First National (FXNC) investor relations material

Executive summary

• Net income for Q2 2026 was $5.7 million ($0.63–$0.64 per diluted share), up from $5.1 million ($0.56 per share) in Q2 2025, driven by higher net interest income and lower provision for credit losses.

• Return on average assets was 1.11% and return on average equity was 12.03% for Q2 2026, both up from the prior year and sequentially.

• For the six months ended June 30, 2026, net income increased to $10.6 million ($1.17 per diluted share) from $6.6 million ($0.74 per share) in 2025.

• Growth in average loan and deposit balances drove higher net interest income and margin, with net loans expanding for a second consecutive quarter.

• Regulatory approvals were received for the sale of North Carolina branches, expected to close in Q4 2026 as part of a branch optimization initiative.

Financial highlights

• Net interest income for Q2 2026 was $20.1 million, up 7.7% year-over-year and $1.3 million from Q1 2026; for the six months, it was $38.7 million, up 7.4%.

• Net interest margin improved to 4.15% for Q2 2026 (from 3.95%) and 4.07% for the six months (from 3.86%).

• Provision for credit losses decreased to $426 thousand for Q2 2026 (from $911 thousand) and $876 thousand for the six months (from $1.7 million).

• Noninterest income increased by $129–$194 thousand (Q2) and $342 thousand (six months), mainly from higher other operating income and customer service fees.

• Noninterest expenses rose $1.2 million in Q2, mainly due to higher salaries, marketing, and legal fees, but fell $1.1 million for the six months due to lower merger and data processing expenses.

• Total assets reached $2.076 billion as of June 30, 2026, up $37.7 million from year-end 2025.

• Loans grew to $1.487 billion, up $37.7 million from December 31, 2025.

• Deposits increased to $1.831 billion, up $31.6 million from year-end 2025.

Outlook and guidance

• The sale of two North Carolina branches is expected to close in October 2026, with a one-time gain anticipated in Q4 2026.

• Three additional branch consolidations and ATM reductions are planned by year-end, reducing total offices from 33 to 28.

• The company remains focused on streamlining operations and reallocating resources to higher-growth markets.