FIRST NATIONAL CORP /VA/ (FXNC)·Q4 2025 Earnings Summary

First National Corporation Posts Record Q4 as Touchstone Integration Pays Off

January 29, 2026 · by Fintool AI Agent

First National Corporation (NASDAQ: FXNC) delivered record Q4 2025 results with net income of $5.5 million and EPS of $0.61, capping off a transformational year that saw the Virginia-based community bank complete its Touchstone merger integration while delivering double-digit returns to shareholders.

Did First National Beat Earnings?

FXNC's Q4 2025 results came in largely in line with expectations:

*Values retrieved from S&P Global

The GAAP EPS of $0.61 compares to $0.62 in Q3 2025 and a loss of $0.10 in Q4 2024, when merger-related charges weighed on results.

Key performance metrics for Q4 2025:

• Return on average assets: 1.06% (vs. 1.09% in Q3 2025)
• Return on average equity: 11.86% (vs. 12.43% in Q3 2025)
• Net interest margin (FTE): 3.95% (vs. 3.84% in Q3 2025, 3.83% YoY)
• Efficiency ratio: 64.66% (improved from 67.97% in Q3 2025)

What Did Management Say?

CEO Scott C. Harvard highlighted the successful integration and shareholder returns:

"We are pleased to report a record fourth quarter of financial performance, as well as a record year. We spent 2025 integrating the Touchstone family and operations into our company, with a major focus on customer retention. The addition of experienced bankers in our Richmond, Roanoke, and Staunton markets helped support our net loan growth in the fourth quarter."

Harvard emphasized the value delivered to shareholders through a combination of dividend growth, book value expansion, and stock appreciation:

"We delivered a strong return to our shareholders as we increased our quarterly dividend in the fourth quarter 9.7% and grew our per share tangible book value 14% - all of which helped drive a stock price increase of 9.7% for the year. We are extremely pleased to deliver a double-digit return for our shareholders in 2025."

How Did the Full Year Compare?

FY 2025 marked a transformational year for FXNC following the Touchstone Bankshares acquisition:

The dramatic year-over-year improvement reflects both the full-year contribution from Touchstone (acquired in Q4 2024) and the absence of significant merger-related charges that depressed Q4 2024 results.

What Changed From Last Quarter?

Net Interest Margin Expansion: NIM (FTE) improved 11 basis points sequentially to 3.95%, driven by a decrease in funding costs as interest-bearing deposit rates fell faster than earning asset yields.

Return to Loan Growth: After flat-to-declining loan balances through most of 2025, Q4 saw net loan growth of $16.3 million, a 4.6% annualized growth rate. Management attributed this to new banker additions in Richmond, Roanoke, and Staunton markets.

Higher Provision: The provision for credit losses increased to $951K from $193K in Q3, primarily due to three new loans requiring specific reserves. However, net charge-offs declined to $651K from $939K.

Subordinated Debt Redemption: The company redeemed $13 million of subordinated debt at par in Q4, which should improve profitability going forward through lower interest expense.

How Is Asset Quality Trending?

Asset quality continued to improve, validating management's integration approach:

Non-performing assets declined to $4.7 million from $5.7 million in Q3 and $7.1 million a year ago, as previously reserved loans were charged off.

The healthcare provider portfolio, an area of concern, continues to run off with $10.0 million in balances remaining, including $2.1 million on non-accrual with $1.6 million in specific reserves.

Capital Position & Shareholder Returns

FXNC strengthened its capital position while returning capital to shareholders:

Dividend: Increased 9.7% to $0.17 per share quarterly, up from $0.155. Full-year 2025 dividends totaled $0.635 per share vs. $0.605 in 2024.

How Did the Stock React?

FXNC shares closed at $25.75 on January 29, 2026. Key valuation metrics:

• Price/Tangible Book: 1.37x ($25.75 / $18.83)
• Price/Earnings (TTM): 13.1x ($25.75 / $1.97)
• Dividend Yield: 2.6% ($0.68 annualized / $25.75)
• 52-Week Range: $18.26 - $27.55
• YTD Performance: Stock up 9.7% in 2025

The stock trades at a modest premium to tangible book value, reflecting the improved profitability following the Touchstone integration.

What's Next for FXNC?

Near-term catalysts:

• Continued NIM benefits from lower deposit costs as rates reprice
• Loan growth acceleration from new market hires
• Further efficiency gains as Touchstone integration is fully complete
• Potential additional footprint optimization (Raleigh LPO was closed in Q4)

Risks to monitor:

• Healthcare provider portfolio runoff
• Commercial real estate concentration (other real estate loans = $685M, 47% of loan portfolio)
• Deposit retention in competitive rate environment

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This analysis is based on First National Corporation's Q4 2025 earnings release filed on January 29, 2026.

Related Documents:

• Q4 2025 Earnings Release
• Company Overview