First National (FXNC) risk factors, FY2025 10-K

Risks Related to our Lending Activities and Economic Conditions

1. 01Our business is subject to various lending and other economic risks that could adversely affect our results of operations and financial condition28% rewritten
2. 02Adverse changes in economic conditions in our market areas or adverse conditions in an industry on which a local market in which we do business is dependent could adversely affect our results of operations and financial condition
3. 03The Company’s allowance for credit losses on loans may prove to be insufficient to absorb losses in its loan and securities portfolios
4. 04The Company’s concentration in loans secured by real estate may adversely affect earnings due to changes in the real estate markets
5. 05The Company has a significant exposure in commercial real estate, and loans with this type of collateral are viewed as having more risk of default
6. 06The Company’s loan portfolio contains construction and development loans, and a decline in real estate values and economic conditions would adversely affect the value of the collateral securing the loans and have an adverse effect on the Company’s financial condition
7. 07The Company’s credit standards and its on-going credit assessment processes might not protect it from significant credit losses
8. 08Prepayments of loans and securities could materially impact earnings through a reduction in interest income and fees on loans and interest income on securities
9. 09The Company’s focus on lending to small to mid-sized community-based businesses may increase its credit risk
10. 10The Company relies upon independent appraisals to determine the value of the real estate which secures a significant portion of its loans, and the values indicated by such appraisals may not be realizable if the Company is forced to foreclose upon such loans
11. 11The Company depends on the accuracy and completeness of information about clients and counterparties, and its financial condition could be adversely affected if it relies on misleading information
12. 12Nonperforming assets take significant time to resolve and adversely affect the Company’s results of operations and financial condition
13. 13We are subject to environmental liability risk associated with our lending activities
14. 14Weakness in the secondary residential mortgage loan markets or demand for mortgage loans may adversely affect income
15. 15The Company’s wealth management revenue is directly impacted by the market value of assets under management, which could adversely impact Company profitability

Risks Related to our Industry

1. 16We are subject to interest rate risk and fluctuations in interest rates may negatively affect our results of operations and financial condition
2. 17We rely substantially on deposits obtained from customers in our target markets to provide liquidity and support growth
3. 18Consumers may increasingly decide not to use banks to complete their financial transactions, which could have a material adverse impact on our financial condition and operations25% rewritten
4. 19Competition in our primary market area may limit asset growth and profitability
5. 20The carrying value of intangible assets, such as goodwill and core deposit intangibles, may be adversely affected
6. 21There are risks resulting from the use of models in our business

Risks Related to Operations and Technology

1. 22The Company’s risk-management framework may not be effective in mitigating risk and loss
2. 23Security breaches and other disruptions could compromise our information and expose us to liability or result in the loss of money, which could damage our reputation and our business
3. 24The Company relies on other companies to provide key components of its business infrastructure
4. 25Our business is technology dependent, and an inability to successfully implement technological improvements may adversely affect our ability to be competitive and our results of operations and financial condition53% rewritten
5. 26Loss of any of our key personnel could disrupt our operations and result in reduced revenues or increased expenses
6. 27The success of our business strategies depends on our ability to identify and recruit individuals with experience and relationships in our primary markets
7. 28Difficulties in combining the operations of new or acquired bank branches, loan production offices or entities with the Company’s own operations may prevent the Company from achieving the expected benefits from acquisitions
8. 29The inability of the Company to successfully manage its growth or implement its growth strategy may adversely affect the Company’s results of operations and financial conditions
9. 30Failure to maintain effective systems of internal and disclosure controls could have a material adverse effect on the Company’s results of operation and financial condition
10. 31The Company or any of its subsidiaries is a defendant from time to time in a variety of litigation and other actions
11. 32The Company is subject to claims and litigation pertaining to fiduciary responsibility
12. 33The soundness of other financial institutions could adversely affect the Company
13. 34The operational functions of business counterparties over which the Company may have limited, or no control may experience disruptions that could adversely impact the Company
14. 35Severe weather, pandemics, natural disasters, acts of war or terrorism, and other external events could significantly impact our business

Risks Related to the Regulation of the Company

1. 36Compliance with laws, regulations and supervisory guidance, both new and existing, may adversely affect our business, financial condition and results of operations
2. 37Our earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies
3. 38The Company is subject to stringent capital and liquidity requirements as a result of the Basel III regulatory capital reforms and the Dodd-Frank Act, which could adversely affect our results of operations and future growth
4. 39Legislative or regulatory changes or actions, or significant litigation, could adversely affect the Company or the businesses in which the Company is engaged27% rewritten
5. 40Changes in accounting standards could impact reported earnings and capital
6. 41Changes in tax rates applicable to the Company may cause impairment of deferred tax assets
7. 42Evolving expectations from customers, regulators, investors, and other stakeholders with respect to environmental, social and governance (ESG) practices may impose additional costs on the Company or expose it to new or additional risks80% rewritten
8. 43Climate change and related legislative and regulatory initiatives may result in operational changes and expenditures that could significantly impact the Company’s business68% rewritten

Risks Related to The Company’s Securities

1. 44The Company relies on dividends from its subsidiaries for substantially all of its revenue
2. 45Future issuances of the Company’s common stock could adversely affect the market price of the common stock and could be dilutive
3. 46Current economic conditions or other factors may cause volatility in the Company’s common stock value
4. 47Future sales of our common stock by shareholders or the perception that those sales could occur may cause our common stock price to decline
5. 48The Company’s subordinated debt and junior subordinated debt are superior to its common stock, which may limit its ability to pay dividends on common stock in the future
6. 49The Company’s governing documents and Virginia law contain anti-takeover provisions that could negatively affect its shareholders