First National Corporation reported record earnings for the second quarter ended June 30, 2025, with net income of $5.05 million, or $0.56 per diluted common share. Adjusted earnings, excluding acquisition-related items, reached $5.1 million, or $0.57 per adjusted diluted common share, reflecting the successful integration of the Touchstone franchise.
Net interest income increased by $1.0 million to $18.5 million from the prior quarter, with the net interest margin (FTE) expanding to 3.95% from 3.77% in Q1 2025. This improvement was driven by increases in loan yields and net accretion income, despite higher than average loan payoff volumes.
Noninterest expense decreased significantly by $3.1 million to $15.2 million from the prior quarter, primarily due to a reduction in pre-tax merger-related expenses to $92 thousand and lower operating costs following the completion of the core banking system conversion in February 2025. While loan and deposit growth was muted, the company achieved improved efficiency and strong liquidity, with available liquidity sources totaling $633.7 million.
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