EX-99.1 2 vabk-ex99_1.htm EX-99.1 EX-99.1

 

Exhibit 99.1

img2203825_0.jpg 

FOR IMMEDIATE RELEASE

INVESTOR RELATIONS CONTACT:

 

Tara Y. Harrison (434) 817-8587

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

ANNOUNCES THIRD QUARTER 2022 EARNINGS

Charlottesville, VA – October 27, 2022 - Virginia National Bankshares Corporation (NASDAQ: VABK) (the “Company”) today reported net income of $5.8 million, or $1.08 per diluted share, for the quarter ended September 30, 2022, which represents an 84% increase over net income of $3.1 million, or $0.59 per diluted share, recognized for the quarter ended September 30, 2021. For the nine months ended September 30, 2022, net income of $16.4 million, or $3.06 per diluted share, was recognized, compared to $4.8 million, or $1.07 per diluted share, for the nine months ended September 30, 2021. Note that merger and merger-related expenses of $1.9 million and $8.1 million were incurred in the quarterly and year-to-date periods ended September 30, 2021, respectively, in connection with the April 1, 2021 mergers of Fauquier Bankshares, Inc. (“Fauquier”) and The Fauquier Bank ("TFB") with and into the Company and Virginia National Bank (the "Bank"), respectively.

“We are extremely pleased with our third quarter and year-to-date financial results,” commented President and Chief Executive Officer, Glenn W. Rust. “We continue to benefit from the efficiencies gained from our 2021 merger with Fauquier and we remain ahead of our original projections of the earn back period. Net interest income has increased substantially over the prior year, and we have effectively managed our overhead cost structure. Our strong balance sheet, capital levels and liquidity have allowed us to take a conservative approach to lending as we remain cautious during these trying economic times.”

 

Third Quarter 2022 and Selected Balance Sheet Financial Highlights

•
Return on average assets ("ROAA") for the three months ended September 30, 2022 increased to 1.30% compared to 0.65% realized in the same period in the prior year.
•
Return on average equity (“ROAE”) for the three months ended September 30, 2022 improved to 16.50% compared to 7.70% realized in same period in the prior year.
•
The efficiency ratio on a fully tax equivalent basis (“FTE”) (a non-GAAP financial measure)1 was 57.0% for the three months ended September 30, 2022, an improvement over the 75.2% for the same period in the prior year.
•
The Company has not incurred any merger or merger-related expenses since December 31, 2021, compared to $8.1 million incurred during the nine months ended September 30, 2021.
•
The Company is realizing significant savings associated with the merger and expects to realize significant additional savings in salaries and employee benefits, data processing and professional fees over the next year. Full-time equivalent employee headcount was 215 as of April 1, 2021, the effective date of the merger, and is down to 165 as of September 30, 2022.

Loans and Asset Quality

•
Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.08% as of September 30, 2022, compared to 0.13% as of September 30, 2021. Nonperforming assets have been reduced to $1.5 million as of September 30, 2022, compared to $2.4 million as of September 30, 2021, as the company currently holds no other real estate owned and has reduced non-accrual loans and loans greater than 90 days past due as detailed below.

__________________________________________________________________

1 See "Reconciliation of Certain Non-GAAP Financial Measures" at the end of this release.

 

Page 1 of 10

 

 

Loans and Asset Quality (continued)

•
Three loans to two borrowers are in non-accrual status, totaling $607 thousand, as of September 30, 2022, compared to $777 thousand as of September 30, 2021. Acquired loans that 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 $859 thousand as of September 30, 2022, compared to $1.0 million as of September 30, 2021. The September 30, 2022 balance includes a government-guaranteed loan in the amount of $709 thousand. The portfolio includes three non-insured student loans that are 90 days or more past due and still accruing interest, amounting to $21 thousand. Acquired loans that 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 0.58% as of September 30, 2022 and 0.51% as of September 30, 2021. 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 $17.0 million as of September 30, 2022. The ALLL as a percentage of gross loans, excluding the impact of the acquired loans and fair value mark (a non-GAAP financial measure)1, would have been 0.90% as of September 30, 2022 and September 30, 2021. The total of the ALLL and the fair value mark as a percentage of gross loans (a non-GAAP financial measure)1 amounted to 2.38% as of September 30, 2022 and 2.24% as of September 30, 2021.
•
A provision for loan losses of $39 thousand was recognized during the three months ended September 30, 2022, compared to $267 thousand recognized in the three months ended September 30, 2021.
•
Gross loans outstanding at September 30, 2022 totaled $942.3 million, a decrease of $170.1 million, or 15%, compared to September 30, 2021. The decrease is due predominantly to: 1) paydowns of legacy organic loans due mainly to business sales, property sales and participation fluctuations of $72.8 million, 2) workouts and paydowns of loans acquired from Fauquier ("acquired loans") of $67.5 million, and 3) the forgiveness of Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans in the amount of $36.5 million.

Net Interest Income

•
Net interest income for the three months ended September 30, 2022 of $14.3 million increased $773 thousand, or 6%, compared to the three months ended September 30, 2021, due primarily to the increase in average balances of securities, positively impacting net interest income through rate and volume, offset by the reduction in average balances of loans.
•
The fair value accretion on acquired loans positively impacted net interest income by 12 basis points (“bps”) during the current quarter.
•
The overall cost of funds, including noninterest deposits, of 16 bps incurred in the three months ended September 30, 2022 increased 2 bps from 14 bps in the same period in the prior year. Overall, the cost of interest-bearing deposits declined period over period, from a cost of 31 bps to 22 bps. The slight increase is due to the impact of the Company prepaying 100% of its outstanding FHLB advances during the quarter ending September 30, 2021, which positively impacted interest expense by $416 thousand as a result of accelerating the fair value accretion on such TFB debt.
•
Low-cost deposits, which include noninterest checking accounts and interest-bearing checking, savings and money market accounts, remained in excess of 90% of total deposits at September 30, 2022 and 2021.

Noninterest Income

Noninterest income for the three months ended September 30, 2022 decreased $1.2 million, or 34%, compared to the three months ended September 30, 2021, primarily due to the prior period Other Income, as reported on the consolidated statements of income, including a second partial recovery of $401 thousand of unearned insurance premiums related to the loss of insurance on the student loan portfolio and a recovery of $312 thousand from a TFB loan that was charged off prior to April 1, 2021. In addition, wealth management fees, advisory and brokerage fees and debit/credit card/ATM fees have each decreased approximately $150 thousand over the prior period due to an anticipated reduction in the number of accounts in each area.

Noninterest Expense

Noninterest expense for the three months ended September 30, 2022 declined $3.3 million, or 26%, compared to the three months ended September 30, 2021, primarily due to reduction in merger and merger-related expenses of $1.9 million, in addition to the reduction of data processing expenses of $402 thousand and reduction of salaries and employee benefits of $310 thousand, as a result of efficiencies gained from the merger.

 

Page 2 of 10

 

 

Book Value

Book value per share was $23.65 as of September 30, 2022 and $30.13 as of September 30, 2021, and tangible book value per share (a non-GAAP financial measure)1 was $20.77 as of September 30, 2022 compared to $26.92 as of September 30, 2021. These values declined primarily due to the increase in unrealized loss on the investment portfolio period over period.

Income Taxes

The effective tax rate for the three months ended September 30, 2022 amounted to 18.0% compared to 19.4% for the three months ended September 30, 2021, which are both lower than the statutory rate due to the recognition of low-income housing tax credits. The effective tax rate for the prior period is higher than the current period due to the non-deductibility of certain merger and merger-related expenses in the prior period.

Dividends

Cash dividends of $1.6 million, or $0.30 per share, were declared during the current quarter. The remaining 72% 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 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. 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, 2021 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.

 

Page 4 of 10

 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

 

 

September 30, 2022

 

December 31, 2021 *

 

September 30, 2021

 

 

(Unaudited)

 

 

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

Cash and due from banks

$

25,856

 

$

20,345

 

$

18,919

 

Interest-bearing deposits in other banks

 

66,111

 

 

336,032

 

 

254,194

 

Federal funds sold

 

53,118

 

 

152,463

 

 

152,417

 

Securities:

 

 

 

 

 

 

Available for sale, at fair value

 

538,459

 

 

303,817

 

 

277,046

 

Restricted securities, at cost

 

5,138

 

 

4,950

 

 

2,610

 

Total securities

 

543,597

 

 

308,767

 

 

279,656

 

Loans, net of deferred fees and costs

 

942,347

 

 

1,061,211

 

 

1,112,450

 

Allowance for loan losses

 

(5,485

)

 

(5,984

)

 

(5,623

)

Loans, net

 

936,862

 

 

1,055,227

 

 

1,106,827

 

Premises and equipment, net

 

18,817

 

 

25,093

 

 

25,239

 

Bank owned life insurance

 

38,298

 

 

31,234

 

 

31,033

 

Goodwill

 

8,140

 

 

8,140

 

 

8,898

 

Core deposit intangible, net

 

6,990

 

 

8,271

 

 

7,855

 

Other intangible assets, net

 

223

 

 

274

 

 

290

 

Other real estate owned, net

 

-

 

 

611

 

 

611

 

Right of use asset, net

 

6,941

 

 

7,583

 

 

7,970

 

Accrued interest receivable and other assets

 

28,803

 

 

18,144

 

 

17,916

 

Total assets

$

1,733,756

 

$

1,972,184

 

$

1,911,825

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Demand deposits:

 

 

 

 

 

 

Noninterest-bearing

$

539,134

 

$

522,281

 

$

504,696

 

Interest-bearing

 

417,530

 

 

446,314

 

 

424,642

 

Money market and savings deposit accounts

 

505,733

 

 

665,530

 

 

642,788

 

Certificates of deposit and other time deposits

 

134,250

 

 

162,045

 

 

165,057

 

Total deposits

 

1,596,647

 

 

1,796,170

 

 

1,737,183

 

Junior subordinated debt, net

 

3,401

 

 

3,367

 

 

3,356

 

Lease liability

 

6,551

 

 

7,108

 

 

7,463

 

Accrued interest payable and other liabilities

 

1,183

 

 

3,552

 

 

3,913

 

Total liabilities

 

1,607,782

 

 

1,810,197

 

 

1,751,915

 

Commitments and contingent liabilities

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preferred stock, $2.50 par value

 

-

 

 

-

 

 

-

 

Common stock, $2.50 par value

 

13,214

 

 

13,178

 

 

13,178

 

Capital surplus

 

105,095

 

 

104,584

 

 

104,446

 

Retained earnings

 

58,026

 

 

46,436

 

 

42,746

 

Accumulated other comprehensive loss

 

(50,361

)

 

(2,211

)

 

(460

)

Total shareholders' equity

 

125,974

 

 

161,987

 

 

159,910

 

Total liabilities and shareholders' equity

$

1,733,756

 

$

1,972,184

 

$

1,911,825

 

Common shares outstanding

 

5,327,271

 

 

5,308,335

 

 

5,307,235

 

Common shares authorized

 

10,000,000

 

 

10,000,000

 

 

10,000,000

 

Preferred shares outstanding

 

-

 

 

-

 

 

-

 

Preferred shares authorized

 

2,000,000

 

 

2,000,000

 

 

2,000,000

 

 

 

* Derived from audited consolidated financial statements

 

Page 5 of 10

 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

 

 

 

For the three months ended

 

 

For the nine months ended

 

 

 

September 30, 2022

 

 

September 30, 2021

 

 

September 30, 2022

 

 

September 30, 2021

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

11,024

 

 

$

12,957

 

 

$

32,403

 

 

$

31,904

 

Federal funds sold

 

 

299

 

 

 

45

 

 

 

662

 

 

 

78

 

Other interest-bearing deposits

 

 

618

 

 

 

55

 

 

 

973

 

 

 

94

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

2,626

 

 

 

742

 

 

 

5,300

 

 

 

2,006

 

Tax exempt

 

 

313

 

 

 

280

 

 

 

925

 

 

 

729

 

Dividends

 

 

66

 

 

 

55

 

 

 

192

 

 

 

121

 

Total interest and dividend income

 

 

14,946

 

 

 

14,134

 

 

 

40,455

 

 

 

34,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Demand and savings deposits

 

 

471

 

 

 

673

 

 

 

1,645

 

 

 

1,598

 

Certificates and other time deposits

 

 

147

 

 

 

282

 

 

 

499

 

 

 

886

 

Borrowings

 

 

51

 

 

 

(325

)

 

 

148

 

 

 

(181

)

Total interest expense

 

 

669

 

 

 

630

 

 

 

2,292

 

 

 

2,303

 

Net interest income

 

 

14,277

 

 

 

13,504

 

 

 

38,163

 

 

 

32,629

 

Provision for (recovery of) loan losses

 

 

39

 

 

 

267

 

 

 

(30

)

 

 

477

 

Net interest income after provision for (recovery of) loan losses

 

 

14,238

 

 

 

13,237

 

 

 

38,193

 

 

 

32,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

Wealth management fees

 

 

590

 

 

 

744

 

 

 

1,719

 

 

 

2,053

 

Advisory and brokerage income

 

 

213

 

 

 

358

 

 

 

639

 

 

 

908

 

Deposit account fees

 

 

443

 

 

 

396

 

 

 

1,366

 

 

 

982

 

Debit/credit card and ATM fees

 

 

660

 

 

 

808

 

 

 

2,146

 

 

 

1,561

 

Earnings/increase in value of bank owned life insurance

 

 

252

 

 

 

201

 

 

 

709

 

 

 

507

 

Resolution of commercial dispute

 

 

-

 

 

 

-

 

 

 

2,400

 

 

 

-

 

Gains on sale of assets

 

 

4

 

 

 

-

 

 

 

1,117

 

 

 

-

 

Other

 

 

138

 

 

 

971

 

 

 

637

 

 

 

1,426

 

Total noninterest income

 

 

2,300

 

 

 

3,478

 

 

 

10,733

 

 

 

7,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,252

 

 

 

4,562

 

 

 

13,069

 

 

 

11,705

 

Net occupancy

 

 

1,318

 

 

 

1,039

 

 

 

3,797

 

 

 

2,643

 

Equipment

 

 

249

 

 

 

205

 

 

 

786

 

 

 

661

 

Bank franchise tax

 

 

304

 

 

 

320

 

 

 

912

 

 

 

922

 

Computer software

 

 

287

 

 

 

361

 

 

 

907

 

 

 

744

 

Data processing

 

 

712

 

 

 

1,114

 

 

 

2,149

 

 

 

2,397

 

FDIC deposit insurance assessment

 

 

70

 

 

 

349

 

 

 

421

 

 

 

594

 

Marketing, advertising and promotion

 

 

347

 

 

 

337

 

 

 

873

 

 

 

706

 

Merger and merger-related expenses

 

 

-

 

 

 

1,935

 

 

 

-

 

 

 

8,087

 

Plastics expense

 

 

91

 

 

 

212

 

 

 

322

 

 

 

589

 

Professional fees

 

 

310

 

 

 

186

 

 

 

1,051

 

 

 

873

 

Core deposit intangible amortization

 

 

415

 

 

 

417

 

 

 

1,281

 

 

 

845

 

Other

 

 

1,148

 

 

 

1,787

 

 

 

3,472

 

 

 

2,832

 

Total noninterest expense

 

 

9,503

 

 

 

12,824

 

 

 

29,040

 

 

 

33,598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

7,035

 

 

 

3,891

 

 

 

19,886

 

 

 

5,991

 

Provision for income taxes

 

 

1,263

 

 

 

753

 

 

 

3,505

 

 

 

1,201

 

Net income

 

$

5,772

 

 

$

3,138

 

 

$

16,381

 

 

$

4,790

 

Net income per common share, basic

 

$

1.08

 

 

$

0.59

 

 

$

3.08

 

 

$

1.08

 

Net income per common share, diluted

 

$

1.08

 

 

$

0.59

 

 

$

3.06

 

 

$

1.07

 

Weighted average common shares outstanding, basic

 

 

5,326,543

 

 

 

5,306,370

 

 

 

5,321,652

 

 

 

4,453,303

 

Weighted average common shares outstanding, diluted

 

 

5,348,900

 

 

 

5,338,872

 

 

 

5,347,878

 

 

 

4,478,779

 

 

Page 6 of 10

 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)

(Unaudited)

 

 

At or For the Three Months Ended

 

 

 

September 30,
2022

 

 

June 30,
2022

 

 

March 31,
2022

 

 

December 31,
2021

 

 

September 30,
2021

 

Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per weighted average share, basic

 

$

1.08

 

 

$

1.07

 

 

$

0.93

 

 

$

0.98

 

 

$

0.59

 

Net income per weighted average share, diluted

 

$

1.08

 

 

$

1.06

 

 

$

0.92

 

 

$

0.98

 

 

$

0.59

 

Weighted average shares outstanding, basic

 

 

5,326,543

 

 

 

5,326,271

 

 

 

5,311,983

 

 

 

5,308,108

 

 

 

5,306,370

 

Weighted average shares outstanding, diluted

 

 

5,348,900

 

 

 

5,347,008

 

 

 

5,343,564

 

 

 

5,338,088

 

 

 

5,338,872

 

Actual shares outstanding

 

 

5,327,271

 

 

 

5,326,271

 

 

 

5,326,271

 

 

 

5,308,335

 

 

 

5,307,235

 

Tangible book value per share at period end

 

$

20.77

 

 

$

22.24

 

 

$

24.37

 

 

$

27.36

 

 

$

26.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets 1

 

 

1.30

%

 

 

1.27

%

 

 

1.03

%

 

 

1.06

%

 

 

0.65

%

Return on average equity 1

 

 

16.50

%

 

 

16.16

%

 

 

12.53

%

 

 

12.86

%

 

 

7.70

%

Net interest margin (FTE) 2

 

 

3.47

%

 

 

3.02

%

 

 

2.59

%

 

 

2.72

%

 

 

3.08

%

Efficiency ratio (FTE) 3

 

 

57.04

%

 

 

58.32

%

 

 

62.02

%

 

 

57.70

%

 

 

75.17

%

Loan-to-deposit ratio

 

 

59.02

%

 

 

60.05

%

 

 

56.75

%

 

 

59.08

%

 

 

64.04

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

14,277

 

 

$

12,461

 

 

$

11,425

 

 

$

12,359

 

 

$

13,504

 

Net interest income (FTE) 2

 

$

14,360

 

 

$

12,543

 

 

$

11,490

 

 

$

12,437

 

 

$

13,581

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

9.17

%

 

 

8.79

%

 

 

8.03

%

 

 

7.61

%

 

 

7.59

%

Total risk-based capital ratio

 

 

16.97

%

 

 

16.51

%

 

 

15.66

%

 

 

14.56

%

 

 

13.74

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets and Asset Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

 

$

1,644,124

 

 

$

1,668,471

 

 

$

1,802,461

 

 

$

1,817,010

 

 

$

1,750,799

 

Average gross loans

 

$

959,086

 

 

$

984,883

 

 

$

1,031,593

 

 

$

1,088,278

 

 

$

1,140,281

 

Paycheck Protection Program loans, end of period

 

$

254

 

 

$

1,925

 

 

$

9,976

 

 

$

24,482

 

 

$

36,740

 

Fair value mark on acquired loans

 

$

17,046

 

 

$

17,502

 

 

$

17,920

 

 

$

18,466

 

 

$

19,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

$

5,503

 

 

$

5,834

 

 

$

5,984

 

 

$

5,623

 

 

$

5,522

 

Provision for (recovery of) loan losses

 

 

39

 

 

 

(217

)

 

 

148

 

 

 

537

 

 

 

267

 

Charge-offs

 

 

(119

)

 

 

(191

)

 

 

(473

)

 

 

(230

)

 

 

(208

)

Recoveries

 

 

62

 

 

 

77

 

 

 

175

 

 

 

54

 

 

 

42

 

Net charge-offs

 

 

(57

)

 

 

(114

)

 

 

(298

)

 

 

(176

)

 

 

(166

)

End of period

 

$

5,485

 

 

$

5,503

 

 

$

5,834

 

 

$

5,984

 

 

$

5,623

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans 4

 

$

607

 

 

$

511

 

 

$

518

 

 

$

495

 

 

$

777

 

Loans 90 days or more past due and still accruing 5

 

 

859

 

 

 

626

 

 

 

837

 

 

 

800

 

 

 

1,044

 

OREO

 

 

-

 

 

 

-

 

 

 

611

 

 

 

611

 

 

 

611

 

Total nonperforming assets (NPA)

 

$

1,466

 

 

$

1,137

 

 

$

1,966

 

 

$

1,906

 

 

$

2,432

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NPA as a % of total assets

 

 

0.08

%

 

 

0.07

%

 

 

0.10

%

 

 

0.10

%

 

 

0.13

%

NPA as a % of gross loans plus OREO

 

 

0.16

%

 

 

0.12

%

 

 

0.20

%

 

 

0.18

%

 

 

0.22

%

ALLL to gross loans

 

 

0.58

%

 

 

0.57

%

 

 

0.58

%

 

 

0.56

%

 

 

0.51

%

ALLL + fair value mark to gross loans (non-GAAP)

 

 

2.38

%

 

 

2.39

%

 

 

2.35

%

 

 

2.30

%

 

 

2.24

%

Non-accruing loans to gross loans 4

 

 

0.06

%

 

 

0.05

%

 

 

0.05

%

 

 

0.05

%

 

 

0.07

%

Net charge-offs to average loans 1

 

 

0.02

%

 

 

0.05

%

 

 

0.12

%

 

 

0.06

%

 

 

0.06

%

 

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

 

 

 

September 30, 2022

 

 

September 30, 2021

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Average

 

 

Income/

 

 

Average

 

 

Average

 

 

Income/

 

 

Average

 

(dollars in thousands)

 

Balance

 

 

Expense

 

 

Yield/Cost

 

 

Balance

 

 

Expense

 

 

Yield/Cost

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Securities

 

$

445,854

 

 

$

2,692

 

 

 

2.42

%

 

$

214,194

 

 

$

797

 

 

 

1.49

%

Tax Exempt Securities 1

 

 

65,836

 

 

 

395

 

 

 

2.40

%

 

 

59,869

 

 

 

355

 

 

 

2.37

%

Total Securities 1

 

 

511,690

 

 

 

3,087

 

 

 

2.41

%

 

 

274,063

 

 

 

1,152

 

 

 

1.68

%

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

834,323

 

 

 

9,485

 

 

 

4.51

%

 

 

929,017

 

 

 

10,005

 

 

 

4.27

%

Commercial

 

 

74,970

 

 

 

846

 

 

 

4.48

%

 

 

141,388

 

 

 

1,810

 

 

 

5.08

%

Consumer

 

 

49,793

 

 

 

693

 

 

 

5.52

%

 

 

69,876

 

 

 

1,144

 

 

 

6.50

%

      Total Loans

 

 

959,086

 

 

 

11,024

 

 

 

4.56

%

 

 

1,140,281

 

 

 

12,959

 

 

 

4.51

%

Fed Funds Sold

 

 

52,908

 

 

 

298

 

 

 

2.23

%

 

 

137,472

 

 

 

45

 

 

 

0.13

%

Other interest-bearing deposits

 

 

120,440

 

 

 

620

 

 

 

2.04

%

 

 

198,983

 

 

 

55

 

 

 

0.11

%

Total Earning Assets

 

 

1,644,124

 

 

 

15,029

 

 

 

3.63

%

 

 

1,750,799

 

 

 

14,211

 

 

 

3.22

%

Less: Allowance for Loan Losses

 

 

(5,530

)

 

 

 

 

 

 

 

 

(5,607

)

 

 

 

 

 

 

Total Non-Earning Assets

 

 

124,247

 

 

 

 

 

 

 

 

 

159,106

 

 

 

 

 

 

 

Total Assets

 

$

1,762,841

 

 

 

 

 

 

 

 

$

1,904,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Checking

 

$

401,886

 

 

$

56

 

 

 

0.06

%

 

$

410,504

 

 

$

72

 

 

 

0.07

%

Money Market and Savings Deposits

 

 

547,878

 

 

 

415

 

 

 

0.30

%

 

 

621,211

 

 

 

601

 

 

 

0.38

%

Time Deposits

 

 

142,195

 

 

 

147

 

 

 

0.41

%

 

 

171,256

 

 

 

282

 

 

 

0.65

%

Total Interest-Bearing Deposits

 

 

1,091,959

 

 

 

618

 

 

 

0.22

%

 

 

1,202,971

 

 

 

955

 

 

 

0.31

%

Borrowings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

22,260

 

 

 

(375

)

 

 

-6.68

%

Junior subordinated debt

 

 

3,394

 

 

 

51

 

 

 

5.96

%

 

 

3,349

 

 

 

50

 

 

 

5.92

%

Total Interest-Bearing Liabilities

 

 

1,095,353

 

 

 

669

 

 

 

0.24

%

 

 

1,228,580

 

 

 

630

 

 

 

0.20

%

Non-Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

519,759

 

 

 

 

 

 

 

 

 

499,068

 

 

 

 

 

 

 

Other liabilities

 

 

8,932

 

 

 

 

 

 

 

 

 

15,003

 

 

 

 

 

 

 

Total Liabilities

 

 

1,624,044

 

 

 

 

 

 

 

 

 

1,742,651

 

 

 

 

 

 

 

Shareholders' Equity

 

 

138,797

 

 

 

 

 

 

 

 

 

161,647

 

 

 

 

 

 

 

Total Liabilities & Shareholders' Equity

 

$

1,762,841

 

 

 

 

 

 

 

 

$

1,904,298

 

 

 

 

 

 

 

Net Interest Income (FTE)

 

 

 

 

$

14,360

 

 

 

 

 

 

 

 

$

13,581

 

 

 

 

Interest Rate Spread 2

 

 

 

 

 

 

 

 

3.38

%

 

 

 

 

 

 

 

 

3.02

%

Cost of Funds

 

 

 

 

 

 

 

 

0.16

%

 

 

 

 

 

 

 

 

0.14

%

Interest Expense as a Percentage of
     Average Earning Assets

 

 

 

 

 

 

 

 

0.16

%

 

 

 

 

 

 

 

 

0.14

%

Net Interest Margin (FTE) 3

 

 

 

 

 

 

 

 

3.47

%

 

 

 

 

 

 

 

 

3.08

%

 

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

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)

(dollars in thousands)

(Unaudited)

 

 

 

For the nine months ended

 

 

 

September 30, 2022

 

 

September 30, 2021

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Average

 

 

Income/

 

 

Average

 

 

Average

 

 

Income/

 

 

Average

 

(dollars in thousands)

 

Balance

 

 

Expense

 

 

Yield/Cost

 

 

Balance

 

 

Expense

 

 

Yield/Cost

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Securities

 

$

340,692

 

 

$

5,492

 

 

 

2.15

%

 

$

189,250

 

 

$

2,127

 

 

 

1.50

%

Tax Exempt Securities 1

 

 

65,447

 

 

 

1,170

 

 

 

2.38

%

 

 

50,559

 

 

 

923

 

 

 

2.43

%

Total Securities 1

 

 

406,139

 

 

 

6,662

 

 

 

2.19

%

 

 

239,809

 

 

 

3,050

 

 

 

1.70

%

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

855,632

 

 

 

27,567

 

 

 

4.31

%

 

 

771,407

 

 

 

24,284

 

 

 

4.21

%

Commercial

 

 

85,148

 

 

 

2,930

 

 

 

4.60

%

 

 

158,691

 

 

 

4,967

 

 

 

4.18

%

Consumer

 

 

50,808

 

 

 

1,906

 

 

 

5.02

%

 

 

65,426

 

 

 

2,653

 

 

 

5.42

%

      Total Loans

 

 

991,588

 

 

 

32,403

 

 

 

4.37

%

 

 

995,524

 

 

 

31,904

 

 

 

4.28

%

Fed Funds Sold

 

 

118,228

 

 

 

661

 

 

 

0.75

%

 

 

94,502

 

 

 

78

 

 

 

0.11

%

Other interest-bearing deposits

 

 

196,801

 

 

 

975

 

 

 

0.66

%

 

 

118,331

 

 

 

94

 

 

 

0.11

%

Total Earning Assets

 

 

1,712,756

 

 

 

40,701

 

 

 

3.18

%

 

 

1,448,166

 

 

 

35,126

 

 

 

3.24

%

Less: Allowance for Loan Losses

 

 

(5,806

)

 

 

 

 

 

 

 

 

(5,618

)

 

 

 

 

 

 

Total Non-Earning Assets

 

 

124,518

 

 

 

 

 

 

 

 

 

104,539

 

 

 

 

 

 

 

Total Assets

 

$

1,831,468

 

 

 

 

 

 

 

 

$

1,547,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Checking

 

$

411,504

 

 

$

175

 

 

 

0.06

%

 

$

333,193

 

 

$

191

 

 

 

0.08

%

Money Market and Savings Deposits

 

 

584,597

 

 

 

1,470

 

 

 

0.34

%

 

 

484,742

 

 

 

1,407

 

 

 

0.39

%

Time Deposits

 

 

151,045

 

 

 

499

 

 

 

0.44

%

 

 

148,715

 

 

 

886

 

 

 

0.80

%

Total Interest-Bearing Deposits

 

 

1,147,146

 

 

 

2,144

 

 

 

0.25

%

 

 

966,650

 

 

 

2,484

 

 

 

0.34

%

Borrowings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

31,967

 

 

 

(280

)

 

 

-1.17

%

Junior subordinated debt

 

 

3,383

 

 

 

148

 

 

 

5.85

%

 

 

2,324

 

 

 

99

 

 

 

5.70

%

Total Interest-Bearing Liabilities

 

 

1,150,529

 

 

 

2,292

 

 

 

0.27

%

 

 

1,000,941

 

 

 

2,303

 

 

 

0.31

%

Non-Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

524,592

 

 

 

 

 

 

 

 

 

402,163

 

 

 

 

 

 

 

Other liabilities

 

 

10,107

 

 

 

 

 

 

 

 

 

10,617

 

 

 

 

 

 

 

Total Liabilities

 

 

1,685,228

 

 

 

 

 

 

 

 

 

1,413,721

 

 

 

 

 

 

 

Shareholders' Equity

 

 

146,240

 

 

 

 

 

 

 

 

 

133,366

 

 

 

 

 

 

 

Total Liabilities & Shareholders' Equity

 

$

1,831,468

 

 

 

 

 

 

 

 

$

1,547,087

 

 

 

 

 

 

 

Net Interest Income (FTE)

 

 

 

 

$

38,409

 

 

 

 

 

 

 

 

$

32,823

 

 

 

 

Interest Rate Spread 2

 

 

 

 

 

 

 

 

2.91

%

 

 

 

 

 

 

 

 

2.94

%

Cost of Funds

 

 

 

 

 

 

 

 

0.18

%

 

 

 

 

 

 

 

 

0.22

%

Interest Expense as a Percentage of
     Average Earning Assets

 

 

 

 

 

 

 

 

0.18

%

 

 

 

 

 

 

 

 

0.21

%

Net Interest Margin (FTE) 3

 

 

 

 

 

 

 

 

3.00

%

 

 

 

 

 

 

 

 

3.03

%

 

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 9 of 10

 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES

(dollars in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

September 30,
2022

 

 

June 30, 2022

 

 

March 31, 2022

 

 

December 31, 2021

 

 

September 30, 2021

 

Fully tax-equivalent measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

14,277

 

 

$

12,461

 

 

$

11,425

 

 

$

12,359

 

 

$

13,504

 

Fully tax-equivalent adjustment

 

 

83

 

 

 

82

 

 

 

65

 

 

 

78

 

 

 

77

 

Net interest income (FTE) 1

 

$

14,360

 

 

$

12,543

 

 

$

11,490

 

 

$

12,437

 

 

$

13,581

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio 2

 

 

57.3

%

 

 

58.6

%

 

 

62.3

%

 

 

58.0

%

 

 

75.5

%

Fully tax-equivalent adjustment

 

 

-0.3

%

 

 

-0.3

%

 

 

-0.3

%

 

 

-0.3

%

 

 

-0.3

%

Efficiency ratio (FTE) 3

 

 

57.0

%

 

 

58.3

%

 

 

62.0

%

 

 

57.7

%

 

 

75.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.45

%

 

 

3.00

%

 

 

2.57

%

 

 

2.70

%

 

 

3.06

%

Fully tax-equivalent adjustment

 

 

0.02

%

 

 

0.02

%

 

 

0.02

%

 

 

0.02

%

 

 

0.02

%

Net interest margin (FTE) 1

 

 

3.47

%

 

 

3.02

%

 

 

2.59

%

 

 

2.72

%

 

 

3.08

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

 

 

 

 

 

 

 

 

 

 

September 30,
2022

 

 

September 30,
2021

 

 

 

 

 

 

 

 

 

 

Fully tax-equivalent measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

38,163

 

 

$

32,629

 

 

 

 

 

 

 

 

 

 

Fully tax-equivalent adjustment

 

 

230

 

 

 

194

 

 

 

 

 

 

 

 

 

 

Net interest income (FTE) 1

 

$

38,393

 

 

$

32,823

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio 2

 

 

59.4

%

 

 

83.9

%

 

 

 

 

 

 

 

 

 

Fully tax-equivalent adjustment

 

 

-0.3

%

 

 

-0.4

%

 

 

 

 

 

 

 

 

 

Efficiency ratio (FTE) 3

 

 

59.1

%

 

 

83.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

2.98

%

 

 

3.01

%

 

 

 

 

 

 

 

 

 

Fully tax-equivalent adjustment

 

 

0.02

%

 

 

0.02

%

 

 

 

 

 

 

 

 

 

Net interest margin (FTE) 1

 

 

3.00

%

 

 

3.03

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

September 30,
2022

 

 

June 30, 2022

 

 

March 31, 2022

 

 

December 31, 2021

 

 

September 30, 2021

 

Other financial measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLL to gross loans

 

 

0.58

%

 

 

0.57

%

 

 

0.58

%

 

 

0.56

%

 

 

0.51

%

Impact of acquired loans and fair value mark

 

 

0.32

%

 

 

0.34

%

 

 

0.37

%

 

 

0.39

%

 

 

0.39

%

ALLL to gross loans, excluding acquired loans and fair value mark (non-GAAP)

 

 

0.90

%

 

 

0.91

%

 

 

0.95

%

 

 

0.95

%

 

 

0.90

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLL to gross loans

 

 

0.58

%

 

 

0.57

%

 

 

0.58

%

 

 

0.56

%

 

 

0.51

%

Fair value mark to gross loans

 

 

1.80

%

 

 

1.82

%

 

 

1.77

%

 

 

1.74

%

 

 

1.73

%

ALLL + fair value mark to gross loans (non-GAAP)

 

 

2.38

%

 

 

2.39

%

 

 

2.35

%

 

 

2.30

%

 

 

2.24

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

23.65

 

 

$

25.20

 

 

$

27.42

 

 

$

30.50

 

 

$

30.13

 

Impact of intangible assets

 

 

(2.88

)

 

 

(2.96

)

 

 

(3.05

)

 

 

(3.14

)

 

$

(3.21

)

Tangible book value per share (non-GAAP)

 

$

20.77

 

 

$

22.24

 

 

$

24.37

 

 

$

27.36

 

 

$

26.92

 

 

 

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.

 

 

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