2014

First National Corporation Earnings Increased Over 100% for First Quarter

STRASBURG, Va., April 24, 2013 /PRNewswire/ -- First National Corporation (the "Company") (OTCBB: FXNC), the parent company of First Bank (the "Bank"), reported net income of $1.0 million for the quarter ending March 31, 2013, compared to $475 thousand for the same period in 2012.  Return on average assets improved to 0.75% compared to 0.36% for the first quarter of 2012. Return on average equity was 8.84% for the first quarter of 2013, up from 5.17% for the first quarter of 2012.  After the effective dividend on preferred stock, net income available to common shareholders totaled $756 thousand or $0.15 per basic and diluted share for the first quarter of 2013, compared to $251 thousand, or $0.08 per basic and diluted share for the same period of 2012. 

(Logo: http://photos.prnewswire.com/prnh/20120213/PH52225LOGO )

Scott C. Harvard, President and CEO of the Company and the Bank commented, "We are pleased with the marked improvement in our performance for the first quarter of 2013 compared to the same quarter a year ago. Our banking company has come a long way by being focused on improving asset quality, preserving strong core earnings, and deepening customer relationships. The Bank was able to absorb non-recurring expenses intended to enhance efficiency in future periods, while still delivering much improved results during the quarter. We continue to be diligent with our classified and troubled loans against what we believe is an improving economy in the northern Shenandoah Valley. Finally, the Bank has renewed its focus on customers, service, and communities in our market by expanding to a new Customer Service Center at The Village at Orchard Ridge in Winchester, bringing back totally absolutely free checking accounts, and rewarding employees for exceeding expectations."

Operating Highlights for the First Quarter

  • The Company benefited from asset quality improvement
    • Provision for loan losses decreased by $2.3 million
    • Net charge-offs decreased by $1.2 million
    • Provisions for OREO decreased by $227 thousand
    • OREO expenses decreased by $204 thousand
    • Legal expenses decreased by $71 thousand
  • Allowance for loan losses totaled 3.34% of loans
  • Net interest margin for the quarter was 3.80%
  • Return on average assets improved to 0.75%
  • Opened a new Customer Service Center at The Village at Orchard Ridge
  • Reintroduced FREE CHECKING  

Net income was $508 thousand higher for the first quarter of 2013, compared to the same period one year ago.  Improved asset quality contributed to a $2.3 million decrease in the provision for loan losses.  Nonperforming assets decreased 7% to $14.9 million at March 31, 2013, compared to $15.9 million at March 31, 2012. Compared to their high at September 30, 2011, total non-performing assets have declined by $13.4 million from 5.22% of assets to 2.77% of assets at March 31, 2013.  Net charge-offs for the period decreased $1.2 million to $69 thousand, compared to $1.3 million in the first quarter of 2012. The allowance for loan losses totaled $12.8 million or 3.34% of total loans at March 31, 2013.  This compared to an allowance for loan losses of $13.6 million, or 3.49% of total loans, at March 31, 2012. Loans delinquent 30 to 89 days, a leading indicator of credit deterioration, totaled 1.30% of loans, their lowest level in the past three years.  Also during the first quarter of 2013, expenses related to OREO decreased $457 thousand to $107 thousand, compared to $564 thousand for the same period of 2012.

Net interest income totaled $4.6 million for the first quarter of 2013, compared to $5.1 million for the same period one year ago.  The net interest margin was 3.80% compared to 4.14% for the same period in 2012.  The net interest margin was stable when compared to the preceding quarter ended December 31, 2012. The Bank introduced several initiatives during the first quarter intended to stabilize the net interest margin. Totally free checking accounts were reintroduced with electronic bank statements, free ATM usage, free check cards, and free online banking. During the first month that free checking was introduced, the number of free checking accounts opened exceeded all other deposit product types. The retail funding mix improved with deposits shifting from time deposits to checking accounts and other core deposits. The Bank opened a new Customer Service Center at The Village at Orchard Ridge which had a positive impact on the funding mix. In the lending area, the Bank introduced a new incentive plan for lenders that provides rewards for net interest margin management.

Noninterest income, excluding gains on sales of securities, increased 7% to $1.5 million, compared to $1.4 million for the same period one year ago. Revenues from trust and investment advisory fees and bank owned life insurance increased while service charges on deposit accounts and ATM and check card fees decreased.  At March 31, 2013, the Bank's trust and investment advisory division had over $247.6 million of assets under management and their monthly revenues reached a new high.

Noninterest expense increased 4% to $5.1 million for the first quarter of 2013, compared to $4.9 million for the same period in 2012.  Other operating expenses increased $236 thousand to $832 thousand, compared to $596 thousand for the same period one year ago. Other operating expenses increased primarily from the decision to terminate a land lease for branch expansion that resulted in a one-time charge to earnings.  The elimination of this lease payment is expected to improve efficiency in future periods.  Salaries and employee benefits increased $265 thousand to $2.6 million for the first quarter of 2013, compared to $2.4 million for the same period of 2012.  These increased expenses were partially offset by a decrease in OREO related expenses from $564 thousand for the first quarter of 2012 to $107 thousand for the first quarter of 2013.

Cautionary Statements

The Company notes to investors that past results of operations do not necessarily indicate future results.  Certain factors that affect the Company's operations and business environment are subject to uncertainties that could in turn affect future results.  These factors are identified in the Annual Report on Form 10-K for the year ended December 31, 2012, which can be accessed from the Company's website at www.fbvirginia.com, as filed with the Securities and Exchange Commission.

About the Company

First National Corporation, headquartered in Strasburg, Virginia, is the bank holding company of First Bank. First Bank offers loan, deposit, trust and investment products and services from 10 office locations located throughout the northern Shenandoah Valley region of Virginia, which includes Shenandoah County, Warren County, Frederick County and the City of Winchester.  Banking services are also accessed from the Bank's website, www.fbvirginia.com, and from a network of ATMs located throughout its market area.  First Bank also owns First Bank Financial Services, Inc., which invests in entities that provide investment services and title insurance.

 

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






(unaudited)

For the Three Months Ended

Income Statement


March 31,

2013


March 31,

2012

Interest and dividend income





  Interest and fees on loans


$           4,933


$         5,547

  Interest on federal funds sold


-


3

  Interest on deposits in banks


10


3

  Interest and dividends on securities available for sale:





    Taxable interest


372


535

    Tax-exempt interest


73


102

    Dividends


19


18

Total interest and dividend income


$           5,407


$         6,208






Interest expense





  Interest on deposits


$              706


$            986

  Interest on trust preferred capital notes


56


62

  Interest on other borrowings


29


80

Total interest expense


$              791


$         1,128






Net interest income


$           4,616


$         5,080

Provision for loan losses


(250)


2,000

Net interest income after provision for loan losses


$           4,866


$         3,080






Noninterest income





  Service charges on deposit accounts


$              459


$            502

  ATM and check card fees


333


372

  Trust and investment advisory fees


452


346

  Fees for other customer services


88


98

  Gains on sale of loans


59


43

  Gains on sale of securities available for sale


-


1,117

  Gains on sale of premises and equipment


3


-

  Other operating income


107


36

Total noninterest income


$           1,501


$         2,514






Noninterest expense





  Salaries and employee benefits


$           2,634


$         2,369

  Occupancy


378


326

  Equipment         


299


306

  Marketing


110


78

  Stationery and supplies


75


81

  Legal and professional fees


179


250

  ATM and check card fees


158


156

  FDIC assessment


341


178

  (Gains) losses on sale of other real estate owned, net


(116)


(90)

  Provision for other real estate owned


174


401

  Other real estate owned expense


49


253

  Other operating expense


832


596

Total noninterest expense


$           5,113


$         4,904






Income before income taxes


$           1,254


$            690

Income tax provision


271


215

Net income


$              983


475

Effective dividend and accretion on preferred stock


227


224

Net income available to common shareholders


$              756


$            251






Common Share and Per Common Share Data





Net income, basic and diluted


$             0.15


$          0.08

Shares outstanding at period end


4,901,464


2,955,649

Weighted average shares, basic and diluted


4,904,464


2,955,649

Book value at period end


$             6.35


7.39

Cash dividends


$                   -


$            -



















 

 

 

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)



(unaudited)

For the Three Months Ended



March 31,

2013


March 31,

2012

Key Performance Ratios





Return on average assets


0.75%


0.36%

Return on average equity


8.84%


5.17%

Net interest margin


3.80%


4.14%

Efficiency ratio (1)


77.99%


70.27%






Average Balances





Average assets


$    529,827


$    529,469

Average earning assets


498,462


499,681

Average shareholders' equity


45,090


36,981






Asset Quality





Loan charge-offs


$          278


$        1,426

Loan recoveries


209


125

Net charge-offs


69


1,301

Non-accrual loans


9,715


10,370

Other real estate owned, net


5,173


5,562

Nonperforming assets


14,888


15,932

Loans over 90 days past due, still accruing


-


369

Troubled debt restructurings (accruing)


4,096


1,804

Special mention loans


26,685


27,622

Substandard loans (accruing)


41,460


48,195

Doubtful loans


-


258











March 31,

2013


March 31,

2012

Capital Ratios





Tier 1 capital


$              55,696


$      45,522

Total capital


60,580


50,595

Total capital to risk-weighted assets


15.82%


12.74%

Tier 1 capital to risk-weighted assets


14.55%


11.46%

Leverage ratio


10.51%


8.60%






Balance Sheet





Cash and due from banks


$               7,678


$          9,477

Interest-bearing deposits in banks


31,859


19,553

Securities available for sale, at fair value


89,089


84,627

Restricted securities, at cost


1,805


2,775

Loans held for sale


-


329

Loans, net of allowance for loan losses


369,583


376,758

Premises and equipment, net


18,130


19,446

Interest receivable


1,430


1,523

Other assets


17,955


13,755

  Total assets


$            537,529


$      528,243






Noninterest-bearing demand deposits


$              90,789


$         85,043

Savings and interest-bearing demand deposits


224,150


204,682

Time deposits


155,041


174,870

  Total deposits


$            469,980


$       464,595

Other borrowings


6,070


14,094

Trust preferred capital notes


9,279


9,279

Other liabilities


6,649


4,131

  Total liabilities


$            491,978


$       492,099












 

 

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)


(unaudited)


March 31,

2013


March 31,

 2012

Balance Sheet (continued)




Preferred stock

$           14,446


$          14,299

Common stock

6,127


3,695

Surplus

6,813


1,644

Retained earnings

19,156


16,753

Accumulated other comprehensive loss, net

(991)


(247)

  Total shareholders' equity

$           45,551


$          36,144





  Total liabilities and shareholders' equity

$         537,529


$        528,243





Loan Data




Mortgage loans on real estate:




  Construction and land development

$           45,783


$          49,893

  Secured by farm land

1,344


6,148

  Secured by 1-4 family residential

143,765


125,628

  Other real estate loans

161,398


169,590

Loans to farmers (except those secured by real estate)

2,173


2,378

Commercial and industrial loans (except those secured by real estate)

20,570


27,071

Consumer installment loans

6,408


8,565

Deposit overdrafts

71


100

All other loans

827


1,021

  Total loans

$         382,339


$        390,394

Allowance for loan losses

12,756


13,636

Loans, net

$         369,583


$        376,758














(1) The efficiency ratio is computed by dividing noninterest expense excluding the provision for other real estate owned and gains and losses on other real estate owned by the sum of net interest income on a tax equivalent basis and noninterest income excluding gains and losses on sales of securities and premises and equipment.  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 for 2013 and 2012 was 34%.  Net interest income on a tax equivalent basis was $4,667 and $5,140 for the three months ended March 31, 2013 and 2012, respectively. Noninterest income excluding gains and losses on sales of securities and premises and equipment was $1,498 and $1,397 for the three months ended March 31, 2013 and 2012, respectively. The efficiency ratio is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency.  Such information is not in accordance with generally accepted accounting principles (GAAP) and should not be construed as such.  Management believes 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.

 

Contact:


Scott C. Harvard

M. Shane Bell

President and CEO

Executive Vice President and CFO

(540) 465-9121

(540) 465-9121

sharvard@fbvirginia.com

sbell@fbvirginia.com

 

SOURCE First National Corporation



RELATED LINKS
http://www.fbvirginia.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.