FIRST NATIONAL CORP /VA/ Earnings Per Share Disclosure
Note 15. Earnings per Common Share
Basic earnings per common share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance.
The following table presents the computation of basic and diluted earnings per share for the years ended December 31, 2024 and 2023 (dollars in thousands, except per share data):
| 2024 | 2023 | |||||||
| (Numerator): | ||||||||
| Net income | $ | 6,966 | $ | 9,624 | ||||
| (Denominator): | ||||||||
| Weighted average shares outstanding – basic | 6,955,592 | 6,265,394 | ||||||
| Potentially dilutive common shares – restricted stock units | 15,497 | 13,711 | ||||||
| Weighted average shares outstanding – diluted | 6,971,089 | 6,279,105 | ||||||
| Income per common share | ||||||||
| Basic | $ | 1.00 | $ | 1.54 | ||||
| Diluted | $ | 1.00 | $ | 1.53 | ||||
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.