# EDGAR Filing Document

**Accession Number:** 0001572334
**File Stem:** 0000950170-23-001482
**Filing Date:** 2023-1
**Character Count:** 44309
**Document Hash:** ab07757cc23cf2fccb2320f74d909847
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-001482.hdr.sgml**: 20230131

**ACCESSION NUMBER**: 0000950170-23-001482

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230131

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230131

**DATE AS OF CHANGE**: 20230131

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Virginia National Bankshares Corp
- **CENTRAL INDEX KEY:** 0001572334
- **STANDARD INDUSTRIAL CLASSIFICATION:** NATIONAL COMMERCIAL BANKS [6021]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** VA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40305
- **FILM NUMBER:** 23572977

**BUSINESS ADDRESS:**
- **STREET 1:** 404 PEOPLE PLACE
- **CITY:** CHARLOTTESVILLE
- **STATE:** VA
- **ZIP:** 22911
- **BUSINESS PHONE:** 434-817-7676

**MAIL ADDRESS:**
- **STREET 1:** 404 PEOPLE PLACE
- **CITY:** CHARLOTTESVILLE
- **STATE:** VA
- **ZIP:** 22911

?xml version="1.0" encoding="ASCII"? 8-K

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549**

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**FORM** 8-K

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**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**Date of Report (Date of earliest event reported):** January 31, 2023<br>

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VIRGINIA NATIONAL BANKSHARES CORPORATION

**(Exact name of Registrant as Specified in Its Charter)**

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| | | |
|:---|:---|:---|
| Virginia | 001-40305 | 46-2331578 |
| **(State or Other Jurisdiction<br>of Incorporation)** | **(Commission File Number)** | **(IRS Employer<br>Identification No.)** |
| 404 People Place |  |  |
| Charlottesville**,** Virginia |  | 22911 |
| **(Address of Principal Executive Offices)** |  | **(Zip Code)** |

---

**Registrant's Telephone Number, Including Area Code:** (434) 817-8621<br>

**(Former Name or Former Address, if Changed Since Last Report)**

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

**Securities registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| **<br>Title of each class** | **Trading<br>Symbol(s)** | **<br>Name of each exchange on which registered** |
| Common Stock | VABK | The NASDAQ Stock Market LLC |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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**Item 2.02 Results of Operations and Financial Condition.**

On January 31, 2023, Virginia National Bankshares Corporation (the "Company") issued a press statement announcing the consolidated earnings for the quarter and year ended December 31, 2022.

A copy of the press statement is furnished as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.

The information in this Form 8-K, and the exhibit hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

**Item 9.01 Financial Statements and Exhibits.**

(d) Exhibits.

**<u>Exhibit No.</u> <u>Description of Exhibit</u>** 

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| | |
|:---|:---|
| [<u>99.1</u>](vabk-ex99_1.htm) | [<u>Press statement issued by Virginia National Bankshares Corporation on January 31, 2023.</u>](vabk-ex99_1.htm) |
| 104  | Cover Page Interactive Data File (embedded within the Inline XBRL document). |

---

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
|  |  |  | **VIRGINIA NATIONAL BANKSHARES CORPORATION** |
| Date: | January 31, 2023 | By:  | /s/ Tara Y. Harrison |
|  |  |  | Tara Y. Harrison<br>Executive Vice President and Chief Financial Officer |

---

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## Exhibit 99.1

**Exhibit 99.1**

![img2203825_0.jpg](img2203825_0.jpg)

FOR IMMEDIATE RELEASE INVESTOR RELATIONS CONTACT: <br> Tara Y. Harrison (434) 817-8587

**VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES** 

**RECORD 2022 FOURTH QUARTER AND RECORD FULL YEAR EARNINGS**

Charlottesville, VA – January 31, 2023 - Virginia National Bankshares Corporation (NASDAQ: VABK) (the "Company") today reported record quarterly net income of $7.1 million, or $1.32 per diluted share, for the quarter ended December 31, 2022, which represents a 35% increase over net income of $5.2 million, or $0.98 per diluted share, recognized for the quarter ended December 31, 2021. For the twelve months ended December 31, 2022, record net income of $23.4 million, or $4.38 per diluted share, was recognized, compared to $10.1 million, or $2.14 per diluted share, for the twelve months ended December 31, 2021. Note that pre-tax merger and merger-related expenses of $7.4 million were incurred in the year-to-date period ended December 31, 2021, in connection with the April 1, 2021 mergers of Fauquier Bankshares, Inc. ("Fauquier") and The Fauquier Bank ("TFB") with and into the Company and Virginia National Bank (the "Bank"), respectively.

"We are proud to post record results for the fourth quarter and calendar year of 2022," commented President and Chief Executive Officer, Glenn W. Rust. "Our earn back period for the 2021 merger with Fauquier was less than two years and we continue to reap the benefits of an effectively managed overhead cost structure. We posted a return on average assets of 1.30% for 2022 and we continue to maintain a strong credit discipline."

**Fourth Quarter 2022 Highlights**

• Return on average assets ("ROAA") for the three months ended December 31, 2022 increased to 1.65% compared to 1.06% realized in the same period in the prior year.

• Return on average equity ("ROAE") for the three months ended December 31, 2022 improved to 22.23% compared to 12.86% realized in same period in the prior year.

• The efficiency ratio on a fully tax equivalent basis ("FTE") (a non-GAAP financial measure)<sup>1</sup> was 51.7% for the three months ended December 31, 2022, an improvement over 57.7% for the same period in the prior year.

• The Company did not incur any merger or merger-related expenses in 2022, compared to $7.4 million incurred during 2021.

• The Company is realizing significant savings in salaries and employee benefits, data processing and professional fees associated with the merger. Full-time equivalent employee headcount was 215 as of April 1, 2021, the effective date of the merger, and is down to 157 as of December 31, 2022. In addition, the Company closed two branches in the fourth quarter of 2022, reducing future operating costs.

• During the fourth quarter of 2022, the Company sold its interest in Sturman Wealth Advisors, resulting in a gain on sale of the line of business of $404 thousand. All goodwill and unamortized intangible assets associated with the 2016 purchase of this business line have been eliminated from the Company's balance sheet.

**Loans and Asset Quality**

• Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.08% as of December 31, 2022, compared to 0.10% as of December 31, 2021. Nonperforming assets have been reduced to $1.4 million as of December 31, 2022, compared to $1.9 million as of December 31, 2021, and the Company currently holds no other real estate owned.

__________________________________________________________________

<sup>1</sup>See "Reconciliation of Certain Non-GAAP Financial Measures" at the end of this release.

Page 1 of 11

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**Loans and Asset Quality (continued)**

• Four loans to three borrowers are in non-accrual status, totaling $673 thousand, as of December 31, 2022, compared to $495 thousand as of December 31, 2021. Loans acquired from TFB ("acquired loans") that otherwise would be in non-accrual status are not included in this figure, as they earn interest through the yield accretion.

• Loans 90 days or more past due and still accruing interest amounted to $705 thousand as of December 31, 2022, compared to $800 thousand as of December 31, 2021. The portfolio includes three non-insured student loans that are 90 days or more past due and still accruing interest, amounting to $59 thousand. Acquired loans that are greater than 90 days past due and still accruing interest are included in this figure, net of their fair value mark.

• The period-end allowance for loan losses ("ALLL") as a percentage of total loans was 0.59% as of December 31, 2022 and 0.56% as of December 31, 2021. 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 $15.9 million as of December 31, 2022. The ALLL as a percentage of gross loans, excluding the impact of the acquired loans and fair value mark (a non-GAAP financial measure)<sup>1</sup>, would have been 0.90% as of December 31, 2022 and 0.95% as of December 31, 2021. The total of the ALLL and the fair value mark as a percentage of gross loans (a non-GAAP financial measure)<sup>1</sup> amounted to 2.29% as of December 31, 2022 and 2.30% as of December 31, 2021.

• A provision for loan losses of $136 thousand was recognized during the three months ended December 31, 2022, compared to $537 thousand recognized in the three months ended December 31, 2021.

• Gross loans outstanding at December 31, 2022 totaled $936.4 million, a decrease of $124.8 million, or 12%, compared to December 31, 2021. Loans originated and funded during 2022 were offset by: 1) paydowns of legacy organic loans due mainly to business sales, property sales and participation fluctuations, 2) workouts and paydowns of loans, the majority of which originated from legacy Fauquier, and 3) the forgiveness of Small Business Administration Paycheck Protection Program loans.

**Net Interest Income**

• Net interest income for the three months ended December 31, 2022 of $15.4 million increased $3.0 million, or 24%, compared to the three months ended December 31, 2021, due primarily to the increase in average balances of securities, positively impacting net interest income through rate and volume, offset by the reduction in average balances of loans.

• The fair value accretion on acquired loans positively impacted net interest income by 21 basis points ("bps") during the current quarter.

• The overall cost of funds, including noninterest deposits, of 23 bps incurred in the three months ended December 31, 2022 increased 8 bps from 22 bps in the same period in the prior year. Overall, the cost of interest-bearing deposits increased period over period, from a cost of 30 bps to 32 bps. Average balances in noninterest-bearing deposits remained relatively flat period over period.

• Low-cost deposits, which include noninterest checking accounts and interest-bearing checking, savings and money market accounts, remained in excess of 91% of total deposits at December 31, 2022 and 2021.

**Noninterest Income**

Noninterest income for the three months ended December 31, 2022 decreased $100 thousand, or 3%, compared to the three months ended December 31, 2021, primarily due to the decline in wealth management fees, due to an anticipated reduction in the number of accounts served by the Trust & Estate segment and the decline in performance fees collected by Masonry Capital Management. In the fourth quarter of 2022, the Company received a $267 thousand recovery of unearned premiums related to the loss of insurance on the student loan portfolio, bringing the total recovered life-to-date to over $1 million. The Company also closed on the sale of Sturman Wealth Advisors, as noted above, in the current period.

**Noninterest Expense**

Noninterest expense for the three months ended December 31, 2022 increased $592 thousand, or 7%, compared to the three months ended December 31, 2021, due to combination of several variances, including an increase in losses due to fraud and an impairment charge on an asset held for sale, offset by reduced plastics expense as a result of changing vendors and lower salaries and employee benefits as a result of efficiencies gained from the merger. In addition, the fourth quarter of 2021 noninterest expense included a favorable adjustment to merger and merger-related expenses after receiving a refund from a third-party vendor for system implementation credits and adjusting merger-related accrued bonuses.

Page 2 of 11

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**Book Value** 

Book value per share was $25.05 as of December 31, 2022 and $30.50 as of December 31, 2021, and tangible book value per share (a non-GAAP financial measure)<sup>1</sup> was $22.36 as of December 31, 2022 compared to $27.36 as of December 31, 2021. These values declined due to the increase in unrealized losses on the investment portfolio period over period.

**Income Taxes**

The effective tax rate for the twelve months ended December 31, 2022 amounted to 17.9% compared to 15.5% for the twelve months ended December 31, 2021, which are both lower than the statutory rate due to the recognition of low-income housing tax credits and the effect of tax-exempt income from municipal bonds and bank owned life insurance policies. The 2021 effective tax rate was also impacted by the non-deductibility of certain merger-related expenses for tax purposes.

**Dividends**

Cash dividends of $1.6 million, or $0.30 per share, were declared during the current quarter, and $6.4 million, or $1.20 per share, were declared during the current year.

_____________________________________________________________________

<sup>1</sup>See "Reconciliation of Certain Non-GAAP Financial Measures" at the end of this release.

Page 3 of 11

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**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 nine banking offices throughout Fauquier and Prince William counties, three banking offices in Charlottesville and Albemarle County, 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. Investment management services are offered through Masonry Capital Management, LLC, a registered investment adviser and wholly-owned subsidiary of the Company.

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 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: general economic and market conditions, including the effects of declines in real estate values, an increase in unemployment levels and general economic contraction as a result of COVID-19 or other pandemics; fluctuations in interest rates, deposits, loan demand, and asset quality; assumptions that underlie the Company's allowance for loan losses; the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (e.g., COVID-19 or other pandemics), and of governmental and societal responses thereto; the performance of vendors or other parties with which the Company does business; competition; technology; changes in laws, regulations and guidance; changes in accounting principles or guidelines; performance of assets under management; expected revenue synergies and cost savings from the recently completed merger with Fauquier may not be fully realized or realized within the expected timeframe; the businesses of the Company and Fauquier may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; revenues following the merger may be lower than expected; customer and employee relationships and business operations may be disrupted by the merger; and other factors impacting financial services businesses. 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, 2021 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.

Page 4 of 11

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**VIRGINIA NATIONAL BANKSHARES CORPORATION**

**CONSOLIDATED BALANCE SHEETS**

**(dollars in thousands, except per share data)**

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| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021\*** |
|  | **(Unaudited)** |  |
| ASSETS |  |  |
| Cash and due from banks | $**20993** | $20345 |
| Interest-bearing deposits in other banks | **19098** | 336032 |
| Federal funds sold | **45** | 152463 |
| Securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Available for sale, at fair value | **538186** | 303817 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted securities, at cost | **5137** | 4950 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total securities | **543323** | 308767 |
| Loans, net of deferred fees and costs | **936415** | 1061211 |
| Allowance for loan losses | **(5552)** | (5984) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loans, net | **930863** | 1055227 |
| Premises and equipment, net | **17808** | 25093 |
| Assets held for sale | **965** | - |
| Bank owned life insurance | **38552** | 31234 |
| Goodwill | **7768** | 8140 |
| Core deposit intangible, net | **6586** | 8271 |
| Other intangible assets, net | **-** | 274 |
| Other real estate owned, net | **-** | 611 |
| Right of use asset, net | **6536** | 7583 |
| Deferred tax asset, net | **17165** | 4840 |
| Accrued interest receivable and other assets | **13151** | 13304 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $**1622853** | $1972184 |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |
| Liabilities: |  |  |
| &nbsp;&nbsp;Demand deposits: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Noninterest-bearing | $**495649** | $522281 |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing | **399983** | 446314 |
| &nbsp;&nbsp;Money market and savings deposit accounts | **467600** | 665530 |
| &nbsp;&nbsp;Certificates of deposit and other time deposits | **115106** | 162045 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | **1478338** | 1796170 |
| &nbsp;&nbsp;Junior subordinated debt, net | **3413** | 3367 |
| &nbsp;&nbsp;Lease liability | **6173** | 7108 |
| &nbsp;&nbsp;Accrued interest payable and other liabilities | **1513** | 3552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | **1489437** | 1810197 |
| Commitments and contingent liabilities |  |  |
| Shareholders' equity: |  |  |
| Preferred stock, $2.50 par value | **-** | - |
| Common stock, $2.50 par value | **13214** | 13178 |
| Capital surplus | **105344** | 104584 |
| Retained earnings | **63482** | 46436 |
| Accumulated other comprehensive loss | **(48624)** | (2211) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity | **133416** | 161987 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity | $**1622853** | $1972184 |
| Common shares outstanding | **5337271** | 5308335 |
| Common shares authorized | **10000000** | 10000000 |
| Preferred shares outstanding | **-** | - |
| Preferred shares authorized | **2000000** | 2000000 |

---

\* Derived from audited consolidated financial statements

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**VIRGINIA NATIONAL BANKSHARES CORPORATION**

**CONSOLIDATED STATEMENTS OF INCOME**

**(dollars in thousands, except per share data)**

**(Unaudited)**

Page 6 of 11

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the three months ended** | **For the three months ended** | **For the twelve months ended** | **For the twelve months ended** |
|  | **December 31, 2022** | **December 31, 2021** | **December 31, 2022** | **December 31, 2021** |
| Interest and dividend income: |  |  |  |  |
| &nbsp;&nbsp;Loans, including fees | $**11828** | $11995 | $**44231** | $43899 |
| &nbsp;&nbsp;Federal funds sold | **426** | 61 | **1088** | 139 |
| &nbsp;&nbsp;Other interest-bearing deposits | **494** | 139 | **1467** | 233 |
| &nbsp;&nbsp;Investment securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Taxable | **3116** | 804 | **8416** | 2810 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax exempt | **324** | 292 | **1249** | 1021 |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends | **88** | 49 | **280** | 170 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest and dividend income | **16276** | 13340 | **56731** | 48272 |
| Interest expense: |  |  |  |  |
| &nbsp;&nbsp;Demand and savings deposits | **682** | 710 | **2327** | 2308 |
| &nbsp;&nbsp;Certificates and other time deposits | **158** | 222 | **657** | 1108 |
| &nbsp;&nbsp;Junior subordinated debt | **52** | 49 | **200** | (132) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | **892** | 981 | **3184** | 3284 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net interest income | **15384** | 12359 | **53547** | 44988 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for loan losses | **136** | 537 | **106** | 1014 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net interest income after provision for loan losses | **15248** | 11822 | **53441** | 43974 |
| Noninterest income: |  |  |  |  |
| &nbsp;&nbsp;Wealth management fees | **721** | 1455 | **2440** | 3508 |
| &nbsp;&nbsp;Advisory and brokerage income | **131** | 246 | **770** | 1154 |
| &nbsp;&nbsp;Deposit account fees | **433** | 477 | **1799** | 1459 |
| &nbsp;&nbsp;Debit/credit card and ATM fees | **648** | 509 | **2794** | 2070 |
| &nbsp;&nbsp;Earnings/increase in value of bank owned life insurance | **254** | 201 | **963** | 708 |
| &nbsp;&nbsp;Resolution of commercial dispute | **-** | - | **2400** | - |
| &nbsp;&nbsp;Gain on sale of business line | **404** | - | **404** | - |
| &nbsp;&nbsp;Gains (losses) on sale of assets, net | **(74)** | 1 | **1043** | 81 |
| &nbsp;&nbsp;Other | **411** | 139 | **1048** | 1485 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest income | **2928** | 3028 | **13661** | 10465 |
| Noninterest expense: |  |  |  |  |
| &nbsp;&nbsp;Salaries and employee benefits | **4191** | 4424 | **17260** | 16129 |
| &nbsp;&nbsp;Net occupancy | **729** | 932 | **4526** | 3575 |
| &nbsp;&nbsp;Equipment | **111** | 305 | **897** | 966 |
| &nbsp;&nbsp;Bank franchise tax | **304** | 214 | **1216** | 1136 |
| &nbsp;&nbsp;Computer software | **229** | 276 | **1136** | 1020 |
| &nbsp;&nbsp;Data processing | **805** | 620 | **2954** | 2793 |
| &nbsp;&nbsp;FDIC deposit insurance assessment | **90** | 264 | **511** | 858 |
| &nbsp;&nbsp;Marketing, advertising and promotion | **351** | 216 | **1224** | 922 |
| &nbsp;&nbsp;Merger and merger-related expenses | **-** | (664) | **-** | 7423 |
| &nbsp;&nbsp;Plastics expense | **72** | 389 | **394** | 978 |
| &nbsp;&nbsp;Professional fees | **306** | 244 | **1357** | 1117 |
| &nbsp;&nbsp;Core deposit intangible amortization | **403** | 544 | **1684** | 1389 |
| &nbsp;&nbsp;Impairment on assets held for sale | **242** | - | **242** | - |
| &nbsp;&nbsp;Other | **1683** | 1160 | **5155** | 4216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total noninterest expense | **9516** | 8924 | **38556** | 42522 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income before income taxes | **8660** | 5926 | **28546** | 11917 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for income taxes | **1603** | 707 | **5108** | 1846 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income | $**7057** | $5219 | $**23438** | $10071 |
| &nbsp;&nbsp;Net income per common share, basic | $**1.32** | $0.98 | $**4.40** | $2.16 |

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| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;Net income per common share, diluted | $**1.32** | $0.98 | $**4.38** | $2.14 |
| &nbsp;&nbsp;Weighted average common shares outstanding, basic | **5333902** | 5308108 | **5324740** | 4668761 |
| &nbsp;&nbsp;Weighted average common shares outstanding, diluted | **5362220** | 5338088 | **5351358** | 4695405 |

---

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**VIRGINIA NATIONAL BANKSHARES CORPORATION**

**FINANCIAL HIGHLIGHTS**

**(dollars in thousands, except per share data)**

**(Unaudited)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **At or For the Three Months Ended** | **At or For the Three Months Ended** | **At or For the Three Months Ended** | **At or For the Three Months Ended** | **At or For the Three Months Ended** |
|  | **December 31, <br>2022** | **September 30, 2022** | **June 30, 2022** | **March 31, 2022** | **December 31, <br>2021** |
| **Common Share Data:** |  |  |  |  |  |
| Net income per weighted average share, basic | $1.32 | $1.08 | $1.07 | $0.93 | $0.98 |
| Net income per weighted average share, diluted | $1.32 | $1.08 | $1.06 | $0.92 | $0.98 |
| Weighted average shares outstanding, basic | 5333902 | 5326543 | 5326271 | 5311983 | 5308108 |
| Weighted average shares outstanding, diluted | 5362220 | 5348900 | 5347008 | 5343564 | 5338088 |
| Actual shares outstanding | 5327271 | 5327271 | 5326271 | 5326271 | 5308335 |
| Tangible book value per share at period end | $22.36 | $20.77 | $22.24 | $24.37 | $27.36 |
| **Key Ratios:** |  |  |  |  |  |
| Return on average assets **1** | 1.65% | 1.30% | 1.27% | 1.03% | 1.06% |
| Return on average equity **1** | 22.23% | 16.50% | 16.16% | 12.53% | 12.86% |
| Net interest margin (FTE) **2** | 3.91% | 3.47% | 3.02% | 2.59% | 2.72% |
| Efficiency ratio (FTE) **3** | 51.7% | 57.0% | 58.3% | 62.0% | 57.7% |
| Loan-to-deposit ratio | 63.3% | 59.0% | 60.1% | 56.8% | 59.1% |
| **Net Interest Income:** |  |  |  |  |  |
| Net interest income | $15384 | $14277 | $12461 | $11425 | $12359 |
| Net interest income (FTE) **2** | $15470 | $14361 | $12543 | $11490 | $12437 |
| **Capital Ratios:** |  |  |  |  |  |
| Tier 1 leverage ratio | 9.77% | 9.17% | 8.79% | 8.03% | 7.61% |
| Total risk-based capital ratio | 17.64% | 16.97% | 16.51% | 15.66% | 14.56% |
| **Assets and Asset Quality:** |  |  |  |  |  |
| Average earning assets | $1568765 | $1644124 | $1668471 | $1802461 | $1817010 |
| Average gross loans | $938740 | $959086 | $984883 | $1031593 | $1088278 |
| Paycheck Protection Program loans, end of period | $234 | $254 | $1925 | $9976 | $24482 |
| Fair value mark on acquired loans | $15887 | $17046 | $17502 | $17920 | $18466 |
| Allowance for loan losses: |  |  |  |  |  |
| Beginning of period | $5485 | $5503 | $5834 | $5984 | $5623 |
| Provision for (recovery of) loan losses | 136 | 39 | (217) | 148 | 537 |
| Charge-offs | (472) | (119) | (191) | (473) | (230) |
| Recoveries | 403 | 62 | 77 | 175 | 54 |
| Net charge-offs | (69) | (57) | (114) | (298) | (176) |
| End of period | $5552 | $5485 | $5503 | $5834 | $5984 |
| Non-accrual loans **4** | $673 | $607 | $511 | $518 | $495 |
| Loans 90 days or more past due and still accruing **5** | 705 | 859 | 626 | 837 | 800 |
| OREO | - | - | - | 611 | 611 |
| Total nonperforming assets (NPA) | $1378 | $1466 | $1137 | $1966 | $1906 |
| NPA as a % of total assets | 0.08% | 0.08% | 0.07% | 0.10% | 0.10% |
| NPA as a % of gross loans plus OREO | 0.15% | 0.16% | 0.12% | 0.20% | 0.18% |
| ALLL to gross loans | 0.59% | 0.58% | 0.57% | 0.58% | 0.56% |
| ALLL + fair value mark to gross loans (non-GAAP) | 2.29% | 2.38% | 2.39% | 2.35% | 2.30% |
| Non-accruing loans to gross loans **4** | 0.07% | 0.06% | 0.05% | 0.05% | 0.05% |
| Net charge-offs to average loans **1** | 0.03% | 0.02% | 0.05% | 0.12% | 0.06% |

---

<sup>1</sup>Ratio is computed on an annualized basis.

<sup>2</sup>The net interest margin and net interest income are reported on a fully tax-equivalent basis (FTE) basis, using a Federal income tax rate of 21%.

<sup>3</sup>The efficiency ratio (FTE) is computed as a percentage of noninterest expense divided by the sum of net interest income (FTE) and noninterest income. This is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information should not be viewed as a substitute for GAAP. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate them differently. Refer to the Reconciliation of Certain Non-GAAP Financial (FTE) Measures at the end of this release.

<sup>4</sup> Acquired loans which otherwise would be in non-accrual status are not included in this figure, as they earn interest through the yield accretion.

<sup>5</sup> Past due loans from the acquired portfolio are included at fair value.

Page 9 of 11

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**VIRGINIA NATIONAL BANKSHARES CORPORATION**

**AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)**

**(dollars in thousands)**

**(Unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the three months ended** | **For the three months ended** | **For the three months ended** | **For the three months ended** | **For the three months ended** | **For the three months ended** |
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  |  | **Interest** |  |  | **Interest** |  |
|  | **Average** | **Income/** | **Average** | **Average** | **Income/** | **Average** |
|  | **Balance** | **Expense** | **Yield/Cost** | **Balance** | **Expense** | **Yield/Cost** |
| ASSETS |  |  |  |  |  |  |
| Interest Earning Assets: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxable Securities | $471566 | $3204 | 2.72% | $225757 | $853 | 1.51% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax Exempt Securities 1 | 67090 | 410 | 2.44% | 63083 | 370 | 2.35% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Securities 1 | 538656 | 3614 | 2.68% | 288840 | 1223 | 1.69% |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real Estate | 820751 | 10322 | 4.99% | 923040 | 10456 | 4.49% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial | 71730 | 785 | 4.34% | 109024 | 846 | 3.08% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer | 46259 | 721 | 6.18% | 56214 | 693 | 4.89% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Loans | 938740 | 11828 | 5.00% | 1088278 | 11995 | 4.37% |
| &nbsp;&nbsp;&nbsp;&nbsp;Fed Funds Sold | 46042 | 426 | 3.67% | 152435 | 61 | 0.16% |
| &nbsp;&nbsp;&nbsp;&nbsp;Other interest-bearing deposits | 45327 | 494 | 4.32% | 287457 | 139 | 0.19% |
| Total Earning Assets | 1568765 | 16362 | 4.14% | 1817010 | 13418 | 2.93% |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Allowance for Loan Losses | (5395) |  |  | (5704) |  |  |
| Total Non-Earning Assets | 135015 |  |  | 140539 |  |  |
| Total Assets | $1698385 |  |  | $1951845 |  |  |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |
| Interest Bearing Liabilities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest Bearing Deposits: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest Checking | $403570 | $55 | 0.05% | $421372 | $70 | 0.07% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Money Market and Savings Deposits | 500397 | 627 | 0.50% | 660438 | 639 | 0.38% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Time Deposits | 125334 | 158 | 0.50% | 162584 | 222 | 0.54% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Interest-Bearing Deposits | 1029301 | 840 | 0.32% | 1244394 | 931 | 0.30% |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowings | 2 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Junior subordinated debt | 3406 | 52 | 6.06% | 3360 | 50 | 5.90% |
| Total Interest-Bearing Liabilities | 1032709 | 892 | 0.34% | 1247754 | 981 | 0.31% |
| Non-Interest-Bearing Liabilities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Demand deposits | 531719 |  |  | 532397 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 8019 |  |  | 10741 |  |  |
| Total Liabilities | 1572447 |  |  | 1790892 |  |  |
| Shareholders' Equity | 125938 |  |  | 160953 |  |  |
| Total Liabilities & Shareholders' Equity | $1698385 |  |  | $1951845 |  |  |
| Net Interest Income (FTE) |  | $15470 |  |  | $12437 |  |
| Interest Rate Spread 2 |  |  | 3.80% |  |  | 2.62% |
| Cost of Funds |  |  | 0.23% |  |  | 0.22% |
| Interest Expense as a Percentage of <br>&nbsp;&nbsp;&nbsp;&nbsp; Average Earning Assets |  |  | 0.23% |  |  | 0.21% |
| Net Interest Margin (FTE) 3 |  |  | 3.91% |  |  | 2.72% |

---

<sup>1</sup> Tax-exempt income for investment securities has been adjusted to a fully tax-equivalent basis (FTE), using a Federal income tax rate of 21%.

Refer to the Reconcilement of Non-GAAP Measures table at the end of this release.

<sup>2</sup> Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.

<sup>3</sup> Net interest margin (FTE) is net interest income expressed as a percentage of average earning assets.

Page 10 of 11

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**VIRGINIA NATIONAL BANKSHARES CORPORATION**

**AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)**

**(dollars in thousands)**

**(Unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **For the twelve months ended** | **For the twelve months ended** | **For the twelve months ended** | **For the twelve months ended** | **For the twelve months ended** | **For the twelve months ended** |
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  |  | **Interest** |  |  | **Interest** |  |
|  | **Average** | **Income/** | **Average** | **Average** | **Income/** | **Average** |
|  | **Balance** | **Expense** | **Yield/Cost** | **Balance** | **Expense** | **Yield/Cost** |
| ASSETS |  |  |  |  |  |  |
| Interest Earning Assets: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Securities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxable Securities | $373680 | $8696 | 2.33% | $198450 | $2980 | 1.50% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax Exempt Securities 1 | 65861 | 1582 | 2.40% | 53716 | 1292 | 2.41% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Securities 1 | 439541 | 10278 | 2.34% | 252166 | 4272 | 1.69% |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real Estate | 847238 | 38011 | 4.49% | 808707 | 35303 | 4.37% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial | 81410 | 3583 | 4.40% | 145462 | 5731 | 3.94% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer | 49619 | 2637 | 5.31% | 63039 | 2865 | 4.54% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Loans | 978267 | 44231 | 4.52% | 1017208 | 43899 | 4.32% |
| &nbsp;&nbsp;&nbsp;&nbsp;Fed Funds Sold | 100033 | 1088 | 1.09% | 109104 | 139 | 0.13% |
| &nbsp;&nbsp;&nbsp;&nbsp;Other interest-bearing deposits | 161260 | 1467 | 0.91% | 160960 | 233 | 0.14% |
| Total Earning Assets | 1679101 | 57064 | 3.40% | 1539438 | 48543 | 3.15% |
| &nbsp;&nbsp;&nbsp;&nbsp;Less: Allowance for Loan Losses | (5702) |  |  | (5297) |  |  |
| Total Non-Earning Assets | 124525 |  |  | 115193 |  |  |
| Total Assets | $1797924 |  |  | $1649334 |  |  |
| LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |
| Interest Bearing Liabilities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest Bearing Deposits: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest Checking | $409504 | $230 | 0.06% | $355419 | $261 | 0.07% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Money Market and Savings Deposits | 563374 | 2097 | 0.37% | 529027 | 2047 | 0.39% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Time Deposits | 144564 | 657 | 0.45% | 152211 | 1108 | 0.73% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Interest-Bearing Deposits | 1117442 | 2984 | 0.27% | 1036657 | 3416 | 0.33% |
| &nbsp;&nbsp;&nbsp;&nbsp;Borrowings |  |  |  | 23700 | (280) | -1.18% |
| &nbsp;&nbsp;&nbsp;&nbsp;Junior subordinated debt | 3389 | 200 | 5.90% | 2565 | 148 | 5.77% |
| Total Interest-Bearing Liabilities | 1120831 | 3184 | 0.28% | 1062922 | 3284 | 0.31% |
| Non-Interest-Bearing Liabilities: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Demand deposits | 526389 |  |  | 434989 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 9581 |  |  | 10875 |  |  |
| Total Liabilities | 1656801 |  |  | 1508786 |  |  |
| Shareholders' Equity | 141123 |  |  | 140548 |  |  |
| Total Liabilities & Shareholders' Equity | $1797924 |  |  | $1649334 |  |  |
| Net Interest Income (FTE) |  | $53880 |  |  | $45259 |  |
| Interest Rate Spread 2 |  |  | 3.11% |  |  | 2.84% |
| Cost of Funds |  |  | 0.19% |  |  | 0.22% |
| Interest Expense as a Percentage of <br>&nbsp;&nbsp;&nbsp;&nbsp; Average Earning Assets |  |  | 0.19% |  |  | 0.21% |
| Net Interest Margin (FTE) 3 |  |  | 3.21% |  |  | 2.94% |

---

<sup>1</sup> Tax-exempt income for investment securities has been adjusted to a fully tax-equivalent basis (FTE), using a Federal income tax rate of 21%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refer to the Reconcilement of Non-GAAP Measures table at the end of this release.

<sup>2</sup> Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities.

<sup>3</sup> Net interest margin (FTE) is net interest income expressed as a percentage of average earning assets.

Page 11 of 11

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**VIRGINIA NATIONAL BANKSHARES CORPORATION**

**RECONCILIATION OF CERTAIN QUARTERLY NON-GAAP FINANCIAL MEASURES** 

**(dollars in thousands)**

**(Unaudited)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
|  | **December 31,<br>2022** | **September 30, 2022** | **June 30, 2022** | **March 31, 2022** | **December 31, 2021** |
| **Fully tax-equivalent measures** |  |  |  |  |  |
| Net interest income | $15384 | $14277 | $12461 | $11425 | $12359 |
| Fully tax-equivalent adjustment | 86 | 83 | 82 | 65 | 78 |
| Net interest income (FTE) 1 | $15470 | $14360 | $12543 | $11490 | $12437 |
| Efficiency ratio 2 | 52.0% | 57.3% | 58.6% | 62.3% | 58.0% |
| Fully tax-equivalent adjustment | -0.3% | -0.3% | -0.3% | -0.3% | -0.3% |
| Efficiency ratio (FTE) 3 | 51.7% | 57.0% | 58.3% | 62.0% | 57.7% |
| Net interest margin | 3.89% | 3.45% | 3.00% | 2.57% | 2.70% |
| Fully tax-equivalent adjustment | 0.02% | 0.02% | 0.02% | 0.02% | 0.02% |
| Net interest margin (FTE) 1 | 3.91% | 3.47% | 3.02% | 2.59% | 2.72% |
|  | **As of** | **As of** | **As of** | **As of** | **As of** |
|  | **December 31,<br>2022** | **September 30, 2022** | **June 30, 2022** | **March 31, 2022** | **December 31, 2021** |
| **Other financial measures** |  |  |  |  |  |
| ALLL to gross loans | 0.59% | 0.58% | 0.57% | 0.58% | 0.56% |
| Impact of acquired loans and fair value mark | 0.31% | 0.32% | 0.34% | 0.37% | 0.39% |
| ALLL to gross loans, excluding acquired loans and fair value mark (non-GAAP) | 0.90% | 0.90% | 0.91% | 0.95% | 0.95% |
| ALLL to gross loans | 0.59% | 0.58% | 0.57% | 0.58% | 0.56% |
| Fair value mark to gross loans | 1.70% | 1.80% | 1.82% | 1.77% | 1.74% |
| ALLL + fair value mark to gross loans (non-GAAP) | 2.29% | 2.38% | 2.39% | 2.35% | 2.30% |
| Book value per share | $25.05 | $23.65 | $25.20 | $27.42 | $30.50 |
| Impact of intangible assets | (2.69) | (2.88) | (2.96) | (3.05) | $(3.14) |
| Tangible book value per share (non-GAAP) | $22.36 | $20.77 | $22.24 | $24.37 | $27.36 |

---

<sup>1</sup>FTE calculations use a Federal income tax rate of 21%.

<sup>2</sup>The efficiency ratio, GAAP basis, is computed by dividing noninterest expense by the sum of net interest income and noninterest income.

<sup>3</sup>The efficiency ratio, FTE, is computed by dividing noninterest expense by the sum of net interest income (FTE) and noninterest income.

Page 12 of 11

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**VIRGINIA NATIONAL BANKSHARES CORPORATION**

**RECONCILIATION OF CERTAIN ANNUAL NON-GAAP FINANCIAL MEASURES** 

**(dollars in thousands, except per share data)**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the Twelve Months Ended** | **For the Twelve Months Ended** |
|  | **December 31, 2022** | **December 31, 2021** |
| **Fully tax-equivalent measures** |  |  |
| Net interest income | $53547 | $44988 |
| Fully tax-equivalent adjustment | 333 | 271 |
| Net interest income (FTE) 1 | $53880 | $45259 |
| Efficiency ratio 2 | 57.4% | 76.7% |
| Fully tax-equivalent adjustment | -0.3% | -0.4% |
| Efficiency ratio (FTE) 3 | 57.1% | 76.3% |
| Net interest margin | 3.19% | 2.92% |
| Fully tax-equivalent adjustment | 0.02% | 0.02% |
| Net interest margin (FTE) 1 | 3.21% | 2.94% |

---

<sup>1</sup>FTE calculations use a Federal income tax rate of 21%.

<sup>2</sup>The efficiency ratio, GAAP basis, is computed by dividing noninterest expense by the sum of net interest income and noninterest income.

<sup>3</sup>The efficiency ratio, FTE, is computed by dividing noninterest expense by the sum of net interest income (FTE) and noninterest income.

Page 13 of 11

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