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First 1 National Corporation First National Corporation Reports Second Quarter 2021 Financial Results --- STRASBURG , Va . , July 29 , 2021 First National Corporation ( the " Company " or " First National " ) ( NASDAQ : FXNC ) , the bank holding company of First Bank ( the " Bank ” ) , reported unaudited consolidated net income of $ 3.3 million , or $ 0.69 per diluted share , for the second quarter of 2021 , which resulted in return on average assets of 1.31 % and return on average equity of 15.33 % . This compares to net income of $ 2.2 million , or $ 0.46 per diluted share , and return on average assets of 1.00 % and return on average equity of 11.30 % for the second quarter of 2020 . During the second quarter of 2021 , the Company incurred merger related expenses totaling $ 277 thousand related to the acquisition of The Bank of Fincastle ( the " Merger " ) , which was completed on July 1 , 2021. Merger related expenses were comprised primarily of legal and professional fees . Also included in earnings in the second quarter of 2021 was a recovery of loan losses totaling $ 1.0 million , compared to a provision for loan losses of $ 800 thousand in the same period of 2020 . Key highlights of the second quarter of 2021 are as follows . Comparisons are to the corresponding period in the prior year unless otherwise stated : • Return on average assets of 1.31 % • Return on average equity of 15.33 % • • • Efficiency ratio of 63.65 % Noninterest income increased 37 % to $ 2.4 million Nonperforming assets decreased to 0.21 % of total assets Recovery of loan losses totaled $ 1.0 million Merger related expenses totaled $ 277 thousand " We are especially pleased with the Company's financial performance for the second quarter while our team worked to complete the Merger with The Bank of Fincastle on July 1 , " said Scott Harvard , president and chief executive officer . Harvard continued . “ In addition to a return to superior asset quality metrics , which resulted in a recovery of loan losses , the Bank experienced a 37 % increase in noninterest income that was primarily from revenue growth from all banking services . Fee income earned from deposit accounts , wealth management , and other customer services increased , all with double digit growth percentages . The Company also absorbed $ 277 thousand of merger related expenses during the period . We are delighted with the team of associates who have joined the Bank through the Merger and we are optimistic about prospects for the future . " COVID - 19 PANDEMIC UPDATE Operations During the second quarter of 2021 , the Bank continued to follow its Pandemic Plan that strives to protect the health of its employees and customers , while continuing to deliver banking services . In response to vaccinations that continued to be provided to thousands of people in our market areas , and the decrease in the number of COVID - 19 cases in our communities , the Bank entered phase two of its plan in late March 2021 after operating in phase one since early December 2020. After operating for almost four months primarily through branch drive throughs , ATMs , and mobile and internet banking platforms , lobbies re - opened in March for walk - in customers to conduct their banking business . Paycheck Protection Program The Bank continued to participate as a lender in the U.S. Small Business Administration's ( " SBA " ) Paycheck Protection Program ( " PPP " ) to support local small businesses and non - profit organizations by providing forgivable loans . During the second and third quarters of 2020 , the Bank originated $ 76.6 million of PPP loans , received $ 2.5 million of loan fees from the SBA , and incurred $ 535 thousand of loan origination costs . The PPP stopped accepting applications in August of 2020. The loan fees continue to be accreted into earnings evenly over the life of the loans , net of loan origination costs , through interest and fees on loans . PPP loans that were originated in 2020 totaled $ 26.1 million at June 30 , 2021 and are scheduled to mature in the second and third quarters of 2022 .