First National Corporation reported earnings of $1.4 million and earnings per share of $0.29 for the second quarter ended June 30, 2016, a 30% increase compared to $1.1 million or $0.22 per share for the first quarter of 2016. Earnings for the second quarter of 2015 were $116 thousand or $0.02 per share.
For the six months ended June 30, 2016, reported earnings totaled $2.5 million or $0.51 per share, compared to $331 thousand or $0.07 per share for the six months ended June 30, 2015. Year-to-date earnings for 2016 were positively impacted by higher revenues from net interest income and noninterest income, combined with lower noninterest expenses.
In addition, net income available to common shareholders was favorably impacted by the elimination of dividends on preferred stock. Year-to-date earnings for 2015 were negatively impacted by integration expenses totaling $877 thousand related to the acquisition of six bank branches and the assumption of $186.8 million of deposit liabilities.
Select highlights for the second quarter include:
- Return on equity increased to 11.90%, compared to 9.39% for the first quarter of 2016, and 2.97% for the second quarter of 2015
- Net income available to common shareholders increased $334 thousand, or 30%, to $1.4 million compared to the first quarter of 2016, and increased $1.3 million compared to the second quarter of 2015
- The efficiency ratio improved to 71.64% for the quarter, compared to 77.32% in the prior quarter and 83.52% in the second quarter of 2015
- Noninterest expense decreased $234 thousand, or 4%, compared to the first quarter of 2016, and decreased $972 thousand, or 14%, compared to the second quarter of 2015
- Assets per employee increased to $4.2 million, compared to $3.5 million at the end of the second quarter of 2015
- Net interest income increased $97 thousand, or 2%, compared to the first quarter of 2016, and increased $728 thousand, or 14%, compared to the second quarter of 2015
- Net loans increased $11.3 million, or 3%, during the quarter, and increased $74.2 million, or 19%, over the prior year
- Noninterest income increased $169 thousand, or 9%, compared to the first quarter of 2016, and decreased $197 thousand, or 9%, compared to the second quarter of 2015
“We continue to be pleased with the progress being made in our Company since the deposit and branch acquisition that was consummated in the second quarter of 2015,” said Scott C. Harvard, president and chief executive officer of First National. Harvard added, “While we firmly believed the transaction was a significant strategic accomplishment, we recognized that it would take successful execution to drive the long term benefits to the Company. The Company’s performance trends quarter over quarter since the acquisition reflect effective plan execution to date.
“Last year, the Company embarked on efficiency initiatives that focused on better use of technology and eliminating unnecessary processes and paperwork across the bank. The initiatives lead to improved customer service, higher productivity and reduced expenses. The bank consolidated one branch at the end of 2015 and has announced a second branch closure that will occur at the end of July 2016. Employee productivity has increased significantly as evidenced by the assets-to-employee ratio of $4.2 million at June 30, 2016, compared to $3.5 million one year ago. Successful execution of the deposit acquisition also included deliberate and disciplined deployment of the acquired funds into loan assets. Through the second quarter of this year, we have deployed over 30% of the acquired deposits into loans, positively impacting revenues and earnings, while liquidity remains available for potential loan and earnings growth. I couldn’t be prouder of our entire team as we begin to reap the benefits of their efforts.”
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