The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true v ...

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) First National Corporation, a Virginia-based bank holding company, operates through First Bank, providing diverse financial services across Virginia - First National Corporation is a bank holding company whose primary operating subsidiary is First Bank, a commercial bank chartered under Virginia law[18](index=18&type=chunk) - The Bank offers a full suite of loan (consumer, mortgage, commercial), deposit (checking, savings, treasury management), and wealth management products and services[21](index=21&type=chunk) - The Bank's primary market includes attractive areas along the I-81, I-66, and I-64 corridors in Virginia, serving diverse industries through 20 branch offices and digital platforms[21](index=21&type=chunk) - As of June 30, 2023, the Bank ranked third in its market area with an **11.13% share of total deposits**[23](index=23&type=chunk) - At December 31, 2023, the company employed **224 full-time equivalent employees**[25](index=25&type=chunk) Capital Ratio (First Bank) | Capital Ratio (First Bank) | December 31, 2023 | | :--- | :--- | | Total capital to risk-weighted assets | 14.05% | | Tier 1 capital to risk-weighted assets | 12.82% | | Common equity Tier 1 capital to risk-weighted assets | 12.82% | | Tier 1 capital to average assets | 9.31% | | Capital conservation buffer ratio | 6.05% | [Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) The company faces key risks including economic downturns, interest rate fluctuations, intense competition, cybersecurity threats, reliance on third-party vendors, and extensive regulatory changes - The company's business is directly affected by general economic conditions, with a deterioration potentially leading to increased loan delinquencies, problem assets, and reduced demand for services[66](index=66&type=chunk) - A significant concentration in loans secured by real estate, especially commercial real estate, exposes the company to risks from downturns in the real estate market[70](index=70&type=chunk)[72](index=72&type=chunk) - Profitability is substantially dependent on the net interest margin, which is vulnerable to fluctuations in interest rates. Rising rates in 2022 and 2023 increased unrealized losses in the investment portfolio[87](index=87&type=chunk)[88](index=88&type=chunk) - The company relies on third-party vendors for key components of its business infrastructure, such as data processing and online banking, creating inherent operational risks[100](index=100&type=chunk) - Cybersecurity breaches pose a significant threat, potentially compromising confidential information and exposing the company to liability and reputational damage[97](index=97&type=chunk) - The company is subject to extensive state and federal regulation, and changes in laws or their interpretation could adversely affect business operations and increase costs[117](index=117&type=chunk)[124](index=124&type=chunk) - The company relies on dividends from its subsidiary, First Bank, for substantially all of its revenue, and these dividends are subject to regulatory restrictions[133](index=133&type=chunk) [Unresolved Staff Comments](index=31&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - Not applicable[141](index=141&type=chunk) [Cybersecurity](index=32&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity risk management is overseen by the Chief Risk Officer and the Audit Committee, following the NIST Framework with layered defenses and regular assessments - The cybersecurity program is managed by the Chief Risk Officer, who reports to the CEO and periodically to the Board's Audit Committee[143](index=143&type=chunk) - The information security program is structured around the National Institute of Standards and Technology (NIST) Cybersecurity Framework[144](index=144&type=chunk) - The company employs a layered defensive strategy, including preventative and detective tools, employee training, and regular assessments of infrastructure and systems[145](index=145&type=chunk) - The Audit Committee of the Board of Directors is responsible for overseeing the information security and technology governance programs, receiving quarterly reports from the Chief Risk Officer[149](index=149&type=chunk) [Properties](index=33&type=section&id=Item%202.%20Properties) The company's headquarters is in Strasburg, Virginia, with First Bank operating 20 branches and other facilities, all in good condition - The Company's headquarters is at 112 West King Street, Strasburg, Virginia[151](index=151&type=chunk) - As of December 31, 2023, the Bank operated **20 branches**, a loan production office, and two customer service centers[151](index=151&type=chunk) [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no material pending legal proceedings to which it or its property is subject - There are no material pending legal proceedings to which the Company is a party or to which its property is subject[152](index=152&type=chunk) [Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[152](index=152&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under 'FXNC', with 802 shareholders of record, and repurchased 37,532 shares in 2023 - The company's common stock is traded on the Nasdaq Capital Market under the symbol **\"FXNC\"**[155](index=155&type=chunk) - As of March 19, 2024, there were **802 shareholders of record** and approximately 1,143 beneficial owners[155](index=155&type=chunk) - The company repurchased **37,532 shares** of common stock at a weighted average price of **$15.14** during 2023 under a repurchase plan that expired at year-end[157](index=157&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income declined in 2023 due to increased credit loss provisions, lower net interest income, and higher expenses, while assets grew and capital remained strong despite asset quality deterioration Financial Performance Summary | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **Net Income** | $9.6 million | $16.8 million | | **Diluted EPS** | $1.53 | $2.68 | | **Return on Average Assets** | 0.71% | 1.19% | | **Return on Average Equity** | 8.59% | 15.87% | | **Net Interest Margin** | 3.41% | 3.44% | - The **$7.2 million decrease in net income** was driven by a **$4.3 million increase in provision for credit losses**, a **$2.2 million decrease in net interest income**, and a **$1.6 million increase in noninterest expense**[167](index=167&type=chunk) - The provision for credit losses increased to **$6.2 million** in 2023 from **$1.9 million** in 2022, with net charge-offs rising to **$3.6 million**, including **$2.5 million** related to a purchased third-party loan portfolio[169](index=169&type=chunk)[225](index=225&type=chunk)[259](index=259&type=chunk) - Total assets increased by **$49.9 million to $1.42 billion**, while total deposits decreased slightly by **$7.6 million to $1.23 billion**[233](index=233&type=chunk)[234](index=234&type=chunk) - Non-performing assets increased to **$6.8 million (0.48% of total assets)** at year-end 2023, up from **$2.9 million (0.21% of total assets)** in 2022[246](index=246&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) Net interest income decreased by 5% in 2023 due to higher interest expense, while credit loss provisions surged, noninterest income fell, and noninterest expenses rose - Net interest income decreased by **$2.2 million (5%)** as the increase in cost of funds (interest expense up **$10.5 million**) exceeded the increase in yield on earning assets (interest income up **$8.3 million**)[216](index=216&type=chunk) - The provision for credit losses increased by **$4.3 million to $6.2 million**, comprised of a **$6.0 million** provision for loans, a **$260 thousand** provision for unfunded commitments, and a small recovery for securities[224](index=224&type=chunk) - Noninterest income decreased by **$866 thousand (7%)**, primarily because 2022 results included a **$2.9 million gain** on the sale of an investment, partially offset by a **$2.0 million loss** on securities sales in that same year[228](index=228&type=chunk) - Noninterest expense increased by **$1.6 million (5%)**, with notable increases in salaries and benefits (+$330 thousand), legal and professional fees (+$233 thousand), and ATM/check card expense (+$208 thousand)[230](index=230&type=chunk) [Financial Condition](index=53&type=section&id=Financial%20Condition) Total assets grew to $1.42 billion driven by loan growth, but asset quality weakened, leading to increased credit loss allowances, while deposits shifted and capital remained strong - Total loans increased by **$48.9 million to $969.4 million**, with growth in other real estate (+$28.8 million) and residential real estate (+$12.9 million) loans[241](index=241&type=chunk) - Non-performing assets rose to **$6.8 million**, or **0.70% of total loans**, compared to **$2.7 million**, or **0.29%**, in the prior year, largely attributed to purchased commercial and industrial loans[246](index=246&type=chunk)[259](index=259&type=chunk) - The allowance for credit losses on loans increased to **$12.0 million (1.24% of total loans)** from **$7.4 million (0.81% of total loans)** at year-end 2022[250](index=250&type=chunk) - The securities portfolio decreased by **$14.8 million to $303.2 million** and held gross unrealized losses of **$31.5 million** at year-end[260](index=260&type=chunk) - Total deposits decreased by **$7.6 million**, with noninterest-bearing demand deposits falling by **$48.1 million** while time deposits grew by **$55.5 million**[234](index=234&type=chunk)[269](index=269&type=chunk) - The Bank remained well-capitalized, with a Total risk-based capital ratio of **14.05%** and a Tier 1 leverage ratio of **9.31%** at December 31, 2023[292](index=292&type=chunk)[298](index=298&type=chunk) [Financial Statements and Supplementary Data](index=44&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The audited financial statements for 2023 and 2022 reflect the CECL adoption, with total assets of $1.42 billion and net income of $9.6 million, and note a subsequent acquisition agreement - The company adopted the new credit loss accounting standard, ASU 2016-13 (CECL), on January 1, 2023, resulting in a **$2.2 million increase** to the allowance for credit losses on loans and a net decrease to retained earnings of **$2.0 million**[310](index=310&type=chunk)[374](index=374&type=chunk) Consolidated Balance Sheet Summary (in thousands) | Account | Dec 31, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | $1,419,295 | $1,369,383 | | Loans, net | $957,456 | $913,077 | | Total Deposits | $1,233,726 | $1,241,332 | | **Total Liabilities** | $1,303,024 | $1,261,023 | | **Total Shareholders' Equity** | $116,271 | $108,360 | Consolidated Income Statement Summary (in thousands) | Account | Year Ended Dec 31, 2023 (in thousands) | Year Ended Dec 31, 2022 (in thousands) | | :--- | :--- | :--- | | Net Interest Income | $43,413 | $45,575 | | Provision for Credit Losses | $6,150 | $1,850 | | **Net Income** | **$9,624** | **$16,797** | - Subsequent Event: On March 25, 2024, the Company entered into an agreement to acquire Touchstone Bankshares, Inc. for approximately **$47.0 million** in stock; Touchstone had total assets of **$658.7 million** as of December 31, 2023[535](index=535&type=chunk)[536](index=536&type=chunk) [Controls and Procedures](index=91&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2023, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2023[542](index=542&type=chunk) - There were no changes in the Company's internal control over financial reporting during the fourth quarter of 2023 that have materially affected, or are reasonably likely to materially affect, internal controls[543](index=543&type=chunk) Part III [Directors, Executive Compensation, and Corporate Governance](index=92&type=section&id=Items%2010-14) Information on directors, executive compensation, corporate governance, and related matters is incorporated by reference from the 2024 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Company's Proxy Statement for the 2024 Annual Meeting of Shareholders[548](index=548&type=chunk)[549](index=549&type=chunk)[550](index=550&type=chunk)[551](index=551&type=chunk)[552](index=552&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=93&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including governance documents, material contracts, and required certifications - This section contains a list of all exhibits filed with the Form 10-K, including governance documents, material contracts, and required certifications[556](index=556&type=chunk)

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics a ...

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companie ...

First National Corp. (FXNC) has been on a downward spiral lately with significant selling pressure. After declining 13.5% over the past four weeks, the stock looks well positioned for a trend reversal as it is now in oversold territory and there is strong agreement among Wall Street analysts that the company will report better earnings than they predicted earlier.How to Determine if a Stock is OversoldWe use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whet ...

Financial Performance - Net income for Q3 2023 decreased by $1.3 million, or 30%, to $3.1 million, with diluted earnings per share at $0.50 compared to $0.71 in Q3 2022[143] - For the nine months ended September 30, 2023, net income decreased by $1.5 million, or 13%, to $10.5 million, with diluted earnings per share at $1.67 compared to $1.92 in the same period of 2022[148] - Net income for the three months ended September 30, 2023, decreased by $1.3 million, or 30%, to $3.1 million, with a return on average assets of 0.91%[161] Interest Income and Expenses - Net interest income fell by $1.0 million, or 9%, and total noninterest expenses increased by $701 thousand, or 8%[144] - Net interest income for the three months ended September 30, 2023, decreased by $1.0 million, or 9%, to $10.7 million compared to $11.7 million for the same period in 2022[161] - For the nine months ended September 30, 2023, net interest income decreased by $961 thousand, attributed to a $6.8 million increase in total interest income offset by a $7.8 million increase in total interest expense[173] Asset Quality and Credit Losses - The provision for credit losses decreased by $100 thousand in Q3 2023, reflecting improved asset quality[144] - The provision for credit losses decreased by $100 thousand for the three months ended September 30, 2023, contributing to the offset of net income decline[162] - The provision for credit losses for the nine months ended September 30, 2023, totaled $200 thousand, down from $600 thousand in the same period of the prior year, indicating a positive trend in credit risk management[183] Operational Efficiency - The efficiency ratio for Q3 2023 was 70.67%, compared to 61.09% in Q3 2022, indicating a decline in operational efficiency[153] Interest Rates and Margins - The net interest margin decreased by 23 basis points, with the Federal funds target rate averaging 5.43% in Q3 2023, up from 2.35% a year ago[145] - The net interest margin for the third quarter of 2023 was impacted by a 23-basis point decrease, with the Federal funds target rate averaging 5.43%, compared to 2.35% for the same period last year[166] - The yield on earning assets increased by 68 basis points, partially offsetting the higher cost of funds which rose by 94 basis points[145] Noninterest Income and Expenses - Noninterest income for the third quarter of 2023 increased by $26 thousand, or 1%, to $3.1 million, driven by a 7% increase in ATM and check card fees and a 10% increase in wealth management fees[184] - Noninterest expenses increased by $1.5 million, or 6%, to $28.1 million for the nine-month period ended September 30, 2023, compared to the same period one year ago[189] Loans and Deposits - Total loans for the three months ended September 30, 2023, amounted to $943.452 million, with a taxable yield of 5.31%, up from $890.696 million and a yield of 4.79% in the same period of 2022[178] - Loans totaled $952.5 million at September 30, 2023, representing a $32.0 million, or 5% annualized increase from December 31, 2022[196] - Deposits totaled $1.2 billion on September 30, 2023, which was a $6.2 million decrease from December 31, 2022[208] Assets and Liabilities - The total assets as of September 30, 2023, were $1.355 billion, a decrease from $1.393 billion as of September 30, 2022[178] - Total liabilities decreased by $6.8 million during the nine-month period ended September 30, 2023, primarily from a $6.2 million decrease in total deposits[194] Capital and Regulatory Compliance - The Bank's total capital to risk-weighted assets ratio was 14.80% as of September 30, 2023, exceeding the regulatory minimum requirements[216] - The Bank met all capital adequacy requirements, including a capital conservation buffer ratio of 6.80% as of September 30, 2023[216] - The Bank qualified as "well capitalized" under prompt corrective action requirements as of September 30, 2023[217] Miscellaneous - The effective tax rate for the first nine months of 2023 was 19.3%, compared with 19.0% for the same period in 2022[192] - The estimated amount of uninsured customer deposits increased to $346.9 million as of September 30, 2023, from $261.7 million on December 31, 2022[210] - The Company authorized a stock repurchase plan of up to $5.0 million, repurchasing 37,532 shares at an average price of $15.14 per share during the first nine months of 2023[218]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-38874 (Exact name of registrant as specified in its charter) Virginia 54-1232965 (State or other jurisdiction of incorporat ...

Financial Performance - Net income for Q1 2023 increased by $120 thousand, or 3%, to $3.8 million, with earnings per diluted share at $0.61 compared to $0.60 in Q1 2022[142]. - Net income for Q1 2023 increased by $120 thousand, or 3%, to $3.8 million, or $0.61 per diluted share, compared to $3.7 million, or $0.60 per diluted share in Q1 2022[156]. - The return on average assets was 1.15% and return on average equity was 14.2% for Q1 2023, compared to 1.06% and 13.4% in Q1 2022[142]. Income and Expenses - Net interest income rose by $628 thousand, or 6%, driven by a $2.5 million, or 23%, increase in total interest income, despite a $1.9 million, or 394%, increase in total interest expense[143][144]. - Net interest income rose by $628 thousand, or 6%, driven by a $2.5 million increase in total interest income, despite a $1.9 million increase in total interest expense[157]. - Total noninterest income increased by $67 thousand, or 2%, primarily from service charges on deposits and ATM fees[147]. - Total noninterest income increased by $67 thousand, or 3%, primarily due to higher service charges on deposits and ATM fees[169]. - Total noninterest expense increased by $556 thousand, or 6%, mainly due to higher salaries and employee benefits, marketing, and other operating expenses[148]. - Total noninterest expense increased by $556 thousand, or 6%, mainly from higher salaries and employee benefits, marketing, and ATM expenses[170]. - The efficiency ratio for Q1 2023 was 65.49%, compared to 64.38% in Q1 2022, indicating a slight decline in operational efficiency[150]. Credit Quality - The allowance for credit losses on loans totaled $8.7 million, or 0.95% of total loans, as of March 31, 2023, up from 0.81% on December 31, 2022[146]. - There was no provision for credit losses recorded in Q1 2023 or Q1 2022, indicating stable credit quality[146]. - The company recorded no provision for credit losses for both Q1 2023 and Q1 2022[167]. - Non-performing assets totaled $1.8 million, representing approximately 0.13% of total assets, down from 0.21% at the end of 2022[182]. - Other potential problem loans decreased to $1.7 million from $2.3 million at December 31, 2022, indicating improved asset quality management[183]. Assets and Liabilities - Total assets increased to $1.4 billion, up $2.9 million from December 31, 2022, primarily due to a $13.7 million increase in interest-bearing deposits[173]. - Total liabilities decreased slightly by $548 thousand, with total deposits increasing by $193 thousand, while noninterest-bearing deposits decreased by $17.3 million[174]. - Total shareholders' equity rose by $3.5 million, driven by a $955 thousand increase in retained earnings despite cash dividend payments of $0.15 per share[175]. - Loans totaled $918.0 million, a decrease of $2.6 million from December 31, 2022, while average loans increased by $1.0 million from the previous quarter[176]. - Securities portfolio decreased to $315.5 million, down $2.5 million or 0.8% from December 31, 2022, with gross unrealized losses in the available for sale portfolio totaling $21.3 million[186]. - Deposits totaled $1.2 billion, an increase of $193 thousand from December 31, 2022, with average deposits decreasing by $42.7 million or 3% compared to the previous quarter[188]. Liquidity and Capital - On-balance sheet liquidity totaled $142.1 million, an increase from $129.4 million at December 31, 2022[192]. - The Bank had no borrowings from the Bank Term Funding Program during the first quarter of 2023, despite having access to liquidity sources totaling $471.2 million[190]. - As of March 31, 2023, the total available off-balance sheet liquidity for the Bank was $329.094 million, an increase from $287.762 million at December 31, 2022[193]. - The Bank's total available secured lines of credit amounted to $278.094 million as of March 31, 2023, compared to $236.762 million at the end of 2022[193]. - The Bank's common equity Tier 1 capital ratio was 13.94% as of March 31, 2023, exceeding the regulatory minimum requirement of 7.0%[198]. - The capital conservation buffer ratio stood at 6.88% as of March 31, 2023, indicating a strong capital position above the required buffer[198]. - The Bank's Tier 1 capital to risk-weighted assets ratio was 13.94% as of March 31, 2023, indicating a solid capital base[198]. Commitments and Stock Activity - Commitments to extend credit were $170.2 million at March 31, 2023, up from $158.3 million at December 31, 2022[204]. - The Bank had $17.6 million in outstanding standby letters of credit as of March 31, 2023, slightly down from $18.0 million at December 31, 2022[207]. - The Company authorized a stock repurchase plan of up to $5.0 million, with 1,557 shares repurchased at an average price of $16.06 per share during Q1 2023[200]. - The Bank did not pledge securities to, or borrow from, the BTFP facility during the first quarter of 2023, despite having $91.2 million in eligible securities[194]. - The Company recorded an adjustment for unfunded commitments of $153 thousand for the adoption of ASC Topic 326 as of January 1, 2023[206].

Financial Performance - Net income increased by $6.4 million to $16.8 million, or $2.68 per diluted share, for the year ended December 31, 2022, compared to $10.4 million, or $1.86 per diluted share, for the same period in 2021[159]. - Net interest income increased by $10.7 million, or 31%, for the year ended December 31, 2022, driven by a $12.3 million increase in total interest income[162]. - Noninterest income rose by $2.4 million, primarily from a $2.9 million gain recognized from the sale of an interest in a company owned by First Bank Financial Services, Inc.[165]. - Return on average assets was 1.19% and return on average equity was 15.87% for the year ended December 31, 2022, compared to 0.88% and 10.30%, respectively, for the year ended December 31, 2021[160]. - The efficiency ratio improved to 61.75% in 2022 from 64.44% in 2021, indicating enhanced operational efficiency[175]. Asset and Liability Management - Total assets decreased to $1,369.4 million as of December 31, 2022, from $1,389.4 million in 2021[168]. - Total liabilities decreased by $11.4 million to $1.3 billion at December 31, 2022, with total deposits decreasing by $7.4 million[220]. - Total shareholders' equity decreased by $8.6 million to $108.4 million at December 31, 2022, mainly due to a $22.8 million decrease in accumulated other comprehensive income[221]. - As of December 31, 2022, total deposits amounted to $1.2 billion, a slight decrease of $7.4 million from the previous year[254]. Loan Performance - The provision for loan losses increased by $2.5 million, resulting in a total allowance for loan losses of $7.4 million, or 0.81% of total loans, at December 31, 2022[164]. - Loans increased by $95.4 million to $920.5 million at December 31, 2022, with residential real estate loans increasing by $39.4 million[225]. - Non-performing assets totaled $2.9 million at December 31, 2022, representing approximately 0.21% of total assets[229]. - The allowance for loan losses increased to $7.4 million at December 31, 2022, representing 0.81% of total loans, up from 0.69% in the prior year[235]. - The Bank modified loans totaling $9.1 million at December 31, 2022, all in the commercial real estate loan portfolio, which were performing under modified terms[234]. Interest Income and Expense - Interest income from loans increased to $41,720,000 in 2022 from $32,797,000 in 2021, representing a growth of 27.5%[177]. - Total net interest income rose to $45,575,000 in 2022 compared to $34,840,000 in 2021, marking an increase of 30.9%[177]. - Total interest income rose by $12.3 million, or 33%, driven by a $212.0 million, or 19%, increase in average earning assets[206]. - Total interest expense increased by $1.5 million, or 66%, due to a $141.8 million, or 19%, increase in average interest-bearing liabilities[206]. Capital Management - The Company authorized a stock repurchase plan of up to $5.0 million, with no shares repurchased during the year ended December 31, 2022[281]. - Common equity Tier 1 capital increased to $132,103 million in 2022 from $120,224 million in 2021, reflecting a growth of approximately 9.8%[277]. - Total risk-based capital rose to $139,549 million in 2022, up from $125,934 million in 2021, indicating an increase of about 10.9%[277]. - The common equity Tier 1 capital ratio decreased to 13.82% in 2022 from 14.09% in 2021, while the total capital ratio also fell to 14.60% from 14.76%[277]. Regulatory Compliance - The Bank's regulatory capital ratios met all requirements, including a common equity Tier 1 capital ratio of 7.0%[275]. - First Bank remained well-capitalized as of December 31, 2022, meeting all regulatory capital requirements[285]. Risk Management - The Company manages risks associated with third-party lending programs through minimum credit scores and robust performance analysis[202]. - The Board Loan Committee reviews all loans greater than $1.0 million and meets at least twice per quarter to oversee risk management[191]. - The Bank's loan policy includes approval limits for individual loan officers based on their position and experience to manage risk effectively[191].