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): January 26, 2024 |
|---|
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 January 26, 2024, Virginia National Bankshares Corporation (the “Company”) issued a press statement announcing the consolidated earnings for the quarter and full-year ended December 31, 2023.
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 January 26, 2024. |
|---|---|
| 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: | January 26, 2024 | 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 2023 FOURTH QUARTER AND FULL YEAR EARNINGS
Charlottesville, VA – January 26, 2024 - Virginia National Bankshares Corporation (NASDAQ: VABK) (the “Company”) today reported quarterly net income of $3.2 million, or $0.59 per diluted share, for the quarter ended December 31, 2023, compared to $7.1 million, or $1.32 per diluted share, recognized for the quarter ended December 31, 2022. For the twelve months ended December 31, 2023, the Company recognized net income of $19.3 million, or $3.58 per diluted share, compared to $23.4 million, or $4.38 per diluted share, for the twelve months ended December 31, 2022. Gross loans outstanding as of December 31, 2023 totaled $1.1 billion, an increase of $156.3 million, or 16.7%, compared to December 31, 2022 and an increase of $72.1 million, or 7.1%, compared to September 30, 2023.
2023 Fourth Quarter and Full Year Highlights
• The Company continued to experience loan growth in the fourth quarter of 2023, resulting in a 7.1% increase from the prior quarter and 16.7% over the prior year-end.
• Yield on loans elevated to 5.47% for the three months ended December 31, 2023, from 5.00% for the prior year same period and increased to 5.72% for the year ended December 31, 2023, from 4.52% for the year ended December 31, 2022.
• Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.17% as of December 31, 2023, and 0.08% as of December 31, 2022.
• Noninterest expense for the three months ended December 31, 2023 decreased $977 thousand, or 10.5%, compared to the three months ended December 31, 2022. For the year ended December 31, 2023, noninterest expense decreased $4.5 million, or 11.7%. Such decreases are the result of continued efficiencies gained from the merger, including: reduced headcount resulting in lower salaries and employee benefit costs; lower occupancy costs from right-sizing our branch network; and reduced professional fees.
• The Company utilizes a third-party to offer multi-million-dollar FDIC insurance to customers with balances in excess of single-bank limits through Insured Cash Sweep® (ICS) plans. Deposit balances held in ICS plans amounted to $151.6 million as of December 31, 2023 and $134.6 million as of December 31, 2022.
• Total deposits declined $69.2 million, or 4.7% from December 31, 2022 to December 31, 2023, as many customers moved funds outside of the Bank to earn higher yields while the Bank's strategy was to keep cost of funds low during the first quarter of 2023. Deposit balances increased $38.8 million, or 2.8%, from September 30, 2023 to December 31, 2023, as the Bank's strategy shifted to meet customer rate demands.
• Correlated with the year-over-year deposit decline noted above, borrowings increased from December 31, 2022 to December 31, 2023 by $66.5 million. As of December 31, 2023, the Company had unused borrowing facilities in place of approximately $119.5 million. Management closely monitors its liquidity position.
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Loans and Asset Quality
• Gross loans outstanding as of December 31, 2023 totaled $1.1 billion, an increase of $156.3 million, or 16.7%, compared to December 31, 2022.
• Nonperforming assets amounted to $2.7 million as of December 31, 2023, compared to $1.4 million as of December 31, 2022; the Company currently holds no other real estate owned.
o Eight loans to seven borrowers are in non-accrual status, totaling $1.9 million, as of December 31, 2023, compared to $673 thousand as of December 31, 2022. The adoption of CECL altered the manner in which purchased loans that were in non-accrual status are presented, and as a result, two such loans totaling $470 thousand are now included in this figure.
o Loans 90 days or more past due and still accruing interest amounted to $880 thousand as of December 31, 2023, compared to $705 thousand as of December 31, 2022. The past due balance as of December 31, 2023 is comprised of two loans totaling $783 thousand which are 100% government-guaranteed, and five student loans totaling $97 thousand.
• The period-end Allowance for Credit Losses (“ACL”) as a percentage of total loans was 0.77% as of December 31, 2023 and 0.59% as of December 31, 2022. The fair value mark that was allocated to the acquired loans was $21.3 million as of April 1, 2021, with a remaining balance of $9.4 million as of December 31, 2023.
• For the three months ended December 31, 2023, the Company recorded a provision for credit losses of $794 thousand, which includes an $81 thousand provision for unfunded commitments. The increase in provision over the prior year is primarily the result of the increase in originated loan balances.
Net Interest Income
• Net interest income for the three months ended December 31, 2023 of $10.8 million decreased $4.6 million, or 30.1%, compared to the three months ended December 31, 2022, as the increase in interest expense on deposit accounts and borrowings outweighed the increase in interest income earned on assets. Net interest income for 2023 of $49.0 million decreased $4.6 million, or 8.6%, compared to 2022.
• Net interest margin (FTE), (a non-GAAP financial measure)1, for the three months ended December 31, 2023 declined to 2.89%, compared to 3.91% for the three months ended December 31, 2022. However, net interest margin (FTE), (a non-GAAP financial measure)1, for 2023 increased to 3.37% compared to 3.21% for 2022.
• The overall cost of funds, including noninterest-bearing deposits, of 201 bps incurred in the three months ended December 31, 2023 increased 178 bps from 23 bps in the same period in the prior year. Overall, the cost of interest-bearing deposits increased period over period, from a cost of 32 bps to 258 bps. The overall cost of funds, including noninterest-bearing deposits, of 148 bps incurred for the full year of 2023 increased 129 bps from 19 bps in 2022. Overall, the cost of interest-bearing deposits increased year-over-year, from a cost of 27 bps to 194 bps.
Noninterest Income
• Noninterest income for the three months ended December 31, 2023 decreased $550 thousand, or 20.5%, compared to the three months ended December 31, 2022. In the fourth quarter of 2022, the Company received a $267 thousand recovery of unearned premiums related to the loss of insurance on the student loan portfolio. Also, $131 thousand of income was recognized in the fourth quarter of 2022 related to advisory and brokerage income; this business line was sold in the fourth quarter of 2022, eliminating future income and expense related thereto.
• Noninterest income for 2023 decreased $4.6 million, or 33.4%, compared to 2022. During the prior year, the Company received and recognized a $2.4 million one-time payment to resolve a commercial dispute and a $1.0 million gain was recognized in connection with the sale of two buildings. Also during 2022, a $404 thousand gain was recognized in connection with the sale of Sturman Wealth Advisors; as noted above, as a result of the sale of the business line, future income and expense is eliminated related thereto.
Book Value
Book value per share was $28.52 as of December 31, 2023 and $25.00 as of December 31, 2022, and tangible book value per share (a non-GAAP financial measure)1 was $26.12 as of December 31, 2023 compared to $22.31 as of December 31, 2022. These values increased as net retained income increased and unrealized losses in the investment portfolio decreased period over period.
_____________________________________________________________________
1 See "Reconciliation of Certain Quarterly Non-GAAP Financial Measures" at the end of this release.
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Income Taxes
The effective tax rate amounted to 16.6% compared to 18.5% for the three months ended December 31, 2023 and 2022, respectively, and 17.2% and 17.9% for the full years of 2023 and 2022, respectively, which are all lower than the statutory rate, due to the recognition of low-income housing tax credits and the effect of tax-exempt income from municipal bonds and income from bank owned life insurance policies in the form of interest and proceeds as a result of a death of a former employee.
Dividends
Cash dividends of $1.8 million, or $0.33 per share, were declared and paid during the fourth quarter of 2023.
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 nine banking offices throughout Fauquier and Prince William counties, three banking offices in Charlottesville and Albemarle County, and banking offices in Winchester and 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. 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: inflation, interest rates, market and monetary fluctuations; liquidity and capital requirements; market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises, war and other military conflicts or other major events, the governmental and societal responses thereto, or the prospect of these events; changes, particularly declines, in general economic and market conditions in the local economies in which the Company operates, including the effects of declines in real estate values; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; the impact of changes in laws, regulations and guidance related to financial services including, but not limited to, taxes, banking, securities and insurance; changes in accounting principles, policies and guidelines; the financial condition of the Company’s borrowers; the Company's ability to attract, hire, train and retain qualified employees; an increase in unemployment levels; competitive pressures on loan and deposit pricing and demand; fluctuation in asset quality; assumptions that underlie the Company’s ACL; the value of securities held in the Company's investment portfolio; performance of assets under management; cybersecurity threats or attacks and the development and maintenance of reliable electronic systems; changes in technology and their impact on the marketing of new products and services and the acceptance of these products and services by new and existing customers; the willingness of customers to substitute competitors’ products and services for the Company’s products and services; the risks and uncertainties described from time to time in the Company’s press releases and filings with the SEC; and the Company’s performance in managing the risks involved in any of the foregoing. 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, 2022 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, 2022* | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Cash and due from banks | 18,074 | $ | 20,993 | ||
| Interest-bearing deposits in other banks | 10,316 | 19,098 | |||
| Federal funds sold | - | 45 | |||
| Securities: | |||||
| Available for sale (AFS), at fair value | 420,595 | 538,186 | |||
| Restricted securities, at cost | 8,385 | 5,137 | |||
| Total securities | 428,980 | 543,323 | |||
| Loans, net of deferred fees and costs | 1,092,665 | 936,415 | |||
| Allowance for credit losses | (8,395 | ) | (5,552 | ) | |
| Loans, net | 1,084,270 | 930,863 | |||
| Premises and equipment, net | 16,195 | 17,808 | |||
| Assets held for sale | - | 965 | |||
| Bank owned life insurance | 38,904 | 38,552 | |||
| Goodwill | 7,768 | 7,768 | |||
| Core deposit intangible, net | 5,093 | 6,586 | |||
| Right of use asset, net | 6,748 | 6,536 | |||
| Deferred tax asset, net | 15,382 | 17,315 | |||
| Accrued interest receivable and other assets | 14,287 | 13,507 | |||
| Total assets | 1,646,017 | $ | 1,623,359 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Liabilities: | |||||
| Demand deposits: | |||||
| Noninterest-bearing | 372,857 | $ | 495,649 | ||
| Interest-bearing | 305,541 | 399,983 | |||
| Money market and savings deposit accounts | 412,119 | 467,600 | |||
| Certificates of deposit and other time deposits | 318,581 | 115,106 | |||
| Total deposits | 1,409,098 | 1,478,338 | |||
| Federal funds purchased | 3,462 | - | |||
| Borrowings | 66,500 | - | |||
| Junior subordinated debt, net | 3,459 | 3,413 | |||
| Lease liability | 6,504 | 6,173 | |||
| Accrued interest payable and other liabilities | 3,954 | 2,019 | |||
| Total liabilities | 1,492,977 | 1,489,943 | |||
| Commitments and contingent liabilities | |||||
| Shareholders' equity: | |||||
| Preferred stock, 2.50 par value | - | - | |||
| Common stock, 2.50 par value | 13,253 | 13,214 | |||
| Capital surplus | 107,940 | 105,344 | |||
| Retained earnings | 71,891 | 63,482 | |||
| Accumulated other comprehensive loss | (40,044 | ) | (48,624 | ) | |
| Total shareholders' equity | 153,040 | 133,416 | |||
| Total liabilities and shareholders' equity | 1,646,017 | $ | 1,623,359 | ||
| Common shares outstanding | 5,365,982 | 5,337,271 | |||
| Common shares authorized | 10,000,000 | 10,000,000 | |||
| Preferred shares outstanding | - | - | |||
| Preferred shares authorized | 2,000,000 | 2,000,000 |
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, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||
| Interest and dividend income: | ||||||||||
| Loans, including fees | $ | 14,644 | $ | 11,828 | $ | 56,053 | $ | 44,231 | ||
| Federal funds sold | 64 | 427 | 207 | 1,088 | ||||||
| Other interest-bearing deposits | 59 | 494 | 501 | 1,467 | ||||||
| Investment securities: | ||||||||||
| Taxable | 2,880 | 3,115 | 11,554 | 8,416 | ||||||
| Tax exempt | 325 | 324 | 1,308 | 1,249 | ||||||
| Dividends | 102 | 88 | 367 | 280 | ||||||
| Total interest and dividend income | 18,074 | 16,276 | 69,990 | 56,731 | ||||||
| Interest expense: | ||||||||||
| Demand deposits | 73 | 55 | 346 | 230 | ||||||
| Money market and savings deposits | 2,964 | 627 | 9,673 | 2,097 | ||||||
| Certificates and other time deposits | 3,508 | 159 | 8,617 | 657 | ||||||
| Borrowings | 663 | - | 1,934 | - | ||||||
| Federal funds purchased | 26 | - | 138 | - | ||||||
| Junior subordinated debt | 87 | 51 | 313 | 200 | ||||||
| Total interest expense | 7,321 | 892 | 21,021 | 3,184 | ||||||
| Net interest income | 10,753 | 15,384 | 48,969 | 53,547 | ||||||
| Provision for credit losses | 794 | 136 | 734 | 106 | ||||||
| Net interest income after provision for credit losses | 9,959 | 15,248 | 48,235 | 53,441 | ||||||
| Noninterest income: | ||||||||||
| Wealth management fees | 756 | 721 | 1,976 | 2,440 | ||||||
| Advisory and brokerage income | - | 131 | - | 770 | ||||||
| Deposit account fees | 389 | 434 | 1,593 | 1,799 | ||||||
| Debit/credit card and ATM fees | 535 | 647 | 2,277 | 2,794 | ||||||
| Bank owned life insurance income | 270 | 253 | 1,764 | 963 | ||||||
| Resolution of commercial dispute | - | - | - | 2,400 | ||||||
| Gains (losses) on sales of assets, net | (20 | ) | 87 | 112 | 1,043 | |||||
| Gain on termination of interest swap | - | - | 460 | - | ||||||
| Gains (losses) on sales of AFS, net | - | - | (206 | ) | 404 | |||||
| Other | 206 | 413 | 1,125 | 1,048 | ||||||
| Total noninterest income | 2,136 | 2,686 | 9,101 | 13,661 | ||||||
| Noninterest expense: | ||||||||||
| Salaries and employee benefits | 3,851 | 3,652 | 15,900 | 17,260 | ||||||
| Net occupancy | 918 | 729 | 4,017 | 4,526 | ||||||
| Equipment | 173 | 111 | 762 | 897 | ||||||
| Bank franchise tax | 291 | 304 | 1,220 | 1,216 | ||||||
| Computer software | 188 | 228 | 778 | 1,136 | ||||||
| Data processing | 799 | 806 | 2,970 | 2,727 | ||||||
| FDIC deposit insurance assessment | 170 | 90 | 710 | 511 | ||||||
| Marketing, advertising and promotion | 186 | 351 | 1,098 | 1,224 | ||||||
| Plastics expense | 48 | 72 | 177 | 394 | ||||||
| Professional fees | 82 | 306 | 674 | 1,357 | ||||||
| Core deposit intangible amortization | 355 | 403 | 1,493 | 1,684 | ||||||
| Other | 1,237 | 2,223 | 4,264 | 5,624 | ||||||
| Total noninterest expense | 8,298 | 9,275 | 34,063 | 38,556 | ||||||
| Income before income taxes | 3,797 | 8,659 | 23,273 | 28,546 | ||||||
| Provision for income taxes | 629 | 1,602 | 4,010 | 5,108 | ||||||
| Net income | $ | 3,168 | $ | 7,057 | $ | 19,263 | $ | 23,438 | ||
| Net income per common share, basic | $ | 0.59 | $ | 1.32 | $ | 3.60 | $ | 4.40 | ||
| Net income per common share, diluted | $ | 0.59 | $ | 1.32 | $ | 3.58 | $ | 4.38 | ||
| Weighted average common shares outstanding, basic | 5,365,982 | 5,333,902 | 5,357,085 | 5,324,740 | ||||||
| Weighted average common shares outstanding, diluted | 5,394,713 | 5,362,220 | 5,385,201 | 5,351,358 |
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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, 2023 | September 30, 2023 | June 30, 2023 | March 31, <br>2023 | December 31, 2022 | |||||||||||
| Common Share Data: | |||||||||||||||
| Net income per weighted average share, basic | $ | 0.59 | $ | 0.87 | $ | 1.05 | $ | 1.08 | $ | 1.32 | |||||
| Net income per weighted average share, diluted | $ | 0.59 | $ | 0.86 | $ | 1.05 | $ | 1.08 | $ | 1.32 | |||||
| Weighted average shares outstanding, basic | 5,365,982 | 5,365,982 | 5,357,873 | 5,338,099 | 5,333,902 | ||||||||||
| Weighted average shares outstanding, diluted | 5,394,713 | 5,395,483 | 5,375,073 | 5,375,619 | 5,362,220 | ||||||||||
| Actual shares outstanding | 5,365,982 | 5,365,982 | 5,365,982 | 5,338,650 | 5,327,271 | ||||||||||
| Tangible book value per share at period end (non-GAAP) 5 | $ | 26.12 | $ | 22.83 | $ | 24.01 | $ | 23.88 | $ | 22.31 | |||||
| Key Ratios: | |||||||||||||||
| Return on average assets 1 | 0.79 | % | 1.18 | % | 1.46 | % | 1.48 | % | 1.65 | % | |||||
| Return on average equity 1 | 9.03 | % | 12.91 | % | 15.98 | % | 17.57 | % | 22.23 | % | |||||
| Net interest margin (FTE) 2 | 2.89 | % | 3.04 | % | 3.83 | % | 3.71 | % | 3.91 | % | |||||
| Efficiency ratio (FTE) 3 | 64.0 | % | 60.3 | % | 54.1 | % | 56.2 | % | 51.7 | % | |||||
| Loan-to-deposit ratio | 77.5 | % | 74.5 | % | 72.2 | % | 67.3 | % | 63.3 | % | |||||
| Capital Ratios: | |||||||||||||||
| Tier 1 leverage ratio | 11.13 | % | 11.26 | % | 11.20 | % | 10.64 | % | 9.77 | % | |||||
| Total risk-based capital ratio | 18.24 | % | 18.76 | % | 18.80 | % | 18.37 | % | 17.64 | % | |||||
| Assets and Asset Quality: | |||||||||||||||
| Average earning assets | $ | 1,487,910 | $ | 1,460,555 | $ | 1,443,048 | $ | 1,475,617 | $ | 1,568,765 | |||||
| Average gross loans | $ | 1,061,297 | $ | 986,480 | $ | 940,264 | $ | 932,834 | $ | 938,740 | |||||
| Fair value mark on acquired loans | $ | 9,399 | $ | 9,965 | $ | 10,957 | $ | 14,120 | $ | 15,887 | |||||
| Allowance for credit losses: | |||||||||||||||
| Beginning of period | $ | 7,799 | $ | 7,863 | $ | 7,772 | $ | 5,552 | $ | 5,485 | |||||
| Impact of adoption of CECL | - | $ | - | $ | - | $ | 2,491 | $ | - | ||||||
| Provision for (recovery of) credit losses | 713 | 2 | 216 | (235 | ) | 136 | |||||||||
| Charge-offs | (207 | ) | (199 | ) | (180 | ) | (136 | ) | (472 | ) | |||||
| Recoveries | 90 | 133 | 55 | 100 | 403 | ||||||||||
| Net charge-offs | (117 | ) | (66 | ) | (125 | ) | (36 | ) | (69 | ) | |||||
| End of period | $ | 8,395 | $ | 7,799 | $ | 7,863 | $ | 7,772 | $ | 5,552 | |||||
| Non-accrual loans | $ | 1,852 | $ | 1,143 | $ | 1,185 | $ | 1,228 | $ | 673 | |||||
| Loans 90 days or more past due and still accruing | 880 | 854 | 107 | 69 | 705 | ||||||||||
| Total nonperforming assets (NPA) 4 | $ | 2,732 | $ | 1,997 | $ | 1,292 | $ | 1,297 | $ | 1,378 | |||||
| NPA as a % of total assets | 0.17 | % | 0.13 | % | 0.08 | % | 0.08 | % | 0.08 | % | |||||
| NPA as a % of gross loans | 0.25 | % | 0.20 | % | 0.13 | % | 0.14 | % | 0.15 | % | |||||
| ACL to gross loans | 0.77 | % | 0.76 | % | 0.81 | % | 0.83 | % | 0.59 | % | |||||
| Non-accruing loans to gross loans | 0.17 | % | 0.11 | % | 0.12 | % | 0.13 | % | 0.07 | % | |||||
| Net charge-offs to average loans 1 | 0.04 | % | 0.03 | % | 0.05 | % | 0.02 | % | 0.03 | % |
1 Ratio is computed on an annualized basis.
2 The net interest margin and net interest income are reported on a fully tax-equivalent basis (FTE) basis, using a Federal income tax rate of 21%. This is a non-GAAP financial measure. Refer to the Reconciliation of Certain Non-GAAP Financial (FTE) Measures at the end of this release.
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 The Bank held no other real estate owned during any of the periods presented.
5 This is a non-GAAP financial measure. Refer to the Reconciliation of Certain Non-GAAP Financial (FTE) Measures at the end of this release.
Page 6 of 9
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, 2023 | December 31, 2022 | |||||||||||||||
| Interest | Interest | |||||||||||||||
| Average | Income/ | Average | Average | Income/ | Average | |||||||||||
| Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | |||||||||||
| ASSETS | ||||||||||||||||
| Interest Earning Assets: | ||||||||||||||||
| Securities: | ||||||||||||||||
| Taxable Securities | $ | 346,248 | $ | 2,982 | 3.44 | % | $ | 471,566 | $ | 3,204 | 2.72 | % | ||||
| Tax Exempt Securities 1 | 66,710 | 411 | 2.46 | % | 67,090 | 410 | 2.44 | % | ||||||||
| Total Securities 1 | 412,958 | 3,393 | 3.29 | % | 538,656 | 3,614 | 2.68 | % | ||||||||
| Loans: | ||||||||||||||||
| Real Estate | 873,226 | 11,919 | 5.42 | % | 820,751 | 10,322 | 4.99 | % | ||||||||
| Commercial | 149,765 | 2,018 | 5.35 | % | 71,730 | 785 | 4.34 | % | ||||||||
| Consumer | 38,306 | 707 | 7.32 | % | 46,259 | 721 | 6.18 | % | ||||||||
| Total Loans | 1,061,297 | 14,644 | 5.47 | % | 938,740 | 11,828 | 5.00 | % | ||||||||
| Fed Funds Sold | 4,709 | 64 | 5.39 | % | 46,042 | 426 | 3.67 | % | ||||||||
| Other interest-bearing deposits | 8,946 | 59 | 2.62 | % | 45,327 | 494 | 4.32 | % | ||||||||
| Total Earning Assets | 1,487,910 | 18,160 | 4.84 | % | 1,568,765 | 16,362 | 4.14 | % | ||||||||
| Less: Allowance for Credit Losses | (7,833 | ) | (5,395 | ) | ||||||||||||
| Total Non-Earning Assets | 115,114 | 135,015 | ||||||||||||||
| Total Assets | $ | 1,595,191 | $ | 1,698,385 | ||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||
| Interest Bearing Liabilities: | ||||||||||||||||
| Interest Bearing Deposits: | ||||||||||||||||
| Interest Checking | $ | 287,228 | $ | 73 | 0.10 | % | $ | 403,570 | $ | 55 | 0.05 | % | ||||
| Money Market and Savings Deposits | 413,771 | 2,964 | 2.84 | % | 500,397 | 627 | 0.50 | % | ||||||||
| Time Deposits | 304,053 | 3,508 | 4.58 | % | 125,334 | 158 | 0.50 | % | ||||||||
| Total Interest-Bearing Deposits | 1,005,052 | 6,545 | 2.58 | % | 1,029,301 | 840 | 0.32 | % | ||||||||
| Borrowings | 49,147 | 663 | 5.35 | % | 2 | — | — | |||||||||
| Federal funds purchased | 1,755 | 26 | 5.88 | % | — | — | — | |||||||||
| Junior subordinated debt | 3,454 | 87 | 9.99 | % | 3,406 | 52 | 6.06 | % | ||||||||
| Total Interest-Bearing Liabilities | 1,059,408 | 7,321 | 2.74 | % | 1,032,709 | 892 | 0.34 | % | ||||||||
| Non-Interest-Bearing Liabilities: | ||||||||||||||||
| Demand deposits | 386,001 | 531,719 | ||||||||||||||
| Other liabilities | 10,666 | 8,021 | ||||||||||||||
| Total Liabilities | 1,456,075 | 1,572,449 | ||||||||||||||
| Shareholders' Equity | 139,116 | 125,936 | ||||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 1,595,191 | $ | 1,698,385 | ||||||||||||
| Net Interest Income (FTE) | $ | 10,839 | $ | 15,470 | ||||||||||||
| Interest Rate Spread 2 | 2.10 | % | 3.80 | % | ||||||||||||
| Cost of Funds | 2.01 | % | 0.23 | % | ||||||||||||
| Interest Expense as a Percentage of <br> Average Earning Assets | 1.95 | % | 0.23 | % | ||||||||||||
| Net Interest Margin (FTE) 3 | 2.89 | % | 3.91 | % |
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 7 of 9
VIRGINIA NATIONAL BANKSHARES CORPORATION
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)
(dollars in thousands)
(Unaudited)
| For the twelve months ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2023 | December 31, 2022 | |||||||||||||||
| Interest | Interest | |||||||||||||||
| Average | Income/ | Average | Average | Income/ | Average | |||||||||||
| Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | |||||||||||
| ASSETS | ||||||||||||||||
| Interest Earning Assets: | ||||||||||||||||
| Securities: | ||||||||||||||||
| Taxable Securities | $ | 400,189 | $ | 11,921 | 2.98 | % | $ | 373,680 | $ | 8,696 | 2.33 | % | ||||
| Tax Exempt Securities 1 | 66,895 | 1,657 | 2.48 | % | 65,861 | 1,582 | 2.40 | % | ||||||||
| Total Securities 1 | 467,084 | 13,578 | 2.91 | % | 439,541 | 10,278 | 2.34 | % | ||||||||
| Loans: | ||||||||||||||||
| Real Estate | 839,326 | 47,996 | 5.72 | % | 847,238 | 38,011 | 4.49 | % | ||||||||
| Commercial | 100,122 | 5,121 | 5.11 | % | 81,410 | 3,583 | 4.40 | % | ||||||||
| Consumer | 41,140 | 2,936 | 7.14 | % | 49,619 | 2,637 | 5.31 | % | ||||||||
| Total Loans | 980,588 | 56,053 | 5.72 | % | 978,267 | 44,231 | 4.52 | % | ||||||||
| Fed Funds Sold | 3,825 | 207 | 5.41 | % | 100,033 | 1,088 | 1.09 | % | ||||||||
| Other interest-bearing deposits | 13,964 | 501 | 3.59 | % | 161,260 | 1,467 | 0.91 | % | ||||||||
| Total Earning Assets | 1,465,461 | 70,339 | 4.80 | % | 1,679,101 | 57,064 | 3.40 | % | ||||||||
| Less: Allowance for Credit Losses | (7,907 | ) | (5,702 | ) | ||||||||||||
| Total Non-Earning Assets | 115,908 | 124,525 | ||||||||||||||
| Total Assets | $ | 1,573,462 | $ | 1,797,924 | ||||||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||
| Interest Bearing Liabilities: | ||||||||||||||||
| Interest Bearing Deposits: | ||||||||||||||||
| Interest Checking | $ | 321,154 | $ | 346 | 0.11 | % | $ | 409,504 | $ | 230 | 0.06 | % | ||||
| Money Market and Savings Deposits | 421,083 | 9,673 | 2.30 | % | 563,374 | 2,097 | 0.37 | % | ||||||||
| Time Deposits | 220,348 | 8,617 | 3.91 | % | 144,565 | 657 | 0.45 | % | ||||||||
| Total Interest-Bearing Deposits | 962,585 | 18,636 | 1.94 | % | 1,117,443 | 2,984 | 0.27 | % | ||||||||
| Borrowings | 37,286 | 1,934 | 5.19 | % | — | — | — | |||||||||
| Federal funds purchased | 2,632 | 138 | 5.24 | % | — | — | — | |||||||||
| Junior subordinated debt | 3,436 | 313 | 9.11 | % | 3,388 | 200 | 5.90 | % | ||||||||
| Total Interest-Bearing Liabilities | 1,005,939 | 21,021 | 2.09 | % | 1,120,831 | 3,184 | 0.28 | % | ||||||||
| Non-Interest-Bearing Liabilities: | ||||||||||||||||
| Demand deposits | 418,091 | 526,389 | ||||||||||||||
| Other liabilities | 9,989 | 9,581 | ||||||||||||||
| Total Liabilities | 1,434,019 | 1,656,801 | ||||||||||||||
| Shareholders' Equity | 139,443 | 141,123 | ||||||||||||||
| Total Liabilities & Shareholders' Equity | $ | 1,573,462 | $ | 1,797,924 | ||||||||||||
| Net Interest Income (FTE) | $ | 49,318 | $ | 53,880 | ||||||||||||
| Interest Rate Spread 2 | 2.71 | % | 3.12 | % | ||||||||||||
| Cost of Funds | 1.48 | % | 0.19 | % | ||||||||||||
| Interest Expense as a Percentage of <br> Average Earning Assets | 1.43 | % | 0.19 | % | ||||||||||||
| Net Interest Margin (FTE) 3 | 3.37 | % | 3.21 | % |
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 9
VIRGINIA NATIONAL BANKSHARES CORPORATION
RECONCILIATION OF CERTAIN QUARTERLY NON-GAAP FINANCIAL MEASURES
(dollars in thousands, except per share data)
(Unaudited)
| For the Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||
| Fully tax-equivalent measures | |||||||||||||||
| Net interest income | $ | 10,753 | $ | 11,100 | $ | 13,703 | $ | 13,413 | $ | 15,384 | |||||
| Fully tax-equivalent adjustment | 86 | 87 | 86 | 87 | 86 | ||||||||||
| Net interest income (FTE) 1 | $ | 10,839 | $ | 11,187 | $ | 13,789 | $ | 13,500 | $ | 15,470 | |||||
| Efficiency ratio 2 | 64.4 | % | 60.7 | % | 54.4 | % | 56.5 | % | 52.0 | % | |||||
| Fully tax-equivalent adjustment | -0.4 | % | -0.4 | % | -0.3 | % | -0.3 | % | -0.3 | % | |||||
| Efficiency ratio (FTE) 3 | 64.0 | % | 60.3 | % | 54.1 | % | 56.2 | % | 51.7 | % | |||||
| Net interest margin | 2.87 | % | 3.02 | % | 3.81 | % | 3.69 | % | 3.89 | % | |||||
| Fully tax-equivalent adjustment | 0.02 | % | 0.02 | % | 0.02 | % | 0.02 | % | 0.02 | % | |||||
| Net interest margin (FTE) 1 | 2.89 | % | 3.04 | % | 3.83 | % | 3.71 | % | 3.91 | % | |||||
| For the Twelve Months Ended | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||
| December 31, 2023 | December 31, 2022 | ||||||||||||||
| Fully tax-equivalent measures | |||||||||||||||
| Net interest income | $ | 48,969 | $ | 53,547 | |||||||||||
| Fully tax-equivalent adjustment | 349 | 333 | |||||||||||||
| Net interest income (FTE) 1 | $ | 49,318 | $ | 53,880 | |||||||||||
| Efficiency ratio 2 | 58.7 | % | 57.4 | % | |||||||||||
| Fully tax-equivalent adjustment | -0.4 | % | -0.3 | % | |||||||||||
| Efficiency ratio (FTE) 3 | 58.3 | % | 57.1 | % | |||||||||||
| Net interest margin | 3.34 | % | 3.19 | % | |||||||||||
| Fully tax-equivalent adjustment | 0.03 | % | 0.02 | % | |||||||||||
| Net interest margin (FTE) 1 | 3.37 | % | 3.21 | % | |||||||||||
| As of | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | December 31, 2022 | |||||||||||
| Other financial measures | |||||||||||||||
| Book value per share | $ | 28.52 | $ | 25.29 | $ | 26.54 | $ | 26.50 | $ | 25.00 | |||||
| Impact of intangible assets 4 | (2.40 | ) | (2.46 | ) | (2.53 | ) | (2.62 | ) | (2.69 | ) | |||||
| Tangible book value per share (non-GAAP) | $ | 26.12 | $ | 22.83 | $ | 24.01 | $ | 23.88 | $ | 22.31 |
1 FTE calculations use a Federal income tax rate of 21%.
2 The efficiency ratio, GAAP basis, is computed by dividing noninterest expense by the sum of net interest income and noninterest income.
3 The efficiency ratio, FTE, is computed by dividing noninterest expense by the sum of net interest income (FTE) and noninterest income.
4 Intangible assets include goodwill and core deposit intangible assets, net of accumulated amortization, for all periods presented.
Page 9 of 9