First National Corporation (the “Company” or “First National”)
(NASDAQ: FXNC), the bank holding company of First Bank (the
“Bank”), reported unaudited consolidated net income of $3.2
million, or $0.65 per diluted share, for the fourth quarter of
2020, which resulted in a return on average assets of 1.31% and a
return on average equity of 15.03%. This compares to net income of
$2.7 million, or $0.55 per diluted share, and a return on average
assets of 1.36% and a return on average equity of 14.10% for the
fourth quarter of 2019. Recovery of loan losses of $200 thousand
and provision for loan losses of $250 thousand were included in net
income for the three-month periods ending December 31, 2020 and
2019, respectively.
For the year ending December 31, 2020, net income totaled $8.9
million, or $1.82 per diluted share, which resulted in a return on
average assets of 0.98% and a return on average equity of 10.92%.
This compares to net income of $9.6 million, or $1.92 per diluted
share, and a return on average assets of 1.23% and a return on
average equity of 13.19% for the same period of 2019. Provision for
loan losses of $3.0 million and $450 thousand was included in net
income for the years ending December 31, 2020 and 2019,
respectively.
Highlights for the fourth quarter of 2020:
- Return on average assets of 1.31%
- Return on average equity of 15.03%
- Efficiency ratio of 61.00%
- Net interest income increased $382 thousand, or 5%
- Wealth management revenue increased $102 thousand, or 21%
- Tangible book value increased 13% to $17.47 per share, compared
to $15.50 one year ago
- Nonperforming assets decreased $260 thousand during the quarter
to $6.7 million
“Fourth quarter performance provided a strong finish to an
otherwise challenging but rewarding year,” said Scott Harvard,
president and chief executive officer of First National. Harvard
continued, “Financial results for the quarter were exceptional,
while performance for the year was surprisingly good considering
the business challenges created by the pandemic. Although
non-performing assets increased during the year and certain loans
were modified to help business customers navigate a difficult
operating environment, we are pleased with the Bank’s overall asset
quality. Another bright spot in the company has been consistent
growth of our wealth management business as wealth management
revenue increased by 21% over the same quarter of the prior year.
The entire First Bank team demonstrated why bankers are essential
workers as they navigated family, health, and work to deliver the
personal financial services needed by our small businesses,
neighbors and friends.”
COVID-19 PANDEMIC UPDATE
Operations
During the fourth quarter, the Bank continued to follow its
Pandemic Plan that strives to protect the health of its employees
and customers, while continuing to deliver essential banking
services. In response to an increasing number of COVID-19 cases in
our communities during the fourth quarter, the Bank re-entered
phase one of its plan on December 9, 2020 after operating under
phase two of its plan since July 1, 2020. Phase one of the plan
limits access to banking offices while delivering a majority of its
banking services through branch drive throughs, ATMs, and mobile
and internet banking platforms.
Paycheck Protection Program
The Bank participated as a lender in the U.S. Small Business
Administration’s (“SBA”) Paycheck Protection Program (“PPP”) to
support local small businesses and non-profit organizations. During
the second and third quarters of 2020, the Bank originated $76.6
million of PPP loans, received $2.5 million of loan fees, and
incurred $535 thousand of loan origination costs. The original PPP
provided forgivable loans over a five month period before
it stopped accepting applications in August of 2020. The loan fees
are being accreted into earnings evenly over the life of the loans,
net of the loan costs, through interest and fees on loans. At
December 31, 2020, PPP loan balances totaled $64.7 million with 98%
of the loan balances maturing in the second quarter of 2022 and 2%
of loan balances maturing in the third quarter of 2025. As of
December 31, 2020, customers with PPP loan balances totaling $2.0
million had requested debt forgiveness but have not yet received
notifications of forgiveness decisions from the SBA.
Congress recently revived the PPP (“new PPP”) as part of
the COVID-19 relief bill that was signed into law on
December 27, 2020. The Bank began participating as a lender in the
new PPP in January of 2021. As of January 25, 2021, the Bank
originated $2.1 million of new PPP loans. Loan fees received on new
PPP loans will also be accreted into earnings evenly over the life
of the loans, net of the loan costs, through interest and fees on
loans. These new PPP loans will mature in the first quarter of
2026.
Asset Quality Impact
The pandemic has negatively impacted the financial condition of
certain loan customers. The Bank expects certain sectors of its
commercial real estate loan portfolio, including retail shopping,
lodging and leisure, may experience elevated financial pressure in
future periods. Those sectors comprised 5%, 5% and 2% of the loan
portfolio, respectively, excluding PPP loans, at December 31, 2020.
The Bank also expects that loans in those same sectors of its
commercial and industrial loan portfolio may experience financial
pressure in future periods. The magnitude of the potential decline
in the Bank’s loan quality in future periods will likely depend on
the duration of the pandemic and the extent that the Bank’s
customers experience business interruptions.
Loan Modifications
In response to the unknown impact of the pandemic on the economy
and its customers, the Bank created and implemented a loan payment
deferral program for individual and business customers beginning in
the first quarter of 2020, which provided them the opportunity to
defer monthly payments for 90 days. At June 30, 2020, loans
participating in the program totaled $182.6 million. The majority
of these loans resumed regular payments during the second half of
the year after their deferral periods ended. Loans that remained in
the program totaled $1.2 million at December 31, 2020.
During the fourth quarter of 2020, the Bank modified terms of
certain loans for customers that continued to be negatively
impacted by the pandemic. The loan modifications lowered borrower’s
loan payments by allowing interest only payments for periods
ranging between 6 and 24 months. All loans modified were in the
Bank’s commercial real estate loan portfolio and totaled $14.3
million at December 31, 2020. The loans were comprised of $12.8
million in the lodging sector and $1.5 million in the leisure
sector.
Capital
The Company issued $5.0 million of subordinated debt in June
2020 as a result of its enterprise risk management and capital
planning. The purpose of the issuance was primarily to further
strengthen holding company liquidity and to remain a source of
strength for the Bank in the event of a severe economic downturn.
The Company may also use the proceeds of the issuance for general
corporate purposes, including the potential repayment of the
Company’s subordinated debt issued in 2015, which became callable
on a quarterly basis beginning January 1, 2021. The Company issued
the debt at a 5.50% fixed-to-floating rate subordinated note due
2030 to an institutional investor and was structured to qualify as
Tier 2 capital under bank regulatory guidelines.
The Company’s stock repurchase plan remained suspended during
the fourth quarter of 2020 and ended on December 31, 2020. The
Company has not authorized another stock repurchase plan due to the
potential impact of the pandemic on the economy and the Bank’s
customers. The Company continued to pay cash dividends on common
stock of $0.11 per share in the fourth quarter of 2020, which were
unchanged from cash dividends paid during the first, second and
third quarters of 2020.
BALANCE SHEET
Total assets of First National increased $150.9 million, or 19%,
to $950.9 million at December 31, 2020, compared to $800.0 million
at December 31, 2019. Total securities increased $15.9 million,
while loans, net of the allowance for loan losses, increased $53.0
million, or 9%. The growth in the loan portfolio included PPP loans
that totaled $64.7 million at the end of the year.
Total liabilities increased $143.2 million, or 20%, to $866.0
million at December 31, 2020, compared to $722.8 million one year
ago. The increase in total liabilities was primarily attributable
to significant growth in deposits. Total deposits increased $136.0
million, or 19%, to $842.5 million. Noninterest-bearing demand
deposits increased $73.6 million, or 39%, savings and
interest-bearing demand deposits increased $79.8 million, or 20%,
while time deposits decreased $17.4 million, or 15%. The
origination of PPP loans contributed to the deposit growth as many
customers deposited proceeds of the loans in their deposit accounts
at the Bank. Although proceeds from PPP loan originations during
the second and third quarters of 2020 contributed to the increase
in deposits, the Bank also experienced a significant amount of
deposit growth not related to proceeds from PPP loan
originations.
Shareholders’ equity increased $7.7 million, or 10%, to $84.9
million at December 31, 2020, compared to one year ago, from a $6.7
million increase in retained earnings and a $2.7 million increase
in accumulated other comprehensive income. These increases were
partially offset by $1.7 million decrease in common stock and
surplus, which resulted from stock repurchases in the first quarter
of 2020. The Bank was considered well-capitalized at December 31,
2020.
PERFORMANCE ANALYSIS OF THE THREE-MONTH
PERIOD
Net interest income increased $382 thousand, or 5%, to $7.5
million for the fourth quarter of 2020, compared to the same period
of 2019. The increase resulted from a $593 thousand, or 48%,
decrease in total interest expense, which was partially offset by a
$211 thousand decrease in total interest and dividend income. The
net interest margin decreased 49 basis points to 3.30%. The
decrease in the net interest margin was offset by growth in average
earning assets of $158.8 million, or 21%, and resulted in an
increase in net interest income.
The decrease in interest expense was primarily a result of the
$632 thousand, or 61%, decrease in interest expense on deposits,
which was attributable to reduced interest rates paid on deposits.
The impact of a $79.1 million, or 15% increase in average
interest-bearing deposits was offset by a 53-basis point decrease
in the cost of interest-bearing deposits. A 49-basis point
reduction of the cost of interest-bearing checking accounts and a
108-basis point reduction of the cost of money market accounts made
the largest contributions to the decrease in interest expense.
The decrease in total interest and dividend income resulted from
an 87-basis point decrease in the yield on earning assets, which
was partially offset by a $158.8 million, or 21%, increase in
average earning assets. The decrease in the yield on earning assets
resulted from a 35-basis point decrease in the yield on securities,
a 54-basis point decrease in the yield on loans, and a 153-basis
point decrease in the yield on interest-bearing deposits in banks.
The loan yield was negatively impacted by PPP loans earning a 1.00%
interest rate. Additionally, the mix of earning assets had an
unfavorable impact on the yield on average earning assets as lower
yielding interest-bearing deposits in banks increased from 5% to
13% of average earning assets.
Noninterest income decreased $189 thousand, or 8%, to $2.2
million compared to the same period of 2019. Service charges on
deposits decreased $200 thousand, or 27%, to $553 thousand, and ATM
and check card fees decreased $78 thousand, or 12%, to $576
thousand. The decrease in service charges on deposits resulted from
a reduction in overdraft fee income, which management believes was
a result of the significant increase in deposit balances and a
decrease in consumer spending. ATM and check card fees decreased
primarily from the timing of an annual incentive payment from the
Company’s check card processing vendor, which was received in the
fourth quarter of 2019. These decreases were partially offset by
wealth management fees, which increased $102 thousand, or 21%, from
a higher amount of assets under management.
Noninterest expense increased $90 thousand, or 2%, to $5.9
million, compared to the same period one year ago. The increase was
primarily attributable to a $158 thousand increase in FDIC
assessment expense. This was partially offset by a $105 thousand
decrease in other operating expense, which resulted from lower
amounts of fraud losses on check cards, dues and subscriptions,
employee training expense, and loan servicing costs.
PERFORMANCE ANALYSIS OF THE TWELVE-MONTH
PERIOD
Net interest income increased $1.5 million, or 5%, to $29.5
million for the year ending December 31, 2020, compared to the same
period of 2019. The increase resulted from a $1.5 million, or 31%,
decrease in total interest expense. Total interest and dividend
income was unchanged at $32.9 million. The net interest margin
decreased 38 basis points to 3.50%. The decrease in the net
interest margin was offset by growth in average earning assets of
$118.8 million, or 16%.
The decrease in total interest expense resulted primarily from a
$1.5 million decrease in interest expense on deposits, which was
attributable to reduced interest rates paid on deposits. The impact
of a $63.4 million or 13%, increase in average interest-bearing
deposits was offset by a 36-basis point decrease in the cost of
interest-bearing deposits. A 49-basis point reduction of the cost
of interest-bearing checking accounts and a 77-basis point
reduction of the cost of money market accounts made the largest
contributions to the decrease in interest expense.
Total interest and dividend income remained unchanged from a
$118.8 million, or 16%, increase in average earning assets, which
was offset by a 65-basis point decrease in the yield on earning
assets. The decrease in the yield on earning assets resulted from a
25-basis point decrease in the yield on securities, a 41-basis
point decrease in the yield on loans, and a 175-basis point
decrease in the yield on interest-bearing deposits in banks. The
loan yield was negatively impacted by PPP loans earning a 1.00%
interest rate. Additionally, the mix of earning assets had an
unfavorable impact on the yield on average earning assets as lower
yielding interest-bearing deposits in banks increased from 3% to
10% of average earning assets.
Noninterest income decreased $327 thousand, or 4%, to $8.2
million, compared to the same period of 2019, primarily from a $898
thousand, or 31%, decrease in service charges on deposits. The
decrease in service charges on deposits was attributable to lower
overdraft fee income, which is believed to be a result of the
significant increase in deposit balances and a decrease in consumer
spending. This decrease was partially offset by a $340 thousand, or
18%, increase in wealth management fees, which resulted from higher
amounts of assets under management.
Noninterest expense decreased $532 thousand, or 2%, to $23.8
million, compared to the same period one year ago. The decrease was
primarily attributable to a $296 thousand, or 45%, decrease in
marketing expense and a $431 thousand decrease in other operating
expense, which resulted from lower amounts of fraud losses on check
cards, dues and subscriptions, employee training expense, and loan
servicing costs.
ASSET QUALITY/LOAN LOSS PROVISION
There was a recovery of loan losses of $200 thousand for the
fourth quarter of 2020, which was attributable to a decrease in the
general reserve and specific reserve components of the allowance
for loan losses. The decrease in the general reserve resulted from
a decrease in loan balances during the quarter and a favorable
change in asset quality. Net charge-offs totaled $92 thousand for
the quarter compared to $228 thousand for the same period one year
ago. The allowance for loan losses totaled $7.5 million, or 1.19%
of total loans at December 31, 2020. Excluding PPP loans, the
allowance for loan losses totaled 1.32% of total loans. Provision
for loan losses totaled $250 thousand for the same period of 2019
and the allowance for loan losses totaled $4.9 million, or 0.86% of
total loans at December 31, 2019.
For the year ended December 31, 2020, provision for loan losses
totaled $3.0 million and resulted from increases in the general and
specific reserve components of the allowance for loan losses.
The increase in the general reserve resulted from the Bank’s
observation of unfavorable changes in economic indicators and
consideration of risks associated with modified loans that were
negatively impacted by the pandemic. The specific reserve component
of the allowance for loan losses increased from reserves placed on
newly identified impaired loans. Net charge offs on loans also
contributed to the provision for loan losses, which totaled $449
thousand for the year ending December 31, 2020, compared to $525
thousand for the prior year. Provision for loan losses totaled $450
thousand for the year ended December 31, 2019.
Loans 30 to 89 days past due and accruing totaled $996 thousand,
or 0.16% of total loans at December 31, 2020 compared to $2.4
million, or 0.41% of total loans one year ago. Accruing substandard
loans totaled $1.4 million at December 31, 2020 and $3.4 million at
December 31, 2019. Nonperforming assets consisted only of
non-accrual loans, which totaled $6.7 million, or 0.71% of total
assets at December 31, 2020, compared to $1.5 million, or 0.18% of
total assets one year ago.
FORWARD-LOOKING STATEMENTS
Certain information contained in this discussion may include
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements relate to the Company’s future operations and are
generally identified by phrases such as “the Company expects,” “the
Company believes” or words of similar import. Although the Company
believes that its expectations with respect to the forward-looking
statements are based upon reliable assumptions within the bounds of
its knowledge of its business and operations, there can be no
assurance that actual results, performance or achievements of the
Company will not differ materially from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements involve a
number of risks and uncertainties, including the rapidly changing
uncertainties related to the COVID-19 pandemic and its potential
adverse effect on the economy, our employees and customers, and our
financial performance. For details on other factors that could
affect expectations, see the risk factors and other cautionary
language included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2019, and other filings with the
Securities and Exchange Commission.
ABOUT FIRST NATIONAL CORPORATION
First National Corporation (NASDAQ: FXNC) is the parent company
and bank holding company of First Bank, a community bank that first
opened for business in 1907 in Strasburg, Virginia. The Bank offers
loan and deposit products and services through its website,
www.fbvirginia.com, its mobile banking platform, a network of ATMs
located throughout its market area, one loan production office, a
customer service center in a retirement community, and 14 bank
branch office locations located throughout the Shenandoah Valley,
the central regions of Virginia and in the city of Richmond. In
addition to providing traditional banking services, the Bank
operates a wealth management division under the name First Bank
Wealth Management. First Bank also owns First Bank Financial
Services, Inc., which invests in entities that provide investment
services and title insurance.
CONTACTS
Scott C. Harvard |
|
M. Shane Bell |
President and CEO |
|
Executive Vice President and
CFO |
(540) 465-9121 |
|
(540) 465-9121 |
shavard@fbvirginia.com |
|
sbell@fbvirginia.com |
|
|
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
Income Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
7,310 |
|
|
$ |
7,568 |
|
|
$ |
7,416 |
|
|
$ |
7,203 |
|
|
$ |
7,333 |
|
Interest on deposits in banks |
|
|
31 |
|
|
|
25 |
|
|
|
16 |
|
|
|
118 |
|
|
|
163 |
|
Interest on securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable interest |
|
|
567 |
|
|
|
575 |
|
|
|
636 |
|
|
|
670 |
|
|
|
627 |
|
Tax-exempt interest |
|
|
163 |
|
|
|
152 |
|
|
|
151 |
|
|
|
151 |
|
|
|
156 |
|
Dividends |
|
|
24 |
|
|
|
23 |
|
|
|
26 |
|
|
|
26 |
|
|
|
27 |
|
Total interest income |
|
$ |
8,095 |
|
|
$ |
8,343 |
|
|
$ |
8,245 |
|
|
$ |
8,168 |
|
|
$ |
8,306 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on deposits |
|
$ |
410 |
|
|
$ |
541 |
|
|
$ |
676 |
|
|
$ |
962 |
|
|
$ |
1,042 |
|
Interest on subordinated debt |
|
|
160 |
|
|
|
160 |
|
|
|
91 |
|
|
|
90 |
|
|
|
91 |
|
Interest on junior subordinated debt |
|
|
68 |
|
|
|
68 |
|
|
|
67 |
|
|
|
90 |
|
|
|
98 |
|
Total interest expense |
|
$ |
638 |
|
|
$ |
769 |
|
|
$ |
834 |
|
|
$ |
1,142 |
|
|
$ |
1,231 |
|
Net interest income |
|
$ |
7,457 |
|
|
$ |
7,574 |
|
|
$ |
7,411 |
|
|
$ |
7,026 |
|
|
$ |
7,075 |
|
Provision for (recovery of)
loan losses |
|
|
(200 |
) |
|
|
1,500 |
|
|
|
800 |
|
|
|
900 |
|
|
|
250 |
|
Net interest income after
provision for (recovery of) loan losses |
|
$ |
7,657 |
|
|
$ |
6,074 |
|
|
$ |
6,611 |
|
|
$ |
6,126 |
|
|
$ |
6,825 |
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
$ |
553 |
|
|
$ |
446 |
|
|
$ |
348 |
|
|
$ |
681 |
|
|
$ |
753 |
|
ATM and check card fees |
|
|
576 |
|
|
|
669 |
|
|
|
550 |
|
|
|
519 |
|
|
|
654 |
|
Wealth management fees |
|
|
598 |
|
|
|
573 |
|
|
|
512 |
|
|
|
525 |
|
|
|
496 |
|
Fees for other customer services |
|
|
216 |
|
|
|
323 |
|
|
|
237 |
|
|
|
207 |
|
|
|
181 |
|
Income from bank owned life insurance |
|
|
124 |
|
|
|
131 |
|
|
|
99 |
|
|
|
115 |
|
|
|
123 |
|
Net gains on securities |
|
|
2 |
|
|
|
38 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Net gains on sale of loans |
|
|
10 |
|
|
|
3 |
|
|
|
26 |
|
|
|
31 |
|
|
|
89 |
|
Other operating income |
|
|
73 |
|
|
|
18 |
|
|
|
1 |
|
|
|
21 |
|
|
|
44 |
|
Total noninterest income |
|
$ |
2,152 |
|
|
$ |
2,201 |
|
|
$ |
1,773 |
|
|
$ |
2,099 |
|
|
$ |
2,341 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
3,212 |
|
|
$ |
3,498 |
|
|
$ |
3,022 |
|
|
$ |
3,589 |
|
|
$ |
3,193 |
|
Occupancy |
|
|
422 |
|
|
|
433 |
|
|
|
409 |
|
|
|
402 |
|
|
|
415 |
|
Equipment |
|
|
440 |
|
|
|
439 |
|
|
|
418 |
|
|
|
410 |
|
|
|
406 |
|
Marketing |
|
|
112 |
|
|
|
63 |
|
|
|
74 |
|
|
|
106 |
|
|
|
128 |
|
Supplies |
|
|
90 |
|
|
|
112 |
|
|
|
103 |
|
|
|
89 |
|
|
|
88 |
|
Legal and professional fees |
|
|
310 |
|
|
|
262 |
|
|
|
301 |
|
|
|
279 |
|
|
|
311 |
|
ATM and check card expense |
|
|
253 |
|
|
|
259 |
|
|
|
223 |
|
|
|
245 |
|
|
|
231 |
|
FDIC assessment |
|
|
105 |
|
|
|
52 |
|
|
|
60 |
|
|
|
30 |
|
|
|
(53 |
) |
Bank franchise tax |
|
|
161 |
|
|
|
162 |
|
|
|
161 |
|
|
|
153 |
|
|
|
136 |
|
Data processing expense |
|
|
196 |
|
|
|
191 |
|
|
|
188 |
|
|
|
184 |
|
|
|
179 |
|
Amortization expense |
|
|
24 |
|
|
|
33 |
|
|
|
42 |
|
|
|
52 |
|
|
|
61 |
|
Other real estate owned expense, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Net losses (gains) on disposal of premises and equipment |
|
|
(20 |
) |
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
14 |
|
Other operating expense |
|
|
589 |
|
|
|
631 |
|
|
|
612 |
|
|
|
614 |
|
|
|
694 |
|
Total noninterest expense |
|
$ |
5,894 |
|
|
$ |
6,135 |
|
|
$ |
5,613 |
|
|
$ |
6,144 |
|
|
$ |
5,804 |
|
Income before income
taxes |
|
$ |
3,915 |
|
|
$ |
2,140 |
|
|
$ |
2,771 |
|
|
$ |
2,081 |
|
|
$ |
3,362 |
|
Income tax expense |
|
|
759 |
|
|
|
386 |
|
|
|
528 |
|
|
|
376 |
|
|
|
646 |
|
Net income |
|
$ |
3,156 |
|
|
$ |
1,754 |
|
|
$ |
2,243 |
|
|
$ |
1,705 |
|
|
$ |
2,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
Common Share and Per Common Share Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income, basic |
|
$ |
0.65 |
|
|
$ |
0.36 |
|
|
$ |
0.46 |
|
|
$ |
0.34 |
|
|
$ |
0.55 |
|
Weighted average shares,
basic |
|
|
4,858,288 |
|
|
|
4,854,144 |
|
|
|
4,849,719 |
|
|
|
4,950,887 |
|
|
|
4,968,574 |
|
Net income, diluted |
|
$ |
0.65 |
|
|
$ |
0.36 |
|
|
$ |
0.46 |
|
|
$ |
0.34 |
|
|
$ |
0.55 |
|
Weighted average shares,
diluted |
|
|
4,861,208 |
|
|
|
4,854,649 |
|
|
|
4,849,719 |
|
|
|
4,955,970 |
|
|
|
4,972,535 |
|
Shares outstanding at period
end |
|
|
4,860,399 |
|
|
|
4,858,217 |
|
|
|
4,852,187 |
|
|
|
4,849,692 |
|
|
|
4,969,716 |
|
Tangible book value at period
end |
|
$ |
17.47 |
|
|
$ |
16.92 |
|
|
$ |
16.63 |
|
|
$ |
16.17 |
|
|
$ |
15.50 |
|
Cash dividends |
|
$ |
0.11 |
|
|
$ |
0.11 |
|
|
$ |
0.11 |
|
|
$ |
0.11 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets |
|
|
1.31 |
% |
|
|
0.74 |
% |
|
|
1.00 |
% |
|
|
0.85 |
% |
|
|
1.36 |
% |
Return on average equity |
|
|
15.03 |
% |
|
|
8.52 |
% |
|
|
11.30 |
% |
|
|
8.72 |
% |
|
|
14.10 |
% |
Net interest margin |
|
|
3.30 |
% |
|
|
3.41 |
% |
|
|
3.59 |
% |
|
|
3.77 |
% |
|
|
3.79 |
% |
Efficiency ratio (1) |
|
|
61.00 |
% |
|
|
62.35 |
% |
|
|
60.34 |
% |
|
|
66.50 |
% |
|
|
60.50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
954,810 |
|
|
$ |
944,390 |
|
|
$ |
899,301 |
|
|
$ |
806,609 |
|
|
$ |
795,391 |
|
Average earning assets |
|
|
904,511 |
|
|
|
889,127 |
|
|
|
836,741 |
|
|
|
755,173 |
|
|
|
745,721 |
|
Average shareholders’
equity |
|
|
83,545 |
|
|
|
81,894 |
|
|
|
79,845 |
|
|
|
78,659 |
|
|
|
76,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan charge-offs |
|
$ |
165 |
|
|
$ |
115 |
|
|
$ |
176 |
|
|
$ |
328 |
|
|
$ |
281 |
|
Loan recoveries |
|
|
73 |
|
|
|
96 |
|
|
|
88 |
|
|
|
78 |
|
|
|
53 |
|
Net charge-offs |
|
|
92 |
|
|
|
19 |
|
|
|
88 |
|
|
|
250 |
|
|
|
228 |
|
Non-accrual loans |
|
|
6,714 |
|
|
|
6,974 |
|
|
|
1,480 |
|
|
|
1,522 |
|
|
|
1,459 |
|
Other real estate owned,
net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Nonperforming assets |
|
|
6,714 |
|
|
|
6,974 |
|
|
|
1,480 |
|
|
|
1,522 |
|
|
|
1,459 |
|
Loans 30 to 89 days past due,
accruing |
|
|
996 |
|
|
|
885 |
|
|
|
1,094 |
|
|
|
2,901 |
|
|
|
2,372 |
|
Loans over 90 days past due,
accruing |
|
|
302 |
|
|
|
6 |
|
|
|
1 |
|
|
|
86 |
|
|
|
97 |
|
Troubled debt restructurings,
accruing |
|
|
— |
|
|
|
— |
|
|
|
4,313 |
|
|
|
— |
|
|
|
— |
|
Special mention loans |
|
|
— |
|
|
|
510 |
|
|
|
2,034 |
|
|
|
6,058 |
|
|
|
6,069 |
|
Substandard loans,
accruing |
|
|
1,394 |
|
|
|
3,804 |
|
|
|
8,616 |
|
|
|
4,368 |
|
|
|
3,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital |
|
$ |
91,243 |
|
|
$ |
89,155 |
|
|
$ |
88,109 |
|
|
$ |
86,849 |
|
|
$ |
85,439 |
|
Tier 1 capital |
|
|
84,032 |
|
|
|
81,883 |
|
|
|
81,813 |
|
|
|
81,265 |
|
|
|
80,505 |
|
Common equity tier 1
capital |
|
|
84,032 |
|
|
|
81,883 |
|
|
|
81,813 |
|
|
|
81,265 |
|
|
|
80,505 |
|
Total capital to risk-weighted
assets |
|
|
15.82 |
% |
|
|
15.34 |
% |
|
|
15.20 |
% |
|
|
14.98 |
% |
|
|
14.84 |
% |
Tier 1 capital to
risk-weighted assets |
|
|
14.57 |
% |
|
|
14.09 |
% |
|
|
14.11 |
% |
|
|
14.02 |
% |
|
|
13.99 |
% |
Common equity tier 1 capital
to risk-weighted assets |
|
|
14.57 |
% |
|
|
14.09 |
% |
|
|
14.11 |
% |
|
|
14.02 |
% |
|
|
13.99 |
% |
Leverage ratio |
|
|
8.80 |
% |
|
|
8.67 |
% |
|
|
9.08 |
% |
|
|
10.08 |
% |
|
|
10.13 |
% |
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
13,115 |
|
|
$ |
13,349 |
|
|
$ |
17,717 |
|
|
$ |
30,551 |
|
|
$ |
9,675 |
|
Interest-bearing deposits in
banks |
|
|
114,182 |
|
|
|
108,857 |
|
|
|
90,562 |
|
|
|
17,539 |
|
|
|
36,110 |
|
Securities available for sale,
at fair value |
|
|
140,225 |
|
|
|
117,132 |
|
|
|
123,193 |
|
|
|
128,660 |
|
|
|
120,983 |
|
Securities held to maturity,
at amortized cost |
|
|
14,234 |
|
|
|
15,101 |
|
|
|
16,211 |
|
|
|
17,086 |
|
|
|
17,627 |
|
Restricted securities, at
cost |
|
|
1,875 |
|
|
|
1,848 |
|
|
|
1,848 |
|
|
|
1,848 |
|
|
|
1,806 |
|
Loans held for sale |
|
|
245 |
|
|
|
— |
|
|
|
170 |
|
|
|
621 |
|
|
|
167 |
|
Loans, net of allowance for
loan losses |
|
|
622,429 |
|
|
|
640,591 |
|
|
|
645,220 |
|
|
|
576,283 |
|
|
|
569,412 |
|
Premises and equipment,
net |
|
|
19,319 |
|
|
|
19,548 |
|
|
|
19,792 |
|
|
|
19,619 |
|
|
|
19,747 |
|
Accrued interest
receivable |
|
|
2,717 |
|
|
|
3,156 |
|
|
|
3,863 |
|
|
|
2,124 |
|
|
|
2,065 |
|
Bank owned life insurance |
|
|
17,916 |
|
|
|
17,792 |
|
|
|
17,661 |
|
|
|
17,562 |
|
|
|
17,447 |
|
Core deposit intangibles,
net |
|
|
19 |
|
|
|
43 |
|
|
|
76 |
|
|
|
118 |
|
|
|
170 |
|
Other assets |
|
|
4,656 |
|
|
|
5,316 |
|
|
|
5,777 |
|
|
|
4,401 |
|
|
|
4,839 |
|
Total assets |
|
$ |
950,932 |
|
|
$ |
942,733 |
|
|
$ |
942,090 |
|
|
$ |
816,412 |
|
|
$ |
800,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand
deposits |
|
$ |
263,229 |
|
|
$ |
256,733 |
|
|
$ |
253,974 |
|
|
$ |
197,662 |
|
|
$ |
189,623 |
|
Savings and interest-bearing
demand deposits |
|
|
479,035 |
|
|
|
480,017 |
|
|
|
470,764 |
|
|
|
407,555 |
|
|
|
399,255 |
|
Time deposits |
|
|
100,197 |
|
|
|
101,645 |
|
|
|
114,277 |
|
|
|
115,410 |
|
|
|
117,564 |
|
Total deposits |
|
$ |
842,461 |
|
|
$ |
838,395 |
|
|
$ |
839,015 |
|
|
$ |
720,627 |
|
|
$ |
706,442 |
|
Subordinated debt |
|
|
9,991 |
|
|
|
9,987 |
|
|
|
9,982 |
|
|
|
4,987 |
|
|
|
4,983 |
|
Junior subordinated debt |
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
|
|
9,279 |
|
Accrued interest payable and
other liabilities |
|
|
4,285 |
|
|
|
2,816 |
|
|
|
3,026 |
|
|
|
3,001 |
|
|
|
2,125 |
|
Total liabilities |
|
$ |
866,016 |
|
|
$ |
860,477 |
|
|
$ |
861,302 |
|
|
$ |
737,894 |
|
|
$ |
722,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Common stock |
|
|
6,075 |
|
|
|
6,073 |
|
|
|
6,065 |
|
|
|
6,062 |
|
|
|
6,212 |
|
Surplus |
|
|
6,151 |
|
|
|
6,081 |
|
|
|
5,967 |
|
|
|
5,899 |
|
|
|
7,700 |
|
Retained earnings |
|
|
69,292 |
|
|
|
66,670 |
|
|
|
65,451 |
|
|
|
63,741 |
|
|
|
62,583 |
|
Accumulated other
comprehensive income, net |
|
|
3,398 |
|
|
|
3,432 |
|
|
|
3,305 |
|
|
|
2,816 |
|
|
|
724 |
|
Total shareholders’
equity |
|
$ |
84,916 |
|
|
$ |
82,256 |
|
|
$ |
80,788 |
|
|
$ |
78,518 |
|
|
$ |
77,219 |
|
Total liabilities and
shareholders’ equity |
|
$ |
950,932 |
|
|
$ |
942,733 |
|
|
$ |
942,090 |
|
|
$ |
816,412 |
|
|
$ |
800,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans on real
estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction and land development |
|
$ |
27,328 |
|
|
$ |
27,472 |
|
|
$ |
31,981 |
|
|
$ |
40,279 |
|
|
$ |
43,164 |
|
Secured by farmland |
|
|
521 |
|
|
|
533 |
|
|
|
872 |
|
|
|
888 |
|
|
|
900 |
|
Secured by 1-4 family residential |
|
|
235,814 |
|
|
|
234,198 |
|
|
|
234,188 |
|
|
|
230,980 |
|
|
|
229,438 |
|
Other real estate loans |
|
|
246,362 |
|
|
|
249,786 |
|
|
|
247,623 |
|
|
|
240,486 |
|
|
|
235,655 |
|
Loans to farmers (except those
secured by real estate) |
|
|
637 |
|
|
|
1,120 |
|
|
|
711 |
|
|
|
1,221 |
|
|
|
1,423 |
|
Commercial and industrial
loans (except those secured by real estate) |
|
|
109,201 |
|
|
|
124,157 |
|
|
|
123,995 |
|
|
|
54,287 |
|
|
|
48,730 |
|
Consumer installment
loans |
|
|
6,458 |
|
|
|
7,378 |
|
|
|
8,401 |
|
|
|
9,505 |
|
|
|
10,400 |
|
Deposit overdrafts |
|
|
143 |
|
|
|
194 |
|
|
|
170 |
|
|
|
238 |
|
|
|
374 |
|
All other loans |
|
|
3,450 |
|
|
|
3,530 |
|
|
|
3,575 |
|
|
|
3,983 |
|
|
|
4,262 |
|
Total loans |
|
$ |
629,914 |
|
|
$ |
648,368 |
|
|
$ |
651,516 |
|
|
$ |
581,867 |
|
|
$ |
574,346 |
|
Allowance for loan losses |
|
|
(7,485 |
) |
|
|
(7,777 |
) |
|
|
(6,296 |
) |
|
|
(5,584 |
) |
|
|
(4,934 |
) |
Loans, net |
|
$ |
622,429 |
|
|
$ |
640,591 |
|
|
$ |
645,220 |
|
|
$ |
576,283 |
|
|
$ |
569,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST NATIONAL CORPORATIONQuarterly
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Quarter Ended |
|
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2020 |
|
|
2019 |
|
Reconciliation of Tax-Equivalent Net Interest
Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income – loans |
|
$ |
7,310 |
|
|
$ |
7,568 |
|
|
$ |
7,416 |
|
|
$ |
7,203 |
|
|
$ |
7,333 |
|
Interest income – investments and other |
|
|
785 |
|
|
|
775 |
|
|
|
829 |
|
|
|
965 |
|
|
|
973 |
|
Interest expense – deposits |
|
|
(410 |
) |
|
|
(541 |
) |
|
|
(676 |
) |
|
|
(962 |
) |
|
|
(1,042 |
) |
Interest expense – subordinated debt |
|
|
(160 |
) |
|
|
(160 |
) |
|
|
(91 |
) |
|
|
(90 |
) |
|
|
(91 |
) |
Interest expense – junior subordinated debt |
|
|
(68 |
) |
|
|
(68 |
) |
|
|
(67 |
) |
|
|
(90 |
) |
|
|
(98 |
) |
Total net interest income |
|
$ |
7,457 |
|
|
$ |
7,574 |
|
|
$ |
7,411 |
|
|
$ |
7,026 |
|
|
$ |
7,075 |
|
Non-GAAP measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit realized on non-taxable interest income – loans |
|
$ |
8 |
|
|
$ |
8 |
|
|
$ |
8 |
|
|
$ |
10 |
|
|
$ |
10 |
|
Tax benefit realized on non-taxable interest income – municipal
securities |
|
|
43 |
|
|
|
41 |
|
|
|
40 |
|
|
|
40 |
|
|
|
41 |
|
Total tax benefit realized on
non-taxable interest income |
|
$ |
51 |
|
|
$ |
49 |
|
|
$ |
48 |
|
|
$ |
50 |
|
|
$ |
51 |
|
Total tax-equivalent net
interest income |
|
$ |
7,508 |
|
|
$ |
7,623 |
|
|
$ |
7,459 |
|
|
$ |
7,076 |
|
|
$ |
7,126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FIRST NATIONAL CORPORATIONYear-to-Date
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
Income Statement |
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
|
|
|
|
Interest and fees on loans |
|
$ |
29,497 |
|
|
$ |
28,958 |
|
Interest on deposits in banks |
|
|
190 |
|
|
|
503 |
|
Interest on securities |
|
|
|
|
|
|
|
|
Taxable interest |
|
|
2,448 |
|
|
|
2,705 |
|
Tax-exempt interest |
|
|
617 |
|
|
|
628 |
|
Dividends |
|
|
99 |
|
|
|
103 |
|
Total interest income |
|
$ |
32,851 |
|
|
$ |
32,897 |
|
Interest expense |
|
|
|
|
|
|
|
|
Interest on deposits |
|
$ |
2,589 |
|
|
$ |
4,104 |
|
Interest on federal funds
purchased |
|
|
— |
|
|
|
1 |
|
Interest on subordinated debt |
|
|
501 |
|
|
|
360 |
|
Interest on junior subordinated debt |
|
|
293 |
|
|
|
420 |
|
Interest on other borrowings |
|
|
— |
|
|
|
2 |
|
Total interest expense |
|
$ |
3,383 |
|
|
$ |
4,887 |
|
Net interest income |
|
$ |
29,468 |
|
|
$ |
28,010 |
|
Provision for loan losses |
|
|
3,000 |
|
|
|
450 |
|
Net interest income after
provision for loan losses |
|
$ |
26,468 |
|
|
$ |
27,560 |
|
Noninterest income |
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
$ |
2,028 |
|
|
$ |
2,926 |
|
ATM and check card fees |
|
|
2,314 |
|
|
|
2,330 |
|
Wealth management fees |
|
|
2,208 |
|
|
|
1,868 |
|
Fees for other customer services |
|
|
983 |
|
|
|
686 |
|
Income from bank owned life insurance |
|
|
469 |
|
|
|
456 |
|
Net gains on securities |
|
|
40 |
|
|
|
1 |
|
Net gains on sale of loans |
|
|
70 |
|
|
|
170 |
|
Other operating income |
|
|
113 |
|
|
|
115 |
|
Total noninterest income |
|
$ |
8,225 |
|
|
$ |
8,552 |
|
Noninterest expense |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
$ |
13,321 |
|
|
$ |
13,567 |
|
Occupancy |
|
|
1,666 |
|
|
|
1,652 |
|
Equipment |
|
|
1,707 |
|
|
|
1,645 |
|
Marketing |
|
|
355 |
|
|
|
651 |
|
Supplies |
|
|
394 |
|
|
|
338 |
|
Legal and professional fees |
|
|
1,152 |
|
|
|
1,086 |
|
ATM and check card expense |
|
|
980 |
|
|
|
897 |
|
FDIC assessment |
|
|
247 |
|
|
|
45 |
|
Bank franchise tax |
|
|
637 |
|
|
|
538 |
|
Data processing expense |
|
|
759 |
|
|
|
705 |
|
Amortization expense |
|
|
151 |
|
|
|
302 |
|
Other real estate owned
expense, net |
|
|
— |
|
|
|
1 |
|
Net losses (gains) on disposal of premises and equipment |
|
|
(29 |
) |
|
|
14 |
|
Other operating expense |
|
|
2,446 |
|
|
|
2,877 |
|
Total noninterest expense |
|
$ |
23,786 |
|
|
$ |
24,318 |
|
Income before income
taxes |
|
$ |
10,907 |
|
|
$ |
11,794 |
|
Income tax expense |
|
|
2,049 |
|
|
|
2,238 |
|
Net income |
|
$ |
8,858 |
|
|
$ |
9,556 |
|
|
|
|
|
|
|
|
|
|
FIRST NATIONAL CORPORATIONYear-to-Date
Performance Summary(in thousands, except share and per
share data)
|
|
(unaudited) |
|
|
|
For the Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
Common Share and Per Common Share Data |
|
|
|
|
|
|
|
|
Net income, basic |
|
$ |
1.82 |
|
|
$ |
1.92 |
|
Weighted average shares,
basic |
|
|
4,878,139 |
|
|
|
4,964,832 |
|
Net income, diluted |
|
$ |
1.82 |
|
|
$ |
1.92 |
|
Weighted average shares,
diluted |
|
|
4,880,266 |
|
|
|
4,967,932 |
|
Shares outstanding at period
end |
|
|
4,860,399 |
|
|
|
4,969,716 |
|
Tangible book value at period
end |
|
$ |
17.47 |
|
|
$ |
15.50 |
|
Cash dividends |
|
$ |
0.44 |
|
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
Key Performance
Ratios |
|
|
|
|
|
|
|
|
Return on average assets |
|
|
0.98 |
% |
|
|
1.23 |
% |
Return on average equity |
|
|
10.92 |
% |
|
|
13.19 |
% |
Net interest margin |
|
|
3.50 |
% |
|
|
3.88 |
% |
Efficiency ratio (1) |
|
|
62.52 |
% |
|
|
65.28 |
% |
|
|
|
|
|
|
|
|
|
Average
Balances |
|
|
|
|
|
|
|
|
Average assets |
|
$ |
901,216 |
|
|
$ |
776,933 |
|
Average earning assets |
|
|
846,663 |
|
|
|
727,904 |
|
Average shareholders’
equity |
|
|
81,093 |
|
|
|
72,451 |
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
Loan charge-offs |
|
$ |
784 |
|
|
$ |
884 |
|
Loan recoveries |
|
|
335 |
|
|
|
359 |
|
Net charge-offs |
|
|
449 |
|
|
|
525 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Tax-Equivalent Net Interest Income |
|
|
|
|
|
|
|
|
GAAP measures: |
|
|
|
|
|
|
|
|
Interest income – loans |
|
$ |
29,497 |
|
|
$ |
28,958 |
|
Interest income – investments and other |
|
|
3,354 |
|
|
|
3,939 |
|
Interest expense – deposits |
|
|
(2,589 |
) |
|
|
(4,104 |
) |
Interest expense – federal
funds purchased |
|
|
— |
|
|
|
(1 |
) |
Interest expense – subordinated debt |
|
|
(501 |
) |
|
|
(360 |
) |
Interest expense – junior subordinated debt |
|
|
(293 |
) |
|
|
(420 |
) |
Interest expense – other borrowings |
|
|
— |
|
|
|
(2 |
) |
Total net interest income |
|
$ |
29,468 |
|
|
$ |
28,010 |
|
Non-GAAP measures: |
|
|
|
|
|
|
|
|
Tax benefit realized on non-taxable interest income – loans |
|
$ |
34 |
|
|
$ |
40 |
|
Tax benefit realized on non-taxable interest income – municipal
securities |
|
|
164 |
|
|
|
167 |
|
Total tax benefit realized on
non-taxable interest income |
|
$ |
198 |
|
|
$ |
207 |
|
Total tax-equivalent net
interest income |
|
$ |
29,666 |
|
|
$ |
28,217 |
|
|
|
|
|
|
|
|
|
|
(1) The efficiency ratio is computed by dividing
noninterest expense excluding other real estate owned
income/expense, amortization of intangibles, and gains and losses
on disposal of premises and equipment by the sum of net interest
income on a tax-equivalent basis and noninterest income, excluding
gains and losses on sales of securities. 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 is 21%. See the tables above for
tax-equivalent net interest income and reconciliations of net
interest income to tax-equivalent net interest income. The
efficiency ratio is a non-GAAP financial measure that management
believes provides investors with important information regarding
operational efficiency. Such information is not prepared in
accordance with U.S. generally accepted accounting principles
(GAAP) and should not be construed as such. Management
believes; however, such financial information is meaningful to the
reader in understanding operational performance but cautions that
such information is not viewed as a substitute for GAAP.
(2) All capital ratios reported are for First Bank.
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