accretion income related to acquisition accounting was $867 thousand in the third quarter, an 18-basis point incremental increase to the net interest margin.

Risks and Challenges:

• Non-accrual loans as a percentage of total loans decreased to 0.31% on September 30, 2026.
• Loans past due 30-89 days and still accruing interest increased to $3.4 million (0.23% of total loans) on September 30, 2026, compared to $2.5 million in the prior quarter.
• Other real estate owned (OREO) increased to $747 thousand on September 30, 2026, due to the carrying values of two closed banking offices.
• Total net unrealized losses on the available-for-sale securities portfolio were $21.4 million on September 30, 2026, compared to $15.8 million in the prior quarter.
• Estimated uninsured customer deposits totaled $575.8 million on September 30, 2026.

Management Commentary and Tone:

• Scott C. Harvard, President and CEO, stated the company is "extremely pleased with our record financial performance for the quarter and the year."
• Management cited improved net interest margin, excellent asset quality, and expense management as drivers of the third-quarter financial performance.
• The branch optimization process was completed in the third quarter with the closing and consolidation of three banking offices and the closure of off-site ATMs.

Other Key Points:

• Cash dividends of $0.17 per common share were declared and paid in the third quarter of 2026, compared to $0.155 in the prior year quarter.
• Two banking offices in Roanoke Rapids and Louisburg, North Carolina, were sold in early October 2026.
• The company recorded no net provision for credit losses in the third quarter of 2026, compared to $426 thousand in the second quarter.
• The efficiency ratio (non-GAAP) was 63.21% for the third quarter of 2026, down from 67.97% in the prior year quarter.
• Total risk-based capital ratio was 15.14% for the Company and 14.19% for First Bank on September 30, 2026.
• Other borrowings with the Federal Home Loan Bank were $25.0 million on September 30, 2026.