VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES 2025 FULL YEAR RESULTS AND QUARTERLY DIVIDEND

Dividend Declaration

On January 27, 2026, the Company's Board of Directors declared a quarterly cash dividend of $0.36 per share of common stock payable on February 27, 2026, to the holders of record at the close of business on February 13, 2026.  The quarterly cash dividend represents an annual yield to shareholders of approximately 3.57% based on the closing price of the Company's common stock on January 27, 2026.

President and Chief Executive Officer's comments: "Our strong fourth quarter performance demonstrates our continued attention to strategic operating efficiency and sustainable growth, with increased net income of $1.4 million over the prior quarter," stated Glenn W. Rust, President and Chief Executive Officer.  "Loan growth was modest for the quarter and the year, but our strong asset quality continues to enhance financial results, and our capital and liquidity positions remain strong."

Key Performance Indicators

Fourth quarter 2025 compared to third quarter 2025

• Return on average assets improved to 1.45%. from 1.12%.
• Return on average equity improved to 13.04% from 10.48%.
• Net interest margin (FTE)¹ improved to 3.50% from 3.43%.
• Loan-to-deposit ratio decreased to 86% from 89%.
• Efficiency ratio (FTE)¹ improved to 49.5% from 57.9%.

December 31, 2025 Balance Sheet Highlights

• Gross loans outstanding as of December 31, 2025 totaled $1.2 billion, an increase of $1.6 million, or 0.1% compared to December 31, 2024. The Company experienced modest loan growth in the fourth quarter of 2025, with gross loan balances increasing $2.6 million from September 30, 2025.
• Deposit balances at December 31, 2025 increased $46.8 million or 3.4% from September 30, 2025, and increased $8.2 million since December 31, 2024. This fourth quarter increase is the combined result of the Company's choice to maintain interest rates despite prime decreases and normal corporate deposit behavior at the end of the calendar cycle.
• Securities balances declined $5.4 million from September 30, 2025 to December 31, 2025 as the Company allowed the proceeds from natural maturities and cash flow to fund earning assets with more attractive yields.
• The Company utilizes a third-party to offer multi-million-dollar FDIC insurance to customers with balances in excess of single-bank limits through reciprocal Insured Cash Sweep^® (ICS) plans. Deposit balances held in ICS plans amounted to $200.4 million as of December 31, 2025, $166.6 million as of December 31, 2024 and $145.2 million as of September 30, 2025.
• Outstanding borrowings from the FHLB as of December 31, 2025 were $20.0 million, a decrease of $10.0 million from September 30, 2025. The balance at December 31, 2024 was $20.0 million.
• As of December 31, 2025, the Company had unused borrowing facilities in place of approximately $233.0 million and held no brokered deposits.

Loans and Asset Quality

• Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.56% as of December 31, 2025, 0.42% as of September 30, 2025 and 0.19% as of December 31, 2024.
• Nonperforming assets amounted to $9.2 million as of December 31, 2025, compared to $6.8 million as of September 30, 2025 and $3.0 million as of December 31, 2024;
  • Fourteen loans to thirteen borrowers are in non-accrual status, totaling $2.2 million, as of December 31, 2025, compared to $2.6 million as of September 30, 2025 and $2.3 million as of December 31, 2024.
  • Loans 90 days or more past due and still accruing interest amounted to $7.0 million as of December 31, 2025, compared to $4.2 million at September 30, 2025 and $754 thousand as of December 31, 2024. The past due balance as of December 31, 2025 is comprised of seven loans totaling $6.6 million which are 100% government-guaranteed, one loan secured by residential real estate totaling $391 thousand and three student loans totaling $86 thousand.
  • The Company currently holds no other real estate owned.
• The period-end Allowance for Credit Losses on Loans ("ACL") as a percentage of total loans was 0.67% as of December 31, 2025, 0.69% as of September 30, 2025 and 0.68% as of December 31, 2024. The individual differences in the balances of various pools as well as changing loss rates have resulted in only nominal changes to the overall ACL ratio. The proportionate increase in government-guaranteed loans over the respective periods is also a main driver holding the ACL as a percentage of total loans fairly steady year-over-year. Balances in such loans are 100% government-guaranteed and do not require an ACL.
• The fair value mark that was allocated to the acquired loans was $21.3 million as of April 1, 2021, with a remaining balance of $4.8 million as of December 31, 2025.
• For the three months ended December 31, 2025, the Company recorded a net recovery to the provision for credit losses of $36 thousand, due primarily to updated analysis performed on the Company's loans secured by marketable securities and cash, netted against additional provision for loan growth and unfunded commitments. The reserve for unfunded commitments increased by $140 thousand.

Net Interest Income - Quarterly Comparison

• Net interest income for the three months ended December 31, 2025 of $13.3 million increased $1.1 million, or 9.1%, compared to the three months ended December 31, 2024, predominantly due to decreased interest expense associated with deposit accounts, coupled with increased interest income earned on loans and federal funds sold driving an additional net increase.
• Net interest margin (FTE), (a non-GAAP financial measure)¹, for the three months ended December 31, 2025 was 3.50%, compared to 3.21% for the three months ended December 31, 2024. The increase as compared to the fourth quarter of 2024 was primarily due to the decrease in cost of funds, as described below.
• The Bank's yield on loans was 5.74% for the three months ended December 31, 2025, compared to 5.63% for the prior year same period. The accretion of the fair value mark related to purchased loans positively impacted interest income by 13 bps in the fourth quarter of 2025, and 13 bps in the fourth quarter of 2024.
• The overall cost of funds, including noninterest-bearing deposits, of 173 bps incurred in the three months ended December 31, 2025 decreased 21 bps from 194 bps in the same period in the prior year. Overall, the cost of interest-bearing deposits decreased period over period by 24 bps, from a cost of 2.51% to 2.27%. The cost of borrowings from the FHLB decreased 35 bps from the fourth quarter of 2024 to the fourth quarter of 2025, from 4.33% to 3.98%.

Noninterest Income - Quarterly Comparison

Noninterest income for the three months ended December 31, 2025 decreased $595 thousand, or 26.2%, compared to the three months ended December 31, 2024, primarily as a combined result of lower fee income from debit card usage in 2025 and early extinguishment of debt in 2024.   

Noninterest Expense - Quarterly Comparison

Noninterest expense for the three months ended December 31, 2025 decreased by $1.3 million, or 14.9%, compared to the three months ended December 31, 2024. The 2025 quarter reflected service refunds and credits within data processing expense received as a result of negotiations with the Company's core processing provider.        

Efficiency Ratio - Quarterly Comparison

The Company's efficiency ratio (FTE)¹ improved to 49.5% for the three months ended December 31, 2025 compared to 60.2% for the three months ended December 31, 2024, as the impact of increased net interest income (FTE)¹ and decreased noninterest expense more than offset the decrease in noninterest income. On a year-to-date basis, the efficiency ratio (FTE)¹ improved to 57.6% in 2025 compared to 62.0% in 2024, also because of increased net interest income (FTE)¹.

Income Taxes - Quarterly Comparison

The effective tax rates amounted to 21.4% and 22.0% for the three months ended December 31, 2025 and 2024, respectively.  For each period, the effective income tax rate differed from the U.S. statutory rate of 21% due to the adoption of the proportional amortization method for accounting for low-income housing tax credits, which increased tax expense, net of the recognition of low-income housing tax credits and the effect of tax-exempt income from municipal bonds and income from bank owned life insurance policies.   

Book Value

Book value per share increased to $34.15 as of December 31, 2025, compared to $29.85 as of December 31, 2024, and tangible book value per share (a non-GAAP financial measure)¹ was $32.21 as of December 31, 2025 compared to $27.70 as of December 31, 2024.  These values increased as net retained income increased, the impact of intangible assets declined due to the ongoing amortization of the Company's core deposit intangible asset, and the reduction in accumulated other comprehensive income.

Dividends

Cash dividends of $1.9 million, or $0.36 per share, were declared and paid during the fourth quarter of 2025.  The remaining 67% of net income was retained.

About Virginia National Bankshares Corporation

Virginia National Bankshares Corporation, headquartered in Charlottesville, Virginia, is the bank holding company for Virginia National Bank. The Bank has seven banking offices throughout Fauquier and Prince William counties, four banking offices in Charlottesville and Albemarle County (including one limited-service banking facility), and banking offices in Winchester and Richmond, Virginia.  The Bank offers a full range of banking and related financial services to meet the needs of individuals, businesses and charitable organizations, including the fiduciary services of VNB Trust and Estate Services. The Company's common stock trades on the Nasdaq Capital Market under the symbol "VABK."  Additional information on the Company is also available at www.vnbcorp.com.

Non-GAAP Financial Measures

The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles ("GAAP") and prevailing practices in the banking industry. However, management uses certain non-GAAP measures to supplement the evaluation of the Company's performance. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's core businesses. These non-GAAP disclosures should not be viewed as a substitute for, or more important than, operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP measures are included at the end of this release.

Forward-Looking Statements; Other Information

Certain statements in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, statements with respect to the Company's operations, performance, future strategy and goals, and are often characterized by use of qualified words such as "expect," "believe," "estimate," "project," "anticipate," "intend," "will," "should," or words of similar meaning or other statements concerning the opinions or judgement of the Company and its management about future events. While Company management believes such statements to be reasonable, future events and predictions are subject to circumstances that are not within the control of the Company and its management.  Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including, without limitation, the effects of and changes in: inflation, interest rates, market and monetary fluctuations; liquidity and capital requirements; market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises, war and other military conflicts or other major events, the governmental and societal responses thereto, or the prospect of these events; changes, particularly declines, in general economic and market conditions in the local economies in which the Company operates, including the effects of declines in real estate values;  the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; the impact of changes in laws, regulations and guidance related to financial services  including, but not limited to, taxes, banking, securities and insurance; changes in accounting principles, policies and guidelines; the financial condition of the Company's borrowers; the Company's ability to attract, hire, train and retain qualified employees; an increase in unemployment levels; competitive pressures on loan and deposit pricing and demand; fluctuation in asset quality; assumptions that underlie the Company's ACL; the value of securities held in the Company's investment portfolio; performance of assets under management; cybersecurity threats or attacks and the development and maintenance of reliable electronic systems; changes in technology and their impact on the marketing of new products and services and the acceptance of these products and services by new and existing customers; the willingness of customers to substitute competitors' products and services for the Company's products and services; the risks and uncertainties described from time to time in the Company's press releases and filings with the SEC; and the Company's performance in managing the risks involved in any of the foregoing.  Many of these factors and additional risks and uncertainties are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 and other reports filed from time to time by the Company with the Securities and Exchange Commission. These statements speak only as of the date made, and the Company does not undertake to update any forward-looking statements to reflect changes or events that may occur after this release.