VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES 2024 FOURTH QUARTER AND FULL YEAR EARNINGS

CHARLOTTESVILLE, Va., Jan. 23, 2025 /PRNewswire/ -- Virginia National Bankshares Corporation (NASDAQ:VABK) (the "Company") today reported quarterly net income of $4.6 million, or $0.85 per diluted share, for the quarter ended December 31, 2024, compared to $3.2 million, or $0.59 per diluted share, recognized for the quarter ended December 31, 2023.  For the twelve months ended December 31, 2024, the Company recognized net income of $17.0 million, or $3.15 per diluted share, compared to $19.3 million, or $3.58 per diluted share, for the twelve months ended December 31, 2023. 

The increase in net income from the fourth quarter of 2023 to the same quarter in 2024 was primarily the result of increased interest income from increased average balances of loans at higher rates than the prior period, combined with decreased interest expense, as we reduced our borrowing expense and overall cost of funds. The decline in full year 2024 net income compared to 2023 was primarily the result of increased cost of funds year-over-year.

President and Chief Executive Officer's comments:  "During 2024, we focused on loan growth and reducing ongoing operating expenses," stated Glenn W. Rust, President and Chief Executive Officer.  "I am proud to announce that we succeeded in both of these endeavors.  We increased loan balances 13% over the prior year while decreasing our overhead costs.  Our credit quality metrics continue to be strong, along with our capital and liquidity positions."

Key Performance Indicators

Fourth Quarter 2024 Compared to Fourth Quarter 2023

• Return on average assets increased to 1.12% from 0.79%
• Return on average equity increased to 10.98% from 9.03%
• Net interest margin (FTE)¹ improved to 3.21% from 2.89%
• Loan-to-deposit ratio increased to 86.8% from 77.5%
• Efficiency ratio (FTE)¹ improved to 60.2% from 64.0%

December 2024 Balance Sheet Highlights

• The Company continued to experience loan growth in the fourth quarter of 2024. Gross loans outstanding as of December 31, 2024 totaled $1.2 billion, an increase of $20.5 million, or 1.7%, compared to September 30, 2024, and an increase of $143.3 million, or 13.1% compared to December 31, 2023.
• Outstanding borrowing from the FHLB declined from the prior quarter by $32.5 million and declined from the prior year-end by $46.5 million, as management made a concerted effort to stabilize overall cost of funds. As of December 31, 2024, the Company had unused borrowing facilities in place of approximately $199.0 million and held no brokered deposits.
• Securities balances declined $17.3 million and $159.3 million from September 30, 2024 and December 31, 2023, respectively, to December 31, 2024; 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 $166.6 million as of December 31, 2024, $145.6 million as of September 30, 2024 and $151.5 million as of December 31, 2023.
• Total deposits increased $43.6 million, or 3.2% from September 30, 2024 to December 31, 2024 and increased $14.4 million, or 1.0% year-over year.

Loans and Asset Quality

• Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.19% as of December 31, 2024, 0.33% as of September 30, 2024 and 0.17% as of December 31, 2023.
• Nonperforming assets amounted to $3.0 million as of December 31, 2024, compared to $5.3 million as of September 30, 2024 and $2.7 million as of December 31, 2023;
  • Twelve loans to eleven borrowers are in non-accrual status, totaling $2.3 million, as of December 31, 2024, compared to $2.1 million as of September 30, 2024 and $1.9 million as of December 31, 2023.
  • Loans 90 days or more past due and still accruing interest amounted to $754 thousand as of December 31, 2024, compared to $3.2 million as of September 30, 2024 and $880 thousand as of December 31, 2023. The past due balance as of December 31, 2024 is comprised of three loans totaling $705 thousand which are 100% government-guaranteed, and three student loans totaling $49 thousand.
  • The Company currently holds no other real estate owned.
• The period-end Allowance for Credit Losses ("ACL") as a percentage of total loans was 0.68% as of December 31, 2024, 0.70% as of September 30, 2024 and 0.77% as of December 31, 2023. The proportionate increase in government-guaranteed loans over the respective periods is the driver of the decrease in the ACL as a percentage of total loans year-over-year. Balances in government-guaranteed loans have increased $108.6 million from December 31, 2023 to December 31, 2024. 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 $6.8 million as of December 31, 2024.
• For the three months ended December 31, 2024, the Company recorded a net recovery of provision for credit losses of $126 thousand, as the recovery of previously charged-off loans nearly offset the increase in provision required for new loan balances; this balance is net of an $82 thousand provision for unfunded reserves, as a result of an increase in unfunded construction commitments.

Net Interest Income - Quarterly Comparison

• Net interest income for the three months ended December 31, 2024 of $12.2 million increased $1.5 million, or 13.8%, compared to the three months ended December 31, 2023, as interest income earned on assets increased and interest expense on deposit accounts and borrowings declined.
• Net interest margin (FTE), (a non-GAAP financial measure)¹, for the three months ended December 31, 2024 was 3.21%, compared to 2.89% for the three months ended December 31, 2023. The increase as compared to the fourth quarter of 2023 was the outcome of the increase in yield on loans and the decrease in cost of funds, both described below.
• Yield on loans was 5.63% for the three months ended December 31, 2024, compared to 5.47% for the prior year same period. The accretion of the credit mark related to purchased loans positively impacted interest income by 13 bps in the fourth quarter of 2024, compared to 15 bps in the fourth quarter of 2023.
• The overall cost of funds, including noninterest-bearing deposits, of 194 bps incurred in the three months ended December 31, 2024 decreased 7 bps from 201 bps in the same period in the prior year. Overall, the cost of interest-bearing deposits also decreased period over period by 7 bps, from a cost of 258 bps to 251 bps. Management believes that the Bank's cost of funds stabilized during the first half of 2024, and the cost of funds and cost of interest-bearing deposits have been declining in the second half of 2024. The cost of borrowings also declined from the fourth quarter of 2023 to the fourth quarter of 2024, from 5.35% to 4.33%.

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Noninterest Income - Quarterly Comparison

Noninterest income for the three months ended December 31, 2024 increased $132 thousand, or 6.2%, compared to the three months ended December 31, 2023, as the gain on early redemption of debt of $525 thousand partially offset the lower wealth management, deposit account, debit card, credit card and ATM fees.

Noninterest Expense - Quarterly Comparison

Noninterest expense for the three months ended December 31, 2024 increased $484 thousand, or 5.8%, compared to the three months ended December 31, 2023.  This increase is primarily the result of increased compensation expense from lender incentives related to increased loan production, as well as increased professional services expense from increased cost of such services.  These increases were partially offset by lower data processing costs, as a result of effective contract negotiations.

Income Taxes - Quarterly Comparison

The effective tax rates amounted to 22.0% and 16.6% for the three months ended December 31, 2024 and 2023, respectively.  The increase in the effective tax rate in the current year period is higher than the statutory rate as a result of the adoption of the proportional amortization method for accounting for low-income housing tax credits, which increased tax expense.  The prior year period effective tax rate is 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 income from bank owned life insurance policies.

Book Value

Book value per share increased to $29.85 as of December 31, 2024, compared to $28.52 as of December 31, 2023, and tangible book value per share (a non-GAAP financial measure)¹ was $27.70 as of December 31, 2024 compared to $26.12 as of December 31, 2023.  These values increased as net retained income increased and unrealized losses in the investment portfolio remained relatively flat period over period.

Dividends

Cash dividends of $1.8 million, or $0.33 per share, were declared and paid during the fourth quarter of 2024.

Share Repurchase Plan

Year-to-date, the Company has repurchased 20,350 shares at an average price of $27.42 per share.  No shares were repurchased during the second half of 2024.

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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 eight 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. 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, 2023 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.

 

 

 

 

 

 

 

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