VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES THIRD QUARTER 2022 EARNINGS

CHARLOTTESVILLE, Va., Oct. 27, 2022 /PRNewswire/ -- 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.
• 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. 

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.

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)
	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

 

 

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

 

 

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.

 

 

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.

 

 

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.

 

 

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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SOURCE Virginia National Bankshares Corporation