First National Corporation · NASDAQ:FXNC
First National — Investor Presentation (December 2019)
25 slides from First National's investor presentation, Dec 3, 2019
Slide 1: November 2019
November 2019
Slide 2: Forward-Looking Statements
Forward-Looking Statements The Company makes forward-looking statements in this presentation that are subject to risks and uncertainties. These forward-looking statements may include statements regarding profitability, liquidity, adequacy of capital, the allowance for loan losses, interest rate sens
Slide 3: Company Overview
Company Overview sonny ie Ne G ‘ be Se Community banking since 1907 FXNC listed on Nasdaq Corporate offices in Strasburg and Winchester Operating primarily in 4 Virginia MSAs on the I-81, |-66 and |-64 corridors 14 branches, 1 loan production office $777 million in assets Personal banking, business
Slide 4: Why Invest in FXNC?
Why Invest in FXNC? Ser Management team with track record of building value Low-cost customer deposit relationships Diversified markets in attractive Virginia MSAs Delivering personal service and the latest technology
Slide 5: Q3 2019 and Full Year 2018 Highlights
Q3 2019 and Full Year 2018 Highlights Q3 2019 Highlights “) + Return on equity of 13.31%, return on assets of 1.27% + Wealth management revenue increased 13% * Net interest margin of 3.87% + Nonperforming assets decreased to 0.20% to total assets 2018 Highlights ¢ Record year of net income totaling
Slide 6: First National Total Return to Shareholders
First National Total Return to Shareholders 1 Year 3 Year 5 Year 16% 14% 12% 10% 8% 6% 4% 2% 0% 14% 13% 2% | FXNC SNLSE S&P 500 US Bank 100% 80% 60% 40% 20% 0% Source: S&P Market Intelligence, total return as of November 3, 2019. 68% 71% | | | FXNC SNLSE S&P 500 US Bank 200% 160% 120% 80% 40% 0% 161
Slide 7: Strategies to Build Shareholder Value
Strategies to Build Shareholder Value ec iS wal? Grow Assets Without Adding Significant Overhead Accelerate Growth with Acquisitions and Team Lifts “a Deliver Exceptional Service to Small Business Customers Maintain Low-Cost Deposit Portfolio ch % y rif as Serve Vibrant Virginia Markets Attract and
Slide 8: Grow Assets Without Adding Significant Overhead
Grow Assets Without Adding Significant Overhead Net-Noninterest Expense / Assets 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2015" 2017 2018 3Q19 * Acquired six bank branches in April 2015. 3Q19 represents September 30, 2019 year to date, annualized. Quarterly financial information is unaudited.
Slide 9: Deliver Exceptional Service to Small Business Customers
Deliver Exceptional Service to Small Business Customers Non-Maturity Deposits 70% 4 64% 63% 63% 62% —_——S 60% 50% 9 38% 40% 40% 36% 37% 37% i 30% 20% 2015 2016 2017 2018 3Q19 ——Personal ——Business Average deposit account balances based on September 30, 2019. Dollars in thousands. Quarterly financial
Slide 10: Serve Vibrant Virginia Markets
Serve Vibrant Virginia Markets Virginia’s 2.7% unemployment rate is lower than the nation Projected Population Growth: 2010 — 20201 Diverse economies with large regional medical centers and higher education, including Virginia Commonwealth University, University of Richmond, Shenandoah University an
Slide 11: Accelerate Growth with Acquisitions and Team Lifts
Accelerate Growth with Acquisitions and Team Lifts Acquisition Opportunities in Virginia Success Six branches acquired in 2015 including $186 million in 25 deposits 22 thousand deposit accounts with 0.19% cost of deposits at closing 15 Hired Regional President and a market executive to deploy deposi
Slide 12: Maintain Low Cost Deposit Portfolio
Maintain Low Cost Deposit Portfolio Cost of Deposits 0.80% 0.74% Noninterest ing 0.60% checking, 0.60% 0.41% 0.40% Other savings , e : 0.26% 0.20% 0.21% 0.20% | 0.00% 2015 2016 2017 2018 3Q19 VA YTD Peer* * Peer median based on banks in Virginia with assets $500 million to $1 billion as of June 30,
Slide 13: Deposits Have Been a Source of Strength
Deposits Have Been a Source of Strength Cost of Deposits Loans / Deposits 1.00% er 100.0% 0.80% 63% 0.60% 95.0% 0.40% 0.20% 0.00% ar 89.9% 3Q15 1016 3016 1017 3Q17 1018 3Q18 1019 3Q19 —_—XNC «==—VA Peers 85.0% Fed Funds Rate 83.3% 3.00% 2.50% 2.00% 80.0% 2.00% 1.50% 1.00% | \ | 75.0% 0.50% 5 oo gw B
Slide 14: Attract and Retain Talented Employees
Attract and Retain Talented Employees Executive experience averages more than 25 years Support involvement in community organizations Recipient of “Virginia Business Best Places to Work” award Successful recruitment of talented bankers in new markets 14 Invest in employee education and development N
Slide 15: Tangible Book Value Per Share and Earnings Per Share
Tangible Book Value Per Share and Earnings Per Share TBVPS Diluted EPS $18.00 $2.40 $ $2.04 $15.00 $1 $2.00 $11.57 1.60 $12.00 $10.26 $ 50 $1.38 $8.88 $1.20 $9.00 - 1.20 $6.00 $0.80 $0.40 pal $- * $- 2016 2016 2017 2018 = 3Q19 2015 2016 = -2017 2018 = 3Q19 YTD * Acquired six branches in April 2015,
Slide 16: Performance Metrics
Performance Metrics 2.00%: a 20.00% 16.36% 34% 1.50% sayy 0.98% ie 15.00% 12.00% 11.57% % 84% 1.00% "0.41% (000%: “ aenanr 0.50% im 5.00% | 0.00% . 0.00% 2015" 2016 2017 2018 +3019 2015" 2016 2017 2018 3019 YTD YTD Efficiency Ratio Net Interest Margin 100.0% 80.92% 4.20% 3.93% 3.91% 71,05% 3 5 3.77%
Slide 17: Diversified Revenue
Diversified Revenue Total Revenue $40.0 $9.2 $30.0 $8.3 $8.5 $8.3 $8.3 $20.0 $10.0 $- 2015 2016 2017 2018 + 3Q19YTD mNet Interest Income m Noninterest income Dollars in millions. Noninterest income composition based on September 30, 2019. Quarterly financial information is unaudited. 17 < Noninteres
Slide 18: Loan Portfolio and Improved Yield
Loan Portfolio and Improved Yield Yield on Loans 5.50% 5.00% ‘-_— 00" 4.82% CommerciaX P 4.70% 4.78% Industrial 8. 4.50% 4.00% Commercial RE, 40.6% 3.50% 3.00% 2015 2016 2017 2018 3Q19 VA Loan portfolio composition based on September 30, 2019. * Peer median based on banks in Virginia with assets $50
Slide 19: Asset Quality
Asset Quality Classified Assets / Assets 3.0% 2.5% 2.0% 1.8% 1.5% 1.0% 0.7% 0.5% 0.0% 2015 2016 2017 2018 3Q19 —@=FXNC <@VA Peers ‘ Peer median ratio was based on banks in Virginia with assets $500 million to $1 billion. Quarterly financial information is unaudited. 19 1.80% 1.50% 1.20% 0.90% 0.60%
Slide 20: Capital Position
Capital Position 20.0% 15.0% 16.0% 13.9% 135% TEE 4316% 14.6% 12.0% 10.1% . 85% 8.5% anh 12.0% 9.0% 8.1%. = 8.0% 6.0% 4.0% 3.0% 0.0% 0.0% 2015 * 2016 2017 2018 3019 2015* 2016 2017 2018 3019 Tangible Common Equity 15.0% 12.0% 9.0% 6.0% 3.0% i | 0.0% 2015 * 2016 2017 2018 Total risk based capital and
Slide 21: Appendix
Appendix 21
Slide 22: Financial Performance
Financial Performance Balance Sheet Assets. $692,321 $712,672 $739,110 $752,969 $777,193 Loans, net 433,475 480,746 516,875 537,847 566,341 Deposits 627,116 645,570 664,980 670,566 685,621 Tangible common equity 43,607 50,582 87,212 66,197 75,085 Balance Sheet Ri Loans / Deposits 70.00% 75.29% 78.53
Slide 23: Peer Comparison
Peer Comparison Return on Assets Return on Equity Efficiency Ratio. Net Interest Margin Loans / Deposits baa eran NPAs / Assets 20% 50% 1.6% 16% 0% 42% 100% 40% = 40% 1.50% 1.2% 12% + 80% 3.9% 0% | 30% 3.0% 1.20% 0.4% 4% 60% 3.3% 70% + 10% 1.0% | 0.60% 0.0% 0% 50% 3.0% 60% 0% 0.0% 0.30% 60% 70% 20%
Slide 24: Stock Profile
Stock Profile Exchange Nasdaq Market price $19.74 Common shares outstanding 4,968,277 Market capitalization $98.1 million Insider ownership 114% Institutional ownership 10.6% Quarterly cash dividend $0.09, dividend yield 1.83% Average volume (LTM) 2,603 Diluted EPS (LTM) $1.85 Tangible book value pe
Slide 25: First National Corporation contacts
First’? National Corporation Scott Harvard, President and CEO (540) 465-6121 sharvard@fbvirginia.com Shane Bell, Executive VP and CFO (540) 465-6130 sbell@fbvirginia.com
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