Virginia National Bankshares reported higher third-quarter earnings, supported by improved loan yields and lower funding costs. Net income also benefited from a payout on bank-owned life insurance following the death of a former employee. The Charlottesville-based bank said its net interest margin widened and profitability measures improved from a year earlier.
The results show stronger earnings alongside modest loan growth and generally stable credit measures. Deposits were slightly lower than at year-end, while the bank’s securities portfolio continued to shrink through scheduled maturities and issuer calls.
Earnings and profitability
– Net income for the quarter ended Sept. 30, 2026, was $6.6 million, or $1.20 per diluted share, compared with $4.6 million, or 84 cents per share, a year earlier.
– Net interest income rose 11.2% year over year to $14.5 million. For the first nine months of 2026, it was $41.2 million, up from $38.2 million in the same period of 2025.
– Net interest margin, on a fully tax-equivalent basis, increased to 3.73% from 3.43% in the third quarter of 2025. For the first nine months, it was 3.59%, compared with 3.37%.
– The bank’s loan yield rose to 5.90% from 5.64% a year earlier. Its overall cost of funds, including noninterest-bearing deposits, fell 9 basis points year over year to 1.68%.
– Return on average assets improved to 1.58% from 1.12%, and return on average equity rose to 13.34% from 10.48%. The efficiency ratio improved to 50.7% from 57.9%.
– The bank said the earnings increase reflected higher loan yields, lower deposit costs and the insurance payout. The payout was tied to a former employee’s death, rather than recurring banking income.
Balance sheet and funding
– Gross loans totaled about $1.2 billion at Sept. 30, up $12.3 million, or 1.0%, from a year earlier and $9.7 million, or 0.8%, from Dec. 31, 2025.
– Deposits were $1.4 billion, down $32.2 million from year-end but up $14.6 million from a year earlier. The company attributed fluctuations to normal seasonal behavior among its commercial customers.
– The loan-to-deposit ratio was 89.1%, little changed from 89.2% a year earlier.
– Securities totaled $219.9 million, down $34.3 million from year-end and $39.7 million from a year earlier. The decline reflected normal portfolio runoff as securities matured or were called.
– Federal Home Loan Bank borrowings stood at $20 million, unchanged from year-end and down from $30 million a year earlier. The bank reported about $227 million of unused borrowing capacity and no brokered deposits.
– Book value per share increased to $35.01 from $32.89 a year earlier. Tangible book value per share rose to $33.21 from $30.90; the company attributed the gains to earnings retained in shareholders’ equity.
Credit quality
– Nonperforming assets were $5.9 million, or 0.36% of total assets, compared with $6.8 million and 0.42% a year earlier. At Dec. 31, 2025, they were $9.2 million, or 0.56% of assets.
– The company said period-end movements in certain past-due loans largely reflected the timing of payments on government-guaranteed loans serviced by a third party.
– The allowance for credit losses on loans was 0.66% of total loans, compared with 0.69% a year earlier and 0.67% at year-end. The company said government guarantees reduce expected losses on the guaranteed portions of some loans.
– In the quarter, a $91,000 loan-loss provision was more than offset by a $205,000 recovery in reserves for unfunded commitments, resulting in a net recovery of $114,000. For the first nine months, net recoveries totaled $219,000, primarily because balances subject to unfunded commitments declined.
What changes for investors: The quarter reflects stronger spread income and improved profitability, while the insurance payout also contributed to the year-over-year earnings increase. The bank’s reported credit measures remained low, and its loan-to-deposit ratio was essentially unchanged.