First National Corporation Reports Significant Increase in Net Income for Q1 2026

First National Corporation (the Company) reported a significant increase in its financial performance for the first quarter of 2026, with net income rising to $4.9 million, or $0.54 per diluted share, compared to $1.6 million, or $0.18 per diluted share, in the same period of 2025. This increase in net income was primarily driven by a $1.2 million rise in net interest income after provision and a $2.4 million reduction in noninterest expenses, largely attributed to the operational merger with Touchstone Bankshares, Inc. The return on average assets improved to 0.98%, while the return on average equity reached 10.51%, up from 0.32% and 3.85%, respectively, in the prior year.

Total interest income for the quarter increased by $307 thousand, while total interest expense decreased by $918 thousand, resulting in a net interest income of $18.7 million, a 7% increase from the previous year. The net interest margin also improved to 3.99%, up from 3.77% in the first quarter of 2025, reflecting a favorable shift in the cost of interest-bearing liabilities. The provision for credit losses decreased to $450 thousand from $832 thousand in the prior year, indicating improved asset quality and lower specific reserves on loans.

In terms of operational metrics, total assets rose to $2.076 billion, marking a $37.8 million increase from December 31, 2025. This growth was primarily driven by a $25.1 million increase in interest-bearing deposits and a $14.7 million rise in net loans, which totaled $1.450 billion as of March 31, 2026. The Company’s total liabilities also increased by $35.5 million, mainly due to changes in customer deposits, which saw noninterest-bearing deposits rise by $14.4 million and savings and interest-bearing deposits increase by $26.8 million.

The Company is also undergoing strategic changes, including the planned sale of two banking offices and the consolidation of three others, aimed at streamlining operations and enhancing customer service. These transactions are expected to close in the second half of 2026, pending regulatory approvals. Additionally, First National Corporation continues to maintain strong capital ratios, with total capital to risk-weighted assets at 14.64% as of March 31, 2026, exceeding the minimum regulatory requirements.

Looking ahead, the Company remains focused on leveraging its operational efficiencies and enhancing its product offerings to support continued growth. Management anticipates that the strategic initiatives, including the consolidation of banking offices and the focus on digital banking solutions, will position the Company favorably in a competitive market landscape. However, the outlook remains cautious due to potential economic uncertainties and market conditions that could impact future performance.