FXNC

First National Corp($FXNC) CEO Makes Consecutive Purchases Amid 22% Stock Decline, Betting on Long-Term Value Despite Post-Merger Earnings Slump

05/09/2025 18:53

First National Corp ($FXNC) CEO Brad Schwartz has captured investor attention with consecutive stock purchases amid recent share price declines. According to SEC filings, Schwartz acquired a total of 2,000 shares—1,000 shares each on May 6 and May 8—for approximately $39,170. Both transactions were executed pursuant to a Rule 10b5-1 plan, indicating they were made according to a predetermined schedule rather than in response to immediate market conditions. These purchases come as $FXNC shares have fallen approximately 22% from their December peak. The decline has been particularly pronounced since early April. After maintaining a level around $22 through late March, the stock dropped to $20.29 on April 3, then continued falling to $18.60 by mid-April. It has recently staged a modest recovery, trading in the mid-$19 range. Schwartz's buying represents the most notable insider activity since a series of significant purchases by board members last summer. Director James R. Wilkins III made approximately 15 separate purchases totaling 18,020 shares at an average price of $15.25 throughout June and July 2024. Additionally, Director Kirtesh Patel acquired 7,500 shares at $15.56 on July 3, 2024. Following these insider purchases, the stock steadily climbed, exceeding $25 by the end of 2024. $FXNC is a regional bank holding company headquartered in Virginia that completed its merger with Touchstone Bankshares on October 1, 2024. This strategic acquisition added approximately $664.3 million in assets and $479.3 million in loans, bringing the company's total assets to $2 billion. The merger represents a significant milestone in the company's growth strategy. However, recent financial results have presented mixed signals. In Q1 2025, the company reported earnings of $0.18 per share, significantly below analyst expectations of $0.54. Revenue increased by 46% year-over-year to $20.2 million, but net income declined by 50% to $1.6 million compared to the same quarter last year. This suggests challenges with cost management and operational efficiency following the merger. Financial sector analysts note that while $FXNC's revenue growth is impressive, the decline in profitability is concerning. The company projects an average revenue growth rate of 20% per annum over the next two years, substantially outpacing the industry average of 7.1%. However, the recent profitability decline likely reflects integration challenges following the merger. Regional banks have faced pressure since early 2025 due to recession concerns and U.S. dollar weakness. In early April, the U.S. dollar recorded its largest daily decline since November 2022, falling approximately 1.7%, and has depreciated about 6.1% in 2025. This macroeconomic environment has impacted the broader financial sector. Notably, CEO Schwartz's consecutive purchases occurred shortly after the earnings announcement. Insider buying, particularly by a CEO, is typically interpreted as a strong signal of confidence in the company's value and future prospects. Furthermore, the fact that these purchases were made pursuant to a Rule 10b5-1 plan suggests they were based on long-term value assessment rather than short-term market conditions. Current analyst assessments for $FXNC maintain a 'hold' rating with a 12-month price target of $24.00, approximately 22% above current levels. The CEO's consecutive purchases following a substantial short-term price decline may reflect management's view that the current share price understates the company's intrinsic value. Despite merger integration challenges and short-term performance issues, management appears focused on long-term growth potential. Investors should monitor both this insider buying signal and upcoming quarterly results to gauge when merger synergies might begin to materialize more substantially.

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