Virginia National's Net Interest Margin Widens Further

The Tip Desk · October 29, 2026 · 3 min read

Net interest income rose 11.2% to $14.5 million as the fully tax-equivalent margin reached 3.73% and net income was $6.6 million, or $1.20 a share.

Virginia National Bankshares Corporation (VABK), the Charlottesville-based holding company for Virginia National Bank, reported net interest income of $14.5 million for the three months ended September 30, 2026, up $1.5 million, or 11.2%, from a year earlier, as the fully tax-equivalent net interest margin widened further.

Net interest margin (FTE) was 3.73%, 30 basis points above 3.43% in the year-ago quarter, after a 25 bps year-over-year expansion to 3.65% in the second quarter. The company said the increase in net interest income was predominantly due to decreased interest expense on deposit accounts and increased loan yields.

Loan yield was 5.90%, 26 bps above 5.64% a year earlier. Accretion of the fair-value mark on purchased loans added 18 bps to interest income in the third quarter of 2026, versus 13 bps in the third quarter of 2025. Overall cost of funds fell 9 bps to 1.68% from 1.77%. The cost of interest-bearing deposits declined 8 bps to 2.18%, and the cost of Federal Home Loan Bank borrowings fell 86 bps to 3.91%.

President and Chief Executive Officer Glenn W. Rust said the 30-basis-point margin expansion reflected disciplined balance-sheet management. Return on average assets improved to 1.58% from 1.12%, and return on average equity improved to 13.34% from 10.48%.

Gross loans outstanding were $1.2 billion at September 30, 2026, up $12.3 million, or 1.0%, from September 30, 2025, reversing a 0.6% year-over-year decline at June 30, 2026. Average gross loans were $1.235 billion. Deposits were $1.4 billion, up $14.6 million from a year earlier. The loan-to-deposit ratio was 89.1%. Securities balances were $219.9 million. Unused FHLB borrowing facilities were about $227.0 million, and the company held no brokered deposits.

Noninterest income rose $0.3 million, or 24.1%, to $1.7 million, driven by a $421 thousand bank-owned life insurance payout netted against $157 thousand less in debit/credit card and ATM fees from decreased card usage. Noninterest expense fell $134 thousand, or 1.6%, to $8.3 million. The efficiency ratio (FTE) improved to 50.7% from 57.9%.

Credit costs were light. The company recorded a $91 thousand provision for credit losses on loans and a $205 thousand recovery in the reserve for unfunded commitments, for a net recovery of $114 thousand, versus a $332 thousand provision a year earlier. Net charge-offs to average loans were 0.01%. Nonperforming assets were $5.9 million, or 0.36% of assets. The allowance for credit losses on loans was 0.66% of gross loans.

Book value per share was $35.01, and tangible book value per share was $33.21. Tier 1 leverage was 13.33% and total risk-based capital 22.05%; both September 30, 2026 ratios are estimates subject to change pending regulatory filings. Cash dividends of $2.0 million, or $0.36 a share, were declared and paid in the quarter; the remaining 70% of net income was retained.