VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES 2025 SECOND QUARTER EARNINGS AND QUARTERLY DIVIDEND
CHARLOTTESVILLE, Va., July 24, 2025 /PRNewswire/ -- Virginia National Bankshares Corporation (NASDAQ:VABK) (the "Company") today reported quarterly net income of $4.2 million, or $0.78 per diluted share, for the quarter ended June 30, 2025, compared to $4.2 million, or $0.77 per diluted share, recognized for the quarter ended June 30, 2024. For the six months ended June 30, 2025, the Company recognized net income of $8.7 million, or $1.61 per diluted share, compared to $7.8 million, or $1.45 per diluted share, for the six months ended June 30, 2024.
The increase in second quarter net income year-over-year was primarily the result of increased net interest income, resulting from increased interest income from higher average loan balances compared to the prior period, combined with decreased interest expense, as a result of the reduction in cost of funds associated with deposits and borrowings. The decrease in interest expense on deposits was the primary contributor to the increase in net income year-to-date for 2025 compared to the prior year.
Dividend Declaration
On July 23, 2025, the Company's Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock payable on August 29, 2025, to the holders of record at the close of business on August 15, 2025. The quarterly cash dividend represents an annual yield to shareholders of approximately 3.78% based on the closing price of the Company's common stock on July 23, 2025.
President and Chief Executive Officer's comments: "We continue to post steady earnings results for 2025, with year-to-date earnings of $8.7 million, putting the Bank 12% ahead of 2024," stated Glenn W. Rust, President and Chief Executive Officer. "Our continuing focus on operating efficiencies and asset quality enables our lending and retail teams to provide exceptional service to depositors and borrowers alike. This translates into a positive return to our customers, the communities we serve, and our shareholders."
Key Performance IndicatorsSecond quarter 2025 compared to second quarter 2024
Return on average assets remained steady at 1.05%.
Net interest margin (FTE)1 improved to 3.40% from 3.04%
Loan-to-deposit ratio increased to 89.4% from 84.3%, with loan balances increasing by $83.5 million or 7.2% since June 30, 2024.
Efficiency ratio (FTE)1 improved to 61.2% from 62.7%
June 30, 2025 Balance Sheet Highlights
The Company continued to experience modest loan growth in the second quarter of 2025, with gross loan balances increasing $5.7 million from year-end. Gross loans outstanding as of June 30, 2025 totaled $1.2 billion, an increase of $83.5 million, or 7.2% compared to June 30, 2024.
Deposit balance decreases of $34.5 million since December 31, 2024 facilitated the efforts to stabilize the overall cost of funds through changes in the mix of lower cost components. Deposits increased $15.2 million or 1.1% from June 30, 2024.
Securities balances declined $28.3 million from June 30, 2024 to June 30, 2025; this decline was strategic as funds from the maturities of investments were repurposed to higher yielding assets in the form of loans.
The Company utilizes a third-party to offer multi-million-dollar FDIC insurance to customers with balances in excess of single-bank limits through reciprocal Insured Cash Sweep® (ICS) plans. Deposit balances held in ICS plans amounted to $159.6 million as of June 30, 2025, $166.6 million as of December 31, 2024 and $144.8 million as of June 30, 2024.
Outstanding borrowings from the FHLB increased by $41.0 million to $61.0 million as of June 30, 2025 from December 31, 2024 and by $31.0 million from $30.0 million at June 30, 2024. As of June 30, 2025, the Company had unused borrowing facilities in place of approximately $172.0 million and held no brokered deposits.
Loans and Asset Quality
Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.48% as of June 30, 2025, 0.19% as of December 31, 2024 and 0.25% as of June 30, 2024.
Nonperforming assets amounted to $7.8 million as of June 30, 2025, compared to $3.0 million as of December 31, 2024 and $4.0 million as of June 30, 2024;
Fourteen loans to thirteen borrowers are in non-accrual status, totaling $2.6 million, as of June 30, 2025, compared to $2.3 million as of December 31, 2024 and $2.4 million as of June 30, 2024.
Loans 90 days or more past due and still accruing interest amounted to $5.2 million as of June 30, 2025, compared to $754 thousand as of December 31, 2024 and $1.6 million as of June 30, 2024. The past due balance as of June 30, 2025 is comprised of six loans totaling $5.1 million which are 100% government-guaranteed, and six student loans totaling $31 thousand.
The Company currently holds no other real estate owned.
The period-end Allowance for Credit Losses on Loans ("ACL") as a percentage of total loans was 0.67% as of June 30, 2025, 0.68% as of December 31, 2024 and 0.69% as of June 30, 2024. The individual differences in the balances of various pools as well as changing loss rates has resulted in only nominal changes to the overall ACL ratio. The proportionate increase in government-guaranteed loans over the respective periods is also a main driver holding the ACL as a percentage of total loans fairly steady year-over-year. Balances in such loans are 100% government-guaranteed and do not require an ACL.
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 $5.7 million as of June 30, 2025.
For the three months ended June 30, 2025, the Company recorded a net charge to the provision for credit losses of $3 thousand, due primarily to declining balances in pools with higher loss rates offsetting reserves required by changes in environmental factors. The provision includes an $87 thousand recovery for changes in unfunded reserves, as a result of a decline in unfunded construction commitments.
Net Interest Income
Net interest income for the three months ended June 30, 2025 of $12.8 million increased $1.6 million, or 14.4%, compared to the three months ended June 30, 2024, as interest income earned on assets increased with decreased interest expense on deposit accounts driving an additional net increase.
Net interest margin (FTE), (a non-GAAP financial measure)1, for the three months ended June 30, 2025 was 3.40%, compared to 3.04% for the three months ended June 30, 2024. The increase as compared to the first quarter of 2024 was the outcome of the higher yielding mix of interest earning assets and the decrease in cost of funds, both described below.
The Bank's yield on loans was 5.60% for the three months ended June 30, 2025, compared to 5.71% for the prior year same period. The accretion of the fair value mark related to purchased loans positively impacted interest income by 14 bps in the second quarter of 2025, compared to 15 bps in the second quarter of 2024.
The overall cost of funds, including noninterest-bearing deposits, of 177 bps incurred in the three months ended June 30, 2025 decreased 33 bps from 210 bps in the same period in the prior year. Overall, the cost of interest-bearing deposits decreased period over period by 51 bps, from a cost of 274 bps to 223 bps. The cost of borrowings decreased 39 bps from the second quarter of 2024 to the second quarter of 2025, from 5.13% to 4.74%.
1
See "Reconciliation of Certain Quarterly Non-GAAP Financial Measures" at the end of this release.
Noninterest Income
Noninterest income for the three months ended June 30, 2025 decreased $380 thousand, or 22.5%, compared to the three months ended June 30, 2024, primarily as a result of lower wealth management fees, and lower fee income from deposit accounts and debit card usage.
Noninterest Expense
Noninterest expense for the three months ended June 30, 2025 increased by $559 thousand, or 6.9%, compared to the three months ended June 30, 2024. Increased franchise taxes and the cost of data processing and professional and legal fees for special projects drove increases during the quarter.
Efficiency Ratio
The Company's efficiency ratio (FTE)1 improved to 61.2% for the three months ended June 30, 2025 compared to 62.7% for the three months ended June 30, 2024, primarily due to increased net interest income (FTE)1. On a year-to-date basis, the efficiency ratio (FTE)1 improved to 61.8% in 2025 compared to 64.8% in 2024, also as a result of increased net interest income (FTE)1.
Income Taxes
The effective tax rates amounted to 21.9% and 18.3% for the three months ended June 30, 2025 and 2024, respectively. For each period, the effective income tax rate differed from the U.S. statutory rate of 21% due to the recognition of low-income housing tax credits net of the impact of the accounting change to proportional amortization in 2024, the effect of tax-exempt income from municipal bonds and income from bank owned life insurance policies.
Book Value
Book value per share increased to $31.67 as of June 30, 2025, compared to $28.70 as of June 30, 2024, and tangible book value per share (a non-GAAP financial measure)1 was $29.63 as of June 30, 2025 compared to $26.43 as of June 30, 2024. These values increased as net retained income increased and the impact of intangible assets declined due to the ongoing amortization of the Company's core deposit intangible asset.
Dividends
Cash dividends of $1.9 million, or $0.36 per share, were declared and paid during the second quarter of 2025. The remaining 54% of net income was retained.
1
See "Reconciliation of Certain Quarterly 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 seven banking offices throughout Fauquier and Prince William counties, four banking offices in Charlottesville and Albemarle County (including one limited-service banking facility), 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 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, or more important than, operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP measures are included at the end of this release.
Forward-Looking Statements; Other Information
Certain statements in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, statements with respect to the Company's operations, performance, future strategy and goals, and are often characterized by use of qualified words such as "expect," "believe," "estimate," "project," "anticipate," "intend," "will," "should," or words of similar meaning or other statements concerning the opinions or judgement of the Company and its management about future events. While Company management believes such statements to be reasonable, future events and predictions are subject to circumstances that are not within the control of the Company and its management. Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including, without limitation, the effects of and changes in: inflation, interest rates, market and monetary fluctuations; liquidity and capital requirements; market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises, war and other military conflicts or other major events, the governmental and societal responses thereto, or the prospect of these events; changes, particularly declines, in general economic and market conditions in the local economies in which the Company operates, including the effects of declines in real estate values; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; the impact of changes in laws, regulations and guidance related to financial services including, but not limited to, taxes, banking, securities and insurance; changes in accounting principles, policies and guidelines; the financial condition of the Company's borrowers; the Company's ability to attract, hire, train and retain qualified employees; an increase in unemployment levels; competitive pressures on loan and deposit pricing and demand; fluctuation in asset quality; assumptions that underlie the Company's ACL; the value of securities held in the Company's investment portfolio; performance of assets under management; cybersecurity threats or attacks and the development and maintenance of reliable electronic systems; changes in technology and their impact on the marketing of new products and services and the acceptance of these products and services by new and existing customers; the willingness of customers to substitute competitors' products and services for the Company's products and services; the risks and uncertainties described from time to time in the Company's press releases and filings with the SEC; and the Company's performance in managing the risks involved in any of the foregoing. Many of these factors and additional risks and uncertainties are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 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 CORPORATIONCONSOLIDATED BALANCE SHEETS(dollars in thousands, except per share data)
June 30, 2025
December 31, 2024*
June 30, 2024
(Unaudited)
(Unaudited)
ASSETS
Cash and due from banks
$
5,999
$
5,311
$
8,785
Interest-bearing deposits in other banks
9,840
11,792
8,515
Federal funds sold
22,683
-
-
Securities:
Available for sale (AFS), at fair value
254,909
263,537
284,698
Restricted securities, at cost
8,120
6,193
6,667
Total securities
263,029
269,730
291,365
Loans, net of deferred fees and costs
1,241,712
1,235,969
1,158,214
Allowance for credit losses
(8,347)
(8,455)
(8,028)
Loans, net
1,233,365
1,227,514
1,150,186
Premises and equipment, net
12,204
15,383
15,818
Bank owned life insurance
40,659
40,059
39,468
Goodwill
7,768
7,768
7,768
Core deposit intangible, net
3,213
3,792
4,418
Right of use asset, net
4,805
5,551
6,287
Deferred tax asset, net
14,084
15,407
15,860
Accrued interest receivable and other assets
15,046
14,519
25,350
Total assets
$
1,632,695
$
1,616,826
$
1,573,820
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits:
Noninterest-bearing
$
384,538
$
374,079
$
357,931
Interest-bearing
266,012
303,405
257,365
Money market and savings deposit accounts
457,077
437,619
423,055
Certificates of deposit and other time deposits
281,438
308,443
335,490
Total deposits
1,389,065
1,423,546
1,373,841
Federal funds purchased
-
236
2,438
Borrowings
61,000
20,000
30,000
Junior subordinated debt, net
3,530
3,506
3,483
Lease liability
4,661
5,389
6,102
Accrued interest payable and other liabilities
3,667
3,847
3,792
Total liabilities
1,461,923
1,456,524
1,419,656
Commitments and contingent liabilities
Shareholders' equity:
Preferred stock, $2.50 par value
-
-
-
Common stock, $2.50 par value
13,318
13,263
13,256
Capital surplus
106,834
106,394
105,935
Retained earnings
87,514
82,507
77,961
Accumulated other comprehensive loss
(36,894)
(41,862)
(42,988)
Total shareholders' equity
170,772
160,302
154,164
Total liabilities and shareholders' equity
$
1,632,695
$
1,616,826
$
1,573,820
Common shares outstanding
5,391,979
5,370,912
5,370,912
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 CORPORATIONCONSOLIDATED STATEMENTS OF INCOME(dollars in thousands, except per share data)(Unaudited)
For the three months ended
For the six months ended
June 30, 2025
June 30, 2024
June 30, 2025
June 30, 2024
Interest and dividend income:
Loans, including fees
$
17,330
$
16,242
$
34,363
$
31,903
Federal funds sold
64
160
248
399
Other interest-bearing deposits
45
58
87
115
Investment securities:
Taxable
1,265
1,776
2,574
3,935
Tax exempt
323
327
646
653
Dividends
109
100
224
218
Total interest and dividend income
19,136
18,663
38,142
37,223
Interest expense:
Demand deposits
67
68
136
139
Money market and savings deposits
2,927
2,952
5,930
5,874
Certificates and other time deposits
2,670
3,982
5,724
8,032
Borrowings
582
388
1,091
874
Federal funds purchased
18
9
25
16
Junior subordinated debt
76
83
146
171
Total interest expense
6,340
7,482
13,052
15,106
Net interest income
12,796
11,181
25,090
22,117
Provision for (recovery of) credit losses
3
(338)
(157)
(360)
Net interest income after provision for (recovery of) credit losses
12,793
11,519
25,247
22,477
Noninterest income:
Wealth management fees
206
240
435
666
Deposit account fees
293
338
600
725
Debit/credit card and ATM fees
355
523
725
1,011
Bank owned life insurance income
307
289
600
564
Gains (losses) on sales of assets, net
-
(3)
278
36
Gain on early redemption of debt
-
-
-
379
Losses on sales of AFS, net
-
-
-
(4)
Other
150
304
433
492
Total noninterest income
1,311
1,691
3,071
3,869
Noninterest expense:
Salaries and employee benefits
3,863
3,850
7,799
8,002
Net occupancy
889
865
1,905
1,837
Equipment
202
167
