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

RECORD 2022 FOURTH QUARTER AND RECORD FULL YEAR EARNINGS

Charlottesville, VA – January 31, 2023 - Virginia National Bankshares Corporation (NASDAQ: VABK) (the “Company”) today reported record quarterly net income of $7.1 million, or $1.32 per diluted share, for the quarter ended December 31, 2022, which represents a 35% increase over net income of $5.2 million, or $0.98 per diluted share, recognized for the quarter ended December 31, 2021. For the twelve months ended December 31, 2022, record net income of $23.4 million, or $4.38 per diluted share, was recognized, compared to $10.1 million, or $2.14 per diluted share, for the twelve months ended December 31, 2021. Note that pre-tax merger and merger-related expenses of $7.4 million were incurred in the year-to-date period ended December 31, 2021, 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 proud to post record results for the fourth quarter and calendar year of 2022,” commented President and Chief Executive Officer, Glenn W. Rust. “Our earn back period for the 2021 merger with Fauquier was less than two years and we continue to reap the benefits of an effectively managed overhead cost structure. We posted a return on average assets of 1.30% for 2022 and we continue to maintain a strong credit discipline.”

 

 

Fourth Quarter 2022 Highlights

•
Return on average assets ("ROAA") for the three months ended December 31, 2022 increased to 1.65% compared to 1.06% realized in the same period in the prior year.
•
Return on average equity (“ROAE”) for the three months ended December 31, 2022 improved to 22.23% compared to 12.86% 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 51.7% for the three months ended December 31, 2022, an improvement over 57.7% for the same period in the prior year.
•
The Company did not incur any merger or merger-related expenses in 2022, compared to $7.4 million incurred during 2021.
•
The Company is realizing significant savings in salaries and employee benefits, data processing and professional fees associated with the merger. Full-time equivalent employee headcount was 215 as of April 1, 2021, the effective date of the merger, and is down to 157 as of December 31, 2022. In addition, the Company closed two branches in the fourth quarter of 2022, reducing future operating costs.
•
During the fourth quarter of 2022, the Company sold its interest in Sturman Wealth Advisors, resulting in a gain on sale of the line of business of $404 thousand. All goodwill and unamortized intangible assets associated with the 2016 purchase of this business line have been eliminated from the Company's balance sheet.

Loans and Asset Quality

•
Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.08% as of December 31, 2022, compared to 0.10% as of December 31, 2021. Nonperforming assets have been reduced to $1.4 million as of December 31, 2022, compared to $1.9 million as of December 31, 2021, and the Company currently holds no other real estate owned.

__________________________________________________________________

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

Page 1 of 11

 

 

Loans and Asset Quality (continued)

•
Four loans to three borrowers are in non-accrual status, totaling $673 thousand, as of December 31, 2022, compared to $495 thousand as of December 31, 2021. Loans acquired from TFB ("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 $705 thousand as of December 31, 2022, compared to $800 thousand as of December 31, 2021. The portfolio includes three non-insured student loans that are 90 days or more past due and still accruing interest, amounting to $59 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 0.59% as of December 31, 2022 and 0.56% as of December 31, 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 $15.9 million as of December 31, 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 December 31, 2022 and 0.95% as of December 31, 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 2.29% as of December 31, 2022 and 2.30% as of December 31, 2021.
•
A provision for loan losses of $136 thousand was recognized during the three months ended December 31, 2022, compared to $537 thousand recognized in the three months ended December 31, 2021.
•
Gross loans outstanding at December 31, 2022 totaled $936.4 million, a decrease of $124.8 million, or 12%, compared to December 31, 2021. Loans originated and funded during 2022 were offset by: 1) paydowns of legacy organic loans due mainly to business sales, property sales and participation fluctuations, 2) workouts and paydowns of loans, the majority of which originated from legacy Fauquier, and 3) the forgiveness of Small Business Administration Paycheck Protection Program loans.

Net Interest Income

•
Net interest income for the three months ended December 31, 2022 of $15.4 million increased $3.0 million, or 24%, compared to the three months ended December 31, 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 21 basis points (“bps”) during the current quarter.
•
The overall cost of funds, including noninterest deposits, of 23 bps incurred in the three months ended December 31, 2022 increased 8 bps from 22 bps in the same period in the prior year. Overall, the cost of interest-bearing deposits increased period over period, from a cost of 30 bps to 32 bps. Average balances in noninterest-bearing deposits remained relatively flat period over period.
•
Low-cost deposits, which include noninterest checking accounts and interest-bearing checking, savings and money market accounts, remained in excess of 91% of total deposits at December 31, 2022 and 2021.

Noninterest Income

Noninterest income for the three months ended December 31, 2022 decreased $100 thousand, or 3%, compared to the three months ended December 31, 2021, primarily due to the decline in wealth management fees, due to an anticipated reduction in the number of accounts served by the Trust & Estate segment and the decline in performance fees collected by Masonry Capital Management. 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, bringing the total recovered life-to-date to over $1 million. The Company also closed on the sale of Sturman Wealth Advisors, as noted above, in the current period.

Noninterest Expense

Noninterest expense for the three months ended December 31, 2022 increased $592 thousand, or 7%, compared to the three months ended December 31, 2021, due to combination of several variances, including an increase in losses due to fraud and an impairment charge on an asset held for sale, offset by reduced plastics expense as a result of changing vendors and lower salaries and employee benefits as a result of efficiencies gained from the merger. In addition, the fourth quarter of 2021 noninterest expense included a favorable 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.

 

Page 2 of 11

 

 

Book Value

Book value per share was $25.05 as of December 31, 2022 and $30.50 as of December 31, 2021, and tangible book value per share (a non-GAAP financial measure)1 was $22.36 as of December 31, 2022 compared to $27.36 as of December 31, 2021. These values declined due to the increase in unrealized losses on the investment portfolio period over period.

Income Taxes

The effective tax rate for the twelve months ended December 31, 2022 amounted to 17.9% compared to 15.5% for the twelve months ended December 31, 2021, which are both 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 bank owned life insurance policies. The 2021 effective tax rate was also impacted by the non-deductibility of certain merger-related expenses for tax purposes.

Dividends

Cash dividends of $1.6 million, or $0.30 per share, were declared during the current quarter, and $6.4 million, or $1.20 per share, were declared during the current year.

_____________________________________________________________________

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

 

Page 3 of 11

 

 

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: 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 11

 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

 

 

December 31, 2022

 

 

December 31, 2021*

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

Cash and due from banks

$

20,993

 

 

$

20,345

 

Interest-bearing deposits in other banks

 

19,098

 

 

 

336,032

 

Federal funds sold

 

45

 

 

 

152,463

 

Securities:

 

 

 

 

 

Available for sale, at fair value

 

538,186

 

 

 

303,817

 

Restricted securities, at cost

 

5,137

 

 

 

4,950

 

Total securities

 

543,323

 

 

 

308,767

 

Loans, net of deferred fees and costs

 

936,415

 

 

 

1,061,211

 

Allowance for loan losses

 

(5,552

)

 

 

(5,984

)

Loans, net

 

930,863

 

 

 

1,055,227

 

Premises and equipment, net

 

17,808

 

 

 

25,093

 

Assets held for sale

 

965

 

 

 

-

 

Bank owned life insurance

 

38,552

 

 

 

31,234

 

Goodwill

 

7,768

 

 

 

8,140

 

Core deposit intangible, net

 

6,586

 

 

 

8,271

 

Other intangible assets, net

 

-

 

 

 

274

 

Other real estate owned, net

 

-

 

 

 

611

 

Right of use asset, net

 

6,536

 

 

 

7,583

 

Deferred tax asset, net

 

17,165

 

 

 

4,840

 

Accrued interest receivable and other assets

 

13,151

 

 

 

13,304

 

Total assets

$

1,622,853

 

 

$

1,972,184

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

Liabilities:

 

 

 

 

 

Demand deposits:

 

 

 

 

 

Noninterest-bearing

$

495,649

 

 

$

522,281

 

Interest-bearing

 

399,983

 

 

 

446,314

 

Money market and savings deposit accounts

 

467,600

 

 

 

665,530

 

Certificates of deposit and other time deposits

 

115,106

 

 

 

162,045

 

Total deposits

 

1,478,338

 

 

 

1,796,170

 

Junior subordinated debt, net

 

3,413

 

 

 

3,367

 

Lease liability

 

6,173

 

 

 

7,108

 

Accrued interest payable and other liabilities

 

1,513

 

 

 

3,552

 

Total liabilities

 

1,489,437

 

 

 

1,810,197

 

Commitments and contingent liabilities

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

Preferred stock, $2.50 par value

 

-

 

 

 

-

 

Common stock, $2.50 par value

 

13,214

 

 

 

13,178

 

Capital surplus

 

105,344

 

 

 

104,584

 

Retained earnings

 

63,482

 

 

 

46,436

 

Accumulated other comprehensive loss

 

(48,624

)

 

 

(2,211

)

Total shareholders' equity

 

133,416

 

 

 

161,987

 

Total liabilities and shareholders' equity

$

1,622,853

 

 

$

1,972,184

 

Common shares outstanding

 

5,337,271

 

 

 

5,308,335

 

Common shares authorized

 

10,000,000

 

 

 

10,000,000

 

Preferred shares outstanding

 

-

 

 

 

-

 

Preferred shares authorized

 

2,000,000

 

 

 

2,000,000

 

 

 

* Derived from audited consolidated financial statements

 

Page 5 of 11

 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

 

Page 6 of 11

 

 

 

 

For the three months ended

 

 

For the twelve months ended

 

 

 

December 31, 2022

 

 

December 31, 2021

 

 

December 31, 2022

 

 

December 31, 2021

 

Interest and dividend income:

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

11,828

 

 

$

11,995

 

 

$

44,231

 

 

$

43,899

 

Federal funds sold

 

 

426

 

 

 

61

 

 

 

1,088

 

 

 

139

 

Other interest-bearing deposits

 

 

494

 

 

 

139

 

 

 

1,467

 

 

 

233

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

3,116

 

 

 

804

 

 

 

8,416

 

 

 

2,810

 

Tax exempt

 

 

324

 

 

 

292

 

 

 

1,249

 

 

 

1,021

 

Dividends

 

 

88

 

 

 

49

 

 

 

280

 

 

 

170

 

Total interest and dividend income

 

 

16,276

 

 

 

13,340

 

 

 

56,731

 

 

 

48,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Demand and savings deposits

 

 

682

 

 

 

710

 

 

 

2,327

 

 

 

2,308

 

Certificates and other time deposits

 

 

158

 

 

 

222

 

 

 

657

 

 

 

1,108

 

Junior subordinated debt

 

 

52

 

 

 

49

 

 

 

200

 

 

 

(132

)

Total interest expense

 

 

892

 

 

 

981

 

 

 

3,184

 

 

 

3,284

 

Net interest income

 

 

15,384

 

 

 

12,359

 

 

 

53,547

 

 

 

44,988

 

Provision for loan losses

 

 

136

 

 

 

537

 

 

 

106

 

 

 

1,014

 

Net interest income after provision for loan losses

 

 

15,248

 

 

 

11,822

 

 

 

53,441

 

 

 

43,974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

Wealth management fees

 

 

721

 

 

 

1,455

 

 

 

2,440

 

 

 

3,508

 

Advisory and brokerage income

 

 

131

 

 

 

246

 

 

 

770

 

 

 

1,154

 

Deposit account fees

 

 

433

 

 

 

477

 

 

 

1,799

 

 

 

1,459

 

Debit/credit card and ATM fees

 

 

648

 

 

 

509

 

 

 

2,794

 

 

 

2,070

 

Earnings/increase in value of bank owned life insurance

 

 

254

 

 

 

201

 

 

 

963

 

 

 

708

 

Resolution of commercial dispute

 

 

-

 

 

 

-

 

 

 

2,400

 

 

 

-

 

Gain on sale of business line

 

 

404

 

 

 

-

 

 

 

404

 

 

 

-

 

Gains (losses) on sale of assets, net

 

 

(74

)

 

 

1

 

 

 

1,043

 

 

 

81

 

Other

 

 

411

 

 

 

139

 

 

 

1,048

 

 

 

1,485

 

Total noninterest income

 

 

2,928

 

 

 

3,028

 

 

 

13,661

 

 

 

10,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,191

 

 

 

4,424

 

 

 

17,260

 

 

 

16,129

 

Net occupancy

 

 

729

 

 

 

932

 

 

 

4,526

 

 

 

3,575

 

Equipment

 

 

111

 

 

 

305

 

 

 

897

 

 

 

966

 

Bank franchise tax

 

 

304

 

 

 

214

 

 

 

1,216

 

 

 

1,136

 

Computer software

 

 

229

 

 

 

276

 

 

 

1,136

 

 

 

1,020

 

Data processing

 

 

805

 

 

 

620

 

 

 

2,954

 

 

 

2,793

 

FDIC deposit insurance assessment

 

 

90

 

 

 

264

 

 

 

511

 

 

 

858

 

Marketing, advertising and promotion

 

 

351

 

 

 

216

 

 

 

1,224

 

 

 

922

 

Merger and merger-related expenses

 

 

-

 

 

 

(664

)

 

 

-

 

 

 

7,423

 

Plastics expense

 

 

72

 

 

 

389

 

 

 

394

 

 

 

978

 

Professional fees

 

 

306

 

 

 

244

 

 

 

1,357

 

 

 

1,117

 

Core deposit intangible amortization

 

 

403

 

 

 

544

 

 

 

1,684

 

 

 

1,389

 

Impairment on assets held for sale

 

 

242

 

 

 

-

 

 

 

242

 

 

 

-

 

Other

 

 

1,683

 

 

 

1,160

 

 

 

5,155

 

 

 

4,216

 

Total noninterest expense

 

 

9,516

 

 

 

8,924

 

 

 

38,556

 

 

 

42,522

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

8,660

 

 

 

5,926

 

 

 

28,546

 

 

 

11,917

 

Provision for income taxes

 

 

1,603

 

 

 

707

 

 

 

5,108

 

 

 

1,846

 

Net income

 

$

7,057

 

 

$

5,219

 

 

$

23,438

 

 

$

10,071

 

Net income per common share, basic

 

$

1.32

 

 

$

0.98

 

 

$

4.40

 

 

$

2.16

 

Page 7 of 11

 

 

Net income per common share, diluted

 

$

1.32

 

 

$

0.98

 

 

$

4.38

 

 

$

2.14

 

Weighted average common shares outstanding, basic

 

 

5,333,902

 

 

 

5,308,108

 

 

 

5,324,740

 

 

 

4,668,761

 

Weighted average common shares outstanding, diluted

 

 

5,362,220

 

 

 

5,338,088

 

 

 

5,351,358

 

 

 

4,695,405

 

Page 8 of 11

 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)

(Unaudited)

 

 

At or For the Three Months Ended

 

 

 

December 31,
2022

 

 

September 30, 2022

 

 

June 30, 2022

 

 

March 31, 2022

 

 

December 31,
2021

 

Common Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per weighted average share, basic

 

$

1.32

 

 

$

1.08

 

 

$

1.07

 

 

$

0.93

 

 

$

0.98

 

Net income per weighted average share, diluted

 

$

1.32

 

 

$

1.08

 

 

$

1.06

 

 

$

0.92

 

 

$

0.98

 

Weighted average shares outstanding, basic

 

 

5,333,902

 

 

 

5,326,543

 

 

 

5,326,271

 

 

 

5,311,983

 

 

 

5,308,108

 

Weighted average shares outstanding, diluted

 

 

5,362,220

 

 

 

5,348,900

 

 

 

5,347,008

 

 

 

5,343,564

 

 

 

5,338,088

 

Actual shares outstanding

 

 

5,327,271

 

 

 

5,327,271

 

 

 

5,326,271

 

 

 

5,326,271

 

 

 

5,308,335

 

Tangible book value per share at period end

 

$

22.36

 

 

$

20.77

 

 

$

22.24

 

 

$

24.37

 

 

$

27.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets 1

 

 

1.65

%

 

 

1.30

%

 

 

1.27

%

 

 

1.03

%

 

 

1.06

%

Return on average equity 1

 

 

22.23

%

 

 

16.50

%

 

 

16.16

%

 

 

12.53

%

 

 

12.86

%

Net interest margin (FTE) 2

 

 

3.91

%

 

 

3.47

%

 

 

3.02

%

 

 

2.59

%

 

 

2.72

%

Efficiency ratio (FTE) 3

 

 

51.7

%

 

 

57.0

%

 

 

58.3

%

 

 

62.0

%

 

 

57.7

%

Loan-to-deposit ratio

 

 

63.3

%

 

 

59.0

%

 

 

60.1

%

 

 

56.8

%

 

 

59.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

15,384

 

 

$

14,277

 

 

$

12,461

 

 

$

11,425

 

 

$

12,359

 

Net interest income (FTE) 2

 

$

15,470

 

 

$

14,361

 

 

$

12,543

 

 

$

11,490

 

 

$

12,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

9.77

%

 

 

9.17

%

 

 

8.79

%

 

 

8.03

%

 

 

7.61

%

Total risk-based capital ratio

 

 

17.64

%

 

 

16.97

%

 

 

16.51

%

 

 

15.66

%

 

 

14.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets and Asset Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average earning assets

 

$

1,568,765

 

 

$

1,644,124

 

 

$

1,668,471

 

 

$

1,802,461

 

 

$

1,817,010

 

Average gross loans

 

$

938,740

 

 

$

959,086

 

 

$

984,883

 

 

$

1,031,593

 

 

$

1,088,278

 

Paycheck Protection Program loans, end of period

 

$

234

 

 

$

254

 

 

$

1,925

 

 

$

9,976

 

 

$

24,482

 

Fair value mark on acquired loans

 

$

15,887

 

 

$

17,046

 

 

$

17,502

 

 

$

17,920

 

 

$

18,466

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning of period

 

$

5,485

 

 

$

5,503

 

 

$

5,834

 

 

$

5,984

 

 

$

5,623

 

Provision for (recovery of) loan losses

 

 

136

 

 

 

39

 

 

 

(217

)

 

 

148

 

 

 

537

 

Charge-offs

 

 

(472

)

 

 

(119

)

 

 

(191

)

 

 

(473

)

 

 

(230

)

Recoveries

 

 

403

 

 

 

62

 

 

 

77

 

 

 

175

 

 

 

54

 

Net charge-offs

 

 

(69

)

 

 

(57

)

 

 

(114

)

 

 

(298

)

 

 

(176

)

End of period

 

$

5,552

 

 

$

5,485

 

 

$

5,503

 

 

$

5,834

 

 

$

5,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans 4

 

$

673

 

 

$

607

 

 

$

511

 

 

$

518

 

 

$

495

 

Loans 90 days or more past due and still accruing 5

 

 

705

 

 

 

859

 

 

 

626

 

 

 

837

 

 

 

800

 

OREO

 

 

-

 

 

 

-

 

 

 

-

 

 

 

611

 

 

 

611

 

Total nonperforming assets (NPA)

 

$

1,378

 

 

$

1,466

 

 

$

1,137

 

 

$

1,966

 

 

$

1,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NPA as a % of total assets

 

 

0.08

%

 

 

0.08

%

 

 

0.07

%

 

 

0.10

%

 

 

0.10

%

NPA as a % of gross loans plus OREO

 

 

0.15

%

 

 

0.16

%

 

 

0.12

%

 

 

0.20

%

 

 

0.18

%

ALLL to gross loans

 

 

0.59

%

 

 

0.58

%

 

 

0.57

%

 

 

0.58

%

 

 

0.56

%

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

 

 

2.29

%

 

 

2.38

%

 

 

2.39

%

 

 

2.35

%

 

 

2.30

%

Non-accruing loans to gross loans 4

 

 

0.07

%

 

 

0.06

%

 

 

0.05

%

 

 

0.05

%

 

 

0.05

%

Net charge-offs to average loans 1

 

 

0.03

%

 

 

0.02

%

 

 

0.05

%

 

 

0.12

%

 

 

0.06

%

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%.

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 9 of 11

 

 

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, 2022

 

 

December 31, 2021

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Average

 

 

Income/

 

 

Average

 

 

Average

 

 

Income/

 

 

Average

 

 

 

Balance

 

 

Expense

 

 

Yield/Cost

 

 

Balance

 

 

Expense

 

 

Yield/Cost

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Securities

 

$

471,566

 

 

$

3,204

 

 

 

2.72

%

 

$

225,757

 

 

$

853

 

 

 

1.51

%

Tax Exempt Securities 1

 

 

67,090

 

 

 

410

 

 

 

2.44

%

 

 

63,083

 

 

 

370

 

 

 

2.35

%

Total Securities 1

 

 

538,656

 

 

 

3,614

 

 

 

2.68

%

 

 

288,840

 

 

 

1,223

 

 

 

1.69

%

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

820,751

 

 

 

10,322

 

 

 

4.99

%

 

 

923,040

 

 

 

10,456

 

 

 

4.49

%

Commercial

 

 

71,730

 

 

 

785

 

 

 

4.34

%

 

 

109,024

 

 

 

846

 

 

 

3.08

%

Consumer

 

 

46,259

 

 

 

721

 

 

 

6.18

%

 

 

56,214

 

 

 

693

 

 

 

4.89

%

Total Loans

 

 

938,740

 

 

 

11,828

 

 

 

5.00

%

 

 

1,088,278

 

 

 

11,995

 

 

 

4.37

%

Fed Funds Sold

 

 

46,042

 

 

 

426

 

 

 

3.67

%

 

 

152,435

 

 

 

61

 

 

 

0.16

%

Other interest-bearing deposits

 

 

45,327

 

 

 

494

 

 

 

4.32

%

 

 

287,457

 

 

 

139

 

 

 

0.19

%

Total Earning Assets

 

 

1,568,765

 

 

 

16,362

 

 

 

4.14

%

 

 

1,817,010

 

 

 

13,418

 

 

 

2.93

%

Less: Allowance for Loan Losses

 

 

(5,395

)

 

 

 

 

 

 

 

 

(5,704

)

 

 

 

 

 

 

Total Non-Earning Assets

 

 

135,015

 

 

 

 

 

 

 

 

 

140,539

 

 

 

 

 

 

 

Total Assets

 

$

1,698,385

 

 

 

 

 

 

 

 

$

1,951,845

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Checking

 

$

403,570

 

 

$

55

 

 

 

0.05

%

 

$

421,372

 

 

$

70

 

 

 

0.07

%

Money Market and Savings Deposits

 

 

500,397

 

 

 

627

 

 

 

0.50

%

 

 

660,438

 

 

 

639

 

 

 

0.38

%

Time Deposits

 

 

125,334

 

 

 

158

 

 

 

0.50

%

 

 

162,584

 

 

 

222

 

 

 

0.54

%

Total Interest-Bearing Deposits

 

 

1,029,301

 

 

 

840

 

 

 

0.32

%

 

 

1,244,394

 

 

 

931

 

 

 

0.30

%

Borrowings

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Junior subordinated debt

 

 

3,406

 

 

 

52

 

 

 

6.06

%

 

 

3,360

 

 

 

50

 

 

 

5.90

%

Total Interest-Bearing Liabilities

 

 

1,032,709

 

 

 

892

 

 

 

0.34

%

 

 

1,247,754

 

 

 

981

 

 

 

0.31

%

Non-Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

531,719

 

 

 

 

 

 

 

 

 

532,397

 

 

 

 

 

 

 

Other liabilities

 

 

8,019

 

 

 

 

 

 

 

 

 

10,741

 

 

 

 

 

 

 

Total Liabilities

 

 

1,572,447

 

 

 

 

 

 

 

 

 

1,790,892

 

 

 

 

 

 

 

Shareholders' Equity

 

 

125,938

 

 

 

 

 

 

 

 

 

160,953

 

 

 

 

 

 

 

Total Liabilities & Shareholders' Equity

 

$

1,698,385

 

 

 

 

 

 

 

 

$

1,951,845

 

 

 

 

 

 

 

Net Interest Income (FTE)

 

 

 

 

$

15,470

 

 

 

 

 

 

 

 

$

12,437

 

 

 

 

Interest Rate Spread 2

 

 

 

 

 

 

 

 

3.80

%

 

 

 

 

 

 

 

 

2.62

%

Cost of Funds

 

 

 

 

 

 

 

 

0.23

%

 

 

 

 

 

 

 

 

0.22

%

Interest Expense as a Percentage of
     Average Earning Assets

 

 

 

 

 

 

 

 

0.23

%

 

 

 

 

 

 

 

 

0.21

%

Net Interest Margin (FTE) 3

 

 

 

 

 

 

 

 

3.91

%

 

 

 

 

 

 

 

 

2.72

%

 

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 10 of 11

 

 

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, 2022

 

 

December 31, 2021

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

 

Interest

 

 

 

 

 

 

Average

 

 

Income/

 

 

Average

 

 

Average

 

 

Income/

 

 

Average

 

 

 

Balance

 

 

Expense

 

 

Yield/Cost

 

 

Balance

 

 

Expense

 

 

Yield/Cost

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable Securities

 

$

373,680

 

 

$

8,696

 

 

 

2.33

%

 

$

198,450

 

 

$

2,980

 

 

 

1.50

%

Tax Exempt Securities 1

 

 

65,861

 

 

 

1,582

 

 

 

2.40

%

 

 

53,716

 

 

 

1,292

 

 

 

2.41

%

Total Securities 1

 

 

439,541

 

 

 

10,278

 

 

 

2.34

%

 

 

252,166

 

 

 

4,272

 

 

 

1.69

%

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate

 

 

847,238

 

 

 

38,011

 

 

 

4.49

%

 

 

808,707

 

 

 

35,303

 

 

 

4.37

%

Commercial

 

 

81,410

 

 

 

3,583

 

 

 

4.40

%

 

 

145,462

 

 

 

5,731

 

 

 

3.94

%

Consumer

 

 

49,619

 

 

 

2,637

 

 

 

5.31

%

 

 

63,039

 

 

 

2,865

 

 

 

4.54

%

Total Loans

 

 

978,267

 

 

 

44,231

 

 

 

4.52

%

 

 

1,017,208

 

 

 

43,899

 

 

 

4.32

%

Fed Funds Sold

 

 

100,033

 

 

 

1,088

 

 

 

1.09

%

 

 

109,104

 

 

 

139

 

 

 

0.13

%

Other interest-bearing deposits

 

 

161,260

 

 

 

1,467

 

 

 

0.91

%

 

 

160,960

 

 

 

233

 

 

 

0.14

%

Total Earning Assets

 

 

1,679,101

 

 

 

57,064

 

 

 

3.40

%

 

 

1,539,438

 

 

 

48,543

 

 

 

3.15

%

Less: Allowance for Loan Losses

 

 

(5,702

)

 

 

 

 

 

 

 

 

(5,297

)

 

 

 

 

 

 

Total Non-Earning Assets

 

 

124,525

 

 

 

 

 

 

 

 

 

115,193

 

 

 

 

 

 

 

Total Assets

 

$

1,797,924

 

 

 

 

 

 

 

 

$

1,649,334

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Bearing Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Checking

 

$

409,504

 

 

$

230

 

 

 

0.06

%

 

$

355,419

 

 

$

261

 

 

 

0.07

%

Money Market and Savings Deposits

 

 

563,374

 

 

 

2,097

 

 

 

0.37

%

 

 

529,027

 

 

 

2,047

 

 

 

0.39

%

Time Deposits

 

 

144,564

 

 

 

657

 

 

 

0.45

%

 

 

152,211

 

 

 

1,108

 

 

 

0.73

%

Total Interest-Bearing Deposits

 

 

1,117,442

 

 

 

2,984

 

 

 

0.27

%

 

 

1,036,657

 

 

 

3,416

 

 

 

0.33

%

Borrowings

 

 

—

 

 

 

—

 

 

 

—

 

 

 

23,700

 

 

 

(280

)

 

 

-1.18

%

Junior subordinated debt

 

 

3,389

 

 

 

200

 

 

 

5.90

%

 

 

2,565

 

 

 

148

 

 

 

5.77

%

Total Interest-Bearing Liabilities

 

 

1,120,831

 

 

 

3,184

 

 

 

0.28

%

 

 

1,062,922

 

 

 

3,284

 

 

 

0.31

%

Non-Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand deposits

 

 

526,389

 

 

 

 

 

 

 

 

 

434,989

 

 

 

 

 

 

 

Other liabilities

 

 

9,581

 

 

 

 

 

 

 

 

 

10,875

 

 

 

 

 

 

 

Total Liabilities

 

 

1,656,801

 

 

 

 

 

 

 

 

 

1,508,786

 

 

 

 

 

 

 

Shareholders' Equity

 

 

141,123

 

 

 

 

 

 

 

 

 

140,548

 

 

 

 

 

 

 

Total Liabilities & Shareholders' Equity

 

$

1,797,924

 

 

 

 

 

 

 

 

$

1,649,334

 

 

 

 

 

 

 

Net Interest Income (FTE)

 

 

 

 

$

53,880

 

 

 

 

 

 

 

 

$

45,259

 

 

 

 

Interest Rate Spread 2

 

 

 

 

 

 

 

 

3.11

%

 

 

 

 

 

 

 

 

2.84

%

Cost of Funds

 

 

 

 

 

 

 

 

0.19

%

 

 

 

 

 

 

 

 

0.22

%

Interest Expense as a Percentage of
     Average Earning Assets

 

 

 

 

 

 

 

 

0.19

%

 

 

 

 

 

 

 

 

0.21

%

Net Interest Margin (FTE) 3

 

 

 

 

 

 

 

 

3.21

%

 

 

 

 

 

 

 

 

2.94

%

 

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 11 of 11

 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

RECONCILIATION OF CERTAIN QUARTERLY NON-GAAP FINANCIAL MEASURES

(dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

December 31,
2022

 

 

September 30, 2022

 

 

June 30, 2022

 

 

March 31, 2022

 

 

December 31, 2021

 

Fully tax-equivalent measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

15,384

 

 

$

14,277

 

 

$

12,461

 

 

$

11,425

 

 

$

12,359

 

Fully tax-equivalent adjustment

 

 

86

 

 

 

83

 

 

 

82

 

 

 

65

 

 

 

78

 

Net interest income (FTE) 1

 

$

15,470

 

 

$

14,360

 

 

$

12,543

 

 

$

11,490

 

 

$

12,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio 2

 

 

52.0

%

 

 

57.3

%

 

 

58.6

%

 

 

62.3

%

 

 

58.0

%

Fully tax-equivalent adjustment

 

 

-0.3

%

 

 

-0.3

%

 

 

-0.3

%

 

 

-0.3

%

 

 

-0.3

%

Efficiency ratio (FTE) 3

 

 

51.7

%

 

 

57.0

%

 

 

58.3

%

 

 

62.0

%

 

 

57.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.89

%

 

 

3.45

%

 

 

3.00

%

 

 

2.57

%

 

 

2.70

%

Fully tax-equivalent adjustment

 

 

0.02

%

 

 

0.02

%

 

 

0.02

%

 

 

0.02

%

 

 

0.02

%

Net interest margin (FTE) 1

 

 

3.91

%

 

 

3.47

%

 

 

3.02

%

 

 

2.59

%

 

 

2.72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

December 31,
2022

 

 

September 30, 2022

 

 

June 30, 2022

 

 

March 31, 2022

 

 

December 31, 2021

 

Other financial measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLL to gross loans

 

 

0.59

%

 

 

0.58

%

 

 

0.57

%

 

 

0.58

%

 

 

0.56

%

Impact of acquired loans and fair value mark

 

 

0.31

%

 

 

0.32

%

 

 

0.34

%

 

 

0.37

%

 

 

0.39

%

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

 

 

0.90

%

 

 

0.90

%

 

 

0.91

%

 

 

0.95

%

 

 

0.95

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLL to gross loans

 

 

0.59

%

 

 

0.58

%

 

 

0.57

%

 

 

0.58

%

 

 

0.56

%

Fair value mark to gross loans

 

 

1.70

%

 

 

1.80

%

 

 

1.82

%

 

 

1.77

%

 

 

1.74

%

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

 

 

2.29

%

 

 

2.38

%

 

 

2.39

%

 

 

2.35

%

 

 

2.30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

25.05

 

 

$

23.65

 

 

$

25.20

 

 

$

27.42

 

 

$

30.50

 

Impact of intangible assets

 

 

(2.69

)

 

 

(2.88

)

 

 

(2.96

)

 

 

(3.05

)

 

$

(3.14

)

Tangible book value per share (non-GAAP)

 

$

22.36

 

 

$

20.77

 

 

$

22.24

 

 

$

24.37

 

 

$

27.36

 

 

 

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.

 

 

Page 12 of 11

 

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

RECONCILIATION OF CERTAIN ANNUAL NON-GAAP FINANCIAL MEASURES

(dollars in thousands, except per share data)

(Unaudited)

 

 

 

For the Twelve Months Ended

 

 

 

December 31, 2022

 

 

December 31, 2021

 

Fully tax-equivalent measures

 

 

 

 

 

 

Net interest income

 

$

53,547

 

 

$

44,988

 

Fully tax-equivalent adjustment

 

 

333

 

 

 

271

 

Net interest income (FTE) 1

 

$

53,880

 

 

$

45,259

 

 

 

 

 

 

 

 

Efficiency ratio 2

 

 

57.4

%

 

 

76.7

%

Fully tax-equivalent adjustment

 

 

-0.3

%

 

 

-0.4

%

Efficiency ratio (FTE) 3

 

 

57.1

%

 

 

76.3

%

 

 

 

 

 

 

 

Net interest margin

 

 

3.19

%

 

 

2.92

%

Fully tax-equivalent adjustment

 

 

0.02

%

 

 

0.02

%

Net interest margin (FTE) 1

 

 

3.21

%

 

 

2.94

%

 

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.

 

Page 13 of 11