Note

13.

Benefit Plans

Pension Plan

The Bank had a noncontributory, defined benefit pension plan for all full-time employees over

years of age with at least

one

year of credited service and hired prior to

May

2011.

Effective

May

2011,

the plan was frozen to new participants. Only individuals employed on or before

April

30,

2011

were eligible to become participants in the plan upon satisfaction of the eligibility requirements. Benefits were generally based upon years of service and average compensation for the

five

highest-paid consecutive years of service. The Bank’s funding practice was to make at least the minimum required annual contribution permitted by the Employee Retirement Income Security Act of

1974,

as amended, and the Internal Revenue Code of

1986,

as amended.

September

14,

2016,

the defined benefit pension plan was amended to be terminated. Under the amendment, benefit accruals ceased as of

November

30,

2016.

The Internal Revenue Service approved the termination on

October 16, 2017

and the Company distributed all plan assets on

March 8, 2018.

Prior to the distribution of all plan assets, the Company made a final cash contribution of

$205

thousand during the year ended

December 31, 2018.

Since all plan assets were distributed during

2018,

the accumulated benefit obligation for the defined benefit pension plan was

zero

December 31, 2019

and

2018.

The following tables provide a reconciliation of the changes in the plan benefit obligation and the fair value of assets for the periods ended

December 31, 2019

and

2018

(in thousands).

	2019		2018
Change in Benefit Obligation
Benefit obligation, beginning of year	$	—	$	5,283
Interest cost		—		17
Benefits paid		—		(5,284	)
Gain due to settlement		—		(16	)
Benefit obligation, end of year	$	—	$	—
Changes in Plan Assets
Fair value of plan assets, beginning of year	$	—	$	5,078
Actual return on plan assets		—		1
Employer contributions		—		205
Benefits paid		—		(5,284	)
Fair value of assets, end of year	$	—	$	—
Funded Status, end of year	$	—	$	—
Amount Recognized in Other Liabilities	$	—	$	—

Amounts Recognized in Accumulated Other Comprehensive Income (Loss), net of tax
Net gain	$	—	$	—
Deferred income tax expense		—		—
Amount recognized	$	—	$	—
Weighted Average Assumptions Used to Determine Benefit Obligation
Discount rate used for disclosure
First five years		N/A		N/A
Five years to twenty years		N/A		N/A
After twenty years		N/A		N/A
Expected return on plan assets		N/A		1.00	%
Rate of compensation increase		N/A		N/A

Components of Net Periodic Benefit Cost
Interest cost	$	—	$	17
Expected return on plan assets		—		(8	)
Recognized net gain due to settlement		—		(135	)
Net periodic benefit cost (benefit)	$	—	$	(126	)
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss)
Net loss	$	—	$	126
Total recognized in other comprehensive income (loss)	$	—	$	126
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income (Loss)	$	—	$	—

	2019		2018
Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost
Discount rate		N/A		1.96	%
Expected return on plan assets		N/A		1.00	%
Rate of compensation increase		N/A		N/A

401

(k) Plan

The Company maintains a

401

(k) plan (the Plan) for all eligible employees. Participating employees

may

elect to contribute up to the maximum percentage allowed by the Internal Revenue Service, as defined in the Plan. The Company makes matching contributions, on a dollar-for dollar basis, for the

first

one

percent of an employee’s compensation contributed to the Plan and

fifty

cents for each dollar of the employee’s contribution between

two

percent and

six

percent. The Company also makes an additional contribution based on years of service to participants who have completed at least

one thousand

hours of service during the year and who are employed on the last day of the Plan Year. All employees who are age

nineteen

or older are eligible. Employee contributions vest immediately. Employer matching contributions vest after

two

Plan service years with the Company. The Company has the discretion to make a profit sharing contribution to the Plan each year based on overall performance, profitability, and other economic factors. For the years ended

December 31, 2019

and

2018

, expense attributable to the Plan amounted to

$812

thousand and

$770

thousand, respectively.

Employee Stock Ownership Plan

January

2000,

the Company established an employee stock ownership plan. The ESOP provided an opportunity for the Company to award shares of First National Corporation stock to employees at its discretion. Employees were eligible to participate in the ESOP effective immediately upon beginning service with the Company. Participants became

100%

vested after

two

years of credited service. The Board of Directors were able to make discretionary contributions, within certain limitations prescribed by federal tax regulations. There was

compensation expense for the ESOP for the years ended

December 31, 2019

and

2018

September

14,

2016,

the ESOP was amended to freeze the plan to new participants and to cease all contributions, effective

December 31, 2016.

The amendment also directed matching contributions and certain other retirement contributions made by the Company to the

401

(k) plan. On

December 31, 2017,

the ESOP was amended to be terminated and the Internal Revenue Service approved the termination on

May 3, 2018.

The Company distributed all assets of the ESOP to participants or beneficiaries on

October 10, 2018.

Since all assets of the ESOP were distributed,

shares of the Company were held by the ESOP at

December 31, 2019

December 31, 2018

Supplemental Executive Retirement Plans

March 15, 2019,

the Company entered into supplemental executive retirement plans and participation agreements with

three

of its employees. The retirement benefits are fixed and provide for retirement benefits payable in

180

monthly installments. The contribution expense totaled

$220

thousand for the year ended

December 31, 2019

and was solely funded by the Company.