Last Updated 5/5/25
First National Corporation, the parent company of First Bank, operates primarily in Virginia, staying close to its roots in community banking. This isn’t the kind of stock that’s splashed across financial headlines. It’s steady, grounded, and focused on doing the basics right—serving local customers, maintaining a conservative balance sheet, and steadily returning value to shareholders.
For dividend investors, that quiet consistency can be far more attractive than the noise surrounding high-growth tech or volatile sectors. FXNC is the type of bank that plays the long game—lean operations, careful lending practices, and a commitment to shareholders that shows up in the form of reliable income.
Recent Events
Over the past year, FXNC has quietly delivered impressive revenue growth, jumping more than 116% year over year. In an industry where many regional banks have been struggling to maintain earnings amid rising deposit costs and margin compression, that kind of topline acceleration stands out. It’s not just recovery—something fundamental is clicking.
Despite a high trailing price-to-earnings ratio near 30, the forward P/E drops sharply to around 8, which suggests that recent earnings were impacted by short-term factors. Looking ahead, the market appears to be pricing in a strong rebound in profitability.
From a balance sheet perspective, FXNC is sitting on a large cash pile—over $165 million—compared to only $32 million in total debt. That level of liquidity is rarely seen at this size. With nearly $18.42 in cash per share and a book value of $18.56, the current stock price of around $19.77 puts it just slightly above book, indicating the market hasn’t fully caught up with its financial strength.
Key Dividend Metrics 📊
🧾 Forward Dividend Yield: 3.17%
📆 Dividend Date: March 14, 2025
🔔 Ex-Dividend Date: February 28, 2025
💰 Payout Ratio: 60.5%
📉 5-Year Average Yield: 2.92%
📈 Dividend Growth: Steady upward trend
🪙 Forward Dividend Rate: $0.62 per share
Dividend Overview
FXNC isn’t offering the flashiest yield on the board, but what it does offer is stability—and for long-term income investors, that’s often the more important piece of the puzzle. At 3.17%, the forward dividend yield sits slightly above its five-year average. That signals a stock that’s priced reasonably, if not modestly undervalued based on its yield history.
More importantly, that yield comes with a comfortable payout ratio of just over 60%. This isn’t a company stretching itself to reward shareholders. It’s paying a sustainable dividend from genuine earnings. There’s a discipline in that approach, especially in banking, where chasing yield can sometimes lead to risky lending or balance sheet issues down the road.
The low beta of 0.42 also gives FXNC another advantage for dividend-focused portfolios—it doesn’t move wildly with the market. When broader indexes swing, FXNC tends to hold its ground better, giving income investors a more predictable stream of returns.
Dividend Growth and Safety
FXNC’s dividend track record reflects its conservative style—no huge hikes or attention-grabbing raises, but a quiet, dependable pattern of increases. There’s a kind of reassurance in that. The bank isn’t trying to impress anyone with big moves; it’s simply growing the dividend in line with earnings and business strength.
The recent improvements in profit margin, now over 12%, and operating margin nearing 20% show that FXNC is running an efficient operation. The fact that it’s returning a decent chunk of those profits to shareholders while still holding a strong cash position speaks volumes about the safety of its dividend.
The bank’s financial foundation looks solid. With over $165 million in cash and low debt, it’s positioned to weather economic bumps without needing to trim the payout. Even more encouraging is that management appears to take a cautious, methodical approach to capital allocation—a valuable trait when you’re relying on a company to maintain and grow its dividend over the years.
Insider ownership is also worth noting. With about 14% of shares held by insiders, there’s skin in the game. That typically means management is aligned with shareholders, and dividend cuts would be avoided unless absolutely necessary.
The stock has also posted a nearly 30% gain over the past year, which is impressive in a tough environment for financials. That performance doesn’t feel speculative—it’s grounded in solid numbers and execution. The dividend hasn’t been the only source of return, but it’s certainly been a steady one.
In short, FXNC offers a unique blend of yield, stability, and safety. It doesn’t promise the moon, but for income investors who value consistency and prudence, it delivers exactly what you’d want from a long-term dividend holding.
Cash Flow Statement
First National Corporation’s cash flow picture over the trailing twelve months (TTM) reveals a shift in operational dynamics. Operating cash flow swung to a negative $22.2 million, a significant drop from the $16.4 million positive figure the year before. This decline is also reflected in the free cash flow, which turned negative at -$25.5 million, contrasting sharply with the $14.5 million it generated in the prior year. Rising interest costs—now at $23.2 million—likely played a role in pressuring operational margins. It’s a meaningful development for a bank that has typically maintained healthy operating cash in past years.
Offsetting this weakness, however, is a sharp rebound in investing cash flow, which came in at a positive $136.8 million. That’s a complete reversal from the deep outflows of prior years and suggests the bank may have sold off or matured a substantial block of investment securities or real estate assets. On the financing side, cash outflows of $38.9 million reflect reduced borrowing or return of capital—possibly through debt reduction or dividend payments. Despite operating headwinds, FXNC ends the period with a cash balance of $162.9 million, up significantly from $87.2 million the year before, giving it solid liquidity to manage through any near-term challenges.
Analyst Ratings
First National Corporation (NASDAQ: FXNC) has recently seen a more cautious stance from analysts. 🧐 On February 11, 2025, Hovde Group shifted its rating from “Outperform” to “Market Perform” and adjusted its price target to $28.50. The change seems to reflect concerns around the bank’s earnings momentum and potential compression in net interest margins as higher interest rates ripple through loan and deposit pricing.
Looking back a bit further, Janney Montgomery Scott made a similar move on September 12, 2023, when it downgraded FXNC from “Buy” to “Neutral” with a target of $19. That reassessment may have been tied to a valuation reset as the stock approached short-term resistance levels or an anticipated earnings slowdown.
🔍 Right now, the broader analyst consensus leans toward a “Hold” rating, with an average 12-month price target sitting around $24.75. That’s a projected upside from current levels, though not aggressive. It suggests analysts see limited downside risk but are waiting for clearer signs of earnings acceleration or improved efficiency before turning more bullish.
Earnings Report Summary
A Big Quarter with a Bigger Acquisition
First National Corporation wrapped up the fourth quarter of 2024 with some major changes that reshaped its balance sheet and positioned it for long-term growth. The standout event was the completion of its acquisition of Touchstone Bankshares at the start of October. That deal pushed total assets to the $2 billion mark, up nearly 39% from the previous quarter. For a regional bank like FXNC, that kind of jump is a game changer. It gives them more scale, more reach, and a bigger customer base to serve.
Alongside the asset growth came a significant lift in net interest income, which climbed to $18.4 million from $11.7 million just one quarter earlier. The bank also saw a solid bump in its net interest margin, rising 40 basis points to 3.83%. That margin expansion tells you they’re getting better returns on their assets, likely helped by stronger loan yields and a shift in the mix of deposits.
Noninterest Gains and Merger Costs
FXNC also saw a boost in noninterest income during the quarter, which hit $6.4 million. A good chunk of that came from a $2.9 million gain tied to the acquisition—a typical benefit when the purchase price comes in under fair market value. On the flip side, noninterest expenses climbed to $21.9 million. Not a surprise there, as merger costs added up to $7.3 million. Integrating two banks isn’t cheap, and these one-time charges are part of the process when pulling off a deal of this size.
After adjusting for merger-related expenses, FXNC posted operating earnings of $6 million and earnings per share of $0.66. Those numbers strip out the noise and give a clearer view of how the business is performing at its core.
Leadership’s Take
CEO Scott Harvard struck an optimistic tone when commenting on the quarter. He highlighted the progress made on integration and the early signs that the acquisition is already creating value. The goal now is to operate as one cohesive institution across a broader footprint while maintaining the customer-first culture that got them here.
In all, the fourth quarter showed that FXNC isn’t just growing for growth’s sake—it’s expanding with purpose. The numbers reflect that, and if management can keep executing, the foundation laid in this report could pay dividends—both literally and figuratively—in the years ahead.
Final Thoughts
In conclusion, First National Corporation (FXNC) presents a compelling, albeit evolving, story for dividend investors. The bank’s significant asset growth and increased net interest income following the Touchstone Bankshares acquisition signal a promising trajectory for future profitability and, potentially, dividend growth. While recent analyst downgrades reflect some caution regarding near-term earnings and margin pressures, FXNC’s strong cash position, low debt, and management’s optimistic outlook suggest a solid foundation. For investors prioritizing a steady income stream from a regional bank with a growing footprint and a commitment to returning capital, FXNC warrants continued attention, particularly as the benefits of its recent acquisition materialize.