8-K
Virginia National Bankshares Corp (VABK)
UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported): February 18, 2022 |
|---|
VIRGINIA NATIONAL BANKSHARES CORPORATION
(Exact name of Registrant as Specified in Its Charter)
| Virginia | 001-40305 | 46-2331578 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (IRS Employer<br>Identification No.) |
| 404 People Place | ||
| Charlottesville, Virginia | 22911 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code: (434) 817-8621 | ||
| --- |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | VABK | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On February 18, 2022, Virginia National Bankshares Corporation (the “Company”) issued a press statement announcing the consolidated earnings for the year and quarter ended December 31, 2021.
A copy of the press statement is furnished as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.
The information in this Form 8-K, and the exhibit hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description of Exhibit
| 99.1 | Press statement issued by Virginia National Bankshares Corporation on February 18, 2022. |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| VIRGINIA NATIONAL BANKSHARES CORPORATION | |||
|---|---|---|---|
| Date: | February 18, 2022 | By: | /s/ Tara Y. Harrison |
| Tara Y. Harrison<br>Executive Vice President and Chief Financial Officer |
EX-99.1
Exhibit 99.1
| FOR IMMEDIATE RELEASE | INVESTOR RELATIONS CONTACT: |
|---|---|
| Tara Y. Harrison (434) 817-8587 |
VIRGINIA NATIONAL BANKSHARES CORPORATION
ANNOUNCES RECORD NET INCOME FOR 2021
Charlottesville, VA – February 18, 2022 - Virginia National Bankshares Corporation (NASDAQ: VABK) (the “Company”) today reported net income of $10.0 million for the year ended December 31, 2021, attaining the highest consolidated net income for any year in the Company's history, even after realizing $7.4 million of pre-tax ($5.6 million after-tax) merger and merger-related expenses. The record net income of $10.0 million is a 25% increase compared to net income of $8.0 million recognized for the year ended December 31, 2020.
Net income of $5.2 million for the quarter ended December 31, 2021, represents a 100% increase over net income of $2.6 million recognized for the quarter ended December 31, 2020. Net income per diluted share of $2.13 for the year ended December 31, 2021 declined from $2.95 for the year ended December 31, 2020 and this decline was driven by the increase in number of shares outstanding as a result of the April 1, 2021 mergers of Fauquier Bankshares, Inc. and The Fauquier Bank (“Fauquier”) with and into the Company and Virginia National Bank, respectively.
Excluding merger and merger-related expenses, the Company would have posted net income of $15.6 million, or $3.31 per diluted share, (a non-GAAP financial measure)1 for the year ended December 31, 2021. Return on average assets (“ROAA”) of 0.61% for the year ended December 31, 2021 would have amounted to 0.95% excluding merger and merger-related expenses (a non-GAAP financial measure),1 compared to 1.00%, or 1.09% excluding merger and merger-related expenses (a non-GAAP financial measure),1 in the year ended December 31, 2020.
“We finished the year with strong financial results after successfully integrating our systems, processes and people in the merger with Fauquier," said Glenn W. Rust, President and Chief Executive Officer. "We have begun to realize significant cost savings, which will allow us to return value to our shareholders earlier than originally anticipated."
Fourth Quarter 2021 Results of Operations
• The efficiency ratio on a fully tax equivalent basis (“FTE”) (a non-GAAP financial measure) was 57.7% for the three months ended December 31, 2021, compared to 57.0% for the three months ended December 31, 2020. 1
• ROAA for the three months ended December 31, 2021 declined to 1.06% compared to 1.23% realized in the same period in the prior year, primarily due to the significant increase in assets as a result of the merger.
• Return on average equity (“ROAE”) for the three months ended December 31, 2021 increased to 12.86% compared to 12.75% realized in same period in the prior year, as the increase in net income was greater than the increase in equity as a result of the merger.
• The Company reversed $664 thousand in pre-tax merger and merger-related expenses during the three months ended December 31, 2021, after receiving a refund from a third-party vendor for system implementation credits and adjusting merger-related accrued bonuses. This post-tax reversal of $588 thousand represents an improvement of $0.11 per diluted share.
• The Company has begun realizing savings associated with the merger and expects to realize significant additional savings over the next year. Full-time equivalent employee headcount was 215 as of April 1, 2021 and 173 as of December 31, 2021.
__________________________________________________________________
1 See "Reconciliation of Certain Non-GAAP Financial Measures" at the end of this release.
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Loans and Asset Quality
• Gross loans outstanding at December 31, 2021 totaled $1.1 billion, an increase of $452 million, or 74%, compared to December 31, 2020. The increase is predominantly due to the acquisition of Fauquier, which added $602.6 million of loan balances, net of the fair value mark, on the consolidated balance sheet beginning April 1, 2021, but was offset by the decline in outstanding balances of Paycheck Protection Program ("PPP") loans of $121.2 million, due to loan forgiveness, the sale of the $6 million student loan portfolio formerly held by Fauquier, and other loan paydowns.
• Loan deferrals declined to $1.2 million as of December 31, 2021, from $3.3 million as of December 31, 2020. Only two loans remain in deferral status as of December 31, 2021, and each loan is government guaranteed.
• One non-accrual loan, in the amount of $495 thousand, was on the books as of December 31, 2021, compared to $8 thousand as of December 31, 2020. Acquired loans which otherwise would be in non-accrual status are not included in this figure, as they earn interest through the yield accretion.
• Loans 90 days or more past due and still accruing interest amounted to $800 thousand as of December 31, 2021, compared to $137 thousand as of December 31, 2020. The December 31, 2021 balance includes a government-guaranteed loan in the amount of $548 thousand. The portfolio only includes eight non-insured student loans that are 90 days or more past due and still accruing interest, amounting to $83 thousand. Loans acquired from Fauquier which are greater than 90 days past due and still accruing interest are included in this figure, net of their fair value mark.
• The period-end allowance for loan losses (“ALLL”) as a percentage of total loans was 0.56% as of December 31, 2021 and 0.90% as of December 31, 2020. The decrease is the result of bringing the Fauquier loans onto the Company’s balance sheet at fair value, with a credit and liquidity mark of $21.3 million effective April 1, 2021. The ALLL as a percentage of loans, excluding the impact of the acquired loans and fair value mark (a non-GAAP financial measure)1, would have been 0.95% as of December 31, 2021, and the ALLL as a percentage of total loans, excluding PPP loans (a non-GAAP financial measure)1, would have been 0.58% as of December 31, 2021.
• A provision for loan losses of $537 thousand was recognized during the three months ended December 31, 2021, compared to $255 thousand recognized in the three months ended December 31, 2020. A provision for loan losses of $1.0 million was recognized during the year ended December 31, 2021, compared to $1.6 million recognized during the year ended December 31, 2020.
Net Interest Income
• Net interest income for the three months ended December 31, 2021 of $12.4 million increased $5.7 million, or 84%, compared to the three months ended December 31, 2020, due to the inclusion of Fauquier’s interest income and expense for the current quarter and the lower rates paid on deposits as compared to the prior year. Net interest income for the year ended December 31, 2021 of $45.0 million increased $21.1 million, or 88%, compared to the prior year due to the inclusion of Fauquier's interest income and expense for three quarters and lower rates paid on deposits.
• The fair value accretion on loans acquired positively impacted net interest income by 19 basis points (“bps”) during the current quarter and by 72 bps for the year ended December 31, 2021.
• The overall cost of funds, including noninterest deposits, of 22 bps incurred in the three months ended December 31, 2021 decreased 14 bps from 36 bps in the same period in 2020, due to lower rates paid on deposit accounts, coupled with the acceleration of the fair value accretion related to the payoff of FHLB advances.
• Low-cost deposits, which include noninterest checking accounts and interest-bearing checking, savings and money market accounts, remained in excess of 86% of total deposits at December 31, 2021 and 2020.
_____________________________________________________________________
1 See "Reconciliation of Certain Non-GAAP Financial Measures" at the end of this release.
Page 2 of 10
Noninterest Income
Noninterest income for the three months ended December 31, 2021 increased $1.2 million, or 64%, compared to the three months ended December 31, 2020 primarily due to the recognition of $822 thousand of performance fee income by Masonry's Capital LLC (a wholly-owned subsidiary of the Company), included in wealth management fees on the consolidated statements of income. Also, the inclusion of Fauquier’s wealth management fees, advisory and brokerage income, income from bank-owned life insurance policies, deposit fees and debit card income attributed to increases in each of those categories. Swap fee income declined $314 thousand, as swap arrangements are not as attractive to borrowers in the current rate environment.
Noninterest income for the year ended December 31, 2021 increased $3.9 million, or 59%, compared to the prior year. Wealth management income, including the performance fees noted above, contributed $2.4 million of this increase. The inclusion of Fauquier's wealth management fees, advisory and brokerage income, income from bank-owned life insurance policies, deposit fees and debit card income also attributed to the year-over-year increase. Swap fee income declined $1.2 million, and limited securities were sold in the current year, compared to a gain of $743 thousand in the prior year.
Noninterest Expense
Noninterest expense for the three months ended December 31, 2021 increased $4.0 million, or 82%, compared to the three months ended December 31, 2020, due to the inclusion of Fauquier’s noninterest expense, in nearly all line items within the category, offset by an adjustment to merger and merger-related expenses after receiving a refund from a third-party vendor for system implementation credits and adjusting merger-related accrued bonuses.
Noninterest expense for the year ended December 31, 2021 increased $23.7 million, or 126%, due to the inclusion of Fauquier's noninterest expenses and an increase of $6.4 million in merger and merger-related expenses.
Book Value
Book value per share was $30.50 as of December 31, 2021 and $30.43 as of December 31, 2020. Tangible book value per share (a non-GAAP financial measure)1 as of December 31, 2021 was $27.36 compared to $30.17 as of December 31, 2020, declining due to the impact of goodwill and other intangible assets recorded upon the acquisition of Fauquier. These amounts are impacted by the increase in shares outstanding as a result of the merger.
Income Taxes
The effective tax rate for the three months ended December 31, 2021 amounted to 11.9%, due to the recognition of low-income housing tax credits, compared to 22.9% for the three months ended December 31, 2020. The effective tax rate for 2021 was 16.0%, also less than the statutory rate due to the recognition of low-income housing tax credits, compared to 20.6% in the prior year.
Dividends
Cash dividends of $1.6 million were declared during the fourth quarter of 2021. The remaining 69% of net income was retained.
_____________________________________________________________________
1 See "Reconciliation of Certain Non-GAAP Financial Measures" at the end of this release.
Page 3 of 10
About Virginia National Bankshares Corporation
Virginia National Bankshares Corporation, headquartered in Charlottesville, Virginia, is the bank holding company for Virginia National Bank. The Bank has ten banking offices throughout Fauquier and Prince William counties, four banking offices in Charlottesville and Albemarle County, and one banking office in Winchester, and offers loan, deposit and treasury management services in Richmond, Virginia. The Bank offers a full range of banking and related financial services to meet the needs of individuals, businesses and charitable organizations, including the fiduciary services of VNB Trust and Estate Services. The Bank also offers, through its networking agreements with third parties, investment advisory and other investment services under Sturman Wealth Advisors. Investment management services are offered through Masonry Capital Management, LLC, a registered investment adviser and wholly-owned subsidiary of the Company.
The Company’s common stock trades on the Nasdaq Capital Market under the symbol “VABK.” Additional information on the Company is also available at www.vnbcorp.com.
Non-GAAP Financial Measures
The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles (“GAAP”) and prevailing practices in the banking industry. However, management uses certain non-GAAP measures to supplement the evaluation of the Company’s performance. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP measures are included at the end of this release.
Forward-Looking Statements; Other Information
Certain statements in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, statements with respect to the Company’s operations, performance, future strategy and goals, and are often characterized by use of qualified words such as “expect,” “believe,” “estimate,” “project,” “anticipate,” “intend,” “will,” “should,” or words of similar meaning or other statements concerning the opinions or judgement of the Company and its management about future events. While Company management believes such statements to be reasonable, future events and predictions are subject to circumstances that are not within the control of the Company and its management. Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including, without limitation, the effects of and changes in: general economic and market conditions, including the effects of declines in real estate values, an increase in unemployment levels and general economic contraction as a result of COVID-19 or other pandemics; fluctuations in interest rates, deposits, loan demand, and asset quality; assumptions that underlie the Company’s allowance for loan losses; the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (e.g., COVID-19 or other pandemics), and of governmental and societal responses thereto; the performance of vendors or other parties with which the Company does business; competition; technology; changes in laws, regulations and guidance; changes in accounting principles or guidelines; performance of assets under management; expected revenue synergies and cost savings from the recently completed merger with Fauquier may not be fully realized or realized within the expected timeframe; the businesses of the Company and Fauquier may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; revenues following the merger may be lower than expected; customer and employee relationships and business operations may be disrupted by the merger; and other factors impacting financial services businesses. Many of these factors and additional risks and uncertainties are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and other reports filed from time to time by the Company with the Securities and Exchange Commission. These statements speak only as of the date made, and the Company does not undertake to update any forward-looking statements to reflect changes or events that may occur after this release.
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VIRGINIA NATIONAL BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
| December 31, <br>2020 * | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Cash and due from banks | 20,345 | $ | 8,116 | ||
| Interest-bearing deposits in other banks | 336,032 | - | |||
| Federal funds sold | 152,463 | 26,579 | |||
| Securities: | |||||
| Available for sale, at fair value | 303,817 | 174,086 | |||
| Restricted securities, at cost | 4,950 | 3,010 | |||
| Total securities | 308,767 | 177,096 | |||
| Loans | 1,061,211 | 609,406 | |||
| Allowance for loan losses | (5,984 | ) | (5,455 | ) | |
| Loans, net | 1,055,227 | 603,951 | |||
| Premises and equipment, net | 25,093 | 5,238 | |||
| Bank owned life insurance | 31,234 | 16,849 | |||
| Goodwill | 8,140 | 372 | |||
| Core deposit intangible, net | 8,271 | - | |||
| Other intangible assets, net | 274 | 341 | |||
| Other real estate owned, net | 611 | - | |||
| Right of use asset, net | 7,583 | 3,527 | |||
| Accrued interest receivable and other assets | 18,485 | 6,341 | |||
| Total assets | 1,972,525 | $ | 848,410 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Liabilities: | |||||
| Demand deposits: | |||||
| Noninterest-bearing | 522,281 | $ | 209,772 | ||
| Interest-bearing | 446,314 | 148,910 | |||
| Money market and savings deposit accounts | 665,530 | 272,980 | |||
| Certificates of deposit and other time deposits | 162,045 | 99,102 | |||
| Total deposits | 1,796,170 | 730,764 | |||
| Advances from the FHLB | - | 30,000 | |||
| Junior subordinated debt | 3,367 | - | |||
| Lease liability | 7,108 | 3,589 | |||
| Accrued interest payable and other liabilities | 3,955 | 1,459 | |||
| Total liabilities | 1,810,600 | 765,812 | |||
| Commitments and contingent liabilities | |||||
| Shareholders' equity: | |||||
| Preferred stock, 2.50 par value, 2,000,000 shares authorized, no shares outstanding | - | - | |||
| Common stock, 2.50 par value, 10,000,000 shares authorized; 5,308,335 shares issued and outstanding as of December 31, 2021 (includes 35,911 nonvested), and 2,714,273 shares issued and outstanding as of December 31, 2020 (includes 25,268 nonvested) | 13,178 | 6,722 | |||
| Capital surplus | 104,584 | 32,457 | |||
| Retained earnings | 46,374 | 41,959 | |||
| Accumulated other comprehensive income (loss) | (2,211 | ) | 1,460 | ||
| Total shareholders' equity | 161,925 | 82,598 | |||
| Total liabilities and shareholders' equity | 1,972,525 | $ | 848,410 |
All values are in US Dollars.
* Derived from audited consolidated financial statements
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VIRGINIA NATIONAL BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
| For the three months ended | For the twelve months ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | |||||||
| Interest and dividend income: | ||||||||||
| Loans, including fees | $ | 11,995 | $ | 6,743 | $ | 43,899 | $ | 24,945 | ||
| Federal funds sold | 61 | 6 | 139 | 104 | ||||||
| Other interest-bearing deposits | 139 | - | 233 | - | ||||||
| Investment securities: | ||||||||||
| Taxable | 804 | 452 | 2,810 | 1,602 | ||||||
| Tax exempt | 292 | 149 | 1,021 | 475 | ||||||
| Dividends | 49 | 34 | 170 | 104 | ||||||
| Total interest and dividend income | 13,340 | 7,384 | 48,272 | 27,230 | ||||||
| Interest expense: | ||||||||||
| Demand and savings deposits | 710 | 356 | 2,308 | 1,824 | ||||||
| Certificates and other time deposits | 222 | 288 | 1,108 | 1,454 | ||||||
| Borrowings | 49 | 38 | (132 | ) | 73 | |||||
| Total interest expense | 981 | 682 | 3,284 | 3,351 | ||||||
| Net interest income | 12,359 | 6,702 | 44,988 | 23,879 | ||||||
| Provision for loan losses | 537 | 255 | 1,014 | 1,622 | ||||||
| Net interest income after provision for loan losses | 11,822 | 6,447 | 43,974 | 22,257 | ||||||
| Noninterest income: | ||||||||||
| Wealth management fees | 1,455 | 332 | 3,508 | 1,133 | ||||||
| Advisory and brokerage income | 246 | 184 | 1,154 | 700 | ||||||
| Deposit account fees | 477 | 167 | 1,459 | 651 | ||||||
| Debit/credit card and ATM fees | 509 | 177 | 2,070 | 612 | ||||||
| Earnings/increase in value of bank owned life insurance | 201 | 110 | 708 | 437 | ||||||
| Gains on sales of securities | 1 | 9 | 1 | 743 | ||||||
| Loan swap fee income | 22 | 336 | 81 | 1,313 | ||||||
| Other | 117 | 530 | 1,484 | 976 | ||||||
| Total noninterest income | 3,028 | 1,845 | 10,465 | 6,565 | ||||||
| Noninterest expense: | ||||||||||
| Salaries and employee benefits | 4,424 | 2,462 | 16,129 | 9,466 | ||||||
| Net occupancy | 932 | 503 | 3,575 | 1,908 | ||||||
| Equipment | 305 | 62 | 966 | 463 | ||||||
| Bank franchise tax | 214 | 161 | 1,136 | 649 | ||||||
| Computer software | 276 | 143 | 1,020 | 579 | ||||||
| Data processing | 620 | 266 | 3,017 | 1,106 | ||||||
| FDIC deposit insurance assessment | 264 | 99 | 858 | 187 | ||||||
| Marketing, advertising and promotion | 216 | 74 | 922 | 409 | ||||||
| Merger and merger-related expenses | (664 | ) | 439 | 7,423 | 988 | |||||
| Plastics expense | 389 | 40 | 978 | 180 | ||||||
| Professional fees | 244 | 221 | 1,117 | 723 | ||||||
| Core deposit intangible amortization | 544 | - | 1,389 | - | ||||||
| Other | 1,160 | 427 | 3,992 | 2,121 | ||||||
| Total noninterest expense | 8,924 | 4,897 | 42,522 | 18,779 | ||||||
| Income before income taxes | 5,926 | 3,395 | 11,917 | 10,043 | ||||||
| Provision for income taxes | 707 | 779 | 1,908 | 2,065 | ||||||
| Net income | $ | 5,219 | $ | 2,616 | $ | 10,009 | $ | 7,978 | ||
| Net income per common share, basic | $ | 0.98 | $ | 0.96 | $ | 2.14 | $ | 2.95 | ||
| Net income per common share, diluted | $ | 0.98 | $ | 0.96 | $ | 2.13 | $ | 2.95 | ||
| Weighted average common shares outstanding, basic | 5,308,108 | 2,714,273 | 4,668,761 | 2,707,877 | ||||||
| Weighted average common shares outstanding, diluted | 5,338,088 | 2,714,905 | 4,695,405 | 2,708,567 |
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VIRGINIA NATIONAL BANKSHARES CORPORATION
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
| At or For the Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, <br>2021 | September 30, <br>2021 | June 30, <br>2021 | March 31, <br>2021 | December 31, <br>2020 | |||||||||||
| Common Share Data: | |||||||||||||||
| Net income per weighted average share, basic | $ | 0.98 | $ | 0.59 | $ | 0.03 | $ | 0.55 | $ | 0.96 | |||||
| Net income per weighted average share, diluted | $ | 0.98 | $ | 0.59 | $ | 0.03 | $ | 0.55 | $ | 0.96 | |||||
| Weighted average shares outstanding, basic | 5,308,108 | 5,306,370 | 5,305,277 | 2,719,840 | 2,714,273 | ||||||||||
| Weighted average shares outstanding, diluted | 5,338,088 | 5,338,872 | 5,320,290 | 2,727,448 | 2,714,905 | ||||||||||
| Actual shares outstanding | 5,308,335 | 5,307,235 | 5,305,819 | 2,728,327 | 2,714,273 | ||||||||||
| Tangible book value per share at period end | $ | 27.36 | $ | 26.92 | $ | 26.60 | $ | 29.07 | $ | 30.17 | |||||
| Key Ratios: | |||||||||||||||
| Return on average assets 1 | 1.06 | % | 0.65 | % | 0.03 | % | 0.68 | % | 1.23 | % | |||||
| Return on average equity 1 | 12.86 | % | 7.70 | % | 0.37 | % | 7.40 | % | 12.75 | % | |||||
| Net interest margin (FTE) 2 | 2.72 | % | 3.08 | % | 3.05 | % | 2.83 | % | 3.32 | % | |||||
| Efficiency ratio (FTE) 3 | 57.70 | % | 75.17 | % | 99.27 | % | 67.72 | % | 57.03 | % | |||||
| Loan-to-deposit ratio | 59.08 | % | 64.04 | % | 71.57 | % | 77.23 | % | 83.39 | % | |||||
| Net Interest Income: | |||||||||||||||
| Net interest income | $ | 12,359 | $ | 13,504 | $ | 13,151 | $ | 5,974 | $ | 6,702 | |||||
| Net interest income (FTE) 2,3 | $ | 12,437 | $ | 13,581 | $ | 13,224 | $ | 6,021 | $ | 6,740 | |||||
| Capital Ratios: | |||||||||||||||
| Tier 1 leverage ratio | 7.61 | % | 7.59 | % | 7.66 | % | 9.01 | % | 9.54 | % | |||||
| Total risk-based capital ratio | 14.56 | % | 13.74 | % | 13.47 | % | 15.49 | % | 15.35 | % | |||||
| Assets and Asset Quality: | |||||||||||||||
| Average Earning Assets | $ | 1,817,010 | $ | 1,750,799 | $ | 1,740,338 | $ | 862,373 | $ | 807,351 | |||||
| Average Gross Loans | $ | 1,088,278 | $ | 1,140,281 | $ | 1,214,123 | $ | 618,902 | $ | 618,296 | |||||
| Paycheck Protection Program Loans, end of period | $ | 24,482 | $ | 36,740 | $ | 73,784 | $ | 70,171 | $ | 55,120 | |||||
| Loan Deferrals, Pandemic Related | $ | 1,215 | $ | 1,243 | $ | 2,004 | $ | 1,539 | $ | 3,346 | |||||
| Allowance for loan losses: | |||||||||||||||
| Beginning of period | $ | 5,623 | $ | 5,522 | $ | 5,615 | $ | 5,455 | $ | 5,334 | |||||
| Provision for (recovery of) loan losses | 537 | 267 | (141 | ) | 351 | 255 | |||||||||
| Charge-offs | (230 | ) | (208 | ) | (156 | ) | (241 | ) | (162 | ) | |||||
| Recoveries | 54 | 42 | 204 | 50 | 28 | ||||||||||
| Net recoveries (charge-offs) | (176 | ) | (166 | ) | 48 | (191 | ) | (134 | ) | ||||||
| End of period | $ | 5,984 | $ | 5,623 | $ | 5,522 | $ | 5,615 | $ | 5,455 | |||||
| Non-accrual loans 4 | $ | 495 | $ | 777 | $ | 17 | $ | 5 | $ | 8 | |||||
| Loans 90 days or more past due and still accruing 5 | 800 | 1,044 | 2,770 | 399 | 137 | ||||||||||
| OREO | 611 | 611 | 611 | - | - | ||||||||||
| Total nonperforming assets (NPA) | $ | 1,906 | $ | 2,432 | $ | 3,398 | $ | 404 | $ | 145 | |||||
| NPA as a % of total assets | 0.10 | % | 0.13 | % | 0.18 | % | 0.04 | % | 0.02 | % | |||||
| NPA as a % of total loans plus OREO | 0.18 | % | 0.22 | % | 0.29 | % | 0.07 | % | 0.02 | % | |||||
| ALLL to total loans | 0.56 | % | 0.51 | % | 0.47 | % | 0.90 | % | 0.90 | % | |||||
| ALLL to total loans, excluding PPP loans (non-GAAP) | 0.58 | % | 0.52 | % | 0.51 | % | 1.02 | % | 0.98 | % | |||||
| Non-accruing loans to total loans 4 | 0.05 | % | 0.07 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||
| Net charge-offs (recoveries) to average loans 1 | 0.06 | % | 0.06 | % | -0.02 | % | 0.12 | % | 0.09 | % |
1 Ratio is computed on an annualized basis.
2 The net interest margin and net interest income are reported on a FTE basis, using a Federal income tax rate of 21%.
3 The efficiency ratio (FTE) is computed as a percentage of noninterest expense divided by the sum of net interest income (FTE) and noninterest income. This is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information should not be viewed as a substitute for GAAP. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate them differently. Refer to the Reconciliation of Certain Non-GAAP Financial (FTE) Measures at the end of this release.
4 Acquired loans which otherwise would be in non-accrual status are not included in this figure, as they earn interest through the yield accretion.
5 Past due loans from the acquired portfolio are included at fair value.
Page 7 of 10
VIRGINIA NATIONAL BANKSHARES CORPORATION
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
(dollars in thousands)
(Unaudited)
| For the three months ended | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2021 | September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||
| Interest | Interest | Interest | |||||||||||||||||||||||
| Average | Income/ | Average | Average | Income/ | Average | Average | Income/ | Average | |||||||||||||||||
| (dollars in thousands) | Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | ||||||||||||||||
| ASSETS | |||||||||||||||||||||||||
| Interest Earning Assets: | |||||||||||||||||||||||||
| Securities | |||||||||||||||||||||||||
| Taxable Securities | $ | 225,757 | $ | 853 | 1.51 | % | $ | 214,194 | $ | 797 | 1.49 | % | $ | 129,201 | $ | 526 | 1.63 | % | |||||||
| Tax Exempt Securities 1 | 63,083 | 371 | 2.35 | % | 59,869 | 355 | 2.37 | % | 26,932 | 149 | 2.21 | % | |||||||||||||
| Total Securities 1 | 288,840 | 1,224 | 1.70 | % | 274,063 | 1,152 | 1.68 | % | 156,133 | 675 | 1.73 | % | |||||||||||||
| Total Loans | 1,088,278 | 11,995 | 4.37 | % | 1,140,281 | 12,959 | 4.51 | % | 618,296 | 6,742 | 4.34 | % | |||||||||||||
| Fed Funds Sold | 152,435 | 61 | 0.16 | % | 137,472 | 45 | 0.13 | % | 32,922 | 6 | 0.07 | % | |||||||||||||
| Other interest-bearing deposits | 287,457 | 138 | 0.19 | % | 198,983 | 55 | 0.11 | % | — | — | — | ||||||||||||||
| Total Earning Assets | 1,817,010 | 13,418 | 2.93 | % | 1,750,799 | 14,211 | 3.22 | % | 807,351 | 7,423 | 3.65 | % | |||||||||||||
| Less: Allowance for Loan Losses | (5,704 | ) | (5,532 | ) | (5,345 | ) | |||||||||||||||||||
| Total Non-Earning Assets | 140,539 | 159,014 | 43,184 | ||||||||||||||||||||||
| Total Assets | $ | 1,951,845 | $ | 1,904,281 | $ | 845,190 | |||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||
| Interest Bearing Liabilities: | |||||||||||||||||||||||||
| Interest Bearing Deposits: | |||||||||||||||||||||||||
| Interest Checking | $ | 421,372 | $ | 70 | 0.07 | % | $ | 410,504 | $ | 72 | 0.07 | % | $ | 135,993 | $ | 24 | 0.07 | % | |||||||
| Money Market and Savings Deposits | 660,438 | 639 | 0.38 | % | 621,211 | 601 | 0.38 | % | 277,850 | 332 | 0.48 | % | |||||||||||||
| Time Deposits | 162,584 | 222 | 0.54 | % | 171,256 | 282 | 0.65 | % | 98,447 | 288 | 1.16 | % | |||||||||||||
| Total Interest-Bearing Deposits | 1,244,394 | 931 | 0.30 | % | 1,202,971 | 955 | 0.31 | % | 512,290 | 644 | 0.50 | % | |||||||||||||
| Short term borrowings | — | — | — | 22,260 | (375 | ) | -6.68 | % | 32,719 | 39 | 0.47 | % | |||||||||||||
| Junior subordinated debt | 3,360 | 50 | 5.86 | % | 3,349 | 50 | 5.92 | % | — | — | — | ||||||||||||||
| Total Interest-Bearing Liabilities | 1,247,754 | 981 | 0.31 | % | 1,228,580 | 630 | 0.20 | % | 545,009 | 683 | 0.50 | % | |||||||||||||
| Non-Interest-Bearing Liabilities: | |||||||||||||||||||||||||
| Demand deposits | 532,397 | 499,068 | 214,020 | ||||||||||||||||||||||
| Other liabilities | 10,741 | 15,003 | 4,210 | ||||||||||||||||||||||
| Total Liabilities | 1,790,892 | 1,742,651 | 763,239 | ||||||||||||||||||||||
| Shareholders' Equity | 160,953 | 161,630 | 81,951 | ||||||||||||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 1,951,845 | $ | 1,904,281 | $ | 845,190 | |||||||||||||||||||
| Net Interest Income (FTE) | $ | 12,437 | $ | 13,581 | $ | 6,740 | |||||||||||||||||||
| Interest Rate Spread 2 | 2.62 | % | 3.02 | % | 3.16 | % | |||||||||||||||||||
| Cost of Funds | 0.22 | % | 0.14 | % | 0.36 | % | |||||||||||||||||||
| Interest Expense as a Percentage of Average Earning Assets | 0.21 | % | 0.14 | % | 0.34 | % | |||||||||||||||||||
| Net Interest Margin (FTE) 3 | 2.72 | % | 3.08 | % | 3.32 | % |
1 Tax-exempt income for investment securities has been adjusted to a fully tax-equivalent basis (FTE), using a Federal income tax rate of 21%.
Refer to the Reconcilement of Non-GAAP Measures table at the end of this release.
2 Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.
3 Net interest margin (FTE) is net interest income expressed as a percentage of average earning assets.
Page 8 of 10
VIRGINIA NATIONAL BANKSHARES CORPORATION
QUARTERLY RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(dollars in thousands, except per share data)
(Unaudited)
| Three Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 | December 31, 2020 | ||||||||||||
| Performance measures | ||||||||||||||||
| Return on average assets ("ROAA") | 1.06 | % | 0.65 | % | 0.03 | % | 0.68 | % | 1.23 | % | ||||||
| Impact of merger expenses 1 | -0.12 | % | 0.30 | % | 0.99 | % | 0.08 | % | 0.17 | % | ||||||
| ROAA, excluding merger expenses 1 (non-GAAP) | 0.94 | % | 0.95 | % | 1.02 | % | 0.76 | % | 1.40 | % | ||||||
| Return on average equity ("ROAE") | 12.86 | % | 7.70 | % | 0.37 | % | 7.40 | % | 12.75 | % | ||||||
| Impact of merger expenses 1 | -1.45 | % | 3.53 | % | 11.51 | % | 0.83 | % | 1.79 | % | ||||||
| ROAE, excluding merger expenses 1 (non-GAAP) | 11.41 | % | 11.23 | % | 11.88 | % | 8.23 | % | 14.54 | % | ||||||
| Net income | $ | 5,219 | $ | 3,138 | $ | 147 | $ | 1,505 | $ | 2,616 | ||||||
| Impact of merger expenses 1 | (588 | ) | 1,424 | 4,553 | 0 | 169 | 368 | |||||||||
| Net income, excluding merger expenses 1 (non-GAAP) | $ | 4,631 | $ | 4,562 | $ | 4,700 | $ | 1,674 | $ | 2,984 | ||||||
| Net income per share | $ | 0.98 | $ | 0.59 | $ | 0.03 | $ | 0.53 | $ | 0.77 | ||||||
| Impact of merger expenses 1 | (0.11 | ) | 0.27 | 0.86 | 0.06 | 0.15 | ||||||||||
| Net income per share, excluding merger expenses 1 (non-GAAP) | $ | 0.87 | $ | 0.86 | $ | 0.89 | $ | 0.59 | $ | 0.92 | ||||||
| Fully tax-equivalent measures | ||||||||||||||||
| Net interest income | $ | 12,359 | $ | 13,504 | $ | 13,151 | $ | 5,974 | $ | 6,702 | ||||||
| Fully tax-equivalent adjustment | 78 | 77 | 73 | 47 | 38 | |||||||||||
| Net interest income (FTE) 2 | $ | 12,437 | $ | 13,581 | $ | 13,224 | $ | 6,021 | $ | 6,740 | ||||||
| Efficiency ratio 3 | 58.0 | % | 75.5 | % | 99.5 | % | 68.2 | % | 57.3 | % | ||||||
| Fully tax-equivalent adjustment | -0.3 | % | -0.3 | % | -0.4 | % | -0.5 | % | -0.3 | % | ||||||
| Efficiency ratio (FTE) 4 | 57.7 | % | 75.2 | % | 99.1 | % | 67.7 | % | 57.0 | % | ||||||
| Net interest margin | 2.70 | % | 3.06 | % | 3.03 | % | 2.81 | % | 3.30 | % | ||||||
| Fully tax-equivalent adjustment | 0.02 | % | 0.02 | % | 0.02 | % | 0.02 | % | 0.02 | % | ||||||
| Net interest margin (FTE) 2 | 2.72 | % | 3.08 | % | 3.05 | % | 2.83 | % | 3.32 | % | ||||||
| As of | ||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||
| 2021 | 2021 | 2021 | 2021 | 2020 | ||||||||||||
| Other financial measures | ||||||||||||||||
| ALLL to total loans | 0.56 | % | 0.51 | % | 0.47 | % | 0.90 | % | 0.90 | % | ||||||
| Impact of acquired loans and fair value mark | 0.39 | % | 0.39 | % | 0.41 | % | — | — | ||||||||
| ALLL to total loans, excluding acquired loans and <br>fair value mark (non-GAAP) | 0.95 | % | 0.90 | % | 0.88 | % | 0.90 | % | 0.90 | % | ||||||
| ALLL to total loans | 0.56 | % | 0.51 | % | 0.47 | % | 0.90 | % | 0.90 | % | ||||||
| Impact of PPP loans | 0.02 | % | 0.01 | % | 0.04 | % | 0.12 | % | 0.08 | % | ||||||
| ALLL to total loans, excluding PPP loans (non-GAAP) | 0.58 | % | 0.52 | % | 0.51 | % | 1.02 | % | 0.98 | % | ||||||
| Book value per share | $ | 30.50 | $ | 30.13 | $ | 29.89 | $ | 29.33 | $ | 30.43 | ||||||
| Impact of intangible assets | (3.14 | ) | (3.21 | ) | (3.29 | ) | $ | (0.26 | ) | $ | (0.26 | ) | ||||
| Tangible book value per share (non-GAAP) | $ | 27.36 | $ | 26.92 | $ | 26.60 | $ | 29.07 | $ | 30.17 |
1 References to merger expenses include merger and merger-related expenses and are net of tax.
2 FTE calculations use a Federal income tax rate of 21%.
3 The efficiency ratio, GAAP basis, is computed by dividing noninterest expense by the sum of net interest income and noninterest income.
4 The efficiency ratio, FTE, is computed by dividing noninterest expense by the sum of net interest income (FTE) and noninterest income.
Page 9 of 10
VIRGINIA NATIONAL BANKSHARES CORPORATION
ANNUAL RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES
(dollars in thousands, except per share data)
(Unaudited)
| For the Twelve Months Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, 2021 | December 31, 2020 | |||||
| Performance measures | ||||||
| Return on average assets ("ROAA") | 0.61 | % | 1.00 | % | ||
| Impact of merger expenses 1 | 0.34 | % | 0.09 | % | ||
| ROAA, excluding merger expenses 1 (non-GAAP) | 0.95 | % | 1.09 | % | ||
| Return on average equity ("ROAE") | 7.12 | % | 10.01 | % | ||
| Impact of merger expenses 1 | 3.95 | % | 0.88 | % | ||
| ROAE, excluding merger expenses 1 (non-GAAP) | 11.07 | % | 10.89 | % | ||
| Net income | $ | 10,009 | $ | 7,978 | ||
| Impact of merger expenses 1 | 5,557 | 704 | ||||
| Net income, excluding merger expenses 1 (non-GAAP) | $ | 15,566 | $ | 8,682 | ||
| Net income per share | $ | 2.13 | $ | 2.95 | ||
| Impact of merger expenses 1 | 1.18 | 0.26 | ||||
| Net income per share, excluding merger expenses 1 (non-GAAP) | $ | 3.31 | $ | 3.21 | ||
| Fully tax-equivalent measures | ||||||
| Net interest income | $ | 44,988 | $ | 23,879 | ||
| Fully tax-equivalent adjustment | 275 | 126 | ||||
| Net interest income (FTE) 2 | $ | 45,263 | $ | 24,005 | ||
| Efficiency ratio 3 | 76.7 | % | 61.7 | % | ||
| Fully tax-equivalent adjustment | -0.4 | % | -0.3 | % | ||
| Efficiency ratio (FTE) 4 | 76.3 | % | 61.4 | % | ||
| Net interest margin | 2.73 | % | 3.16 | % | ||
| Fully tax-equivalent adjustment | 0.01 | % | 0.01 | % | ||
| Net interest margin (FTE) 2 | 2.74 | % | 3.17 | % |
1 References to merger expenses include merger and merger-related expenses and are net of tax.
2 FTE calculations use a Federal income tax rate of 21%.
3 The efficiency ratio, GAAP basis, is computed by dividing noninterest expense by the sum of net interest income and noninterest income.
4 The efficiency ratio, FTE, is computed by dividing noninterest expense by the sum of net interest income (FTE) and noninterest income.
Page 10 of 10