On October 17, 2024, Virginia National Bankshares Corp (VABK, Financial) released its 8-K filing detailing the financial results for the third quarter of 2024. The company, a bank holding entity engaged in commercial and retail banking, reported a net income of $4.6 million, or $0.85 per diluted share, slightly down from $4.7 million, or $0.86 per diluted share, in the same quarter of the previous year. For the nine months ending September 30, 2024, net income was $12.4 million, a decrease from $16.1 million in the prior year period.
Company Overview
Virginia National Bankshares Corp is a bank holding company offering a wide range of banking and financial services. Its operations are divided into segments including the Bank, VNB Trust and Estate Services, Sturman Wealth Advisors, and Masonry Capital. The bank's commercial activities include loans, deposits, and related services for individuals, businesses, and charitable organizations.
Performance and Challenges
The decline in year-to-date net income was primarily attributed to increased cost of funds and the absence of bank-owned life insurance proceeds received in the prior year. However, the company saw an increase in interest income and a reduction in operating expenses. The President and CEO, Glenn W. Rust, highlighted the success of cost-reduction measures and noted the 11% increase in loan balances during 2024, with credit quality metrics remaining strong.
Financial Achievements
Virginia National Bankshares Corp achieved significant loan growth, with gross loans outstanding reaching $1.2 billion as of September 30, 2024, marking an 11.2% increase since December 31, 2023. The company's capital and liquidity positions were described as solid and stable, with a loan-to-deposit ratio of 88.1%, up from 84.3% in the previous quarter.
Key Financial Metrics
Net interest income for the quarter was $12.0 million, an 8.3% increase from the same period last year, driven by higher interest income on assets. The net interest margin improved to 3.24% from 3.04% in the previous quarter. Noninterest income decreased by 45.1% due to the absence of life insurance proceeds and lower fees. Noninterest expenses decreased by 4.8%, reflecting lower compensation and occupancy costs.
Our measures to reduce ongoing overhead costs are paying off for us as evidenced through reduced noninterest expenses," stated Glenn W. Rust, President and Chief Executive Officer.
Balance Sheet and Asset Quality
The company's total assets stood at $1.61 billion, with total deposits decreasing slightly by 2.1% from December 31, 2023. Nonperforming assets increased to $5.3 million, representing 0.33% of total assets. The allowance for credit losses as a percentage of total loans was 0.70%, reflecting an increase in government-guaranteed loans.
Analysis and Outlook
Virginia National Bankshares Corp's performance in the third quarter of 2024 reflects a strategic focus on cost management and loan growth. While the decrease in net income year-over-year presents a challenge, the company's strong credit quality and stable capital position provide a solid foundation for future growth. The increase in net interest margin and loan-to-deposit ratio are positive indicators for the bank's profitability and operational efficiency.
Explore the complete 8-K earnings release (here) from Virginia National Bankshares Corp for further details.
