First National Corporation (NASDAQ: FXNC) reported its first‑quarter 2026 financial results, posting a net income of $4.9 million and diluted earnings per share of $0.54. The bank’s net interest margin expanded to 3.99% on a fully‑trimmed‑effort basis, up from 3.95% in the fourth quarter of 2025 and 3.77% in the first quarter of 2025, reflecting a modest improvement in interest‑income generation. Net interest income totaled $18.8 million, slightly down from $19.0 million in the prior quarter due to a decline in average interest‑earning assets.
Credit quality remained strong, with the allowance for credit losses on loans at $14.7 million—1.00% of total loans—unchanged from the prior quarter. Net charge‑offs fell to $542 thousand from $651 thousand in Q4 2025. Non‑interest income dropped to $3.8 million from $5.0 million in Q4 2025, largely driven by a one‑time recovery of $895 thousand related to an acquired loan.
The company’s diluted earnings per share of $0.54 missed the consensus estimate of $0.56, a shortfall of $0.02 per share. Revenue for the quarter was $22.5 million, below the consensus estimate of $23.3 million. The miss in earnings and revenue contrasts with the year‑over‑year growth in EPS, which rose from $0.18 in Q1 2025 to $0.54 in Q1 2026, and the improvement in net interest margin, which climbed from 3.77% in Q1 2025 to 3.99% in Q1 2026.
"With fewer days, the first quarter is typically the most challenging of the year for profitability, yet we were pleased to exceed our budgeted metrics for earnings, deposits, loans, and asset quality. We expect that the loan production late in the quarter will reap benefits going forward and we will begin the year with good momentum," said President and CEO Scott C. Harvard.
Investors reacted negatively to the earnings release, citing the miss on both EPS and revenue as the primary drivers of the market’s response.
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