Executive Summary

Record quarter: GAAP net income $5.05M and diluted EPS $0.56; adjusted diluted EPS $0.57, with net revenue $22.44M and net interest income $18.55M, driven by net interest margin expansion to 3.95% and improved efficiency ratio to 65.11% .
Touchstone acquisition synergies and disciplined deposit pricing supported earnings; QoQ noninterest expense fell $3.14M (merger costs down $1.85M; salaries/benefits down $0.66M) and noninterest income rose $0.28M .
Balance sheet steady QoQ (assets $2.04B), deposits modestly down $21.8M while liquidity sources totaled $633.7M; YoY loans +46.1% and deposits +42.5% from the Touchstone transaction .
Asset quality mixed: NPAs increased to $6.8M (0.33% of assets) QoQ, but net charge-offs fell to $0.45M and ACL coverage to loans rose to 1.05%; provision for credit losses was $0.91M .
No earnings call transcript was available; no formal quantitative guidance was provided, but dividend was maintained at $0.155 per share .

What Went Well and What Went Wrong

What Went Well

Net interest margin FTE rose to 3.95% (from 3.77% in Q1 and 3.40% in Q2’24) aided by $0.91M of purchase accounting accretion (≈18 bps to NIM); earning asset yields increased 17 bps QoQ to 5.35% .
Efficiency ratio improved to 65.11% from 75.44% in Q1 and 70.64% in Q2’24; adjusted operating noninterest expense decreased $1.29M QoQ to $14.67M as merger expenses and duplicative systems costs subsided .
Management tone positive on integration and discipline: “We are extremely pleased with our performance... Earnings improved... due to net interest margin expansion and our improved efficiency as a combined company... this discipline delivered on improved earnings, strong liquidity and capital growth.” — Scott Harvard, CEO .

What Went Wrong

Deposits declined $21.8M QoQ (to $1.803B) due primarily to lower interest-bearing demand balances; net loans decreased $7.6M QoQ on higher-than-average payoffs, offsetting positive production .
NPAs increased $1.9M QoQ to $6.8M (0.33% of assets), and ACL to NPAs fell to 223.45% (from 302.94% in Q1), reflecting higher individually analyzed loans and related specific reserves .
Provision for credit losses rose to $0.91M (from $0.83M in Q1) amid increased specific reserves tied to individually analyzed loans, though net charge-offs improved QoQ to $0.45M (from $2.40M) .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Net Interest Income ($USD Millions)	$18.36	$17.45	$18.55
Noninterest Income ($USD Millions)	$6.44	$3.61	$3.89
Net Revenue ($USD Millions)	$24.80	$21.06	$22.44
Diluted EPS (GAAP) ($USD)	$(0.10)	$0.18	$0.56
Adjusted Diluted EPS ($USD)	$0.66	$0.35	$0.57
Net Interest Margin FTE (%)	3.83%	3.77%	3.95%
Efficiency Ratio (%)	63.97%	75.44%	65.11%
Return on Avg Assets (%)	(0.18%)	0.32%	1.00%
Return on Avg Equity (%)	(2.35%)	3.85%	11.85%

KPIs

Metric	Q4 2024	Q1 2025	Q2 2025
Total Assets ($USD Billions)	$2.01	$2.03	$2.04
Net Loans ($USD Billions)	$1.45	$1.44	$1.43
Total Deposits ($USD Billions)	$1.80	$1.82	$1.80
NIB Deposits ($USD Billions)	$0.52	$0.54	$0.54
NIB Deposits Share (%)	29%	30%	30%
Liquidity Sources ($USD Millions)	$—	$800.2	$633.7
NPAs ($USD Millions)	$7.11	$4.86	$6.80
NPAs / Total Assets (%)	0.35%	0.24%	0.33%
Net Charge-offs ($USD Millions)	$1.33	$2.40	$0.45
Provision for Credit Losses ($USD Millions)	$4.75	$0.83	$0.91
ACL / Loans (%)	1.12%	1.02%	1.05%

Consensus vs Actual (S&P Global)

Metric	Q2 2025 Consensus	Q2 2025 Actual (S&P)	Q2 2025 Company Reported	Outcome
Revenue ($USD Millions)	$22.30*	$21.46*	$22.44	Mixed: Company reported > consensus; S&P actual < consensus*
Primary EPS ($USD)	N/A*	$0.57*	$0.56	N/A vs EPS; company adjusted EPS $0.57

Values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share ($USD)	Q2 2025	$0.155 (Q1 2025)	$0.155	Maintained

No formal quantitative guidance ranges (revenue, margins, opex, provision, tax rate) were provided in the Q2 2025 materials .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Touchstone acquisition integration	Closed 10/1; bargain purchase gain $2.9M; high merger costs in Q4; systems conversion completed Q1, duplicative costs elevated	Synergies realized via NIM expansion and cost reductions; accretion aided NIM; single core platform post-Feb conversion	Improving operational efficiency
Net interest margin/earning yields	NIM up to 3.83% in Q4; 3.77% in Q1 amid amortization on early payoffs	NIM 3.95%; earning yields +17 bps; $0.91M net accretion adds ≈18 bps	Strengthening
Deposit pricing/mix discipline	Post-acquisition deposit mix improved; cost of funds down in late 2024	Focus on managing deposit pricing; interest-bearing demand down QoQ; NIB share 30%	Stable to positive mix
Operating expenses	Q4 elevated merger costs; Q1 still elevated with fraud losses and FDIC fees	Noninterest expense down $3.14M; adjusted opex down $1.29M	Declining opex base
Asset quality	Q4 provision $4.75M; NPAs 0.35%; Q1 net charge-offs $2.40M; NPAs 0.24%	NPAs 0.33%; net charge-offs $0.45M; provision $0.91M on higher specific reserves	Mixed: reserves higher, charge-offs lower
Liquidity/capital	Liquidity $770–800M in Q4/Q1; capital ratios stable	Liquidity $633.7M; stronger capital ratios; TCE/TA 7.73%	Adequate liquidity; improving capital

Management Commentary

Strategic message: realizing value from Touchstone acquisition and disciplined pricing. “Earnings improved over the prior quarter and the previous year due to net interest margin expansion and our improved efficiency as a combined company… this discipline delivered on improved earnings, strong liquidity and capital growth.” — Scott C. Harvard, CEO .
Opex drivers: Merger-related costs fell to $0.09M vs $1.94M in Q1; duplicative core systems eliminated post-February conversion reduced data processing and internet banking expenses .
NIM drivers: $0.93M loan accretion; $0.16M deposit accretion; earning asset yields rose to 5.35% .

Q&A Highlights

A public Q2 2025 earnings call transcript was not available in the document catalog; no Q&A disclosures were identified [ListDocuments returned none for earnings-call-transcript].

Estimates Context

Revenue: Consensus $22.30M* vs S&P-actual $21.46M* and company net revenue $22.44M — interpretation depends on revenue definition. Company-reported net revenue exceeded consensus, while S&P’s “actual revenue” measure was below consensus. We expect analysts to align definitions (net interest income + noninterest income) going forward.*
EPS: S&P “Primary EPS Consensus Mean” was not available; actual EPS registered at $0.57* (adjusted diluted) and $0.56 GAAP (company). Coverage appears limited (Revenue estimates count = 1*), implying low external visibility.*
Values retrieved from S&P Global.*

Key Takeaways for Investors

Earnings power inflecting: NIM expansion and lower opex post-integration lifted ROAA to 1.00% and ROAE to 11.85%; sustainability hinges on continued accretion and stable deposit costs .
Expense base normalizing: With merger and duplicative system costs largely behind, adjusted opex fell QoQ — a lever for margin resilience if loan growth moderates .
Balance sheet discipline: Deposits modestly lower QoQ, but NIB share at 30% and liquidity at $633.7M provide flexibility; watch competition for deposits and pricing pressure .
Asset quality watchlist: NPAs rose QoQ and provision ticked up on increased specific reserves, though net charge-offs improved materially; underwriting and specific reserve dynamics merit monitoring .
Capital solid: Tangible book per share $17.40; CET1/Tier 1/Total capital ratios at 11.74%/12.37%/14.89% at the HoldCo; dividend maintained at $0.155 per share .
Estimate framework: Limited Street coverage leads to definitional mismatches (revenue) and sparse EPS estimates; align internal models with company net revenue to avoid misreads.*
Near-term trading implication: Positive narrative around efficiency and NIM, tempered by asset quality uptick and deposit declines; catalysts include ongoing accretion, cost controls, and any disclosure of growth or capital actions in subsequent quarters .

FIRST NATIONAL CORP /VA/ (FXNC)·Q2 2025 Earnings Summary