VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES SECOND QUARTER 2022 EARNINGS

Jul 29th, 2022 12:42 EST

CHARLOTTESVILLE, Va., July 29, 2022 /PRNewswire/ -- Virginia National Bankshares Corporation (NASDAQ: VABK) (the "Company") today reported net income of $5.7 million, or $1.06 per diluted share, for the quarter ended June 30, 2022, which represents a $5.5 million increase over net income of $147 thousand, or $0.03 per diluted share, recognized for the quarter ended June 30, 2021.  For the six months ended June 30, 2022, net income of $10.6 million, or $1.98 per diluted share, was recognized, compared to $1.6 million, or $0.41 per diluted share, for the six months ended June 30, 2021.  Note that merger and merger-related expenses of $5.9 million and $6.2 million were incurred in the quarterly and year-to-date periods ended June 30, 2021, respectively, in connection with the April 1, 2021 mergers of Fauquier Bankshares, Inc. and The Fauquier Bank ("Fauquier") with and into the Company and Virginia National Bank (the "Bank"), respectively. 

"We finished the first half of the year with strong financial results," commented President and Chief Executive Officer, Glenn W. Rust. "We continue to add talent in the Northern Virginia and Richmond markets.  The Bank remains positioned to benefit from recent and anticipated increases in interest rates, and our history of strong credit quality has proven beneficial in trying economic times." 

Second Quarter 2022 and Selected Balance Sheet Financial Highlights

  • The efficiency ratio on a fully tax equivalent basis ("FTE") (a non-GAAP financial measure) was 58.3% for the three months ended June 30, 2022, an improvement over 99.1% for the three months ended June 30, 2021. 1
  • Return on average assets ("ROAA") for the three months ended June 30, 2022 increased to 1.27% compared to 0.03% realized in the same period in the prior year.
  • Return on average equity ("ROAE") for the three months ended June 30, 2022 improved to 16.16% compared to 0.37% realized in same period in the prior year.
  • The Company has not incurred any merger or merger-related expenses since December 31, 2021, compared to $5.9 million incurred in the three months ended June 30, 2021.
  • The Company has begun realizing 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 161 as of June 30, 2022.

Loans and Asset Quality

  • Gross loans outstanding at June 30, 2022 totaled $960 million, a decrease of $206 million, or 18%, compared to June 30, 2021. The decrease is due predominantly to: 1) the forgiveness of Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans in the amount of $71.9 million, 2) paydowns of legacy organic loans due mainly to business sales, property sales and participation fluctuations of $53.8 million, and 3) workouts and paydowns of loans acquired from Fauquier ("acquired loans") of $50.4 million.
  • Two loans to one borrower are in non-accrual status, totaling $511 thousand, as of June 30, 2022, compared to $17 thousand as of June 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.

__________________________________________________________________ 

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

Loans and Asset Quality (continued)

  • Loans 90 days or more past due and still accruing interest amounted to $626 thousand as of June 30, 2022, compared to $2.8 million as of June 30, 2021. The June 30, 2022 balance includes a government-guaranteed loan in the amount of $548 thousand. The portfolio includes four non-insured student loans that are 90 days or more past due and still accruing interest, amounting to $29 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 0.57% as of June 30, 2022 and 0.47% as of June 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 $17.5 million as of June 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 0.91% as of June 30, 2022, compared to 0.88% as of June 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 2.39% as of June 30, 2022 and 2.23% as of June 30, 2021.
  • A recovery of provision for loan losses of $217 thousand was recognized during the three months ended June 30, 2022, compared to $141 thousand recognized in the three months ended June 30, 2021.

Net Interest Income

  • Net interest income for the three months ended June 30, 2022 of $12.5 million decreased $690 thousand, or 5%, compared to the three months ended June 30, 2021, due primarily to the reduction in average balances of loans, which declined from an average of $1.2 billion for the three months ended June 30, 2021 to an average of $985 million for the three months ended June 30, 2022.
  • 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 17 bps incurred in the three months ended June 30, 2022 decreased 6 bps from 23 bps in the same period in the prior year, due primarily to lower rates paid on deposit accounts.
  • Low-cost deposits, which include noninterest checking accounts and interest-bearing checking, savings and money market accounts, remained in excess of 89% of total deposits at June 30, 2022 and 2021.

Noninterest Income

Noninterest income for the three months ended June 30, 2022 increased $726 thousand, or 25%, compared to the three months ended June 30, 2021 largely due to the gain on sale of two buildings of $1.1 million, offset by a $408 thousand decline in wealth management fees due to a reduction in the number of accounts. 

Noninterest Expense

Noninterest expense for the three months ended June 30, 2022 declined $6.6 million, or 41%, compared to the three months ended June 30, 2021, primarily due to reduction in merger and merger-related expenses of $5.9 million and the reduction of salaries and employee benefits of $655 thousand. 

Book Value

Book value per share was $25.20 as of June 30, 2022 and $29.89 as of June 30, 2021, and tangible book value per share (a non-GAAP financial measure)1 was $22.24 as of June 30, 2022 compared to $26.60 as of June 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 June 30, 2022 amounted to 17.4%, due to the recognition of low-income housing tax credits in 2022, compared to 32.9% for the three months ended June 30, 2021, which was higher than the statutory rate due to the non-deductibility of certain merger and merger-related expenses. 

Dividends

Cash dividends of $1.6 million 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.

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.

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

June 30, 2022

December 31, 2021 *

June 30, 2021

(Unaudited)

(Unaudited)

ASSETS

Cash and due from banks

$

17,631

$

20,345

$

29,605

Interest-bearing deposits in other banks

145,217

336,032

177,753

Federal funds sold

52,819

152,463

106,621

Securities:

Available for sale, at fair value

461,830

303,817

266,973

Restricted securities, at cost

5,138

4,950

4,272

Total securities

466,968

308,767

271,245

Loans, net of deferred fees and costs

960,192

1,061,211

1,166,161

Allowance for loan losses

(5,503)

(5,984)

(5,522)

Loans, net

954,689

1,055,227

1,160,639

Premises and equipment, net

19,193

25,093

25,386

Bank owned life insurance

38,046

31,234

30,832

Goodwill

8,140

8,140

8,898

Core deposit intangible, net

7,405

8,271

8,272

Other intangible assets, net

240

274

307

Other real estate owned, net

-

611

611

Right of use asset, net

7,343

7,583

8,371

Accrued interest receivable and other assets

27,249

18,144

18,582

Total assets

$

1,744,940

$

1,972,184

$

1,847,122

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Demand deposits:

Noninterest-bearing

$

512,889

$

522,281

$

449,483

Interest-bearing

399,930

446,314

431,556

Money market and savings deposit accounts

535,958

665,530

577,414

Certificates of deposit and other time deposits

150,121

162,045

170,995

Total deposits

1,598,898

1,796,170

1,629,448

Advances from the FHLB

-

-

42,989

Junior subordinated debt, net

3,390

3,367

3,345

Lease liability

6,925

7,108

7,833

Accrued interest payable and other liabilities

1,511

3,552

4,905

Total liabilities

1,610,724

1,810,197

1,688,520

Commitments and contingent liabilities

Shareholders' equity:

Preferred stock, $2.50 par value

-

-

-

Common stock, $2.50 par value

13,201

13,178

13,176

Capital surplus

104,858

104,584

104,360

Retained earnings

53,852

46,436

41,201

Accumulated other comprehensive loss

(37,695)

(2,211)

(135)

Total shareholders' equity

134,216

161,987

158,602

Total liabilities and shareholders' equity

$

1,744,940

$

1,972,184

$

1,847,122

Common shares outstanding

5,326,271

5,308,335

5,305,819

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

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

For the three months ended

For the six months ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Interest and dividend income:

Loans, including fees

$

10,610

$

13,009

$

21,379

$

18,947

Federal funds sold

302

21

363

33

Other interest-bearing deposits

219

39

355

39

Investment securities:

Taxable

1,662

757

2,674

1,264

Tax exempt

308

273

612

449

Dividends

64

32

126

66

Total interest and dividend income

13,165

14,131

25,509

20,798

Interest expense:

Demand and savings deposits

498

548

1,174

925

Certificates and other time deposits

157

324

352

604

Borrowings

49

108

97

144

Total interest expense

704

980

1,623

1,673

Net interest income

12,461

13,151

23,886

19,125

Provision for (recovery of) loan losses

(217)

(141)

(69)

210

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

12,678

13,292

23,955

18,915

Noninterest income:

Wealth management fees

572

980

1,129

1,309

Advisory and brokerage income

210

359

426

550

Deposit account fees

458

426

923

586

Debit/credit card and ATM fees

779

599

1,486

753

Earnings/increase in value of bank owned life insurance

246

199

457

306

Resolution of commercial dispute

-

-

2,400

-

Gains on sale of assets

1,113

-

1,113

27

Other

268

357

499

428

Total noninterest income

3,646

2,920

8,433

3,959

Noninterest expense:

Salaries and employee benefits

4,086

4,741

8,817

7,143

Net occupancy

1,282

1,109

2,479

1,604

Equipment

254

340

537

456

Bank franchise tax

304

429

608

602

Computer software

357

216

620

383

Data processing

699

994

1,437

1,283

FDIC deposit insurance assessment

125

182

351

245

Marketing, advertising and promotion

259

232

526

369

Merger and merger-related expenses

-

5,874

-

6,152

Plastics expense

92

-

231

-

Professional fees

404

510

741

687

Core deposit intangible amortization

427

428

866

428

Other

1,153

938

2,324

1,422

Total noninterest expense

9,442

15,993

19,537

20,774

Income before income taxes

6,882

219

12,851

2,100

Provision for income taxes

1,197

72

2,242

448

Net income

$

5,685

$

147

$

10,609

$

1,652

Net income per common share, basic

$

1.07

$

0.03

$

1.99

$

0.41

Net income per common share, diluted

$

1.06

$

0.03

$

1.98

$

0.41

Weighted average common shares outstanding, basic

5,326,271

5,305,277

5,319,166

4,019,700

Weighted average common shares outstanding, diluted

5,347,008

5,320,290

5,345,242

4,031,301

VIRGINIA NATIONAL BANKSHARES CORPORATION

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)

(Unaudited)

At or For the Three Months Ended

June 30,        2022

March 31,        2022

December 31,        2021

September 30,        2021

June 30, 2021

Common Share Data:

Net income per weighted average share, basic

$

1.07

$

0.93

$

0.98

$

0.59

$

0.03

Net income per weighted average share, diluted

$

1.06

$

0.92

$

0.98

$

0.59

$

0.03

Weighted average shares outstanding, basic

5,326,271

5,311,983

5,308,108

5,306,370

5,305,277

Weighted average shares outstanding, diluted

5,347,008

5,343,564

5,338,088

5,338,872

5,320,290

Actual shares outstanding

5,326,271

5,326,271

5,308,335

5,307,235

5,305,819

Tangible book value per share at period end

$

22.24

$

24.37

$

27.36

$

26.92

$

26.60

Key Ratios:

Return on average assets 1

1.27

%

1.03

%

1.06

%

0.65

%

0.03

%

Return on average equity 1

16.16

%

12.53

%

12.86

%

7.70

%

0.37

%

Net interest margin (FTE) 2

3.02

%

2.59

%

2.72

%

3.08

%

3.05

%

Efficiency ratio (FTE) 3

58.32

%

62.02

%

57.70

%

75.17

%

99.06

%

Loan-to-deposit ratio

60.05

%

56.75

%

59.08

%

64.04

%

71.57

%

Net Interest Income:

Net interest income

$

12,461

$

11,425

$

12,359

$

13,504

$

13,151

Net interest income (FTE) 2

$

12,543

$

11,506

$

12,437

$

13,581

$

13,224

Capital Ratios:

Tier 1 leverage ratio

8.79

%

8.03

%

7.61

%

7.59

%

7.66

%

Total risk-based capital ratio

16.51

%

15.66

%

14.56

%

13.74

%

13.47

%

Assets and Asset Quality:

Average earning assets

$

1,668,471

$

1,802,461

$

1,817,010

$

1,750,799

$

1,740,338

Average gross loans

$

984,883

$

1,031,593

$

1,088,278

$

1,140,281

$

1,214,123

Paycheck Protection Program loans, end of period

$

1,925

$

9,976

$

24,482

$

36,740

$

73,784

Fair value mark on acquired loans

$

17,502

$

17,920

$

18,466

$

19,328

$

20,582

Allowance for loan losses:

Beginning of period

$

5,834

$

5,984

$

5,623

$

5,522

$

5,615

Provision for (recovery of) loan losses

(217)

148

537

267

(141)

Charge-offs

(191)

(473)

(230)

(208)

(156)

Recoveries

77

175

54

42

204

Net recoveries (charge-offs)

(114)

(298)

(176)

(166)

48

End of period

$

5,503

$

5,834

$

5,984

$

5,623

$

5,522

Non-accrual loans 4

$

511

$

518

$

495

$

777

$

17

Loans 90 days or more past due and still accruing 5

626

837

800

1,044

2,770

OREO

-

611

611

611

611

Total nonperforming assets (NPA)

$

1,137

$

1,966

$

1,906

$

2,432

$

3,398

NPA as a % of total assets

0.07

%

0.10

%

0.10

%

0.13

%

0.18

%

NPA as a % of gross loans plus OREO

0.12

%

0.20

%

0.18

%

0.22

%

0.29

%

ALLL to gross loans

0.57

%

0.58

%

0.56

%

0.51

%

0.47

%

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

2.39

%

2.35

%

2.30

%

2.24

%

2.23

%

Non-accruing loans to gross loans 4

0.05

%

0.05

%

0.05

%

0.07

%

0.00

%

Net charge-offs (recoveries) to average loans 1

0.05

%

0.12

%

0.06

%

0.06

%

-0.02

%

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.

VIRGINIA NATIONAL BANKSHARES CORPORATION

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

(dollars in thousands)

(Unaudited)

For the three months ended

June 30, 2022

June 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

$

325,833

$

1,726

2.12

%

$

211,827

$

792

1.50

%

Tax Exempt Securities 1

65,352

390

2.39

%

58,398

346

2.37

%

Total Securities 1

391,185

2,116

2.16

%

270,225

1,138

1.68

%

Loans:

Real Estate

847,661

8,988

4.25

%

997,446

10,175

4.09

%

Commercial

86,394

995

4.62

%

144,209

1,967

5.47

%

Consumer

50,828

627

4.95

%

72,468

867

4.80

%

      Total Loans

984,883

10,610

4.32

%

1,214,123

13,009

4.30

%

Fed Funds Sold

150,393

302

0.81

%

106,934

21

0.08

%

Other interest-bearing deposits

142,010

219

0.62

%

149,056

36

0.10

%

Total Earning Assets

1,668,471

13,247

3.18

%

1,740,338

14,204

3.27

%

Less: Allowance for Loan Losses

(5,866)

(5,732)

Total Non-Earning Assets

133,526

124,287

Total Assets

$

1,796,131

$

1,858,893

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest Bearing Liabilities:

Interest Bearing Deposits:

Interest Checking

$

411,374

$

58

0.06

%

$

437,611

$

93

0.09

%

Money Market and Savings Deposits

550,883

440

0.32

%

561,940

455

0.32

%

Time Deposits

152,695

157

0.41

%

169,556

324

0.77

%

Total Interest-Bearing Deposits

1,114,952

655

0.24

%

1,169,107

872

0.30

%

Borrowings

43,030

59

0.55

%

Junior subordinated debt

3,383

49

5.81

%

3,334

49

5.89

%

Total Interest-Bearing Liabilities

1,118,335

704

0.25

%

1,215,471

980

0.32

%

Non-Interest-Bearing Liabilities:

Demand deposits

527,008

471,078

Other liabilities

10,067

14,109

Total Liabilities

1,655,410

1,700,658

Shareholders' Equity

140,721

158,235

Total Liabilities & Shareholders' Equity

$

1,796,131

$

1,858,893

Net Interest Income (FTE)

$

12,543

$

13,224

Interest Rate Spread 2

2.93

%

2.95

%

Cost of Funds

0.17

%

0.23

%

Interest Expense as a Percentage of      Average Earning Assets

0.17

%

0.23

%

Net Interest Margin (FTE) 3

3.02

%

3.05

%

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.

VIRGINIA NATIONAL BANKSHARES CORPORATION

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

(dollars in thousands)

(Unaudited)

For the six month ended

June 30, 2022

June 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

$

287,241

$

2,800

1.95

%

$

176,151

$

1,264

1.44

%

Tax Exempt Securities 1

65,249

775

2.38

%

45,818

569

2.48

%

Total Securities 1

352,490

3,575

2.03

%

221,969

1,833

1.65

%

Loans:

Real Estate

866,863

18,082

4.21

%

679,951

14,282

4.24

%

Commercial

89,944

2,084

4.67

%

166,941

3,156

3.81

%

Consumer

51,302

1,213

4.77

%

63,148

1,509

4.82

%

      Total Loans

1,008,109

21,379

4.28

%

910,040

18,947

4.20

%

Fed Funds Sold

151,429

363

0.48

%

87,276

72

0.17

%

Other interest-bearing deposits

235,418

356

0.30

%

74,475

66

0.18

%

Total Earning Assets

1,747,446

25,673

2.96

%

1,293,760

20,918

3.26

%

Less: Allowance for Loan Losses

(5,946)

(5,624)

Total Non-Earning Assets

124,851

84,069

Total Assets

$

1,866,351

$

1,372,205

LIABILITIES AND SHAREHOLDERS' EQUITY

Interest Bearing Liabilities:

Interest Bearing Deposits:

Interest Checking

$

416,393

$

119

0.06

%

$

291,025

$

119

0.08

%

Money Market and Savings Deposits

603,259

1,055

0.35

%

422,048

806

0.39

%

Time Deposits

155,544

352

0.46

%

134,355

604

0.91

%

Total Interest-Bearing Deposits

1,175,196

1,526

0.26

%

847,428

1,529

0.36

%

Borrowings

36,551

95

0.52

%

Junior subordinated debt

3,377

98

5.85

%

1,255

49

7.87

%

Total Interest-Bearing Liabilities

1,178,573

1,624

0.28

%

885,234

1,673

0.38

%

Non-Interest-Bearing Liabilities:

Demand deposits

527,049

363,709

Other liabilities

10,704

2,877

Total Liabilities

1,716,326

1,251,820

Shareholders' Equity

150,025

120,385

Total Liabilities & Shareholders' Equity

$

1,866,351

$

1,372,205

Net Interest Income (FTE)

$

24,049

$

19,245

Interest Rate Spread 2

2.68

%

2.88

%

Cost of Funds

0.19

%

0.27

%

Interest Expense as a Percentage of      Average Earning Assets

0.19

%

0.26

%

Net Interest Margin (FTE) 3

2.78

%

3.00

%

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.

VIRGINIA NATIONAL BANKSHARES CORPORATION

QUARTERLY RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES

(dollars in thousands, except per share data)

(Unaudited)

Three Months Ended

June 30, 2022

March 31, 2022

December 31, 2021

September 30, 2021

June 30, 2021

Fully tax-equivalent measures

Net interest income

$

12,461

$

11,425

$

12,359

$

13,504

$

13,151

Fully tax-equivalent adjustment

82

81

78

77

73

Net interest income (FTE) 1

$

12,543

$

11,506

$

12,437

$

13,581

$

13,224

Efficiency ratio 2

58.6

%

62.3

%

58.0

%

75.5

%

99.5

%

Fully tax-equivalent adjustment

-0.3

%

-0.3

%

-0.3

%

-0.3

%

-0.4

%

Efficiency ratio (FTE) 3

58.3

%

62.0

%

57.7

%

75.2

%

99.1

%

Net interest margin

3.00

%

2.57

%

2.70

%

3.06

%

3.03

%

Fully tax-equivalent adjustment

0.02

%

0.02

%

0.02

%

0.02

%

0.02

%

Net interest margin (FTE) 1

3.02

%

2.59

%

2.72

%

3.08

%

3.05

%

As of

June 30, 2022

March 31, 2022

December 31, 2021

September 30, 2021

June 30, 2021

Other financial measures

ALLL to gross loans

0.57

%

0.58

%

0.56

%

0.51

%

0.47

%

Impact of acquired loans and fair value mark

0.34

%

0.37

%

0.39

%

0.39

%

0.41

%

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

0.91

%

0.95

%

0.95

%

0.90

%

0.88

%

ALLL to gross loans

0.57

%

0.58

%

0.56

%

0.51

%

0.47

%

Fair value mark to gross loans

1.82

%

1.77

%

1.74

%

1.73

%

1.76

%

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

2.39

%

2.35

%

2.30

%

2.24

%

2.23

%

Book value per share

$

25.20

$

27.42

$

30.50

$

30.13

$

29.89

Impact of intangible assets

(2.96)

(3.05)

(3.14)

(3.21)

$

(3.29)

Tangible book value per share (non-GAAP)

$

22.24

$

24.37

$

27.36

$

26.92

$

26.60

1

FTE calculations use a Federal income tax rate of 21%.

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.

SOURCE Virginia National Bankshares

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