Earnings

Virginia National Margin Rises 25 Basis Points Sequentially

The Tip Desk · October 27, 2026 · 4 min read

Net interest income rose 7.4% to $13.7 million as the FTE margin widened 25 bps to 3.65% and a $4.7 million Bearing gain lifted net income to $1.65 a share.

Virginia National Bankshares Corporation (VABK), the Charlottesville-based holding company for Virginia National Bank, reported net interest income of $13.7 million for the three months ended June 30, 2026, up 7.4% from a year earlier, as the fully tax-equivalent net interest margin expanded 25 bps to 3.65% from 3.40% in the prior quarter.

In the first quarter, the margin rose 12 bps year over year but fell 10 bps from the fourth quarter of 2025. The company said the increase in net interest income was predominantly due to decreased interest expense on deposit accounts and a higher loan yield.

Overall cost of funds, including noninterest-bearing deposits, fell 13 bps year over year to 1.64% from 1.77%. The cost of interest-bearing deposits declined 11 bps to 2.12%. FHLB borrowing cost dropped 85 bps to 3.89%. Loan yield was 5.74%, 14 bps above the year-ago 5.60%, with fair-value accretion on purchased loans adding 11 bps in the quarter.

Net income was $9.0 million, or $1.65 a share, versus $4.2 million, or $0.78 a share, a year earlier. The company attributed the year-over-year increase primarily to the 13 bps cost-of-funds reduction, lower noninterest expense, and a $4.7 million gain on the sale of a limited partnership interest in Bearing Insurance Group, LLC. Return on average assets improved to 2.24% from 1.05% and return on average equity to 18.81% from 10.05%.

Noninterest income rose 360.1% to $6.0 million on that Bearing gain. Recurring fee lines remained modest: wealth management fees were $214 thousand, deposit account fees $359 thousand, and debit/credit card and ATM fees $245 thousand.

Noninterest expense fell 4.7% to $8.3 million. The company cited continued lower data-processing costs from 2025 core contract renewals and a reduction in other expense, including legal fees. The efficiency ratio (FTE) improved to 41.6% from 61.2% a year earlier.

Gross loans were $1.2 billion at June 30, 2026, down $7.7 million, or 0.6%, from June 30, 2025. Average gross loans were $1.24 billion. Deposits were $1.4 billion, up $20.1 million from a year earlier after a $22.5 million decline from December 31, 2025. Noninterest-bearing demand deposits were $367.3 million. The company said the deposit changes reflected normal customer behavior as customers optimized cash holdings. FHLB borrowings were $20.0 million, unchanged from year-end 2025, versus $61.0 million a year earlier. Unused borrowing facilities were about $237.0 million and the company held no brokered deposits. Securities were $241.0 million.

Nonperforming assets were $5.8 million, or 0.35% of total assets, down from $6.0 million, or 0.36%, at March 31, 2026, and from $7.8 million, or 0.48%, a year earlier. Non-accrual loans were $2.1 million. The company said the primary changes were in loans 90 or more days past due and still accruing, which are government-guaranteed and serviced by a third party, with timing of servicer distributions creating period-end fluctuations. The allowance for credit losses on loans was 0.66% of total loans. Net charge-offs were 0.00% of average loans.

For the three months ended June 30, 2026, the company recorded a $231 thousand provision for credit losses on loans and a $94 thousand reserve for unfunded commitments, both tied to construction and multifamily project loans originated in the second quarter.

Book value per share was $35.89 and tangible book value per share $34.05. Tier 1 leverage was 13.38% and total risk-based capital 21.59% at June 30, 2026, estimates subject to regulatory filings. The board declared a quarterly cash dividend of $0.36 a share, payable August 28, 2026. Cash dividends of $2.0 million, or $0.36 a share, were declared and paid during the quarter; the remaining 78% of net income was retained.

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