The increase in 2026 year-to-date net income as compared to the prior year was primarily due to the cost of funds reduction of 19 basis points and reduced non-interest expense.
Dividend Declaration
On April 22, 2026, the Company's Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock payable on May 29, 2026, to the holders of record at the close of business on May 13, 2026. The quarterly cash dividend implies an annualized dividend yield to shareholders of approximately 3.50% based on the closing price of the Company's common stock on April 21, 2026.
President and Chief Executive Officer's comments: "Our strong performance in the first quarter of 2026 resulted in a 17.2% increase in net income over the first quarter of 2025. We continue to successfully implement financial strategies that enhance our operating efficiency," stated Glenn W. Rust, President and Chief Executive Officer. "Attention to pricing and continued vigilance toward asset quality augment our performance strategies. With our strong capital and liquidity positions, our lending and retail teams are able to work seamlessly to provide exceptional service to the communities we serve."
Key Performance Indicators
First quarter 2026 compared to first quarter 2025
Return on average assets improved to 1.30% from 1.12%.
Return on average equity improved to 11.34% from 11.05%.
Net interest margin (FTE)1 improved to 3.40% from 3.28%.
Loan-to-deposit ratio increased to 86.7% from 86.6%.
Efficiency ratio (FTE)1 improved to 56.6% from 62.4%.
March 31, 2026 Balance Sheet Highlights
Gross loans outstanding as of March 31, 2026 totaled $1.2 billion, a decrease of $4.8 million, or 0.4% compared to March 31, 2025. Gross loans outstanding at March 31, 2026 remained flat when compared to December 31, 2025.
Securities balances declined $22.5 million from March 31, 2025 to March 31, 2026 as the Company allowed the proceeds from natural maturities and cash flow to fund earning assets with more attractive yields.
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 $187.3 million as of March 31, 2026, $200.4 million as of December 31, 2025 and $177.6 million as of March 31, 2025.
Outstanding borrowings from the FHLB were $20.0 million as of March 31, 2026, December 31, 2025, and March 31, 2025.
As of March 31, 2026, the Company had unused borrowing facilities in place of approximately $225.1 million and held no brokered deposits.
1 See "Reconciliation of Certain Quarterly Non-GAAP Financial Measures" at the end of this release.
Loans and Asset Quality
Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.36% as of March 31, 2026, 0.56% as of December 31, 2025 and 0.31% as of March 31, 2025.
Nonperforming assets amounted to $6.0 million as of March 31, 2026, compared to $9.2 million as of December 31, 2025, and $5.0 million as of March 31, 2025;
Fourteen loans to twelve borrowers are in non-accrual status, totaling $2.1 million, as of March 31, 2026, compared to $2.2 million as of December 31, 2025 and $2.8 million as of March 31, 2025.
Loans 90 days or more past due and still accruing interest amounted to $3.8 million as of March 31, 2026, compared to $7.0 million at December 31, 2025 and $2.3 million as of March 31, 2025. The past due balance as of March 31, 2026 is comprised of four loans totaling $3.7 million which are 100% government-guaranteed, and seven student loans totaling $92 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 0.64% as of March 31, 2026, and 0.67% as of December 31, 2025 and March 31, 2025. The change was primarily driven by an improvement in the economic forecast at March 31, 2026, compared to March 31, 2025, and December 31, 2025, as well as the migration of loans to pools requiring lower reserve rates such as loans moving from the construction pool to the permanent loan pools. The portfolio of government-guaranteed loans continues to be a significant driver controlling the ACL year-over-year. Balances in such loans are 100% government-guaranteed and do not require an ACL.
For the three months ended March 31, 2026, the Company recorded a net recovery to the provision for credit losses of $336 thousand, primarily due to the aforementioned pool migrations. The reserve for unfunded commitments decreased by $55 thousand.
Net Interest Income - Quarterly Comparison
Net interest income for the three months ended March 31, 2026 of $12.9 million increased $611 thousand, or 5.0%, compared to the three months ended March 31, 2025, predominantly due to decreased interest expense associated with deposit accounts and borrowings which offset decreased interest income earned on loans and federal funds sold.
Net interest margin (FTE), (a non-GAAP financial measure)1, for the three months ended March 31, 2026 was 3.40%, compared to 3.28% for the three months ended March 31, 2025.
The Bank's yield on loans was 5.53% for the three months ended March 31, 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 first quarter of 2026, and 15 bps in the first quarter of 2025.
The overall cost of funds, including noninterest-bearing deposits, of 1.68% incurred in the three months ended March 31, 2026 decreased 19 bps from 1.87% in the same period in the prior year. The cost of interest-bearing deposits decreased period over period by 20 bps, from a cost of 2.38% to 2.18%. The cost of borrowings from the FHLB decreased 94 bps from the first quarter of 2025 to the first quarter of 2026, from 4.83% to 3.89%.
1 See "Reconciliation of Certain Quarterly Non-GAAP Financial Measures" at the end of this release.
Noninterest Income - Quarterly Comparison
Noninterest income for the three months ended March 31, 2026 decreased $271 thousand, or 15.4%, compared to the three months ended March 31, 2025, primarily as a result of lower debit/credit card and ATM fees due to lower usage and reduced income from a gain on the sale of assets in 2025 compared to 2026.
Noninterest Expense - Quarterly Comparison
Noninterest expense for the three months ended March 31, 2026 decreased by $626 thousand, or 7.1%, compared to the three months ended March 31, 2025. The 2026 quarter reflected lower data processing costs resulting from the contract renewal negotiations which occurred in the fourth quarter of 2025.
Efficiency Ratio - Quarterly Comparison
The Company's efficiency ratio (FTE)1 improved to 56.6% for the three months ended March 31, 2026 compared to 62.4% for the three months ended March 31, 2025, as the impact of increased net interest income (FTE)1 and decreased noninterest expense offset the decrease in noninterest income.
Income Taxes - Quarterly Comparison
The effective tax rates amounted to 19.5% and 16.7% for the three months ended March 31, 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.
Book Value
Book value per share increased to $34.39 as of March 31, 2026, compared to $30.93 as of March 31, 2025, and tangible book value per share (a non-GAAP financial measure)1 was $32.51 as of March 31, 2026 compared to $28.84 as of March 31, 2025. 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 first quarter of 2026. The remaining 63% 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, 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.
VIRGINIA NATIONAL BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
March 31, 2026
December 31, 2025*
(Unaudited)
ASSETS
Cash and due from banks
$
8,500
$
5,798
Interest-bearing deposits in other banks
10,608
10,552
Federal funds sold
57,758
54,264
Securities:
Available-for-sale (AFS), at fair value
240,424
247,992
Restricted securities, at cost
6,195
6,172
Total securities
246,619
254,164
Loans, net of deferred fees and costs
1,237,669
1,237,577
Allowance for credit losses
(7,981)
(8,270)
Loans, net
1,229,688
1,229,307
Premises and equipment, net
11,660
11,687
Bank owned life insurance
41,621
41,302
Goodwill
7,768
7,768
Core deposit intangible, net
2,435
2,682
Right of use asset, net
5,925
6,297
Deferred tax asset, net
12,419
12,079
Accrued interest receivable and other assets
13,163
13,842
Total assets
$
1,648,164
$
1,649,742
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits:
Noninterest-bearing
$
355,475
$
362,322
Interest-bearing
279,470
308,295
Money market and savings deposit accounts
505,291
469,815
Certificates of deposit and other time deposits
286,492
291,299
Total deposits
1,426,728
1,431,731
Federal funds purchased
-
-
Borrowings
20,000
20,000
Junior subordinated debt, net
3,566
3,554
Lease liability
5,835
6,192
Accrued interest payable and other liabilities
5,538
4,104
Total liabilities
1,461,667
1,465,581
Commitments and contingent liabilities
Shareholders' equity:
Preferred stock, $2.50 par value
-
-
Common stock, $2.50 par value
13,393
13,327
Capital surplus
107,573
107,337
Retained earnings
97,475
94,165
Accumulated other comprehensive loss
(31,944)
(30,668)
Total shareholders' equity
186,497
184,161
Total liabilities and shareholders' equity
$
1,648,164
$
1,649,742
Common shares outstanding
5,422,513
5,393,140
Common shares authorized
10,000,000
10,000,000
Preferred shares outstanding
-
-
Preferred shares authorized
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
March 31, 2026
March 31, 2025
Interest and dividend income:
Loans, including fees
$
16,833
$
17,033
Federal funds sold
494
184
Other interest-bearing deposits
35
43
Investment securities:
Taxable
1,103
1,309
Tax exempt
322
323
Dividends
90
115
Total interest and dividend income
18,877
19,007
Interest expense:
Demand deposits
71
69
Money market and savings deposits
3,053
3,003
Certificates and other time deposits
2,585
3,054
Borrowings
192
509
Federal funds purchased
-
7
Junior subordinated debt
70
70
Total interest expense
5,971
6,712
Net interest income
12,906
12,295
Recovery of credit losses
(336)
(160)
Net interest income after recovery of credit losses
13,242
12,455
Noninterest income:
Wealth management fees
220
229
Deposit account fees
366
307
Debit/credit card and ATM fees
251
370
Bank owned life insurance income
319
293
Gains on sales of assets, net
5
278
Other
328
283
Total noninterest income
1,489
1,760
Noninterest expense:
Salaries and employee benefits
3,999
3,936
Net occupancy
779
1,016
Equipment
186
186
Bank franchise tax
468
339
Computer software
214
256
Data processing
550
735
FDIC deposit insurance assessment
175
145
Marketing, advertising and promotion
267
254
Professional fees
348
256
Core deposit intangible amortization
247
295
Other
966
1,407
Total noninterest expense
8,199
8,825
Income before income taxes
6,532
5,390
Provision for income taxes
1,273
901
Net income
$
5,259
$
4,489
Net income per common share, basic
$
0.97
$
0.83
Net income per common share, diluted
$
0.97
$
0.83
Weighted average common shares outstanding, basic
5,409,543
5,378,871
Weighted average common shares outstanding, ...
