VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES 2026 SECOND QUARTER EARNINGS AND QUARTERLY DIVIDEND

CHARLOTTESVILLE, Va., July 23, 2026 /PRNewswire/ -- Virginia National Bankshares Corporation (NASDAQ: VABK) (the "Company") today reported quarterly net income of $9.0 million, or $1.65 per diluted share, for the quarter ended June 30, 2026, compared to $4.2 million, or $0.78 per diluted share, recognized for the quarter ended June 30, 2025. 

The increase in net income for the quarter ended June 30, 2026 as compared to the same period in the prior year was primarily due to the cost of funds reduction of 13 basis points, reduced non-interest expense and a gain from the sale of a limited investment partnership interest in Bearing Insurance Group, LLC ("Bearing").

Dividend Declaration

On July 22, 2026, the Company's Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock payable on August 28, 2026, to the holders of record at the close of business on August 14, 2026. The quarterly cash dividend implies an annualized dividend yield to shareholders of approximately 3.20% based on the closing price of the Company's common stock on July 22, 2026.

President and Chief Executive Officer's comments:  "Our second quarter results reflected strong core performance and also benefited from the Bearing transaction, which illustrate consistent performance in a dynamic environment," stated Glenn W. Rust, President and Chief Executive Officer. "We are disciplined in our approach, and we continue to focus on optimizing the balance sheet to maximize profitability. Asset quality, liquidity and capital remain strong enabling us to finance creditworthy projects which enhance our communities."

Key Performance Indicators

 Second quarter 2026 compared to second quarter 2025

• Return on average assets¹ improved to 2.24% from 1.05%.
• Return on average equity¹ improved to 18.81% from 10.05%.
• Net interest margin (FTE)^1,2 improved to 3.65% from 3.40%.
• Loan-to-deposit ratio decreased slightly to 87.6% from 89.4%.
• Efficiency ratio (FTE)² improved to 41.6% from 61.2%.

June 30, 2026 Balance Sheet Highlights

• Gross loans outstanding as of June 30, 2026 and December 31, 2025 totaled $1.2 billion; this represents a decrease of $7.7 million, or 0.6% compared to June 30, 2025.
• Securities balances were $241.0 million at June 30, 2026, and $254.2 million at December 31, 2025. The balance declined $22.1 million from June 30, 2025 to June 30, 2026, with the additional liquidity allowing the Company to take advantage of investment opportunities that complement its growth and earnings strategies.  
• Deposits at June 30, 2026 were $1.4 billion, a $22.5 million decrease from December 31, 2025, but a $20.1 million increase from June 30, 2025. The changes noted reflect normal customer behavior in the current rate environment as customers continue to optimize their cash holdings. 
• Outstanding borrowings from the FHLB were $20.0 million as of June 30, 2026 and December 31, 2025, and $61.0 million as of June 30, 2025. As of June 30, 2026, the Company had unused borrowing facilities in place of approximately $237.0 million and held no brokered deposits.
• Book value per share increased to $35.89 as of June 30, 2026, compared to $31.67 as of June 30, 2025, and tangible book value per share (a non-GAAP financial measure)² was $34.05 as of June 30, 2026 compared to $29.63 as of June 30, 2025.  The increases reflect the consistent earnings performance that the Company posts, and in particular, the gain from the Bearing transaction in the second quarter of 2026. 

Loans and Asset Quality

• Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.35% as of June 30, 2026, 0.56% as of December 31, 2025 and 0.48% as of June 30, 2025.
• Nonperforming assets amounted to $5.8 million as of June 30, 2026, compared to $9.2 million as of December 31, 2025, and $7.8 million as of June 30, 2025. The primary changes over the periods were in the 90 or more days past due and still accruing loans, which are government-guaranteed loans and are serviced by a third party. Timing of the distribution of payments from the servicer can create fluctuations at period ends.    
• The period-end Allowance for Credit Losses on Loans ("ACL") as a percentage of total loans was 0.66% as of June 30, 2026, 0.67% as of December 31, 2025 and 0.67% as of June 30, 2025. The portfolio of government-guaranteed loans continues to be a significant driver impacting the recovery of credit losses on loans year-over-year. Balances in such loans are 100% guaranteed and do not require an ACL.  
• For the three months ended June 30, 2026, the Company recorded a provision for credit losses of $231 thousand on loans, and a $94 thousand reserve for unfunded commitments, both due to construction and multifamily project loans originated in the second quarter, which drove increases in provision expense as those pools require higher reserves. For the six months ended June 30, 2026, the Company recognized a $105 thousand recovery of credit losses on loans and a $39 thousand provision for unfunded commitments.   

Net Interest Income

• Net interest income for the three months ended June 30, 2026 of $13.7 million increased $952 thousand, or 7.4%, compared to the three months ended June 30, 2025, predominantly due to decreased interest expense associated with deposit accounts and increased yield on loans. On a year-to-date basis, net interest income at June 30, 2026 was $26.7 million compared to $25.1 million at June 30, 2025. 
• Net interest margin (FTE), (a non-GAAP financial measure)², for the three months ended June 30, 2026 was 3.65%, compared to 3.40% for the three months ended June 30, 2025. The net interest margin (FTE)² for the six months ended June 30, 2026 was 3.52% compared to 3.34% for the same period in 2025.
• The Bank's yield on loans was 5.74% for the three months ended June 30, 2026, compared to 5.60% for the prior year same period. The accretion of the fair value mark related to purchased loans positively impacted interest income by 11 bps in the second quarter of 2026, and 14 bps in the second quarter of 2025. The yield on loans for the six months ended June 30, 2026 was 5.64%, which was 4 bps over the same period for 2025.  
• The overall cost of funds, including noninterest-bearing deposits, of 1.64% incurred in the three months ended June 30, 2026 decreased 13 bps from 1.77% in the same period in the prior year. The cost of interest-bearing deposits decreased period over period by 11 bps, from a cost of 2.23% to 2.12%. The cost of borrowings from the FHLB decreased 85 bps from the second quarter of 2025 to the second quarter of 2026, from 4.74% to 3.89%. On a year-to-date basis, at June 30, 2026, the overall cost of funds decreased 16 bps from 1.82% to 1.66%.

Noninterest Income

Noninterest income for the three months ended June 30, 2026 increased $4.7 million, or 360.1%, compared to the three months ended June 30, 2025, the result of a gain of $4.7 million on the Bearing transaction. On a year-to-date basis, at June 30, 2026, the $4.5 million increase over June 30, 2025 also reflects the $4.7 million gain on the Bearing transaction.

Noninterest Expense

Noninterest expense for the three months ended June 30, 2026 decreased by $412 thousand, or 4.7%, compared to the three months ended June 30, 2025. The 2026 quarter reflected continued lower data processing costs resulting from the 2025 core contract renewals, and a reduction of other expense (which includes legal fees) incurred compared to 2025. The $1.0 million decrease in noninterest expense for the six months ended June 30, 2026 compared to the same period of 2025 is due to reduced depreciation and data processing expenses. 

Efficiency Ratio

The Company's efficiency ratio (FTE)² improved to 41.6% for the three months ended June 30, 2026 compared to 61.2% for the three months ended June 30, 2025, as all the components of this ratio improved.   

Income Taxes

The effective tax rates amounted to 20.1% and 21.9% for the three months ended June 30, 2026 and 2025, respectively. For each period, the effective income tax rate differed from the U.S. statutory rate of 21%. The effective tax rate fluctuations are attributable to changes in pretax earnings, low-income housing tax credits and the levels of permanent tax differences.   

Dividends

Cash dividends of $2.0 million, or $0.36 per share, were declared and paid during the second quarter of 2026. The remaining 78% of net income was retained.

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, 2025 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.