PR Newswire | Oct 29, 2021 04:22PM EDT

Results And Availability Of Dividend Reinvestment Plan

10/29 15:21 CDT

Virginia National Bankshares Corporation Announces Third Quarter Financial Results And Availability Of Dividend Reinvestment Plan CHARLOTTESVILLE, Va., Oct. 29, 2021

CHARLOTTESVILLE, Va., Oct. 29, 2021 /PRNewswire/ -- Virginia National Bankshares Corporation (NASDAQ: VABK) (the "Company") today reported net income of $3.1 million, or $0.59 per diluted share, for the quarter ended September 30, 2021, which is a 68% increase compared to net income of $1.9 million, or $0.69 per diluted share, recognized for the quarter ended September 30, 2020. Note that the decline in net income per diluted share for the periods noted was driven by the increase in number of shares outstanding as result of the merger with Fauquier Bankshares, Inc. ("Fauquier"). Excluding merger costs, the Company would have posted net income of $4.6 million, or $0.86 per diluted share, (a non-GAAP financial measure)1 for the quarter ended September 30, 2021. Return on average assets ("ROAA") of 0.65% for the three months ended September 30, 2021 would have amounted to 0.95% excluding merger expenses (a non-GAAP financial measure),1 compared to 0.89%, or 1.05% excluding merger expenses (a non-GAAP financial measure),1 in the three months ended September 30, 2020.

"During the quarter, we incurred the remaining substantial merger related expenses while posting strong net income, continuing to build value for our shareholders," said Glenn W. Rust, President and Chief Executive Officer.

Dividend Reinvestment Plan

As previously announced, the Company has established a dividend reinvestment & direct stock purchase and sale plan for registered shareholders, which will be administered by the Company's transfer agent, American Stock Transfer & Trust Company (AST). Under the plan, registered shareholders will have the ability to reinvest their VABK cash dividends into, as well as make purchases and sales of, VABK common stock, which will be effected by AST on behalf of the shareholder on the open market. The plan is now available for registered shareholders who wish to enroll in the plan. Registered shareholders can go to www.astfinancial.com for more information and to review the plan brochure, or can call toll-free at 800-278-4353. Fees and commissions will apply.

Results of Operations

* The Company incurred $1.9 million in pre-tax merger expenses during the third quarter of 2021 related to the merger, which closed on April 1, 2021. The majority of such merger expenses relate to a change-of-control payment, severance and stay-put bonuses. This post-tax expense of $1.4 million represents $0.27 per diluted share.

* The Company has begun realizing savings associated with the merger and expects to realize significant additional savings over the next year. Full-time equivalent employee headcount was 215 as of April 1, 2021 and 188 as of September 30, 2021.

* Return on average assets ("ROAA") for the third quarter of 2021 declined to 0.65% compared to 0.89% realized in the same period in the prior year, primarily due to the significant increase in assets as a result of the merger. ROAA excluding the impact of merger expenses (a non-GAAP financial measure) would have been 0.95% for the third quarter of 2021. 1

* Return on average equity ("ROAE") for the third quarter of 2021 declined to 7.70% compared to 9.18% realized in same period in the prior year, primarily due to the significant increase in equity as a result of the merger. ROAE excluding the impact of merger expenses (a non-GAAP financial measure) would have been 11.23% for the third quarter of 2021. 1

* The efficiency ratio on a fully tax equivalent basis ("FTE") (a non-GAAP financial measure) was 75.2% for the three months ended September 30, 2021, compared to 65.7% for the three months ended September 30, 2020, due to the additional merger expenses incurred. 1

____________________

^1 See "Reconciliation of Certain Non-GAAP Financial Measures" at the end ofthis release.

Loans and Asset Quality

* Gross loans outstanding at September 30, 2021 totaled $1.1 billion, an increase of $503 million, or 83%, compared to September 30, 2020. The increase is due to the acquisition of The Fauquier Bank ("TFB"), which added $602.6 million of loan balances, net of the fair value mark, on the consolidated balance sheet beginning April 1, 2021, but was offset by the decline in outstanding balances of Paycheck Protection Program loans of $50.1 million from the same period in the prior year, due to loan forgiveness.

* Loan deferrals declined to $1.2 million as of September 30, 2021, from $9.4 million as of September 30, 2020. Only three loans remain in deferral status as of September 30, 2021, and only $28 thousand of this balance is not government guaranteed.

* Non-accrual loans, comprised of only two loans, was $777 thousand as of September 30, 2021, compared to $9 thousand as of September 30, 2020. Purchased credit impaired ("PCI") loans from TFB which are currently in non-accrual status are not included in this figure.

* Loans 90 days or more past due and still accruing interest amounted to $1.0 million as of September 30, 2021, compared to $137 thousand as of December 31, 2020 and $61 thousand as of September 30, 2020. The September 30, 2021 balance includes a government-guaranteed loan in the amount of $548 thousand. The portfolio only includes three non-insured student loans that are 90 days or more past due and still accruing interest, amounting to $31 thousand. Loans acquired from TFB which 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 0.51% as of September 30, 2021, 0.90% as of December 31, 2020 and 0.84% as of September 30, 2020. The decrease is the result of bringing the TFB loans onto the Company's balance sheet at fair value, with a credit and liquidity mark of $21.3 million effective April 1, 2021. The ALLL as a percentage of 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, 2021, and the ALLL as a percentage of total loans, excluding PPP loans (a non-GAAP financial measure)1, would have been 0.52% as of September 30, 2021.

* A provision for loan losses of $267 thousand was recognized during the three months ended September 30, 2021, compared to $224 thousand recognized in the three months ended September 30, 2020.

Net Interest Income

* Net interest income for the three months ended September 30, 2021 of $13.5 million increased $7.5 million from $6.0 million, or 123%, compared to the three months ended September 30, 2020, due to the inclusion of TFB's interest income and expense for the current year and the lower rates paid on deposits as compared to the prior year.

* The fair value accretion on loans acquired positively impacted net interest income by 27 basis points ("bps") during the current quarter.

* The combined company is benefitting from the lower cost of funds experienced by TFB, as well as lower interest rates paid overall, as interest expense only increased period over period by 39%. This is despite the growth in average interest bearing liabilities of $682 thousand, or 125%, from the three months ended September 30, 2020 to the three months ended September 30, 2021 as a result of the merger.

* Also during the three months ended September 30, 2021, the Company prepaid 100% of its outstanding FHLB advances, which positively impacted interest expense by $416 thousand as a result of accelerating the fair value accretion on such TFB debt. A prepayment penalty in the amount of $243 thousand was incurred and is reported in noninterest expense, netting to an overall gain on the transaction of $173 thousand.

* The cost of funds of 20 bps incurred in the three months ended September 30, 2021 decreased 18 bps from 38 bps in the same period in 2020, due to lower rates paid on deposit accounts, coupled with the acceleration of the fair value accretion related to the payoff of FHLB advances, as noted above.

* Low-cost deposits, which include noninterest checking accounts and interest-bearing checking, savings and money market accounts, remained in excess of 86% of total deposits at September 30, 2021 and 2020.

____________________

^1 See "Reconciliation of Certain Non-GAAP Financial Measures" at the end ofthis release.

Noninterest Income

Noninterest income for the three months ended September 30, 2021 increased $2.1 million, or 144%, compared to the three months ended September 30, 2020 primarily due to the inclusion of TFB's wealth management fees, advisory and brokerage income, deposit fees and debit card income. In addition, during the three months ended September 30, 2021, the Company realized a second partial recovery of $401 thousand of unearned insurance premiums related to the loss of insurance on the student loan portfolio and received a recovery of $312 thousand from a TFB loan that was charged off prior to April 1, 2021. Swap fee income declined $320 thousand, as swap arrangements are not as attractive to borrowers in the current rate environment.

Noninterest Expense

Noninterest expense for the three months ended September 30, 2021 increased $7.9 million, or 160%, compared to the three months ended September 30, 2020, due to an increase of $1.3 million of merger expenses, in addition to the inclusion of Fauquier's noninterest expense.

Book Value

Book value per share was $30.13 as of September 30, 2021 and $29.64 as of September 30, 2020. Tangible book value per share (a non-GAAP financial measure)1 as of September 30, 2021 was $26.92 compared to $29.37 as of September 30, 2020, declining due to the impact of goodwill and other intangible assets recorded upon the acquisition of Fauquier. These amounts are impacted by the increase in shares outstanding as a result of the merger.

Income Taxes

The effective tax rate for the three months ended September 30, 2021 amounted to 19.4%, compared to 19.2% for the three months ended September 30, 2020.

Dividends

Cash dividends of $1.6 million were declared during the third quarter of 2021.

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^1 See "Reconciliation of Certain Non-GAAP Financial Measures" at the end ofthis 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 eleven banking offices throughout Fauquier and Prince William counties, four banking offices in Charlottesville and Albemarle County, and one banking office in Winchester, and offers loan, deposit and treasury management services in 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 and of TFB Trust and Estate Management. 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. Suchstatements 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, 2020 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,December 31, September 30, 2021 2020 * 2020

(Unaudited) (Unaudited)

ASSETS

Cash and due from banks $ 18,919 $ 8,116 $ 11,399

Interest-bearing deposits in other banks 254,194 - -

Federal funds sold 152,417 26,579 273

Securities:

Available for sale, at fair value 277,046 174,086 141,245

Restricted securities, at cost 2,610 3,010 3,436

Total securities 279,656 177,096 144,681

Loans 1,112,450 609,406 636,935

Allowance for loan losses (5,623) (5,455) (5,334)

Loans, net 1,106,827 603,951 631,601

Premises and equipment, net 25,239 5,238 5,444

Bank owned life insurance 31,033 16,849 16,739

Goodwill 8,898 372 372

Core deposit intangible 7,855 - -

Other intangible assets, net 290 341 357

Other real estate owned, net 611 - -

Right of use asset, net 7,970 3,527 3,725

Accrued interest receivable and other assets 17,916 6,341 6,367

Total assets $ 1,911,825 $ 848,410 $ 820,958

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Demand deposits:

Noninterest-bearing $ 504,696 $ 209,772 $ 190,204

Interest-bearing 424,642 148,910 135,569

Money market and savings deposit accounts 642,788 272,980 270,653

Certificates of deposit and other time deposits 165,057 99,102 98,095

Total deposits 1,737,183 730,764 694,521

Advances from the FHLB - 30,000 40,000

Junior subordinated debt 3,356 - -

Lease liability 7,463 3,589 3,783

Accrued interest payable and other liabilities 3,913 1,459 2,197

Total liabilities 1,751,915 765,812 740,501

Commitments and contingent liabilities

Shareholders' equity:

Preferred stock, $2.50 par value, 2,000,000 shares authorized, - - - no shares outstanding

Common stock, $2.50 par value, 10,000,000 shares authorized; 5,307,235 shares issued and outstanding as of September 30, 2021 (includes 35,911 nonvested), and 2,714,273 shares issued 13,178 6,722 6,722 and outstanding as of December 31, 2020 and September 30, 2020 (includes 25,268 nonvested)

Capital surplus 104,446 32,457 32,377

Retained earnings 42,746 41,959 40,158

Accumulated other comprehensive income (loss) (460) 1,460 1,200

Total shareholders' equity 159,910 82,598 80,457

Total liabilities and shareholders' equity $ 1,911,825 $ 848,410 $ 820,958

* 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,September 30,September 30,September 30, 2021 2020 2021 2020

Interest and dividend income:

Loans, including fees $12,957 $6,175 $ 31,904 $ 18,202

Federal funds sold 45 3 78 98

Other interest-bearing deposits 55 - 94 -

Investment securities:

Taxable 742 412 2,006 1,150

Tax exempt 280 159 729 326

Dividends 55 22 121 70

Total interest and dividend income 14,134 6,771 34,932 19,846



Interest expense:

Demand and savings deposits 673 383 1,598 1,468

Certificates and other time deposits 282 306 886 1,166

Borrowings (325) 35 (181) 35

Total interest expense 630 724 2,303 2,669

Net interest income 13,504 6,047 32,629 17,177

Provision for loan losses 267 224 477 1,367

Net interest income after provision for loan losses 13,237 5,823 32,152 15,810



Noninterest income:

Wealth management fees 744 263 2,053 801

Advisory and brokerage income 358 175 908 516

Deposit account fees 396 162 982 484

Debit/credit card and ATM fees 808 144 1,561 435

Earnings/increase in value of bank owned life insurance 201 111 507 327

Gains on sales of securities - 91 - 734

Loan swap fee income 24 344 59 977

Other 947 135 1,367 446

Total noninterest income 3,478 1,425 7,437 4,720



Noninterest expense:

Salaries and employee benefits 4,562 2,322 11,705 7,004

Net occupancy 1,039 501 2,643 1,405

Equipment 205 134 661 401

Bank franchise tax 320 161 922 487

Computer software 361 159 744 435

Data processing 1,114 302 2,397 968

FDIC deposit insurance assessment 349 61 594 89

Marketing, advertising and promotion 337 55 706 334

Merger expenses 1,935 549 8,087 549

Plastics expense 212 46 589 140

Professional fees 186 - 873 376

Core deposit intangible amortization 417 - 845 -

Other 1,787 645 2,832 1,694

Total noninterest expense 12,824 4,935 33,598 13,882



Income before income taxes 3,891 2,313 5,991 6,648

Provision for income taxes 753 443 1,201 1,286

Net income $3,138 $1,870 $ 4,790 $ 5,362

Net income per common share, basic $0.59 $0.69 $ 1.08 $ 1.98

Net income per common share, diluted $0.59 $0.69 $ 1.07 $ 1.98

Weighted average common shares outstanding, basic 5,306,370 2,714,273 4,453,303 2,705,730

Weighted average common shares outstanding, diluted 5,338,872 2,714,897 4,478,779 2,706,438

VIRGINIA NATIONAL BANKSHARES CORPORATION

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)

(Unaudited)



At or For the Three Months Ended

September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020

Common Share Data:

Net income per weighted average share, basic $ 0.59 $0.03 $0.55 $ 0.96 $ 0.69

Net income per weighted average share, diluted $ 0.59 $0.03 $0.55 $ 0.96 $ 0.69

Weighted average shares outstanding, basic 5,306,370 5,305,277 2,719,840 2,714,273 2,714,273

Weighted average shares outstanding, diluted 5,338,872 5,320,290 2,727,448 2,714,905 2,714,897

Actual shares outstanding 5,307,235 5,305,819 2,728,327 2,714,273 2,714,273

Tangible book value per share at period end $ 26.92 $26.60 $29.07 $ 30.17 $ 29.37



Key Ratios:

Return on average assets ^1 0.65 % 0.03 % 0.68 % 1.23 % 0.89 %

Return on average equity ^1 7.70 % 0.37 % 7.40 % 12.75 % 9.18 %

Net interest margin (FTE) ^2 3.08 % 3.05 % 2.83 % 3.32 % 3.05 %

Efficiency ratio (FTE) ^3 75.17 % 99.27 % 67.72 % 57.03 % 65.68 %

Loan-to-deposit ratio 64.04 % 71.57 % 77.23 % 83.39 % 91.71 %



Net Interest Income:

Net interest income $ 13,504 $13,151 $5,974 $ 6,702 $ 6,047

Net interest income (FTE) ^2^,3 $ 13,581 $13,224 $6,021 $ 6,741 $ 6,089



Capital Ratios:

Tier 1 leverage ratio 7.59 % 7.66 % 9.01 % 9.54 % 9.41 %

Total risk-based capital ratio 13.74 % 13.47 % 15.49 % 15.35 % 15.41 %



Assets and Asset Quality:

Average Earning Assets $ 1,750,793 $1,740,338 $862,373 $ 807,414 $ 793,712

Average Gross Loans $ 1,140,280 $1,214,123 $618,902 $ 618,296 $ 630,704

Paycheck Protection Program Loans, end of period $ 36,740 $73,784 $70,171 $ 55,120 $ 86,883

Loan Deferrals, Pandemic Related $ 1,243 $2,004 $1,539 $ 3,346 $ 9,439

Allowance for loan losses:

Beginning of period $ 5,522 $5,615 $5,455 $ 5,334 $ 4,917

Provision for (recovery of) loan losses 267 (141) 351 255 224

Charge-offs (208) (156) (241) (162) (62)

Recoveries 42 204 50 28 255

Net recoveries (charge-offs) (166) 48 (191) (134) 193

End of period $ 5,623 $5,522 $5,615 $ 5,455 $ 5,334



Non-accrual loans ^4 $ 777 $17 $5 $ 8 $ 9

Loans 90 days or more past due and still accruing ^5 1,044 2,770 399 137 61

OREO 611 611 - - -

Total nonperforming assets (NPA) $ 2,432 $3,398 $404 $ 145 $ 70



NPA as a % of total assets 0.13 % 0.18 % 0.04 % 0.02 % 0.01 %

NPA as a % of total loans plus OREO 0.22 % 0.29 % 0.07 % 0.02 % 0.01 %

ALLL to total loans 0.51 % 0.47 % 0.90 % 0.90 % 0.84 %

ALLL to total loans, excluding PPP loans (non-GAAP) 0.52 % 0.51 % 1.02 % 0.98 % 0.97 %

Non-accruing loans to total loans ^4 0.07 % 0.00 % 0.00 % 0.00 % 0.00 %

Net charge-offs (recoveries) to average loans ^1 0.06 % -0.02 % 0.12 % 0.09 % -0.12 %

^ Ratio is computed on an annualized basis.1

^ The net interest margin and net interest income are reported on a FTE basis,2 using a Federal income tax rate of 21%.

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 in3 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.

^ Non-accrual loans do not include loans acquired and reported at fair value.4

^ Past due loans from the acquired portfolio are included at fair value.5

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, 2021 June 30, 2021 September 30, 2020

Interest Interest Interest

Average Income/ Average Average Income/ Average Average Income/ Average

(dollars in thousands) Balance Expense Yield/Cost Balance Expense Yield/Cost Balance Expense Yield/Cost

ASSETS

Interest Earning Assets:

Securities

Taxable Securities $214,194 $797 1.49 %$211,827 $792 1.50 %$118,557$ 433 1.46 %

Tax Exempt Securities ^1 59,869 355 2.37 % 58,398 346 2.37 % 27,473 202 2.94 %

Total Securities ^1 274,063 1,152 1.68 % 270,225 1,138 1.68 % 146,030 635 1.74 %

Total Loans 1,140,281 12,959 4.51 % 1,214,123 13,009 4.30 % 630,704 6,175 3.89 %

Fed Funds Sold 137,472 45 0.13 % 106,934 21 0.08 % 16,980 3 0.07 %

Other interest-bearing deposits 198,983 55 0.11 % 149,056 36 0.10 % - - -

Total Earning Assets 1,750,799 14,211 3.22 % 1,740,338 14,204 3.27 % 793,714 6,813 3.41 %

Less: Allowance for Loan Losses (5,532) (5,732) (5,141)

Total Non-Earning Assets 159,014 124,287 47,736

Total Assets $1,904,281 $1,858,893 $836,309



LIABILITIES AND SHAREHOLDERS' EQUITY

Interest Bearing Liabilities:

Interest Bearing Deposits:

Interest Checking $410,504 $72 0.07 %$437,611 $93 0.09 %$139,698$ 40 0.11 %

Money Market and Savings Deposits 621,211 601 0.38 % 561,940 455 0.32 % 281,161 343 0.49 %

Time Deposits 171,256 282 0.65 % 169,556 324 0.77 % 97,300 306 1.25 %

Total Interest-Bearing Deposits 1,202,971 955 0.31 % 1,169,107 872 0.30 % 518,159 689 0.53 %

Short term borrowings 22,260 (375) -6.68 % 43,030 59 0.55 % 28,620 35 0.49 %

Junior subordinated debt 3,349 50 5.92 % 3,334 49 5.89 % - - -

Total Interest-Bearing Liabilities 1,228,580 630 0.20 % 1,215,471 980 0.32 % 546,779 724 0.53 %

Non-Interest-Bearing Liabilities:

Demand deposits 499,068 471,078 203,798

Other liabilities 15,003 14,109 4,870

Total Liabilities 1,742,651 1,700,658 755,447

Shareholders' Equity 161,630 158,235 80,862

Total Liabilities & Shareholders' Equity $1,904,281 $1,858,893 $836,309

Net Interest Income (FTE) $13,581 $13,224 $ 6,089

Interest Rate Spread ^2 3.02 % 2.95 % 2.89 %

Interest Expense as a Percentage of Average Earning 0.14 % 0.23 % 0.36 %Assets

Net Interest Margin (FTE) ^3 3.08 % 3.05 % 3.05 %

^ Tax-exempt income for investment securities has been adjusted to a fully1 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.

^ Interest spread is the average yield earned on earning assets less the2 average rate paid on interest-bearing liabilities.

^ Net interest margin (FTE) is net interest income expressed as a percentage of3 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, June 30, March 31, December 31, September 30,

2021 2021 2021 2020 2020

Performance measures

Return on average assets ("ROAA") 0.65 % 0.03 % 0.68 % 1.23 % 0.89 %

Impact of merger expenses 0.30 % 0.99 % 0.08 % 0.17 % 0.16 %

ROAA, excluding merger expenses (non-GAAP) 0.95 % 1.02 % 0.75 % 1.40 % 1.05 %



Return on average equity ("ROAE") 7.70 % 0.37 % 7.40 % 12.75 % 9.18 %

Impact of merger expenses 3.53 % 11.51 % 0.83 % 1.79 % 1.65 %

ROAE, excluding merger expenses (non-GAAP) 11.23 % 11.88 % 8.22 % 14.54 % 10.83 %



Net income $ 3,138 $147 $ 1,505 $ 2,616 $ 1,870

Impact of merger expenses 1,424 4,553 - 169 - 368 336

Net income, excluding merger expenses $ 4,562 $4,700 $ 1,674 $ 2,984 $ 2,206 (non-GAAP)



Net income per share $ 0.59 $0.03 $ 0.53 $ 0.77 $ 0.41

Impact of merger expenses 0.27 0.86 0.06 0.15 0.12

Net income per share, excluding merger expenses $ 0.86 $0.89 $ 0.59 $ 0.92 $ 0.53 (non-GAAP)



Fully tax-equivalent measures

Net interest income $ 13,504 $13,151 $ 5,974 $ 6,702 $ 6,047

Fully tax-equivalent adjustment 77 73 47 39 42

Net interest income (FTE) ^1 $ 13,581 $13,224 $ 6,021 $ 6,741 $ 6,089



Efficiency ratio ^2 75.5 % 99.5 % 68.2 % 57.3 % 66.0 %

Fully tax-equivalent adjustment -0.3 % -0.4 % -0.5 % -0.3 % -0.3 %

Efficiency ratio (FTE) ^3 75.2 % 99.1 % 67.7 % 57.0 % 65.7 %



Net interest margin 3.06 % 3.03 % 2.81 % 3.30 % 3.03 %

Fully tax-equivalent adjustment 0.02 % 0.02 % 0.02 % 0.02 % 0.02 %

Net interest margin (FTE) ^1 3.08 % 3.05 % 2.83 % 3.32 % 3.05 %



Other financial measures

ALLL to total loans 0.51 % 0.47 % 0.90 % 0.90 % 0.84 %

Impact of acquired loans and fair value mark 0.39 % 0.41 % - - -

ALLL to total loans, excluding acquired loans and 0.90 % 0.88 % 0.90 % 0.90 % 0.84 %fair value mark (non-GAAP)



ALLL to total loans 0.51 % 0.47 % 0.90 % 0.90 % 0.84 %

Impact of PPP loans 0.01 % 0.04 % 0.12 % 0.08 % 0.13 %

ALLL to total loans, excluding PPP loans (non- 0.52 % 0.51 % 1.02 % 0.98 % 0.97 %GAAP)



Book value per share $ 30.13 $29.89 $ 29.33 $ 29.14 $ 29.64

Impact of intangible assets (3.21) (3.29) (0.26) $ (0.27) $ (0.27)

Tangible book value per share (non-GAAP) $ 26.92 $26.60 $ 29.07 $ 28.87 $ 29.37



^ FTE calculations use a Federal income tax rate of 21%.1

^ The efficiency ratio, GAAP basis, is computed by dividing noninterest expense2 by the sum of net interest income and noninterest income.

^ The efficiency ratio, FTE or non-GAAP basis, is computed by dividing3 noninterest expense by the sum of net interest income (FTE) and noninterest income.

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SOURCE Virginia National Bankshares