First National Corporation (FXNC): Business Model Canvas [Dec-2025 Updated]

You're trying to get a sharp read on First National Corporation now that the Touchstone integration is settled, and honestly, mapping out their next move is key. As an analyst who's spent two decades in this game, I can tell you their model hinges on deep community roots supporting a $2.033 billion asset base, driven by solid loan growth and a 3.95% Net Interest Margin from Q2 2025. It's all about local trust meeting modern scale. Below, we break down the nine essential building blocks-from their 33 branch footprint to their $1.825 billion in deposits-so you can see the precise mechanics behind their strategy moving into late 2025.

First National Corporation (FXNC) - Canvas Business Model: Key Partnerships

You're looking at the external relationships First National Corporation (FXNC) relies on to run First Bank and deliver its services across Virginia and North Carolina. These aren't just vendors; they are critical links for liquidity, compliance, and scale, especially after the Touchstone Bankshares, Inc. merger.

Title insurance entity via First Bank Financial Services, Inc.

First National Corporation offers title insurance and investment services through its structure, which supports its lending activities. This partnership ensures that real estate transactions, including the construction, residential, and commercial real estate loans that form a core part of its loan book, are covered from a title risk perspective. The company provides these services alongside wealth management offerings like estate planning.

Core banking system providers and FinTech vendors

The operational backbone for First Bank, which includes processing for its deposit products like checking and savings accounts, relies on external technology partners. Following the acquisition of Touchstone, the systems integration was completed in February 2025, which was a major operational milestone for the combined entity. While the specific core provider name isn't public in the latest filings, the successful conversion supports the combined entity's scale, which reached total assets of $2.033 billion as of March 31, 2025.

Federal Home Loan Bank (FHLB) for liquidity and funding

The Federal Home Loan Bank serves as a key source of wholesale funding and liquidity management. As of June 30, 2025, First National Corporation reported $25.0 million in other borrowings with the FHLB. This contrasts with prior periods, such as June 30, 2024, when borrowings totaled $50.0 million, which were funds borrowed from the Federal Reserve Bank's Bank Term Funding Program and subsequently repaid in the fourth quarter of 2024. This shows active management of contingent liquidity sources.

Local business and community development organizations

First National Corporation emphasizes community engagement as part of its strategy to deliver a reliable return to shareholders. The expansion via the Touchstone merger added operations in North Carolina, meaning these partnerships now span two states. The combined company delivers banking services through 33 branch offices in Virginia and North Carolina and 3 loan production offices. The commitment to the community is underscored by the recent announcement on November 13, 2025, of a 9.7% increase in quarterly cash dividends, signaling confidence in the combined operational model.

Correspondent banks for specialized services

While First Bank provides a full complement of traditional services, correspondent relationships help extend capabilities beyond its immediate footprint or specialized needs. These partnerships are essential for managing the scale of operations, which included total deposits of $1.825 billion as of March 31, 2025, and net loans held for investment of $1.436 billion at that same date.

Here's a quick look at the scale of the business supported by these key relationships as of mid-2025:

The reliance on the FHLB for funding, for instance, shows a direct financial partnership that underpins the loan growth, which was up 49.5% year-over-year in net loans held for investment as of Q1 2025. You've got to keep an eye on that FHLB balance.

• Title insurance services provided via First Bank Financial Services, Inc.
• Core system conversion completed in February 2025.
• FHLB advances used for liquidity management.
• Community reach expanded to North Carolina post-merger.
• Correspondent banks support specialized operational needs.

Finance: draft 13-week cash view by Friday.

First National Corporation (FXNC) - Canvas Business Model: Key Activities

You're looking at the core engine of First National Corporation (FXNC) following that transformational Touchstone acquisition. The key activities revolve around deploying capital, managing liabilities, and ensuring the whole operation runs smoothly and within the lines. Honestly, the first half of 2025 was all about integration, but the numbers show they are already realizing scale.

The primary activity is definitely commercial and consumer loan origination and servicing. This is where the asset base growth comes from. For instance, net loans held for investment stood at $1.436 billion at the end of the first quarter of 2025, which was a 49.5% jump year-over-year. By the second quarter of 2025, that figure settled slightly lower at $1.428 billion, but still up 46.1% from the prior year. To give you a sense of the origination scale in that period, single-family origination in Q1 2025 hit $4.7 billion compared to $3.5 billion in Q1 2024, and total commercial volumes were $3.6 billion in Q1 2025, up 18% from the year before.

Next up is deposit gathering and treasury management solutions. You can't lend without deposits, right? Total deposits reached $1.825 billion as of March 31, 2025, a 44.9% increase from the year prior. By June 30, 2025, deposits were $1.803 billion. A key part of managing this liability side is the noninterest-bearing component, which was $540.4 million in Q1 2025, making up 30% of the total. The net interest margin (NIM) reflects how well they are managing the cost of these funds against the yield on assets; it improved from 3.77% in Q1 2025 to 3.95% in Q2 2025.

The overall scale of the business is captured by managing the asset base. While the prompt noted the $2.033 billion asset base at Q1 2025 following the merger, the latest figure reported for total assets at June 30, 2025, was $2.0 billion. The activities here are about efficient deployment and balance sheet management, which is clearly working given the jump in profitability metrics.

For the wealth management side, First National Corporation (FXNC) through First Bank is actively engaged in providing specialized services beyond standard commercial banking. These activities are crucial for fee income diversification and deepening client relationships. You'll find them executing on:

• Wealth management services provision.
• Estate planning execution.
• Investment management of assets.
• Trustee under an agreement roles.
• Trustee under a will services.
• Estate settlement processing.

Finally, maintaining regulatory compliance and operational efficiency is a non-negotiable key activity, especially post-merger. The company incurred pre-tax merger costs of approximately $1.9 million in Q1 2025 related to the Touchstone acquisition. A clear sign of improving efficiency is the drop in the efficiency ratio, which went from 75.44% in the previous period down to 65.11% by Q2 2025. This focus on efficiency is what helped drive adjusted earnings per share to $0.35 in Q1 2025 and then to $0.57 in Q2 2025. They also recently announced a 9.7% increase in quarterly cash dividends on November 13, 2025, showing confidence in sustained performance.

First National Corporation (FXNC) - Canvas Business Model: Key Resources

You're looking at the core assets First National Corporation (FXNC) relies on to execute its business strategy, especially following the recent Touchstone Bankshares, Inc. merger. These aren't just line items; they represent the actual capacity to lend, take deposits, and serve customers across their footprint.

The foundation of First National Corporation's operational strength is its tangible capital base and strong liquidity sources. This is what allows the bank to fund loan growth and meet customer demands, even in potentially volatile times. The balance sheet scale post-merger is significant.

Here's a quick look at the core financial resources as of the end of the first quarter of 2025:

The physical footprint remains a critical resource for community banking, providing face-to-face access points. First National Corporation maintains a focused geographic presence.

• Branch Network: 33 bank branch office locations
• Geographic Footprint: Located throughout Virginia's Shenandoah Valley, Roanoke Valley, Richmond MSA, south-central region of Virginia, and in northern North Carolina
• Other Physical Points: Three loan production offices and one customer service center in a retirement community

The human capital is the final, and arguably most important, resource. The team's expertise drives the execution of the strategy, especially following a major integration.

The experienced management team and banking personnel are key to realizing the benefits of the recent acquisition. Scott Harvard serves as President and Chief Executive Officer. Brad E. Schwartz became the new CFO effective March 31, 2025, bringing extensive Virginia banking and M&A experience to strengthen post-merger execution. The bank also emphasizes a recruiting focus that has brought together a high-caliber team of experienced local bankers in new markets.

The dividend history also speaks to management's confidence in sustained performance; the company increased its annual cash dividend payout every year for the past ten years.

Finance: draft 13-week cash view by Friday.

First National Corporation (FXNC) - Canvas Business Model: Value Propositions

You're looking at what First National Corporation (FXNC) offers its clients-the core reasons they choose First Bank over the competition. It's all about blending the scale of a post-acquisition entity with the feel of a local shop. That community focus is definitely a key differentiator, especially given their footprint.

The value proposition centers on community-focused, relationship-based banking services. First Bank operates 20 branch offices, mostly concentrated in Virginia's Shenandoah Valley, Roanoke Valley, and Richmond regions. Management explicitly states the goal is growth in markets where community engagement is valued. This local presence helps them deliver on the promise of local decision-making, which supports regional economic growth by keeping lending choices close to home, a key advantage over larger, distant institutions.

For businesses and individuals, First National Corporation provides a full suite of commercial, residential, and consumer loan products. This isn't just a small loan book; net loans held for investment reached $1.428 billion as of June 30, 2025, representing a year-over-year increase of 46.1% following the Touchstone acquisition. You can see the breadth of their lending capabilities here:

Plus, they integrate financial planning through integrated wealth management and trust services. This means they help clients manage assets beyond just deposits and loans. They offer services that cover the full lifecycle of wealth management and fiduciary needs. Here's what that looks like in practice:

• Estate planning
• Investment management of assets
• Trustee under an agreement or will
• Estate settlement
• Corporate trustee services and IRA administration

Honestly, the proof of their operational efficiency supporting these services shows up in the numbers. You want to see that the relationship focus isn't costing them too much. The competitive net interest margin (NIM) of 3.95% for Q2 2025 is a solid data point, showing they are effectively managing asset yields-which hit 5.35% in that quarter-while controlling funding costs. This NIM is up from 3.77% in Q1 2025. Furthermore, the efficiency ratio improved to 65.11% in Q2 2025, demonstrating that scale from the recent acquisition is translating into better cost control, which helps them maintain competitive pricing while delivering strong results like the $5.05 million GAAP net income reported for that same quarter.

Finance: draft 13-week cash view by Friday.

First National Corporation (FXNC) - Canvas Business Model: Customer Relationships

First National Corporation, through its subsidiary First Bank, emphasizes a multi-channel approach to customer relationships, balancing its community bank roots with modern digital capabilities.

Long-term, trust-based relationships typical of a community bank define the core ethos; First Bank, established in 1907 in Strasburg, Virginia, leverages its solid local presence for a competitive edge against larger institutions. This commitment is underscored by the fact that First National Corporation has increased its annual cash dividend payout every year for the past ten years, signaling stability and commitment to its shareholder base, which often mirrors its customer base philosophy.

For commercial clients, the focus is on dedicated support. The bank has a wealth management division, First Bank Wealth Management, and recently appointed a Greater Richmond Market Executive in July 2025, suggesting a structure for focused, high-level commercial engagement. Mortgage origination growth in the first quarter of 2025, which was up 27% over 2024 levels including renewals, was explicitly attributed to customer activity and focused service efforts by our dedicated team.

High-touch, personalized service at branch locations remains central to the community bank model. Following the acquisition of Touchstone Bankshares, Inc., the combined entity operates thirty-three bank branch office locations across key markets including the Shenandoah Valley, the Roanoke Valley, and the Richmond MSA. This physical footprint supports the personalized service model.

The bank supports its relationships with robust digital tools. Automated self-service via mobile and internet banking platforms is available through its website, www.fbvirginia.com, and its mobile banking platform, allowing customers to manage loan and deposit products digitally. The operational merger with Touchstone was completed in February 2025, streamlining the digital experience after operating on two core systems in the first quarter of 2025.

Specific support channels include a dedicated customer service center in a retirement community, demonstrating tailored service for specific segments within its operating areas.

Here's a look at the channels First National Corporation uses to maintain customer relationships as of late 2025:

The bank's total assets reached approximately $2.033 billion after the Q1 2025 operational merger, providing a larger base to serve with these relationship strategies.

The relationship management structure supports key business lines, as seen in the Q1 2025 commercial mortgage origination volumes reaching $3.6 billion.

• Dedicated commercial focus evidenced by market executive hires.
• High-touch service supported by 33 physical locations.
• Digital service via mobile and web platforms post-system conversion in February 2025.
• Trust built on a history dating back to 1907.
• Specific support for senior customers via a dedicated service center.

First National Corporation (FXNC) - Canvas Business Model: Channels

You're looking at how First National Corporation (FXNC) gets its value proposition to the customer base, and the physical and digital footprint is quite established following the Touchstone acquisition.

The physical distribution network remains a core component, anchored by a significant number of brick-and-mortar locations across its operational footprint in Virginia and northern North Carolina. This is complemented by specialized offices focused purely on lending origination.

Here's a quick look at the scale of the physical presence as of mid-2025, based on the latest reported figures:

The digital channels are designed to support self-service capabilities, which is important given the reported noninterest income boost from higher ATM and check card income in Q2 2025. First National Corporation (FXNC) invests in its digital infrastructure to provide secure online and mobile banking experiences.

The primary digital and remote access points First National Corporation (FXNC) uses to reach and service customers include:

• Consumer and business mobile banking platforms.
• Internet banking for account access and transactions.
• Remote deposit capture capabilities.

The physical network is further supported by an extensive ATM network across the market area, which contributes to noninterest income streams. The bank's service delivery model blends these physical touchpoints with robust digital tools for account management, bill pay, and funds transfers.

The physical and digital channels work together to serve the customer segments, which span small and medium-sized businesses, individuals, estates, local governmental entities, and non-profit organizations in Virginia. The bank also maintains a customer service center in a retirement community. The loan production offices are specialized, focusing on origination outside the full-service branch structure.

Key channel features First National Corporation (FXNC) emphasizes are:

• Online account management and bill pay.
• Mobile check deposit functionality.
• Access to loan applications and servicing digitally.

Finance: review Q3 2025 deposit growth by channel type by end of next week.

First National Corporation (FXNC) - Canvas Business Model: Customer Segments

You're looking at the core groups First National Corporation (FXNC) serves across its Virginia and northern North Carolina footprint, which is anchored by First Bank and its wealth management arm. The bank holding company's scale, following the Touchstone Bankshares, Inc. acquisition, gives you a baseline for the market it addresses.

As of March 31, 2025, First National Corporation's balance sheet showed Total Assets of $2.033 billion and Total Deposits of $1.825 billion, indicating the scale of the customer base it manages across its services.

Here's how the customer base breaks down based on the services First Bank and First Bank Wealth Management provide:

• Small and medium-sized businesses (SMBs) in the market area: Receive commercial and industrial loans, term loans for capital expenditures, equipment financing, and working capital lines of credit.
• Individuals and families seeking traditional and wealth management services: Use checking, savings, money market accounts, certificates of deposit (CDs), and home equity loans.
• Local governmental entities and non-profit organizations: Access deposit products and specialized financing solutions within the operational footprint.
• Real estate developers and commercial property investors: Utilize construction loans, including residential and land acquisition/development loans, and commercial real estate loans secured by multi-family buildings, industrial/warehouse buildings, hotels, and religious facilities.
• Affluent individuals requiring estate and investment management: Are served by the wealth management division offering estate planning, investment management of assets, trustee under an agreement, trustee under a will, and estate settlement services.

The composition of the funding base shows a reliance on core customer deposits, with Noninterest bearing deposits making up 30% of the total deposits as of March 31, 2025. The estimated amount of uninsured customer deposits on June 30, 2025, was $545.7 million.

The Net Interest Margin (FTE) for the second quarter of 2025 was 3.95%, up from 3.77% in the first quarter of 2025, reflecting improved asset yields and deposit mix from the recent acquisition. Finance: draft 13-week cash view by Friday.

First National Corporation (FXNC) - Canvas Business Model: Cost Structure

You're looking at the cost side of First National Corporation (FXNC) as of late 2025, post-Touchstone integration. The focus here is on controlling the operational spend now that the system conversion is complete.

Interest expense paid on customer deposits and borrowings

The cost of funding is managed through disciplined deposit pricing, which helped support the Net Interest Income (NII) of $18.55 million for the second quarter of 2025. This NII was achieved despite a $15.9 million decrease in average interest-bearing liabilities from the first quarter of 2025.

Noninterest expense with an efficiency ratio of 65.11% (Q2 2025)

The drive for efficiency is clear, with the efficiency ratio improving to 65.11% in Q2 2025, down from 75.44% in Q1 2025. Total noninterest expense for Q2 2025 was $15.2 million, a significant drop of $3.1 million from the prior quarter. The adjusted operating noninterest expense, which strips out merger costs and amortization, settled at $14.67 million for the quarter.

Here's a quick look at the components driving that noninterest expense in Q2 2025:

Personnel costs (salaries and benefits) for 33 branches

First National Corporation, through First Bank, operates thirty-three bank branch office locations across its market area. Personnel costs showed positive movement in Q2 2025; the salaries and benefits expense component saw a sequential decrease of $0.66 million. This reduction followed a period in Q1 2025 where salary and employee benefits expense had increased due to incentives and stock compensation.

Regulatory compliance and FDIC insurance premiums

While specific FDIC insurance premium costs for Q2 2025 aren't isolated, the cost structure was impacted in the preceding quarter. In Q1 2025, there were noted increases in the FDIC insurance assessment contributing to higher operating expenses.

Technology and systems maintenance costs post-merger

The post-merger technology spend is normalizing. In Q2 2025, management noted that duplicative systems costs subsided, contributing to the overall noninterest expense reduction. This follows the completion of the operational merger and system conversion in February 2025, which had caused elevated expenses, including duplicative costs, in Q1 2025. Separately, Q1 2025 saw higher information technology costs related to system upgrades, including a migration to the "cloud".

Finance: draft 13-week cash view by Friday.

First National Corporation (FXNC) - Canvas Business Model: Revenue Streams

You're looking at the core ways First National Corporation (FXNC) brings in money as of late 2025, primarily drawing from the reported results through the third quarter of 2025. The business model is heavily reliant on traditional banking spreads, but non-interest income is a growing piece of the puzzle, especially following the Touchstone acquisition.

Net Interest Income (NII) from loan and investment portfolios remains the largest component. This is the difference between the interest First National Corporation earns on its assets, like loans and investments, and the interest it pays out on liabilities, such as deposits. For the third quarter ending September 30, 2025, the NII stood at $18.3 million. This followed $18.5 million in the second quarter of 2025. The Net Interest Margin (NIM) on a fully taxable equivalent (FTE) basis for Q3 2025 was 3.84%.

Here's a quick look at how the core interest-based revenue trended through the first three quarters of 2025:

Non-interest income saw a sequential increase in the third quarter, reaching $4.5 million. This category bundles several fee-based services. To be fair, the Q3 figure includes a $304 thousand bargain purchase gain related to the Touchstone acquisition. The growth in this stream is supported by several fee sources:

• Higher ATM and check card income.
• Fees for other customer services.
• Income from wealth management services, which includes estate planning and investment management of assets, as well as trustee services under agreement or will.
• Income from title insurance services, which First National Corporation also provides.

Service charges on deposit accounts and treasury management are a component of that total non-interest income. In the first quarter of 2025, service charges on deposits and customer service fees actually decreased sequentially, though this was offset by increases in ATM and check card income during that period. First National Corporation offers treasury management solutions as part of its deposit products.

The ATM and check card transaction fee income is a specific driver within the non-interest income line. This source saw a boost in the third quarter of 2025, contributing to the overall rise in non-interest income to $4.5 million.

Finance: draft 13-week cash view by Friday.