Exhibit 99.1

First National Corporation Announces 23% Increase in Second Quarter Net Income

STRASBURG, Va., July 25, 2017 --- First National Corporation (the "Company" or "First National") (OTC:FXNC) today reported net income of $1.8 million and earnings per share of $0.36 for the second quarter ended June 30, 2017. This was a $323 thousand, or 23%, increase when compared to net income of $1.4 million and earnings per share of $0.29 for the second quarter of 2016. The increase in net income resulted primarily from an increase in net interest income and a decrease in noninterest expenses. 

For the six months ended June 30, 2017, net income increased $767 thousand, or 30%, to $3.3 million and $0.67 per share, compared to net income of $2.5 million and $0.51 per share for the same period of 2016. The increase in net income resulted primarily from an increase in net interest income and a decrease in noninterest expenses. 

Select highlights for the second quarter of 2017:

·	Net income increased 23%

·	Return on equity of 12.79%

·	Return on average assets of 0.96%

·	Net interest margin increased to 3.73%

·	Efficiency ratio improved to 66.71% from 71.62%

·	Net interest income increased $453 thousand, or 8%

·	Noninterest expenses decreased $178 thousand, or 3%

·	Assets-per-employee increased to $4.6 million, up from $4.2 million at June 30, 2016

·	Proposed expansion to Richmond

"Our banking company continued to reap the benefits of the low cost deposit acquisition and branch expansion from 2015 as the funds were deployed into loans in legacy and new markets," said Scott Harvard, president and chief executive officer of First National.  Harvard added, "The combination of the expansion and efficiency initiatives has generated profitable growth and outstanding financial results. During the quarter, First Bank submitted a branch application to further expand the franchise to the Westhampton neighborhood of Richmond.  This expansion will begin to bring more coherence to the branch footprint, while providing an introduction into a growing deposit and loan market."

BALANCE SHEET

Total assets of First National increased $24.3 million to $735.7 million at June 30, 2017, compared to one year ago.  While total assets increased, the composition changed as loans, net of the allowance for loan losses, increased $38.6 million, or 8%, and securities and interest-bearing deposits in banks decreased $11.2 million, or 6%.  The loan-to-asset ratio increased to 68% at June 30, 2017, up from 65% one year ago, and the loan-to-deposit ratio increased to 76% from 74%.

Total deposits increased $31.5 million, or 5%, to $661.8 million, compared to $630.3 million at June 30, 2016.  When comparing the composition of the deposit portfolio at June 30, 2017 to one year ago, noninterest-bearing demand deposits increased from 25% to 27% of total deposits, while time deposits decreased from 21% to 19%.

Shareholders' equity increased $6.7 million to $56.0 million at June 30, 2017 compared to $49.3 million one year ago, primarily from an increase in retained earnings. Tangible common equity totaled $54.7 million at the end of the second quarter, compared to $47.3 million at June 30, 2016. The Company exceeded its target capital ratios at the end of the quarter and was considered well capitalized.

ANALYSIS OF THE THREE MONTH PERIOD

Net interest income increased $453 thousand, or 8%, to $6.2 million for the quarter, compared to $5.8 million for the same period of 2016.

Total interest income increased $541 thousand, or 9%, to $6.8 million. The increase resulted from higher average earning assets and a higher yield on total earning assets. Earning asset yields increased 14 basis points, primarily from a change in asset composition as average loans increased to 73% of average earning assets for the second quarter, up from 70% for the same period of 2016.

Total interest expense increased $88 thousand, or 18%, to $570 thousand. The increase in interest expense resulted primarily from a 6 basis point increase in the cost of interest-bearing deposits.

Noninterest income totaled $2.0 million, compared to $2.1 million for the same period of 2016. A decrease in service charges on deposits was partially offset by an increase in wealth management revenue and an increase in ATM and check card revenue.

Noninterest expense decreased $178 thousand, or 3%, to $5.7 million. Salaries and employee benefits expense decreased $293 thousand, or 9%, and FDIC assessment decreased $49 thousand.  Salaries and employee benefits decreased primarily from a decrease in salaries and wages, insurance, and retirement plan expense. A reduction in the number of employees had a favorable impact on each of these expense categories.   These decreases were partially offset by an $89 thousand increase in legal and professional fees, and a $53 thousand increase in other real estate owned expense.  Other real estate owned expense totaled $4 thousand for the second quarter of 2017, compared to other real estate income of $49 thousand for the same period of 2016.

ANALYSIS OF THE SIX MONTH PERIOD

Net interest income increased $746 thousand, or 6%, to $12.2 million for the six months ended June 30, 2017, compared to $11.5 million for the same period of 2016.

Total interest income increased $882 thousand, or 7%, to $13.4 million. The increase resulted from higher average earning assets and a higher yield on total earning assets. Earning asset yields increased 12 basis points, primarily from a change in asset composition as average loans increased to 74% of average earning assets for the six month period, up from 70% for the prior year.

Total interest expense increased $136 thousand, or 14%, to $1.1 million.  The increase in interest expense resulted primarily from a 5 basis point increase in the cost of interest-bearing deposits.

Noninterest income totaled $3.9 million, compared to $4.1 million for the same period of 2016. A decrease in service charges on deposits was partially offset by an increase in wealth management revenue and an increase in ATM and check card revenue.

Noninterest expense decreased $544 thousand, or 5%, to $11.5 million. Salaries and employee benefits decreased $495 thousand, or 7%, FDIC assessment decreased $92 thousand, and occupancy decreased $74 thousand. These decreases were partially offset by a $127 thousand increase in other real estate owned expense. Other real estate owned expense totaled $6 thousand for the six month period of 2017, compared to other real estate income of $121 thousand for the same period of 2016.

ASSET QUALITY/LOAN LOSS PROVISION

There was no provision for loan loss during the three month and six month periods ended June 30, 2017. Net charge-offs totaled $7 thousand for the second quarter of 2017.  For the six month period, net recoveries totaled $123 thousand. Nonperforming assets totaled $2.2 million, or 0.29% of total assets at June 30, 2017, which was an improvement compared to $4.5 million, or 0.63% of total assets, one year ago. The allowance for loan losses totaled $5.4 million at June 30, 2017 and $5.7 million at June 30, 2016, representing 1.08% and 1.23% 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, 2016, 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, two loan production offices, a customer service center in a retirement community, and 14 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.

FIRST NATIONAL CORPORATION

Quarterly Performance Summary

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FIRST NATIONAL CORPORATION

Quarterly Performance Summary

(in thousands, except share and per share data)

FIRST NATIONAL CORPORATION

Year-to-Date Performance Summary

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                                                  (unaudited)

FIRST NATIONAL CORPORATION

Year-to-Date Performance Summary

(in thousands, except share and per share data)

 ⁽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 34%. 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.

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