First National (FXNC) 8-K Regulation FD Disclosure

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

___________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2017

___________

FIRST NATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

Virginia (State or other jurisdiction of incorporation)	0-23976 (Commission File Number)		54-1232965 (IRS Employer Identification No.)
112 West King Street Strasburg, Virginia (Address of principal executive offices)		22657 (Zip Code)

Registrant's telephone number, including area code: (540) 465-9121

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

□Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

□Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

□Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

□Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

      Emerging growth company  □   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  □

Item 7.01Regulation FD Disclosure.

On November 6, 2017, First National Corporation (the "Company") participated in the Hovde Group's 2^nd Annual Fast-Forward Bank Conference in Phoenix. An investor presentation, which includes information regarding the Company's financial results, business strategies and trends, is intended to be made available to shareholders, analysts and investors. A copy of the presentation to investors is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.

The information provided pursuant to this Item 7.01 is to be considered "furnished" pursuant to Form 8-K and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section, nor shall it be deemed incorporated by reference into any of the Company's reports or filings under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such report or filing. The filing of this Current Report shall not be deemed an admission as to the materiality of any information in the Current Report that is required to be disclosed solely by reason of Regulation FD.

Item 9.01Financial Statements and Exhibits.

(d)Exhibits. 

Exhibit No	Description
99.1	First National Corporation investor presentation

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FIRST NATIONAL CORPORATION
	(Registrant)
Date:  November 6, 2017	By:	/s/ M. Shane Bell
		M. Shane Bell
		Executive Vice President
		and Chief Financial Officer

3

EXHIBIT INDEX

Exhibit No	Description
99.1	First National Corporation investor presentation

4

Exhibit 99.1

 Investor PresentationNovember 2017 

 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 sensitivity, market risk, growth strategy, and financial and other goals. The words, “believes,” “expects,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward-looking statements. These forward-looking statements are subject to significant uncertainties. Because of these uncertainties, actual future results may be materially different from the results indicated by these forward-looking statements. In addition, past results of operations do not necessarily indicate future results. The following presentation should be read in conjunction with the consolidated financial statements and related notes included in Part II, Item 8, and Item 1A. Risk Factors of the Company’s Form 10-K for the year ended December 31, 2016.  2 

 Corporate Profile  3  Branch Map  Overview  Shares of common stock quoted under “FXNC” on OTC Markets Group exchangeCommunity banking since 190715 branches across 7 counties and 4 MSAs throughout VirginiaWealth management division $204 million AUM  Financial Highlights  Total assets $731.5Total loans held for investment 514.7Total deposits 656.3Shareholders’ equity 57.5Market capitalization 80.6  ($ Millions)  Ratios   Return on average assets 1.00%Return on average equity 12.78%Net interest margin 3.79%Efficiency ratio 66.38%NPAs/assets 0.32%Tangible common equity / tang. assets 7.73%   Market capitalization at October 27, 2017. All other financial information at or for the quarter ended September 30, 2017.    

 Strengths  Management team with track record of successAnnual loan growth averaged 12% last 3 yearsSuperior asset quality with NPAs/Assets of 0.32%Non-interest income at 1.10% of average assetsWealth management with full trust powersLow-cost deposit portfolio at 0.27% Trusted financial advisors building customer relationshipsProviding solutions to small businessesDemonstrated ability to execute acquisitions  4  Financial information at or for the quarter ended September 30, 2017. 

 Markets   Diverse economies with large regional medical centers and higher education, including Shenandoah University, James Madison University and Mary Baldwin University. Low unemployment rates.  Projected population  5  Source: Virginia Employment Commission, October 2017 

 Richmond Expansion   Hired experienced loan and deposit teamDeposit market of $2.9 billion within 3 miles of branchProjecting average annual loan growth of $20 millionProvides geographic diversity for loan portfolioAnticipating earnings accretion in year 2Healthy economy with unemployment lower than U.S.Large employers are government, health care and financeRanked #24 in Top 100 Best Places to Live by U.S. News  6 

 Markets Richmond expansion   Projected population (1)  7  Source: (1) Virginia Employment Commission, October 2017 (2) SNL Financial 

 Experienced Team  Executive  Role  Industry Experience  Scott Harvard  President/CEO  40 years  Dennis Dysart  Sr. EVP/COO   24 years  Shane Bell  EVP/CFO  23 years  Sam Crow  EVP/CCO  26 years  Chris Martin  EVP/CRO  14 years  Butch Smiley  Regional President  35 years  Andy McLean  Market President  36 years  Experienced and motivated management team aligned with shareholdersWell-connected to the business/professional community in its marketsImpressive track record in community banking and creation of franchise valueExcellent regulatory relationships  8 

 Strategy   Grow assets without adding significant overhead  Deploy cash and securities into loans   Deposit growth in vibrant markets  Leverage seasoned bankers in new markets, banker lift-outs, LPOs  Enter new markets, gain scale and efficiencies  Assume deposits for loan growth  Diversify revenue with new businesses  Grow our company to total assets in excess of $1 billion by building relationships and acting as trusted financial advisors delivering financial solutions to small businesses and individuals throughout the communities we serve.  9 

 Efficiency  Scale  Strategic Focus Drivers of Value for U.S. Banks  10  Source: Hovde Group. U.S. banks with assets less than $10 billion 

 Strategy Execution  Well-executed drive to improve efficiencySuccessful $186 million branch acquisitionDeployed acquired deposits with excellent loan growthGrowth of non-interest bearing depositsReinvigorated loan production with superior asset qualitySuccessful team lift out in Staunton-Augusta CountyRecent team lift out and expansion to Richmond’s west end   11 

 Deposit Growth  Total Deposits  12  $466.9 $450.7 $444.3 $627.1 $645.6 $656.3  Dollars in millions. Financial information at December 31. 3Q17 is unaudited. 

 Loan Growth  Total Loans  13   $383.6 $357.1 $378.4 $439.0 $486.1 $514.7  Dollars in millions. Financial information at December 31. 3Q17 is unaudited. 

 Asset Growth  Total Assets  14  $532.7 $522.9 $518.2 $692.3 $716.0 $731.5  Dollars in millions. Financial information at December 31. 3Q17 is unaudited. 

 Asset Quality Low nonperforming assets  Nonperforming assets comprised of non-accrual loans and other real estate owned. Peers defined as banks in Virginia with assets between $500 million to $1 billion as of June 30, 2017. Dollars in millions. Quarterly financial information is unaudited.  NPAs / Assets  Nonperforming Assets   15 

 Improved Efficiency  16  Total revenue comprised of net interest income and non-interest income.Dollars in millions. Quarterly financial information is unaudited.  Efficiency Ratio  Revenue Growth + Expense Management 

 Earnings Per Share Quarterly earnings improvement  Basic and diluted earnings per share. Quarterly financial information is unaudited.  17   2015     

 Profitability  18  Quarterly financial information is unaudited. 

 Capital  19  Note: TCE/TA ratio is First National Corporation. Leverage and Total Risk Based Capital Ratios are First Bank 

 20  Source: SNL Financial, as of October 27, 2017  FXNC Stock Performance +226% over 5 years  1-year  +40%  2-year  +99%  5-year  +226% 

 Revenue Opportunity Drive revenue with loan growth  Loans / Assets  21  Source: SNL Financial. Peers defined as banks in Virginia with assets between $500 million to $1 billion as of June 30, 2017. Quarterly financial information is unaudited. 

 22  Deposit Growth Opportunities Growing VA markets  Source: SNL Financial June 30, 2017. Legacy includes City of Winchester, Frederick, Shenandoah and Warren Counties; South includes Cities of Staunton and Waynesboro, Rockingham, Buckingham and Price Edward Counties; Richmond includes deposits within 3 miles of the Patterson Avenue First Bank office.       

 23  Opportunities to Build Scale Consolidation continues in Virginia  Total Number of Virginia Banks  Source: Virginia Bankers Association 

 Opportunities to Build Scale Whole bank acquisitions  Number of Virginia Banks by Asset Size  24  Source: Virginia Bankers Association 

 Stock Profile  Source: SNL Financial, data as of October 27, 20171 Most recent cash dividend paid on September 15, 20172 At September 30, 2017  Ticker symbol  FXNC  Exchange  OTC  Market price   $16.30  Common shares outstanding  4,945,056  Market capitalization  $80.6 million  Insider ownership  17.2%  Institutional ownership  9.9%  Quarterly cash dividend 1  $0.035, dividend yield 0.9%  Average volume (LTM)  1,025  EPS (MRQ)  $0.37  Tangible book value per share 2  $11.42  25 

 Value Proposition  Proven management teamBranch acquisition and team lift outMargin expansionCapital managementReturn on investmentFocused on scale and efficiency to drive valueLow-cost deposit funding available for loan growthDisciplined loan growth with superior asset qualitySuperior non-interest incomeDeep relationships in robust, growing marketsRecent team lift creates growth opportunity in Richmond  26 

   Appendix  27 

 28  (dollars in thousands)    At or for the year ended,            Nine months ended  except per share data  12/31/2012  12/31/2013  12/31/2014  12/31/2015  12/31/2016      9/30/2017                    Balance Sheet                  Assets  $532,697   $522,890   $518,165   $692,321   $716,000       $731,503   Loans, net   370,519    346,449    371,692    433,475    480,746        509,406   Deposits   466,917    450,711    444,338    627,116    645,570        656,262   Tangible common equity   30,350    38,888    44,884    43,607    50,582       56,450                     Balance Sheet Ratios                  Loans / Deposits  82.15%  79.23%  85.16%  70.00%  75.29%      78.43%  TCE / TA  5.70%  7.44%  8.66%  6.32%  7.08%      7.73%  Leverage ratio 1  9.15%  10.68%  12.90%  8.12%  8.48%      9.06%  Total capital ratio 1  13.59%  16.62%  19.14%  13.86%  13.47%      13.91%                    Performance                  Net income  $1,896   $8,961   $6,493   $1,542  $5,907       $5,131   Diluted EPS  $0.48   $1.83   $1.32   $0.31   $1.20       $1.04   ROAA  0.53%  1.85%  1.45%  0.41%  0.84%      0.95%  ROAE  6.80%  21.87%  13.49%  4.58%  12.00%      12.47%  Net interest margin  3.89%  3.72%  3.86%  3.52%  3.61%      3.74%  Efficiency ratio  70.01%  74.79%  73.96%  80.92%  71.05%      67.51%                    Asset Quality                  NPAs / Assets  2.63%  2.81%  1.91%  0.94%  0.25%      0.32%  NCOs / Avg loans  0.88%  0.53%  0.02%  0.27%  0.04%      0.00%  Reserves / Loans  3.41%  2.98%  1.77%  1.26%  1.09%      1.03%  Financial Performance  1 First Bank capital ratios. Financial information for nine months ended September 30, 2017 is unaudited. 

 Diversified Loan Portfolio  Loan Composition   29  At September 30, 2017. Unaudited. 

 Loan Composition Commercial Real Estate (CRE) Detail    Owner-Occupied      Non Owner-Occupied      Total    Office/retail buildings   5.4%   $ 27,973     5.9%   $ 30,535     11.4%   $58,508   Industrial/warehouse   2.4%   12,518     2.6%   13,178     5.0%   25,696   Hotel/motel-franchise    -    -     4.1%  21,124     4.1%  21,124  Other   2.3%   11,836     1.6%   8,184     3.9%   20,020   Office/retail condominiums   1.8%   9,185     1.5%   7,588     3.3%   16,773   Mixed use   0.8%   4,084     1.5%   7,781     2.3%   11,865   Auto (sales/repairs)   1.7%   8,689     0.0%   51     1.7%   8,740   Self-storage facilities   -   -    1.4%  7,329     1.4%  7,329   Religious facilities   0.6%   2,905     0.9%   4,410     1.4%   7,315   Golf courses   1.1%   5,419     0.0%   218     1.1%   5,637   Restaurants   0.6%   3,172     0.4%   2,169     1.0%   5,341   Convenience store/gas station   0.8%   4,275     0.1%   422     0.9%   4,697   Hotel/motel-private    -    -     0.4%   2,178     0.4%  2,178   Health/recreation facilities   0.4%   1,911     0.1%   364     0.4%   2,275     17.9%   $ 91,967     20.5%  $105,531     38.4%   $197,498   30  At September 30, 2017. Unaudited. 

 Low Cost Deposits  Deposit Composition  Non-maturity deposits 80% of total depositsLow cost funding of 0.27%Comprised of 57% personal, 43% business$15 thousand average balance of non-maturity deposits  31  At September 30, 2017. Unaudited. 

 Scott Harvard, President and CEO(540) 465-6121sharvard@fbvirginia.comShane Bell, Executive VP and CFO(540) 465-6130sbell@fbvirginia.com