Exhibit

Exhibit 99.1

First National Corporation Announces 40% Increase in Second Quarter Net Income

STRASBURG, Va., July 24, 2018 --- First National Corporation (the “Company” or “First National”) (OTC: FXNC) today reported net income of $2.5 million and earnings per share of $0.49 for the second quarter ended June 30, 2018. This was a $695 thousand, or 40%, increase when compared to net income of $1.8 million and earnings per share of $0.36 for the second quarter of 2017. The increase in net income resulted primarily from a $582 thousand, or 9%, increase in net interest income and a $183 thousand decrease in income tax expense.

Select highlights for the second quarter of 2018:


•	Return on average equity of 16.23%


•	Return on average assets of 1.29%


•	Net interest income increased $582 thousand, or 9%


•	Noninterest-bearing deposits increased $20.1 million, or 11%


•	Net loans increased $27.5 million, or 6%


•	Efficiency ratio of 64.17%

“The Company continued to demonstrate outstanding financial performance in the second quarter,” said Scott C. Harvard, president and chief executive officer of First National. Harvard added, “The increase in net interest income had a large impact on performance as the Bank experienced both earning asset growth and net interest margin expansion. We were especially pleased with noninterest-bearing demand deposit growth of 11% over last year, which contributed to a low cost of funds. The Bank plans to continue seeking high quality loan and deposit relationships while maintaining focus on efficient operations.”

BALANCE SHEET

Total assets of First National increased $27.7 million to $763.4 million at June 30, 2018, compared to one year ago. The earning asset composition changed favorably as loans, net of the allowance for loan losses, increased $27.5 million, or 6%, while securities and interest-bearing deposits in banks decreased $1.3 million, or 1%, when comparing the periods.

Total deposits increased $24.7 million, or 4%, to $686.5 million, compared to $661.8 million at June 30, 2017. The deposit portfolio composition also changed favorably as noninterest-bearing deposits increased $20.1 million, or 11%, savings and interest-bearing deposits increased $5.3 million, and time deposits decreased $629 thousand. Noninterest-bearing deposits increased to 29% of total deposits compared to 27% one year ago.

Shareholders’ equity increased $5.7 million to $61.6 million, compared to $56.0 million one year ago from retained earnings. Tangible common equity increased $6.2 million, or 11%, to $61.0 million, compared to $54.7 million at June 30, 2017. The Company’s wholly-owned banking subsidiary, First Bank, was considered well-capitalized based on regulatory requirements at the end of the quarter.

ANALYSIS OF THE THREE MONTH PERIOD

Net interest income increased $582 thousand, or 9%, to $6.8 million, compared to $6.2 million for the same period in 2017. The increase resulted from a higher net interest margin and higher average earning assets. Average earning assets increased 5%, and the net interest margin increased 13 basis points to 3.86%, compared to 3.73% for the same period in 2017. The increase in the net interest margin resulted from a 28 basis point increase in the yield on total earning assets, which was partially offset by a 15 basis point increase in interest expense as a percent of average earning assets.

The higher yield on earning assets was attributable to an increase in yields on loans, securities, and interest-bearing deposits in banks, which all benefited from increases in market rates. The 28 basis point increase in the yield on loans had the largest impact on the increase in the yield on earning assets, when comparing the periods.

The increase in interest expense as a percent of average earning assets was primarily attributable to higher interest rates paid on interest-bearing deposits. The cost of interest-bearing checking accounts and money market accounts had the largest impact as their costs increased by 25 basis points and 53 basis points, respectively, when comparing the periods.

Noninterest income increased $89 thousand, or 4%, to $2.1 million, compared to $2.0 million for the same period of 2017. Wealth management revenue increased $54 thousand, or 15%, and service charges on deposits increased $49 thousand, or 7%, compared to the same period one year ago.

Noninterest expense increased $159 thousand, or 3%, to $5.9 million, compared to $5.7 million for the same period one year ago. This was primarily attributable to a $105 thousand, or 3%, increase in salaries and employee benefits, a $39 thousand increase in occupancy expense, and a $97 thousand increase in other operating expenses. The increases in salaries and employee benefits and occupancy resulted primarily from the expansion of the Company's banking subsidiary, First Bank, into the Richmond, Virginia market during the fourth quarter of 2017. The increases in expenses were partially offset by a $32 thousand decrease in postage expense and a $40 thousand decrease in amortization expense.

Income before taxes increased by $512 thousand, or 20%, to $3.0 million, compared to the same period one year ago. Although income before taxes increased, income tax expense decreased by $183 thousand because of the new 21% federal corporate income tax rate established by the Tax Cuts and Jobs Act enacted in December 2017.

ANALYSIS OF THE SIX MONTH PERIOD

Net interest income increased $1.1 million, or 9%, to $13.4 million, compared to $12.2 million for the same period in 2017. The increase resulted from a higher net interest margin and higher average earning assets. Average earning assets increased 5%, and the net interest margin increased 12 basis points to 3.83%, compared to 3.71% for the same period in 2017. The increase in the net interest margin resulted from a 24 basis point increase in the yield on total earning assets, which was partially offset by a 13 basis point increase in interest expense as a percent of average earning assets.

The higher yield on earning assets was attributable to an increase in yields on loans, securities, and interest-bearing deposits in banks, which all benefited from increases in market rates. The 26 basis point increase in the yield on loans had the largest impact on the increase in the yield on earning assets, when comparing the periods.

The increase in interest expense as a percent of average earning assets was primarily attributable to higher interest rates paid on interest-bearing deposits. The cost of interest-bearing checking accounts and money market accounts had the largest impact as their costs increased by 20 basis points and 51 basis points, respectively, when comparing the periods.

Noninterest income increased $781 thousand, or 20%, to $4.7 million, compared to $3.9 million for the same period of 2017. This was primarily a result of a $441 thousand increase in income from bank owned life insurance, a $153 thousand increase in other operating income, and a $114 thousand increase in wealth management revenue. The increase in income from bank owned life insurance was attributable to a $469 thousand life insurance benefit recorded during the first quarter of 2018. The increase in other operating income was primarily attributable to the termination of the pension plan and the subsequent distribution of plan assets, which increased other operating income by $126 thousand.

Noninterest expense increased $274 thousand, or 2%, to $11.7 million, compared to $11.5 million for the same period one year ago. This was primarily attributable to a $246 thousand, or 4%, increase in salaries and employee benefits, a $72 thousand increase in occupancy expense, and a $137 thousand increase in other operating expenses. The increases in salaries and employee benefits and occupancy resulted primarily from the expansion of First Bank into the Richmond market during the fourth quarter of 2017. The increases in expenses were partially offset by a $84 thousand decrease in

telecommunications expense and a $78 thousand decrease in amortization expense. Telecommunication expense decreased primarily from a refund received in the first quarter of 2018 from over-billed services in prior periods.

Income before taxes increased by $1.5 million, or 33%, to $6.2 million, compared to the same period one year ago. Although income before taxes increased, income tax expense decreased by $295 thousand because of the new 21% federal corporate income tax rate established by the Tax Cuts and Jobs Act enacted in December 2017.

LOAN LOSS PROVISION/ASSET QUALITY

There was no provision for loan losses for the three months ended June 30, 2018 and 2017. Net charge-offs totaled $233 thousand compared to $7 thousand for the same period one year ago.

The provision for loan losses totaled $100 thousand for the six months ended June 30, 2018, compared to no provision for loan losses for the same period one year ago. Net charge-offs totaled $387 thousand for the six months ended June 30, 2018, compared to net recoveries of $123 for the same period one year ago.

Nonperforming assets totaled $2.4 million, or 0.31% of total assets at June 30, 2018, compared to $2.2 million, or 0.29% of total assets, one year ago. The allowance for loan losses totaled $5.0 million at June 30, 2018 and $5.4 million at June 30, 2017, representing 0.95% and 1.08% of total loans, respectively.

FORWARD-LOOKING STATEMENTS

Certain information contained in this discussion may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company’s future operations and are generally identified by phrases such as “the Company expects,” “the Company believes” or words of similar import. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For details on factors that could affect expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, and other filings with the Securities and Exchange Commission.

ABOUT FIRST NATIONAL CORPORATION

First National Corporation (OTC: FXNC) is the parent company and bank holding company of First Bank, a community bank that first opened for business in 1907 in Strasburg, Virginia. The Bank offers loan and deposit products and services through its website, www.fbvirginia.com, its mobile banking platform, a network of ATMs located throughout its market area, a loan production office, a customer service center in a retirement community, and 15 bank branch office locations located throughout the Shenandoah Valley and central regions of Virginia. In addition to providing traditional banking services, the Bank operates a wealth management division under the name First Bank Wealth Management. First Bank also owns First Bank Financial Services, Inc., which invests in entities that provide investment services and title insurance.

CONTACTS

Scott C. Harvard M. Shane Bell

President and CEO Executive Vice President and CFO

(540) 465-9121 (540) 465-9121

sharvard@fbvirginia.com sbell@fbvirginia.com

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)



	(unaudited) For the Quarter Ended
	June 30, 2018		March 31, 2018			December 31, 2017			September 30, 2017		June 30, 2017
Income Statement
Interest income
Interest and fees on loans	$	6,546	$	6,305		$	6,365		$	6,138	$	5,933
Interest on deposits in banks	186		160			96			92		86
Interest on securities
Taxable interest	776		680			636			637		634
Tax-exempt interest	156		145			147			148		145
Dividends on restricted securities	22		22			21			21		21
Total interest income	$	7,686	$	7,312		$	7,265		$	7,036	$	6,819
Interest expense
Interest on deposits	$	665	$	590		$	489		$	446	$	405
Interest on subordinated debt	89		89			91			91		89
Interest on junior subordinated debt	101		86			80			79		76
Total interest expense	$	855	$	765		$	660		$	616	$	570
Net interest income	$	6,831	$	6,547		$	6,605		$	6,420	$	6,249
Provision for loan losses	—		100			100			—		—
Net interest income after provision for loan losses	$	6,831	$	6,447		$	6,505		$	6,420	$	6,249
Noninterest income
Service charges on deposit accounts	$	784	$	762		$	778		$	760	$	735
ATM and check card fees	555		519			596			516		527
Wealth management fees	409		407			386			359		355
Fees for other customer services	151		153			162			131		137
Income from bank owned life insurance	77		559			408			117		102
Net gains (losses) on securities	—		—			(114		)	11		13
Net gains on sale of loans	15		9			51			54		34
Other operating income	76		224			89			69		75
Total noninterest income	$	2,067	$	2,633		$	2,356		$	2,017	$	1,978
Noninterest expense
Salaries and employee benefits	$	3,227	$	3,383		$	3,338		$	3,221	$	3,122
Occupancy	387		400			388			379		348
Equipment	420		423			428			400		400
Marketing	161		109			166			138		136
Supplies	88		80			88			81		105
Legal and professional fees	223		191			228			216		245
ATM and check card expense	211		203			209			205		229
FDIC assessment	66		82			76			84		77
Bank franchise tax	118		115			111			111		110
Telecommunications expense	98		36			103			95		108
Data processing expense	170		162			165			153		152
Postage expense	42		61			14			62		74
Amortization expense	120		131			141			151		160
Other real estate owned expense (income), net	1		(23		)	(192		)	—		4
Net loss on disposal of premises and equipment	—		—			252			—		—
Other operating expense	532		513			506			511		435
Total noninterest expense	$	5,864	$	5,866		$	6,021		$	5,807	$	5,705
Income before income taxes	$	3,034	$	3,214		$	2,840		$	2,630	$	2,522
Income tax expense	583		527			1,523			798		766
Net income	$	2,451	$	2,687		$	1,317		$	1,832	$	1,756

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)



	(unaudited) For the Quarter Ended
	June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
Common Share and Per Common Share Data
Net income, basic	$	0.49		$	0.54		$	0.27		$	0.37		$	0.36
Weighted average shares, basic	4,952,712			4,949,112			4,945,175			4,943,301			4,940,904
Net income, diluted	$	0.49		$	0.54		$	0.27		$	0.37		$	0.36
Weighted average shares, diluted	4,954,265			4,952,373			4,948,981			4,946,128			4,942,726
Shares outstanding at period end	4,953,356			4,952,575			4,945,702			4,945,056			4,941,604
Tangible book value at period end	$	12.31		$	11.89		$	11.57		$	11.42		$	11.08
Cash dividends	$	0.05		$	0.05		$	0.035		$	0.035		$	0.035

Key Performance Ratios
Return on average assets	1.29		%	1.45		%	0.71		%	1.00		%	0.96		%
Return on average equity	16.23		%	18.47		%	9.01		%	12.78		%	12.79		%
Net interest margin	3.86		%	3.79		%	3.86		%	3.79		%	3.73		%
Efficiency ratio ⁽¹⁾	64.17		%	62.39		%	63.48		%	66.38		%	66.71		%

Average Balances
Average assets	$	762,626		$	751,164		$	736,745		$	729,651		$	730,838
Average earning assets	715,163			704,947			689,338			681,800			682,132
Average shareholders’ equity	60,592			58,979			57,973			56,857			55,068

Asset Quality
Loan charge-offs	$	294		$	206		$	223		$	243		$	161
Loan recoveries	61			52			148			100			154
Net charge-offs	233			154			75			143			7
Non-accrual loans	2,330			682			937			2,121			1,913
Other real estate owned, net	68			—			326			250			250
Nonperforming assets	2,398			682			1,263			2,371			2,163
Loans 30 to 89 days past due, accruing	3,408			2,602			4,223			1,960			1,368
Loans over 90 days past due, accruing	549			773			183			89			151
Troubled debt restructurings, accruing	273			278			282			287			291
Special mention loans	3,988			5,365			5,225			9,677			10,378
Substandard loans, accruing	3,798			9,003			8,863			9,218			9,295

Capital Ratios ⁽²⁾
Total capital	$	71,026		$	69,435		$	67,624		$	71,318		$	69,325
Tier 1 capital	65,987			64,163			62,298			66,017			63,881
Common equity tier 1 capital	65,987			64,163			62,298			66,017			63,881
Total capital to risk-weighted assets	13.47		%	13.52		%	13.12		%	13.91		%	13.82		%
Tier 1 capital to risk-weighted assets	12.52		%	12.50		%	12.09		%	12.87		%	12.73		%
Common equity tier 1 capital to risk-weighted assets	12.52		%	12.50		%	12.09		%	12.87		%	12.73		%
Leverage ratio	8.66		%	8.55		%	8.46		%	9.06		%	8.76		%

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)



	(unaudited) For the Quarter Ended
	June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
Balance Sheet
Cash and due from banks	$	13,501		$	11,185		$	11,358		$	9,162		$	9,801
Interest-bearing deposits in banks	27,762			58,092			28,628			24,480			40,937
Securities available for sale, at fair value	106,707			93,699			89,255			93,102			89,741
Securities held to maturity, at carrying value	45,701			46,791			48,208			49,376			50,824
Restricted securities, at cost	1,590			1,590			1,570			1,570			1,570
Loans held for sale	1,195			68			438			660			999
Loans, net of allowance for loan losses	525,894			515,664			516,875			509,406			498,389
Other real estate owned, net of valuation allowance	68			—			326			250			250
Premises and equipment, net	19,633			19,833			19,891			20,510			20,501
Accrued interest receivable	2,073			1,869			1,916			1,886			1,728
Bank owned life insurance	13,787			13,711			13,967			14,232			14,115
Core deposit intangibles, net	679			799			930			1,071			1,222
Other assets	4,774			4,553			5,748			5,798			5,580
Total assets	$	763,364		$	767,854		$	739,110		$	731,503		$	735,657

Noninterest-bearing demand deposits	$	196,839		$	189,460		$	180,912		$	179,351		$	176,780
Savings and interest-bearing demand deposits	367,399			378,330			361,417			350,879			362,128
Time deposits	122,291			125,035			122,651			126,032			122,920
Total deposits	$	686,529		$	692,825		$	664,980		$	656,262		$	661,828
Subordinated debt	4,956			4,952			4,948			4,943			4,939
Junior subordinated debt	9,279			9,279			9,279			9,279			9,279
Accrued interest payable and other liabilities	952			1,105			1,749			3,485			3,644
Total liabilities	$	701,716		$	708,161		$	680,956		$	673,969		$	679,690

Preferred stock	$	—		$	—		$	—		$	—		$	—
Common stock	6,192			6,191			6,182			6,181			6,177
Surplus	7,346			7,312			7,260			7,238			7,177
Retained earnings	50,313			48,109			45,670			44,368			42,709
Accumulated other comprehensive loss, net	(2,203		)	(1,919		)	(958		)	(253		)	(96		)
Total shareholders’ equity	$	61,648		$	59,693		$	58,154		$	57,534		$	55,967
Total liabilities and shareholders’ equity	$	763,364		$	767,854		$	739,110		$	731,503		$	735,657

Loan Data
Mortgage loans on real estate:
Construction and land development	$	37,350		$	33,941		$	35,927		$	37,182		$	36,783
Secured by farm land	975			848			646			657			666
Secured by 1-4 family residential	211,101			208,338			208,177			203,896			205,114
Other real estate loans	223,387			221,504			221,610			221,497			215,076
Loans to farmers (except those secured by real estate)	476			403			822			525			511
Commercial and industrial loans (except those secured by real estate)	40,467			38,850			37,941			33,922			30,690
Consumer installment loans	12,315			12,140			12,101			12,047			9,938
Deposit overdrafts	231			222			232			196			245
All other loans	4,631			4,690			4,745			4,785			4,810
Total loans	$	530,933		$	520,936		$	522,201		$	514,707		$	503,833
Allowance for loan losses	(5,039		)	(5,272		)	(5,326		)	(5,301		)	(5,444		)
Loans, net	$	525,894		$	515,664		$	516,875		$	509,406		$	498,389

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)



	(unaudited) For the Quarter Ended
	June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017
Reconciliation of Tax-Equivalent Net Interest Income
GAAP measures:
Interest income – loans	$	6,546		$	6,305		$	6,365		$	6,138		$	5,933
Interest income – investments and other	1,140			1,007			900			898			886
Interest expense – deposits	(665		)	(590		)	(489		)	(446		)	(405		)
Interest expense – subordinated debt	(89		)	(89		)	(91		)	(91		)	(89		)
Interest expense – junior subordinated debt	(101		)	(86		)	(80		)	(79		)	(76		)
Total net interest income	$	6,831		$	6,547		$	6,605		$	6,420		$	6,249
Non-GAAP measures:
Tax benefit realized on non-taxable interest income – loans	$	11		$	10		$	17		$	18		$	18
Tax benefit realized on non-taxable interest income – municipal securities	41			39			76			76			74
Total tax benefit realized on non-taxable interest income	$	52		$	49		$	93		$	94		$	92
Total tax-equivalent net interest income	$	6,883		$	6,596		$	6,698		$	6,514		$	6,341

FIRST NATIONAL CORPORATION

Year-to-Date Performance Summary

(in thousands, except share and per share data)



	(unaudited) For the Six Months Ended
	June 30, 2018			June 30, 2017
Income Statement
Interest income
Interest and fees on loans	$	12,851		$	11,579
Interest on deposits in banks	346			147
Interest on securities
Taxable interest	1,456			1,296
Tax-exempt interest	301			288
Dividends on restricted securities	44			41
Total interest income	$	14,998		$	13,351
Interest expense
Interest on deposits	$	1,255		$	788
Interest on subordinated debt	178			178
Interest on junior subordinated debt	187			144
Total interest expense	$	1,620		$	1,110
Net interest income	$	13,378		$	12,241
Provision for loan losses	100			—
Net interest income after provision for loan losses	$	13,278		$	12,241
Noninterest income
Service charges on deposit accounts	$	1,546		$	1,490
ATM and check card fees	1,074			1,028
Wealth management fees	816			702
Fees for other customer services	304			277
Income from bank owned life insurance	636			195
Net gains (losses) on securities	—			13
Net gains on sale of loans	24			67
Other operating income	300			147
Total noninterest income	$	4,700		$	3,919
Noninterest expense
Salaries and employee benefits	$	6,610		$	6,364
Occupancy	787			715
Equipment	843			808
Marketing	270			272
Supplies	168			196
Legal and professional fees	414			442
ATM and check card expense	414			391
FDIC assessment	148			156
Bank franchise tax	233			214
Telecommunications expense	134			218
Data processing expense	332			302
Postage expense	103			135
Amortization expense	251			329
Other real estate owned expense (income), net	(22		)	6
Other operating expense	1,045			908
Total noninterest expense	$	11,730		$	11,456
Income before income taxes	$	6,248		$	4,704
Income tax expense	1,110			1,405
Net income	$	5,138		$	3,299

FIRST NATIONAL CORPORATION

Year-to-Date Performance Summary

(in thousands, except share and per share data)



	(unaudited) For the Six Months Ended
	June 30, 2018			June 30, 2017
Common Share and Per Common Share Data
Net income, basic	$	1.04		$	0.67
Weighted average shares, basic	4,950,922			4,938,178
Net income, diluted	$	1.04		$	0.67
Weighted average shares, diluted	4,953,328			4,940,191
Shares outstanding at period end	4,953,356			4,941,604
Tangible book value at period end	$	12.31		$	11.08
Cash dividends	$	0.10		$	0.07

Key Performance Ratios
Return on average assets	1.37		%	0.92		%
Return on average equity	17.33		%	12.29		%
Net interest margin	3.83		%	3.71		%
Efficiency ratio ⁽¹⁾	63.27		%	68.09		%

Average Balances
Average assets	$	756,959		$	722,820
Average earning assets	710,083			674,699
Average shareholders’ equity	59,799			54,118

Asset Quality
Loan charge-offs	$	500		$	267
Loan recoveries	113			390
Net charge-offs (recoveries)	387			(123		)

Reconciliation of Tax-Equivalent Net Interest Income
GAAP measures:
Interest income – loans	$	12,851		$	11,579
Interest income – investments and other	2,147			1,772
Interest expense – deposits	(1,255		)	(788		)
Interest expense – subordinated debt	(178		)	(178		)
Interest expense – junior subordinated debt	(187		)	(144		)
Total net interest income	$	13,378		$	12,241
Non-GAAP measures:
Tax benefit realized on non-taxable interest income – loans	$	21		$	37
Tax benefit realized on non-taxable interest income – municipal securities	80			148
Total tax benefit realized on non-taxable interest income	$	101		$	185
Total tax-equivalent net interest income	$	13,479		$	12,426

⁽¹⁾ The efficiency ratio is computed by dividing noninterest expense excluding other real estate owned income/expense, amortization of intangibles, and gains and losses on disposal of premises and equipment by the sum of net interest income on a tax-equivalent basis and noninterest income, excluding gains and losses on sales of securities. Tax-equivalent net interest income is calculated by adding the tax benefit realized from interest income that is nontaxable to total interest income then subtracting total interest expense. The tax rate utilized in calculating the tax benefit is 21% for 2018 and 34% for 2017. See the tables above for tax-equivalent net interest income and reconciliations of net interest income to tax-equivalent net interest income. The efficiency ratio is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. Such information is not prepared in accordance with U.S. generally accepted accounting principles (GAAP) and should not be construed as such. Management believes, however, such financial information is meaningful to the reader in understanding operational performance, but cautions that such information not be viewed as a substitute for GAAP.

⁽²⁾ All capital ratios reported are for First Bank.