On July 19, 2024, Virginia National Bankshares Corp (VABK, Financial) released its 8-K filing for the second quarter of 2024. The company reported a net income of $4.2 million, or $0.77 per diluted share, for the quarter ended June 30, 2024, compared to $5.7 million, or $1.05 per diluted share, for the same period in 2023. For the first half of 2024, net income was $7.8 million, or $1.45 per diluted share, down from $11.4 million, or $2.13 per diluted share, in the first half of 2023.
Company Overview
Virginia National Bankshares Corp is a bank holding company engaged in commercial and retail banking. The bank offers a range of financial services, including checking accounts, money market deposit accounts, certificates of deposit, individual retirement accounts, and other depository services. Its segments include the Bank, VNB Trust and Estate Services, Sturman Wealth Advisors, and Masonry Capital. The Bank's commercial banking activities involve making loans, taking deposits, and offering related services to individuals, businesses, and charitable organizations.
Performance and Challenges
The decline in net income for both the quarterly and year-to-date periods in 2024 is attributed to increased cost of funds and the accretion of the credit mark related to purchased loans, which was significantly larger in the second quarter of 2023. Despite these challenges, the company saw a 6% increase in loan balances during the first half of the year and a 19% year-over-year increase, with credit quality metrics remaining solid.
Loan balances continued to increase during the second quarter of this year, with organic growth and continued purchases of the government-guaranteed portions of USDA and SBA loans," stated Glenn W. Rust, President and Chief Executive Officer.
Financial Achievements
Virginia National Bankshares Corp's return on average assets decreased to 1.05% from 1.46%, and return on average equity decreased to 11.07% from 15.98% compared to the second quarter of 2023. The net interest margin (FTE) decreased to 3.04% from 3.83%, and the loan-to-deposit ratio increased to 84.3% from 72.2%. The efficiency ratio (FTE) also increased to 62.7% from 54.1%.
Key Financial Metrics
| Metric | Q2 2024 | Q4 2023 | Q2 2023 |
|---|---|---|---|
| Return on Average Assets | 1.05% | 0.79% | 1.46% |
| Return on Average Equity | 11.07% | 9.03% | 15.98% |
| Net Interest Margin (FTE) | 3.04% | 2.89% | 3.83% |
| Loan-to-Deposit Ratio | 84.3% | 77.5% | 72.2% |
| Efficiency Ratio (FTE) | 62.7% | 64.0% | 54.1% |
Income Statement Highlights
Net interest income for Q2 2024 was $11.2 million, a decrease of $2.5 million, or 18.4%, compared to Q2 2023. The decline was due to increased interest expense on deposit accounts and borrowings, which outweighed the increase in interest income earned on assets. Noninterest income decreased by $354 thousand, or 17.3%, primarily due to lower fees from wealth management, deposit accounts, debit cards, credit cards, and ATMs. Noninterest expense decreased by $442 thousand, or 5.2%, mainly due to lower compensation, occupancy, and data processing costs.
Balance Sheet and Cash Flow Highlights
As of June 30, 2024, gross loans outstanding totaled $1.2 billion, an increase of $65.5 million, or 6.0%, compared to December 31, 2023, and an increase of $184.9 million, or 19.0%, compared to June 30, 2023. Outstanding borrowings declined by $36.5 million, or 54.9%, from December 31, 2023, and by $29.7 million, or 49.7%, year-over-year. Total deposits decreased by $35.3 million, or 2.5%, from December 31, 2023, but increased by $25.8 million, or 1.9%, year-over-year.
Analysis
Virginia National Bankshares Corp's performance in Q2 2024 reflects the challenges posed by rising costs and loan accretion issues. However, the company's strong loan growth, stable credit quality, and improved key financial metrics indicate a resilient operational foundation. The inclusion in the Russell 2000 index is expected to enhance stock liquidity and attract more investors.
For more detailed insights and the complete earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Virginia National Bankshares Corp for further details.
