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What changed in Virginia National Bankshares Corp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Virginia National Bankshares Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+242 added−269 removedSource: 10-K (2026-03-27) vs 10-K (2025-03-28)

Top changes in Virginia National Bankshares Corp's 2025 10-K

242 paragraphs added · 269 removed · 197 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

44 edited+23 added−32 removed132 unchanged
Biggest changeIn 2016, the SEC and the federal banking agencies proposed rules that prohibit covered financial institutions (including bank holding companies and banks) from establishing or maintaining incentive-based compensation arrangements that encourage inappropriate risk-taking by providing covered persons (consisting of senior executive officers and significant risk takers, as defined in the rules) with excessive compensation, fees or benefits that could lead to material financial loss to the financial institution.
Biggest changeThe Dodd-Frank Act required the federal banking agencies and the SEC to establish joint regulations or guidelines for financial institutions, such as the Bank, to prohibit incentive-based payment arrangements that encourage inappropriate risk taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.
The Basel III Final Rules also include a requirement that banks maintain additional capital known as the “capital conservation buffer.” 11 The Basel III Final Rules and capital conservation buffer require banks and bank holding companies to maintain: i. a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% capital conservation buffer (which is added to the minimum CET1 ratio, effectively resulting in a required ratio of CET1 to risk-weighted assets of at least 7.0%); ii. a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer (effectively resulting in a required Tier 1 capital ratio of 8.5%); iii. a minimum ratio of total (that is, Tier 1 plus Tier 2) capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer (effectively resulting in a required total capital ratio of 10.5%), and iv. a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average total assets, subject to certain adjustments and limitations.
The Basel III Final Rules also include a requirement that banks maintain additional capital known as the “capital conservation buffer.” The Basel III Final Rules and capital conservation buffer require banks and bank holding companies to maintain: 11 i. a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% capital conservation buffer (which is added to the minimum CET1 ratio, effectively resulting in a required ratio of CET1 to risk-weighted assets of at least 7.0%); ii. a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer (effectively resulting in a required Tier 1 capital ratio of 8.5%); iii. a minimum ratio of total (that is, Tier 1 plus Tier 2) capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer (effectively resulting in a required total capital ratio of 10.5%), and iv. a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average total assets, subject to certain adjustments and limitations.
Notification is required for incidents that have 15 materially affected or are reasonably likely to materially affect the viability of a banking organization’s operations, its ability to deliver banking products and services, or the stability of the financial sector.
Notification is required for incidents that have materially affected or are reasonably likely to materially affect the viability of a banking organization’s operations, its ability 15 to deliver banking products and services, or the stability of the financial sector.
The CFPB supervises and regulates providers of consumer financial products and services, and has rulemaking authority in connection with numerous federal consumer financial protection laws (for example, but not limited to, the Truth-in-Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), the Electronic Funds Transfer Act (EFTA), the Equal Credit Opportunity Act (ECOA), the Home Ownership and Equity Protection 16 Act (HOEPA), the Fair Credit and Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA) and the Home Mortgage Disclosure Act (HMDA)).
The CFPB supervises and regulates providers of consumer financial products and services, and has rulemaking authority in connection with numerous federal consumer financial protection laws (for example, but not limited to, the Truth-in-Lending Act (TILA), the Real Estate Settlement Procedures Act (RESPA), the Electronic Funds Transfer Act (EFTA), the Equal Credit Opportunity Act (ECOA), the Home Ownership and Equity Protection Act (HOEPA), the Fair Credit and Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA) and the Home Mortgage Disclosure Act (HMDA)).
Small creditors are those financial institutions that meet the following requirements: (i) have assets below $2 billion (adjustable annually by CFPB); (ii) originated no more than 2 thousand first-lien, closed-end residential mortgages 17 subject to the ability-to-repay requirements in the preceding calendar year; and (iii) hold the qualified mortgage loan in its portfolio after origination.
Small creditors are those financial institutions that meet the following requirements: (i) have assets below $2 billion (adjustable annually by CFPB); (ii) originated no more than 2 thousand first-lien, closed-end residential mortgages subject to the ability-to-repay requirements in the preceding calendar year; and (iii) hold the qualified mortgage loan in its portfolio after origination.
The rule sets forth timing requirements for delivery of annual privacy notices in the event that a financial institution that qualified for the annual notice exemption later changes its policies or practices in such a way that it no longer qualifies for the exemption. Data privacy and data protection are areas of increasing state legislative focus.
The rule sets forth timing requirements for delivery of annual privacy notices in the event that a financial institution that qualified for the annual notice exemption later changes its policies or practices in such a way that it no longer qualifies for the exemption. 14 Data privacy and data protection are areas of increasing state legislative focus.
In general, the guidelines require, among other things, appropriate systems and practices to identify and manage the risk and exposures specified in the guidelines. Capital Requirements . The Federal Reserve imposes certain capital requirements on bank holding companies under the BHCA, including a minimum leverage ratio and a minimum ratio of “qualifying” capital to risk-weighted assets.
In general, the guidelines require, among other things, appropriate systems and practices to identify and manage the risk and exposures specified in the guidelines. 10 Capital Requirements . The Federal Reserve imposes certain capital requirements on bank holding companies under the BHCA, including a minimum leverage ratio and a minimum ratio of “qualifying” capital to risk-weighted assets.
In determining whether a particular activity is permissible, the Federal Reserve must consider whether the performance of such an activity reasonably can be expected to produce benefits to the public that outweigh possible adverse effects. Possible benefits include greater convenience, increased competition, and gains in efficiency.
In determining whether a particular activity is permissible, the Federal Reserve must consider whether the performance of such an activity reasonably can be expected to produce benefits to the public that outweigh possible adverse 9 effects. Possible benefits include greater convenience, increased competition, and gains in efficiency.
Among other things, these loans must be made on terms substantially the same as those prevailing on transactions made to unaffiliated individuals and certain extensions of credit to those persons must first be approved in advance by a disinterested majority of the entire Board of Directors.
Among other things, these loans must be made on terms substantially the same as those prevailing on transactions made to unaffiliated individuals and certain extensions of credit to those persons must first be approved in advance by a disinterested majority of the entire Board.
Further, a change in the manner in which laws, regulations and regulatory guidance are interpreted by regulatory agencies or courts may have a material impact on the Company’s business, operations and earnings. 9 Permitted Activities .
Further, a change in the manner in which laws, regulations and regulatory guidance are interpreted by regulatory agencies or courts may have a material impact on the Company’s business, operations and earnings. Permitted Activities .
These and additional mandatory and permissive supervisory actions may be taken with respect to significantly undercapitalized and critically undercapitalized institutions. The Bank met the definition of being “well capitalized” as of December 31, 2024. As described above in “The Bank – Regulatory Capital Requirements,” the capital rules issued by the OCC incorporate new requirements into the prompt corrective action framework.
These and additional mandatory and permissive supervisory actions may be taken with respect to significantly undercapitalized and critically undercapitalized institutions. The Bank met the definition of being “well capitalized” as of December 31, 2025. As described above in “The Bank – Regulatory Capital Requirements,” the capital rules issued by the OCC incorporate new requirements into the prompt corrective action framework.
In July 2023, the Federal Reserve and the FDIC issued proposed rules to implement the final components of the Basel III agreement, often known as the “Basel III endgame.” These proposed rules contain provisions that apply to banks with $100 billion or more in total assets and that will significantly alter how those banks calculate risk-based assets.
In July 2023, the Federal Reserve and the FDIC issued proposed rules to implement the final components of the Basel III agreement, often known as the “Basel III endgame.” These proposed rules contain provisions that apply to banks with $100 billion or more in total assets and that would significantly alter how those banks calculate risk-based assets.
In addition, the rule requires a bank service provider to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect banking organization customers for four or more hours. The rule became effective on May 1, 2022.
In addition, the rule requires a bank service provider to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect banking organization customers for four or more hours. The rule became effective on May 1, 2022. Stress Testing.
Employees The Company has a shared vision of guiding principles, core values and strategies that work and have guided the Company through both good and challenging times. The Company strives to ensure that its constituents, including its shareholders, customers, board, executive management and high performing employees, believe in it as well.
Employees The Company has a shared vision of guiding principles, core values and strategies that work and have guided the Company through both good and challenging times. The Company strives to ensure that its constituents, including its shareholders, 8 customers, Board of Directors ("Board"), executive management and high performing employees, believe in it as well.
Each FHLB makes loans to members in accordance with policies and procedures established by the Board of Directors of the FHLB. As a member, the Bank must purchase and maintain stock in the FHLB. At December 31, 2024, the Bank owned $2.1 million of FHLB stock. Consumer Financial Protection .
Each FHLB makes loans to members in accordance with policies and procedures established by the Board of Directors of the FHLB. As a member, the Bank must purchase and maintain stock in the FHLB. At December 31, 2025, the Bank owned $2.1 million of FHLB stock. Consumer Financial Protection .
As of December 31, 2024, the Bank has not elected to apply the CBLR framework, but the Bank continues to assess the potential impact of opting in to the CBLR framework as part of its ongoing capital management and planning processes. Small Bank Holding Company Policy Statement .
As of December 31, 2025, the Bank has not elected to apply the CBLR framework, but the Bank continues to assess the potential impact of opting in to the CBLR framework as part of its ongoing capital management and planning processes. Small Bank Holding Company Policy Statement .
At December 31, 2024, 35% of the Company's employees have been employed by the Company or its subsidiaries for at least 10 years. The Company owns BOLI policies on each executive officer and certain other senior officers of the Company.
At December 31, 2025, 35% of the Company's employees have been employed by the Company or its subsidiaries for at least 10 years. The Company owns BOLI policies on each executive officer and certain other senior officers of the Company.
In June 2019, the federal banking agencies issued a final rule to permit insured depository institutions with total assets of less than $5 billion that do not engage in certain complex or international activities to file the most streamlined version of the quarterly call report, and to reduce data reportable on certain streamlined call report submissions.
In June 2019, the federal banking agencies issued a final rule to permit insured depository institutions with total assets of less than $5 billion, such as the Bank, that do not engage in certain complex or international activities to file the most streamlined version of the quarterly call report, and to reduce data reportable on certain streamlined call report submissions.
Currently held in Charlottesville, Virginia, the FCLA runs as an in-person series of classroom meetings. This program is offered free-of-charge to those students accepted into the FCLA. Up to eight students are accepted into each session.
Currently held in Charlottesville, Virginia, the FCLA runs as an in-person series of classroom meetings. This program is offered free-of-charge to those students accepted into the FCLA. Up to ten students are accepted into each session.
Annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, plus any amendments to these reports, are available, free of charge, at www.vnbcorp.com . The Company’s SEC filings are posted and available as soon as reasonably practicable after the reports are filed electronically with the SEC.
Annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, plus any amendments to these reports, are available, free of charge, on the company's website at www.vnb.com . The Company’s SEC filings are posted and available as soon as reasonably practicable after the reports are filed electronically with the SEC.
The Bank exceeds the thresholds to be considered well capitalized as of December 31, 2024. See “Prompt Corrective Action” below.
The Bank exceeds the thresholds to be considered well capitalized as of December 31, 2025. See “Prompt Corrective Action” below.
We strive for the Company's workforce to reflect the diversity of the customers and communities we serve. The Company's selection and promotion process are without bias and include the active recruitment of minorities and women. At December 31, 2024, women represented 75% of the Company's employees and racial and ethnic minorities represented 17% of the Company's employees.
We strive for the Company's workforce to reflect the diversity of the customers and communities we serve. The Company's selection and promotion process are without bias and include the active recruitment of minorities and women. At December 31, 2025, women represented 75% of the Company's employees and racial and ethnic minorities represented 22% of the Company's employees.
Banks with less than $5 billion of uninsured deposits, such as the Bank, are exempt from this special assessment. In 2024 and 2023, the Company expensed $700 thousand and $710 thousand, respectively, in deposit insurance assessments. Transactions with Affiliates .
Banks with less than $5 billion of uninsured deposits, such as the Bank, are exempt from this special assessment. In 2025 and 2024, the Company expensed $785 thousand and $700 thousand, respectively, in deposit insurance assessments. Transactions with Affiliates .
The Bank is committed to being a reliable and consistent source of credit, providing loans that are priced based upon an overall banking relationship, easy access to the Bank’s local decision makers who possess strong local market knowledge, local delivery, fast response, and continuity in the banking relationship.
The Bank is committed to being a reliable and consistent source of credit, providing loans that are priced based upon an overall banking relationship, easy access to the Bank’s local decision makers who possess strong local market knowledge, local delivery, fast response, and continuity in the banking relationship. 7 Trust and estate administration services are offered through VNB Trust and Estate Services.
To 8 attract and retain high performing employees, the Company provides a competitive compensation and benefits program, including wellness benefits. At December 31, 2024, the Company had 146 full-time equivalent employees, of which 9 were part-time employees. None of its employees are represented by any collective bargaining unit. The Company considers relations with its employees to be good.
To attract and retain high performing employees, the Company provides a competitive compensation and benefits program, including wellness benefits. At December 31, 2025, the Company had 140 full-time employees and 8 part-time employees. None of its employees are represented by any collective bargaining unit. The Company considers relations with its employees to be good.
For example, under the Federal Deposit Insurance Company Improvement Act of 1991, to avoid receivership of an insured depository institution subsidiary, a bank holding company is required to guarantee the compliance of any subsidiary bank that may become “undercapitalized” with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal bank regulatory agency up to the lesser of (i) an amount equal to 5% of the institution’s total assets at the time the institution became undercapitalized, or (ii) the amount that is necessary (or would have been necessary) to bring the institution into compliance with all applicable capital standards as of the time the institution fails to comply with such capital restoration plan. 10 Under the Federal Deposit Insurance Act, the federal bank regulatory agencies have adopted guidelines prescribing safety and soundness standards.
For example, under FDICIA, to avoid receivership of an insured depository institution subsidiary, a bank holding company is required to guarantee the compliance of any subsidiary bank that may become “undercapitalized” with the terms of any capital restoration plan filed by such subsidiary with its appropriate federal bank regulatory agency up to the lesser of (i) an amount equal to 5% of the institution’s total assets at the time the institution became undercapitalized, or (ii) the amount that is necessary (or would have been necessary) to bring the institution into compliance with all applicable capital standards as of the time the institution fails to comply with such capital restoration plan.
Trust and estate administration services are offered through VNB Trust and Estate Services. 7 The Company primarily serves the Virginia communities in and around the cities of Charlottesville, Winchester, Manassas and Richmond, and the counties of Albemarle, Fauquier, Frederick and Prince William. Refer to Item 2. Properties for additional information regarding locations. The Bank’s locations are well-positioned in attractive markets.
The Company primarily serves the Virginia communities in and around the cities of Charlottesville, Winchester, Manassas and Richmond, and the counties of Albemarle, Fauquier, Frederick and Prince William. Refer to Item 2. Properties for additional information regarding locations. The Bank’s locations are well-positioned in attractive markets.
The scope of the laws and regulations, and the intensity of the supervision to which the Company and its subsidiaries are subject, have increased in recent years, initially in response to the 2008 financial crisis, and more recently in light of other factors, including continued turmoil and stress in the financial markets, technological factors, market changes, and increased scrutiny of proposed bank mergers and acquisitions by federal and state bank regulators.
The scope of the laws and regulations, and the intensity of the supervision to which the Company and its subsidiaries are subject, have increased in recent years, initially in response to the 2008 financial crisis, and more recently in light of other factors, including continued turmoil and stress in the financial markets, technological factors and market changes.
The Company expects that its trust preferred securities will be included in the Company’s regulatory capital as Tier 1 capital instruments until their maturity. The Tier 1, CET1, total capital to risk-weighted assets, and leverage ratios of the Company were 17.94%, 17.94%, 18.77% and 11.68%, respectively, as of December 31, 2024, thus exceeding the minimum requirements.
The Company expects that its trust preferred securities will be included in the Company’s regulatory capital as Tier 1 capital instruments until their maturity. The Tier 1, CET1, total capital to risk-weighted assets, and leverage ratios of the Company were 19.60%, 19.60%, 20.42% and 12.52%, respectively, as of December 31, 2025, thus exceeding the minimum requirements.
If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions.
Such legislation could change banking statutes and the operating environment of the Company and the Bank in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities, or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions.
Progressively lower assessment rate schedules will take effect when the reserve ratio reaches 2%, and again when it reaches 2.5%. 13 In November 2023, the FDIC issued a final rule to implement a special DIF assessment following the FDIC’s use of the “systemic risk” exception to the least-cost resolution test in connection with the failures and resolutions of Silicon Valley Bank and Signature Bank.
In November 2023, the FDIC issued a final rule to implement a special DIF assessment following the FDIC’s use of the “systemic risk” exception to the least-cost resolution test in connection with the failures and resolutions of Silicon Valley 13 Bank and Signature Bank.
The Tier 1, CET1, total capital to risk-weighted assets, and leverage ratios of the Bank were 17.77%, 17.77%, 18.60% and 11.55%, respectively, as of December 31, 2024, also exceeding the minimum requirements.
The Tier 1, CET1, total capital to risk-weighted assets, and leverage ratios of the Bank were 19.36%, 19.36%, 20.19% and 12.36%, respectively, as of December 31, 2025, also exceeding the minimum requirements.
The Federal Reserve Board may, in its discretion, exclude any bank holding company from the application of the Small Bank Holding Company Policy Statement if such action is warranted for supervisory purposes.
The Federal Reserve Board may, in its discretion, exclude any bank holding company from the application of the Small Bank Holding Company Policy Statement if such action is warranted for supervisory purposes. The policy statement, among other things, exempts certain bank holding companies from minimum consolidated regulatory capital ratios that apply to other bank holding companies.
Under the CRA, institutions are assigned a rating of “outstanding,” “satisfactory,” “needs to improve,” or “substantial non-compliance.” The Bank received a “satisfactory” CRA rating in its most recent examination.
Under the CRA, institutions are assigned a rating of “outstanding,” “satisfactory,” “needs to improve,” or “substantial non-compliance.” The Bank received a “satisfactory” CRA rating in its most recent examination. On October 24, 2023, the federal bank regulatory agencies issued a final rule to modernize their respective CRA regulations.
References to the Company’s subsidiaries in this document include both the Bank and Masonry Capital. In addition, the Company owns Fauquier Statutory Trust II (“Trust II”), which is an unconsolidated subsidiary. The subordinated debt owed to Trust II is reported as a liability of the Company.
In addition, the Company owns Fauquier Statutory Trust II (“Trust II”), which is an unconsolidated subsidiary. The subordinated debt owed to Trust II is reported as a liability of the Company. The main offices of the Company, the Bank and VNB Trust and Estate Services, as well as corporate and Bank operations, are located in Charlottesville, Virginia.
The Company continues to experience ongoing regulatory reform and these regulatory changes could have a significant effect on how the Company and the Bank conduct business. The specific impacts of regulatory reforms cannot yet be fully predicted and will depend to a large extent on the specific regulations that are likely to be adopted in the future.
These regulatory changes could have significant effects on how the Company and the Bank conduct business. The specific impacts of regulatory reforms, and whether they will last, cannot yet be fully predicted.
Under this rule, certain qualifying financial institutions are not required to provide annual privacy notices to customers. To qualify, a financial institution must not share nonpublic personal information about customers except as described in certain statutory exceptions which do not trigger a customer’s statutory opt-out right.
To qualify, a financial institution must not share nonpublic personal information about customers except as described in certain statutory exceptions which do not trigger a customer’s statutory opt-out right. In addition, the financial institution must not have changed its disclosure policies and practices from those disclosed in its most recent privacy notice.
The Company, as a small creditor, does comply with the “qualified mortgage rules” and the other applicable TILA requirements. Incentive Compensation .
The Company, as a small creditor, does comply with the “qualified mortgage rules” and the other applicable TILA requirements. Incentive Compensation . The federal banking agencies have issued guidance on sound incentive compensation policies that applies to all banking organizations supervised by the agencies including the Company and the Bank.
The proposed rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products and services. Based on its expected asset size, the Company expects to begin complying with this rule in 2028 or 2029.
The proposed rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products and services. On the same day the final rule was released, certain industry participants filed a complaint against the CFPB challenging the final rule.
A financial institution must provide to its customers information regarding its policies and procedures with respect to the handling of customers’ personal information. Each institution must conduct an internal risk assessment of its ability to protect customer information.
The Company and the Bank are subject to various laws and regulations that address the privacy of nonpublic personal financial information of customers. A financial institution must provide to its customers information regarding its policies and procedures with respect to the handling of customers’ personal information.
Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system. Such legislation could change banking statutes and the operating environment of the Company and the Bank in substantial and unpredictable ways.
Future Regulation From time-to-time, various legislative and regulatory initiatives are introduced in Congress and state legislatures, as well as by regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies and depository institutions or proposals to substantially change the financial institution regulatory system.
These privacy laws and regulations generally prohibit a financial institution from providing a customer’s personal financial information to unaffiliated parties without prior notice and approval from the customer. 14 The CFPB published its final rule to update Regulation P pursuant to the amended Gramm-Leach-Bliley Act in 2018.
Each institution must conduct an internal risk assessment of its ability to protect customer information. These privacy laws and regulations generally prohibit a financial institution from providing a customer’s personal financial information to unaffiliated parties without prior notice and approval from the customer.
As a result of the interim final rule, which was effective August 30, 2018, the Company expects that it will be treated as a small bank holding company and will not be subject to regulatory capital requirements.
The Company expects that it will continue to be treated as a small bank holding company under the policy statement and will not be subject to regulatory capital requirements. The Bank remains subject to the regulatory capital requirements described above. 12 Prompt Corrective Action .
Proposals to change the laws, regulations and policies governing the banking industry are frequently raised at both the state and federal levels.
Proposals to change the laws, regulations and policies governing the banking industry are frequently raised at both the state and federal levels. The second Trump administration has implemented significantly different policies from the Biden administration, including new proposed regulations and rescissions or withdrawals of previous guidance, and sharply reduced the workforce at the federal banking agencies.
Removed
The main offices of the Company, the Bank and VNB Trust Estate Services, as well as corporate and Bank operations, are located in Charlottesville, Virginia.
Added
Under the FDIA, the federal bank regulatory agencies have adopted guidelines prescribing safety and soundness standards.
Removed
The Trump administration may seek to implement a regulatory reform agenda that is significantly different than the agenda and policies of the previous administration, which the Company expects may significantly impact the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies. On January 20, 2025, President Donald J.
Added
In light of the adverse reaction to the proposal, the Federal Reserve announced that it would publish a re-proposal of its regulations finalizing the Basel III standards. That re-proposal is expected in early 2026.
Removed
Trump issued a presidential memorandum titled “Regulatory Freeze Pending Review” that directs federal agencies to (1) not propose or issue any rules until they are reviewed and approved by a department or agency head appointed by the President, (2) immediately withdraw any unpublished rules to allow for the review by a department or agency head as described above, and (3) consider postponing for 60 days from the date of the executive order the effective date for any rules that have been published in the Federal Register, or any rules that have been issued but have not taken effect, to allow for review of any questions of fact, law or policy.
Added
The extent to which the re-proposal would impact institutions of the Company’s size is unknown since the original proposal applied to bank holding companies with assets of $100 billion or more. Community Bank Leverage Ratio.
Removed
Subsequent to that presidential memorandum, the administration has taken actions that have reduced available staffing at certain regulatory agencies, and reduced the current regulatory and enforcement activities of certain regulatory agencies, among other substantive impacts.
Added
Progressively lower assessment rate schedules will take effect when the reserve ratio reaches 2%, and again when it reaches 2.5% .
Removed
In September 2024, the OCC approved a final rule updating its regulation for business combinations involving national banks and a policy statement clarifying its review of applications under the Bank Merger Act. The future effectiveness of the OCC’s final rule and policy statement remains unclear.
Added
The revised rules would have substantially altered the methodology for assessing compliance with the CRA, and likely would have made it more challenging and/or costly for the Bank to maintain its “satisfactory” rating. Following its finalization on March 29, 2024, the 2023 modernization rule became subject to an ongoing injunction.
Removed
These proposed rules do not apply to holding companies or banks with less than $100 billion in assets, such as the Company and the Bank, but the final impacts of these rules cannot yet be predicted. The comment window for these proposed rules closed on January 16, 2024. Community Bank Leverage Ratio.
Added
On July 16, 2025, the federal bank regulatory agencies issued a joint proposal to rescind the 2023 modernization rule. The agencies continue to apply the CRA rules as they existed before the 2023 modernization, considering the injunction and pending finalization of the rescission of the modernization rule. Confidentiality of Customer Information .
Removed
In August 2018, the Federal Reserve Board issued an interim final rule to apply the Small Bank Holding Company Policy Statement to bank holding companies with consolidated total assets of less than $3 billion. The policy statement, which, among other things, exempts certain bank holding companies from minimum consolidated regulatory capital ratios that apply to other bank holding companies.
Added
The CFPB published its final rule to update Regulation P pursuant to the amended Gramm-Leach-Bliley Act in 2018. Under this rule, certain qualifying financial institutions are not required to provide annual privacy notices to customers.
Removed
The comment period on the interim final rule closed on October 29, 2018, and, to date, the Federal Reserve 12 Board has not issued a final rule to replace the interim final rule. The Bank remains subject to the regulatory capital requirements described above. Prompt Corrective Action .
Added
The litigation is currently stayed while the CFPB considers revisions to the rule. Based on its expected asset size, the Company would have been required to comply with this rule in 2028 or 2029.
Removed
On October 24, 2023, the federal banking regulatory agencies jointly issued a final rule to modernize CRA regulations consistent with the following key goals: (i) to encourage banks to expand access to credit, investment, and banking services in low-income and moderate-income communities; (ii) to adapt to changes in the banking industry, including internet and mobile banking and the growth of non-branch delivery systems; (iii) to provide greater clarity and consistency in the application of the CRA regulations, including adoption of a new metrics-based approach to evaluating bank retail lending and community development financing; and (iv) to tailor CRA evaluations and data collection to bank size and type, recognizing that differences in bank size and business models may impact CRA evaluations and qualifying activities.
Added
The precise effect of the CFPB’s consumer protection activities on the Company and the Bank cannot be determined with certainty. During 2025, the CFPB reduced its staff by over 80%. The reduction in force is the subject of litigation, and the staffing cuts are currently stayed pending the federal circuit court’s rehearing of the case.
Removed
Most of the final CRA rule’s requirements will be applicable beginning January 1, 2026, with certain requirements, including the data reporting requirements, applicable as of January 1, 2027.
Added
The impact of these developments on banking organizations is uncertain. States and state attorneys general may increase regulatory, investigative and enforcement activity with respect to consumer protection, in response to changes in regulation, supervision and enforcement of consumer protection laws by federal regulators.
Removed
The Bank is evaluating the expected impact of the modernized CRA regulations, but currently does not anticipate any material impact to its business, operations or financial condition due to the modified CRA regulations. The legality of the modernized CRA regulations is being challenged and a preliminary injunction against enforcing new rules implementing the modified CRA regulations has been granted.
Added
Notwithstanding ongoing, legal, budgetary and structural challenges affecting the CFPB, the CFPB remains an active federal regulatory agency with continuing supervisory and enforcement authority and retains its broad authority to pursue enforcement actions, including investigations, civil actions and cease and desist proceedings. The CFPB may also refer civil and criminal findings to the Department of Justice for prosecution.
Removed
In addition, the updated CRA regulations may be impacted by the presidential memorandum entitled “Regulatory Freeze Pending Review” described above. Confidentiality of Customer Information . The Company and the Bank are subject to various laws and regulations that address the privacy of nonpublic personal financial information of customers.
Added
The Bank is also subject to other federal and state 16 consumer protection laws and regulations that, among other things, prohibit unfair, deceptive and abusive, corrupt or fraudulent business practices, untrue or misleading advertising and unfair competition. Mortgage Banking Regulation.
Removed
In addition, the financial institution must not have changed its disclosure policies and practices from those disclosed in its most recent privacy notice.
Added
Pursuant to the guidance, to be consistent with safety and soundness principles, a banking organization’s incentive compensation arrangements should: (i) provide employees with incentives that appropriately balance risk and reward; (ii) be compatible with effective controls and risk management; and (iii) be supported by strong corporate governance including active and effective oversight by the banking organization’s board of directors.
Removed
Corporate Transparency Act On January 1, 2021, as part of the 2021 National Defense Authorization Act, Congress enacted the Corporate Transparency Act (“CTA”), which requires the Financial Crimes Enforcement Network (“FinCEN”) to issue regulations implementing reporting requirements for “reporting companies” (as defined in the CTA) to disclose beneficial ownership interests of certain U.S. and foreign entities by January 1, 2022.
Added
Monitoring methods and processes used by a banking organization should be commensurate with the size and complexity of the organization and its use of incentive compensation.
Removed
The CTA imposes additional reporting requirements on entities not previously subject to such beneficial ownership disclosure regulations and also contains exemptions for several different types of entities, including among others: (i) certain banks, bank holding companies, and credit unions; (ii) money transmitting businesses registered with FinCEN; and (iii) certain insurance companies.
Added
Despite numerous proposals, no regulation has been finalized. Pursuant to SEC regulations, the Company adopted a “clawback” policy with respect to the recovery of incentive-based compensation paid to current or former executive officers in the event of material noncompliance with any financial reporting requirement under the securities laws.
Removed
Reporting companies subject to the CTA are required to provide specific information with respect to beneficial owner(s) (as defined in the CTA) as well as satisfy initial filing obligations (for newly-formed reporting companies) and submit on-going periodic reports. Non-compliance with FinCEN regulations promulgated under the CTA may result in civil fines and criminal penalties.
Added
A copy of our clawback policy is included as Exhibit 97 to this Annual Report on 10-K. The Federal Reserve will review, as part of its standard, risk-focused examination process, the incentive compensation arrangements of financial institutions, such as the Company.
Removed
On September 29, 2022, FinCEN issued a final rule to implement the beneficial ownership reporting requirements of the CTA, which became effective January 1, 2024, and would have required reporting of beneficial ownership for entities that were formed or first registered prior to 2024 by January 1, 2025.
Added
These reviews will be tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements. Deficiencies will be incorporated into the organization’s supervisory ratings, which can affect the organization’s ability to 17 make acquisitions and take other actions.
Removed
Beginning in December 2024, U.S. federal courts have issued preliminary injunctions against enforcement of the CTA, including a stay of the beneficial ownership reporting requirements pending resolution of a lawsuit challenging the CTA’s constitutionality. On February 18, 2025, the U.S.
Added
Enforcement actions may be taken against a banking organization if its incentive compensation arrangements, or related risk-management control or governance processes, pose a risk to the organization’s safety and soundness and the organization is not taking prompt and effective measures to correct the deficiencies. Fair Access to Financial Services .

… 19 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+11 added−17 removed133 unchanged
Biggest changeMoreover, a portion of these loans have been made by the Company in recent years and the borrowers may not have experienced a complete business or economic cycle. Any deterioration of the borrowers’ businesses may hinder their ability to repay their loans with the Company, which could have a material adverse effect on its financial condition and results of operations.
Biggest changeAny deterioration of the borrowers’ businesses may hinder their ability to repay their loans with the Company, which could have a material adverse effect on its financial condition and results of operations. Steps to mitigate such risks include underwriting multiple sources of repayment, including but not limited to, business cash flow, personal guarantees, collateral, and government guarantees, where applicable.
The following discussion, along with management’s discussion and analysis, the information contained in “Forward Looking Statements and Factors that Could Affect Future Results,” and the financial statements and footnotes, sets forth the most significant risks and uncertainties that management believes could adversely affect the Company’s business, financial condition or results of operations, and that investors in the Company’s securities should carefully consider.
The following discussion, along with management’s discussion and analysis, the information contained in “Forward-Looking Statements and Factors that Could Affect Future Results,” and the financial statements and footnotes, sets forth the most significant risks and uncertainties that management believes could adversely affect the Company’s future business, financial condition or results of operations, and that investors in the Company’s securities should carefully consider.
Any deterioration in economic conditions, in particular a prolonged economic slowdown within the Company’s geographic region or a broader disruption in the economy, possibly as a result of a pandemic or other widespread public health emergency, acts of terrorism, or outbreak of domestic or international hostilities (including the ongoing military conflicts between Russia and Ukraine or and in the Middle East), or unanticipated events in the banking industry, such as high-profile bank failures in 2023, could result in the following consequences, any of which could hurt business materially; declines in real estate values and home sales and increases in the financial stress on borrowers and unemployment rates, all of which could lead to increases in loan delinquencies, problem assets and foreclosures, and a deterioration in the value of collateral for loans made by the Company's various business segments; an increase in the level of loan losses exceeding the level the Company has provided in its ACL, which would reduce the Company’s earnings; a decline in demand for the Company's products and services; changes in the fair value of financial instruments held by the Company or its subsidiaries; or declines in available sources or amounts of liquidity and funding.
Any deterioration in economic conditions, in particular a prolonged economic slowdown within the Company’s geographic region or a broader disruption in the economy, possibly as a result of a pandemic or other widespread public health emergency, acts of terrorism, or outbreak of domestic or international hostilities (including the ongoing military conflicts between Russia and Ukraine and in the Middle East), or unanticipated events in the banking industry, such as high-profile bank failures in 2023, could result in the following consequences, any of which could hurt business materially: declines in real estate values and home sales and increases in the financial stress on borrowers and unemployment rates, all of which could lead to increases in loan delinquencies, problem assets and foreclosures, and a deterioration in the value of collateral for loans made by the Company's various business segments; an increase in the level of loan losses exceeding the level the Company has provided in its ACL, which would reduce the Company’s earnings; a decline in demand for the Company's products and services; changes in the fair value of financial instruments held by the Company or its subsidiaries; or declines in available sources or amounts of liquidity and funding.
An inability to raise additional capital on acceptable terms when needed could have a material adverse impact on the Company’s business, financial condition and results of operations. 23 Strategic Risks The Company faces strong and growing competition from financial services companies and other companies that offer banking and other financial services, which could negatively affect the Company’s business.
An inability to raise additional capital on acceptable terms when needed could have a material adverse impact on the Company’s business, financial condition and results of operations. 23 Strategic Risks The Company faces strong and growing competition from financial institutions and other companies that offer banking and other financial services, which could negatively affect the Company’s business.
Steps to mitigate such risks include underwriting multiple sources of repayment, including but not limited to, business cash flow, personal guarantees, collateral, and government guarantees, where applicable. In addition, the Company has established concentration limits that are regularly monitored by management and reported to the Board.
Steps to mitigate such risks include underwriting multiple sources of repayment, including but not limited to, business cash flow, personal guarantees, collateral, and government guarantees, where applicable. In addition, the Company has established concentration limits that are regularly monitored by management and reported to 20 the Board.
Other changes to statutes, regulations or regulatory policies or supervisory guidance, including changes in interpretation or implementation of statutes, regulations, policies or supervisory guidance, could affect the Company in substantial and unpredictable ways. Such additional regulation and supervision has increased, and may continue to increase, the Company’s costs and limit its ability to pursue business opportunities.
Other changes to statutes, regulations or regulatory policies or supervisory guidance, including changes in interpretation or implementation of statutes, regulations, policies or supervisory guidance, could affect the Company in substantial and unpredictable ways. Additional regulation and supervision has increased, and may continue to increase, the Company’s costs and limit its ability to pursue business opportunities.
Although the Company has taken these mitigation steps, there is no guarantee that such practices will be effective to prevent the increased credit risk. 20 The Company’s results of operations are significantly affected by the ability of borrowers to repay their loans.
Although the Company has taken these mitigation steps, there is no guarantee that such practices will be effective to prevent the increased credit risk. The Company’s results of operations are significantly affected by the ability of borrowers to repay their loans.
Furthermore, as cyber threats continue to evolve and increase, the Company may be required to expend significant additional financial and operational resources to modify or enhance its protective measures, or to investigate and remediate any identified information security vulnerabilities.
Furthermore, as cyber threats continue to evolve and increase, the Company may be required to expend significant 26 additional financial and operational resources to modify or enhance its protective measures, or to investigate and remediate any identified information security vulnerabilities.
A breach in security could result in legal claims, regulatory penalties, disruption 26 in operations, and damage to the Company’s reputation, which could adversely affect its business and financial condition.
A breach in security could result in legal claims, regulatory penalties, disruption in operations, and damage to the Company’s reputation, which could adversely affect its business and financial condition.
In addition, multiple major U.S. retailers have experienced data systems incursions reportedly resulting in the thefts of credit and debit card information, online account information and other financial or privileged data. Retailer incursions affect cards issued and deposit accounts maintained by many banks, including Virginia National Bank.
In addition, multiple major U.S. retailers have experienced data systems incursions reportedly resulting in the thefts of credit and debit card information, online account information and other financial or privileged data. Retailer incursions affect cards issued and deposit accounts maintained by many banks, including the Bank.
There are various regulatory restrictions on the ability of banks, such as the Bank, to pay dividends or make other payments to their holding companies. The Company is currently paying a quarterly cash dividend to holders of its common stock at a rate of $0.33 per share.
There are various regulatory restrictions on the ability of banks, such as the Bank, to pay dividends or make other payments to their holding companies. The Company is currently paying a quarterly cash dividend to holders of its common stock at a rate of $0.36 per share.
The Company also faces competition from many other types of financial institutions, including finance companies, mutual and money market fund providers, brokerage firms, insurance companies, credit unions, financial subsidiaries of certain industrial corporations and financial technology companies. Increased competition may result in reduced business for the Company.
The Company also faces competition from many other types of financial services companies, including finance companies, mutual and money market fund providers, brokerage firms, insurance companies, credit unions, financial subsidiaries of certain industrial corporations and financial technology companies. Increased competition may result in reduced business for the Company.
As of December 31, 2024, approximately 27.4% of the Company's deposits were uninsured and the Company relies on these deposits for liquidity. Accordingly, the Company may be required from time-to-time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations.
As of December 31, 2025, approximately 27.4% of the Company's deposits were uninsured and the Company relies on these deposits for liquidity. Accordingly, the Company may be required from time-to-time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations.
The level of the ACL reflected management’s evaluation of the level of loans outstanding, the level of nonperforming loans, historical loan loss experience, delinquency trends, underlying collateral values, the amount of actual losses charged to the reserve in a given period and assessment of present and anticipated economic conditions.
The level of the ACL reflects management’s evaluation of the level of loans outstanding, the level of nonperforming loans, historical loan loss experience, delinquency trends, underlying collateral values, the amount of actual losses charged to the reserve in a given period and assessment of present and anticipated economic conditions.
The Company had no foreclosed property as of December 31, 2024 or December 31, 2023. 22 Liquidity Risks The Company’s liquidity needs could adversely affect results of operations and financial condition. The Company’s primary sources of funds are deposits and loan repayments.
The Company had no foreclosed property as of December 31, 2025 or December 31, 2024. 22 Liquidity Risks The Company’s liquidity needs could adversely affect results of operations and financial condition. The Company’s primary sources of funds are deposits and loan repayments.
Events in the financial services industry, such as the high-profile bank failures in 2023, may also cause concern 21 and uncertainty about the financial services industry generally, which may result in sudden deposit outflows, increased borrowing and funding costs, and increased competition for liquidity, any of which could have a material adverse impact on the Company’s business, financial condition, and results of operations.] Inflation can have an adverse impact on the Company’s business and on its customers.
Events in the financial services industry, such as the high-profile bank failures in 2023, may also cause concern and uncertainty about the financial services industry generally, which may result in sudden deposit outflows, increased 21 borrowing and funding costs, and increased competition for liquidity, any of which could have a material adverse impact on the Company’s business, financial condition, and results of operations.
Deterioration of economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside the Company’s control, may have required an increase in the ACL.
Deterioration of economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside the Company’s control, may require an increase in the ACL.
The determination of the appropriate level of the ACL inherently involved a high degree of subjectivity and required the Company to make significant estimates of credit risks and future trends, all of which could undergo material changes.
The determination of the appropriate level of the ACL inherently involves a high degree of subjectivity and requires the Company to make significant estimates of credit risks and future trends, all of which could undergo material changes.
The Company is affected by domestic monetary policy. The Federal Reserve regulates the supply of money and credit in the United States, and its policies determine in large part the Company’s cost of funds for lending, investing and capital raising activities and the return it earns on those loans and investments, both of which affect the Company’s net interest margin.
The Federal Reserve regulates the supply of money and credit in the United States, and its policies determine in large part the Company’s cost of funds for lending, investing and capital raising activities and the return it earns on those loans and investments, both of which affect the Company’s net interest margin.
Such category of loans consists of $309.8 million of non-owner occupied commercial real estate, $107.2 million of multifamily and $37.0 million of construction, land development and other land loans. These types of loans are generally viewed as having higher risk of default than residential real estate loans.
Such category of loans consists of $333.7 million of non-owner occupied commercial real estate, $127.8 million of multifamily and $35.0 million of construction, land development and other land loans. These types of loans are generally viewed as having higher risk of default than residential real estate loans.
The Company qualifies as a “smaller reporting company,” and the reduced disclosure obligations applicable to smaller reporting companies may make its common stock less attractive to investors.
The Company qualifies as a “smaller reporting company,” and the reduced disclosure obligations applicable to smaller reporting companies may make its common stock less attractive to investors. The Company is a “smaller reporting company” as defined in federal securities laws.
Accordingly, any failure, or perceived failure, to comply with applicable privacy or data protection laws and regulations may subject the Company to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage the Company’s reputation and otherwise adversely affect its operations, financial condition and results of operations. 28 The Company’s business and earnings are impacted by governmental, fiscal and monetary policy over which it has no control.
Accordingly, any failure, or perceived failure, to comply with applicable privacy or data protection laws and regulations may subject the Company to inquiries, examinations and 28 investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage the Company’s reputation and otherwise adversely affect its operations, financial condition and results of operations.
In addition, any failure to maintain effective controls or to timely effect any necessary improvement of the Company’s internal and disclosure controls could, among other things, result in losses from fraud or error, harm the Company’s reputation or cause investors to lose confidence in its reported financial information, all of which could have a material adverse effect on its results of operation and financial condition. 25 The Company depends on the accuracy and completeness of information about customers and counterparties, and the Company’s financial condition could be adversely affected if it relies on misleading or incorrect information.
In addition, any failure to maintain effective controls or to timely effect any necessary improvement of the Company’s internal and disclosure controls could, among other things, result in losses from fraud or error, harm the Company’s reputation or cause investors to lose confidence in its reported financial information, all of which could have a material adverse effect on its results of operation and financial condition.
Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. The Company is currently facing increased regulation and supervision of its industry. The Dodd-Frank Act instituted major changes to the banking and financial institutions regulatory regimes.
Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. The Dodd-Frank Act instituted major changes to the banking and financial institutions regulatory regimes.
As of December 31, 2024, the Company had approximately $453.9 million in loans secured by non-owner occupied commercial real estate, which represented approximately 36.7% of total loans outstanding at that date and 226% of regulatory capital.
As of December 31, 2025, the Company had approximately $496.5 million in loans secured by non-owner occupied commercial real estate, which represented approximately 40.1% of total loans outstanding at that date and 247% of regulatory capital.
Although the Company believed the ACL was a reasonable estimate of known and inherent losses in the loan portfolio at the time, it could not precisely predict such losses or be certain that the ACL would be adequate in the future.
Although the Company believes the ACL is a reasonable estimate of known and inherent losses in the loan portfolio, it cannot precisely predict such losses or be certain that the ACL will be adequate in the future.
In deciding whether to extend credit or to enter into other transactions with customers and counterparties, the Company may rely on information furnished to it by or on behalf of customers and counterparties, including financial statements and other financial information, which it does not independently verify.
The Company depends on the accuracy and completeness of information about customers and counterparties, and the Company’s financial condition could be adversely affected if it relies on misleading or incorrect information. 25 In deciding whether to extend credit or to enter into other transactions with customers and counterparties, the Company may rely on information furnished to it by or on behalf of customers and counterparties, including financial statements and other financial information, which it does not independently verify.
The Company’s credit administration function employs risk management techniques to help ensure that problem loans are promptly identified. While these procedures are designed to provide the Company with the information needed to implement policy adjustments where necessary and to take appropriate corrective actions, there can be no assurance that such measures will be effective in avoiding undue credit risk.
While these procedures are designed to provide the Company with the information needed to implement policy adjustments where necessary and to t a ke appropriate corrective actions, there can be no assurance that such measures will be effective in avoiding undue credit risk.
If the Company is not able to afford such technologies, properly or timely anticipate or implement such technologies, or effectively train its staff to use such technologies, its business, financial condition or operating results could be adversely affected.
If the Company is not able to afford such technologies, properly or timely anticipate or implement such technologies, or effectively train its staff to use such technologies, its business, financial condition or operating results could be adversely affected. The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact the Company’s business.
Legal, Regulatory and Compliance Risks The Company operates in a highly regulated industry and the laws and regulations that govern the Company’s operations, corporate governance, executive compensation and financial accounting, or reporting, including changes in them or the Company’s failure to comply with them, may adversely affect the Company.
Any of these risks could expose the Company to liability or adverse legal or regulatory consequences and harm the Company’s reputation and the public perception of its business or the effectiveness of its security measures. 27 Legal, Regulatory and Compliance Risks The Company operates in a highly regulated industry and the laws and regulations that govern the Company’s operations, corporate governance, executive compensation and financial accounting, or reporting, including changes in them or the Company’s failure to comply with them, may adversely affect the Company.
In addition, bank regulatory agencies and the Company’s auditors periodically reviewed its ACL and may have required an increase in the provision for loan losses or the recognition of further loan charge-offs, based on judgments different from those of management.
In addition, bank regulatory agencies and the Company’s auditors periodically review its ACL and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on judgments different from those of management. 19 The Company’s focus on lending to small to mid-sized community-based businesses may increase its credit risk.
Credit risk and credit losses can increase if its loans are concentrated to borrowers who, as a group, may be uniquely or disproportionately affected by economic or market conditions. As of December 31, 2024, approximately 76.4% of the Company’s loans are secured by real estate, both residential and commercial.
The Company offers a variety of secured loans, including commercial lines of credit, commercial term loans, real estate, construction, home equity, consumer and other loans. Credit risk and credit losses can increase if its loans are concentrated to borrowers who, as a group, may be uniquely or disproportionately affected by economic or market conditions.
Any changes in these conditions, in current accounting principles or interpretations of these principles could impact the Company’s assessment of fair value and thus the determination of other-than-temporary impairment of the securities in the investment securities portfolio, which could adversely affect the Company’s earnings and capital ratios. Asset values also directly impact revenues in the Company’s wealth management businesses.
Any changes in these conditions, in current accounting principles or interpretations of these principles could impact the Company’s assessment of fair value and thus the determination of the need for an allowance for credit loss on securities in the investment securities portfolio, which could adversely affect the Company’s earnings and capital ratios.
The inability to have sufficient capital, whether internally generated through earnings or raised in the capital markets, could adversely impact the Company’s ability to support and to grow its operations. If the Company grows its operations faster than it generates capital internally, it will need to access the capital markets.
Access to sufficient capital is critical in order to enable the Company to implement its business plan, support its business, expand its operations and meet applicable capital requirements. The inability to have sufficient capital, whether internally generated through earnings or raised in the capital markets, could adversely impact the Company’s ability to support and to grow its operations.
Further, 27 any new laws, rules and regulations could make compliance more difficult or expensive or otherwise adversely affect the Company’s business and financial condition. Regulations issued by the CFPB could adversely impact earnings due to, among other things, increased compliance costs or costs due to noncompliance.
Further, any new laws, rules and regulations could make compliance more difficult or expensive or otherwise adversely affect the Company’s business and financial condition. Changes in accounting standards could impact reported earnings.
Declines in asset values can reduce the value of clients’ portfolios or fund assets, which in turn can result in lower fees earned for managing such assets. Weaknesses in economic or market conditions, or adverse developments in the financial services industry, could pose challenges for the Company and could adversely affect the results of operations, liquidity, and financial condition [.
Weaknesses in economic or market conditions, or adverse developments in the financial services industry, could pose challenges for the Company and could adversely affect the results of operations, liquidity, and financial condition .
If any of the foregoing risks materialize, it could have a material adverse effect on the Company’s business, financial condition and results of operations. Changes in accounting standards could impact reported earnings.
If any of the foregoing risks materialize, it could have a material adverse effect on the Company’s business, financial condition and results of operations. Failure to maintain effective systems of internal and disclosure control could have a material adverse effect on the Company’s results of operation and financial condition.
If the Company cannot provide reliable financial reports or prevent fraud, its reputation and operating results would be harmed. As part of the Company’s ongoing monitoring of internal control, it may discover material weaknesses or significant deficiencies in its internal control that require remediation.
As part of the Company’s ongoing monitoring of internal control, it may discover material weaknesses or significant deficiencies in its internal control that require remediation.
The Company may not be able to raise additional capital in the form of additional debt or equity on acceptable terms, or at all. The Company’s ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, the Company’s financial condition and its results of operations.
The Company’s ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, the Company’s financial condition and its results of operations. Economic conditions and a loss of confidence in financial institutions may increase the Company’s cost of capital and limit access to some sources of capital.
During 2022, the United States experienced the highest level of inflation since the 1980s. In response, the Federal Reserve increased the federal funds target rate at the fastest pace in over 40 years, increasing 425 bps during 2022 and an additional 100 bps in 2023, before declining by 100bps during 2024 and early 2025.
In response, the Federal Reserve increased the federal funds target rate at the fastest pace in over 40 years, increasing 425 bps during 2022 and an additional 100 bps in 2023, before declining during 2024 and 2025. Price-wage inflation may cause the Company to give higher than normal raises to employees and start new employees at a higher wage.
These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities and have a heightened vulnerability to economic conditions. If general economic conditions in the market areas in which the Company operates negatively impact this important customer sector, the Company’s results of operations and financial condition may be adversely affected.
If general economic conditions in the market areas in which the Company operates negatively impact this important customer sector, the Company’s results of operations and financial condition may be adversely affected. Moreover, a portion of these loans have been made by the Company in recent years and the borrowers may not have experienced a complete business or economic cycle.
The Company is also required to establish and maintain an adequate internal control structure over financial reporting pursuant to regulations of the FDIC. As a public company, the Company is required by the Sarbanes-Oxley Act to design and maintain a system of internal control over financial reporting and include management’s assessment regarding internal control over financial reporting.
As a public company, the Company is required by the Sarbanes-Oxley Act to design and maintain a system of internal control over financial reporting and include management’s assessment regarding internal control over financial reporting. If the Company cannot provide reliable financial reports or prevent fraud, its reputation and operating results would be harmed.
Failure to maintain effective systems of internal and disclosure control could have a material adverse effect on the Company’s results of operation and financial condition. Effective internal and disclosure controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company.
Effective internal and disclosure controls are necessary for the Company to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. The Company is also required to establish and maintain an adequate internal control structure over financial reporting pursuant to regulations of the FDIC.
The Company has established concentration limits that are regularly monitored by management and reported to the Board.
As of December 31, 2025, approximately 76.4% of the Company’s loans are secured by real estate, both residential and commercial. The Company has established concentration limits that are regularly monitored by management and reported to the Board.
The Company may be required to slow or discontinue loan growth, capital expenditures or other investments, or liquidate assets should such sources not be adequate. Recent negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system.
The Company may be required to slow or discontinue loan growth, capital expenditures or other investments, or liquidate assets should such sources not be adequate. The Company may need to raise additional capital in the future and may not be able to do so on acceptable terms, or at all.
The Company may need to raise additional capital in the future and may not be able to do so on acceptable terms, or at all. Access to sufficient capital is critical in order to enable the Company to implement its business plan, support its business, expand its operations and meet applicable capital requirements.
If the Company grows its operations faster than it generates capital internally, it will need to access the capital markets. The Company may not be able to raise additional capital in the form of additional debt or equity on acceptable terms, or at all.
No adjustments to the ACL have been recommended or required as a result of audits. 19 The Company’s focus on lending to small to mid-sized community-based businesses may increase its credit risk. Most of the Company’s commercial business and commercial real estate loans are made to small and mid-sized businesses and 501(c)3 organizations.
Most of the Company’s commercial business and commercial real estate loans are made to small and mid-sized businesses and 501(c)3 organizations. These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities and have a heightened vulnerability to economic conditions.
The Company’s concentration in loans secured by real estate may increase its future credit losses, which would negatively affect the Company’s financial results. The Company offers a variety of secured loans, including commercial lines of credit, commercial term loans, real estate, construction, home equity, consumer and other loans.
Although the Company has taken these mitigation steps, there is no guarantee that such practices will be effective to prevent the increased credit risk. The Company’s concentration in loans secured by real estate may increase its future credit losses, which would negatively affect the Company’s financial results.
Removed
While the adoption of ASC 326 does not affect ultimate loan performance or cash flows of the Company from making loans, the period in which expected credit losses affect net income of the Company may not be similar to the recognition of loan losses under prior accounting guidance, and recognizing an ACL based on expected credit losses may create more volatility in the level of the Company's ACL and results of operations, including based on volatility in economic forecasts and expectations of loan performance in future periods, as actual results may differ materially from management's estimates.
Added
References to past events in these risk factors are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.
Removed
If the Company is required to materially increase the level of ACL for any reason, such increase could adversely affect the Company's business, financial condition, and results of operations.
Added
The Company’s credit administration function employs risk management techniques to help ensure that problem loans are promptly identified.
Removed
Steps to mitigate such risks include underwriting multiple sources of repayment, including but not limited to, business cash flow, personal guarantees, collateral, and government guarantees, where applicable. Although the Company has taken these mitigation steps, there is no guarantee that such practices will be effective to prevent the increased credit risk.
Added
Inflation can have an adverse impact on the Company’s business and on its customers. During 2022, the United States experienced the highest level of inflation since the 1980s.
Removed
The Company receives asset-based management fees based on the value of clients’ portfolios or investments in funds managed by the Company and, in some cases, the Company may also receive performance fees based on increases in the value of such investments.
Added
The Company or its third-party vendors, clients, or counterparties may develop or incorporate AI technology in certain business processes, services, or products. The development and use of AI presents a number of risks and challenges to the Company’s business.
Removed
Price-wage inflation may cause the Company to give higher than normal raises to employees and start new employees at a higher wage.
Added
The legal and regulatory environment relating to AI is uncertain and rapidly evolving, and includes regulatory schemes targeted specifically at AI as well as provisions in intellectual property, privacy, consumer protection, employment, and other laws applicable to the use of AI.
Removed
The closures of Silicon Valley Bank and Signature Bank in March 2023, and First Republic Bank in May 2023, and concerns about similar future events, have generated significant market volatility among publicly traded bank holding companies and, in particular, regional banks. More recently, concerns about commercial real estate concentrations at regional and community banks have exacerbated this volatility.
Added
These evolving laws and regulations could require changes in the Company’s implementation of AI technology and increase the Company’s compliance costs and the risk of non-compliance.
Removed
These market developments have negatively impacted customer confidence in the safety and soundness of regional and community banks.
Added
AI models, particularly generative AI models, may produce output or take action that is incorrect, that reflects biases included in the data on which they are trained, that results in the release of private, confidential, or proprietary information, that infringes on the intellectual property rights of others, or that is otherwise harmful.
Removed
As a result, customers may choose to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations.
Added
In addition, the complexity of many AI models makes it difficult to understand why they are generating particular outputs.
Removed
While federal bank regulators took action to ensure that depositors of the failed banks had access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in regional and community banks and the banking system more broadly.
Added
This limited transparency increases the challenges associated with assessing the proper operation of AI models, understanding and monitoring the capabilities of the AI models, reducing erroneous outputs, eliminating bias, and complying with regulations that require documentation or explanation of the basis on which decisions are made.
Removed
Furthermore, there is no guarantee that regional bank failures or bank runs similar to the ones that occurred in 2023 will not occur in the future and, if they were to occur, they may have a material and adverse impact on customer and investor confidence in regional and community banks negatively impacting the Company’s liquidity, capital, results of operations and stock price.
Added
Further, the Company may rely on AI models developed by third parties, and, to that extent, would be dependent in part on the manner in which those third parties develop and train their models, including risks arising from the inclusion of any unauthorized material in the training data for their models and the effectiveness of the steps these third parties have taken to limit the risks associated with the output of their models, matters over which the Company may have limited visibility.
Removed
Economic conditions and a loss of confidence in financial institutions may increase the Company’s cost of capital and limit access to some sources of capital.
Added
The Company’s business and earnings are impacted by governmental, fiscal and monetary policy over which it has no control. The Company is affected by domestic monetary policy.
Removed
The CFPB significantly influences consumer financial laws, regulation and policy through rulemaking related to enforcement of the Dodd-Frank Act’s prohibitions against unfair, deceptive, and abusive consumer finance products or practices, which are directly affecting the business operations of financial institutions offering consumer financial products or services, including the Company.
Removed
This agency’s broad rulemaking authority includes identifying practices or acts that are unfair, deceptive, or abusive in connection with any consumer financial transaction, financial product, or service.
Removed
In particular, the CFPB’s interpretation of the Dodd-Frank Act’s prohibitions against unfair, deceptive, and abusive consumer finance products or practices may ultimately affect products or services currently offered by the Company and its subsidiaries and may affect the amount of revenue that may be derived from these products and services in the future, especially revenue from overdraft products offered by the Bank.
Removed
Although the CFPB has supervisory jurisdiction over banks with $10 billion or greater in assets, rules, regulations, and policies issued by the CFPB may also apply to the Company or its subsidiaries by virtue of the adoption of such policies and practices by the Federal Reserve and the OCC.
Removed
Further, the CFPB may include its own examiners in regulatory examinations by the Company and the Bank’s primary regulators. The limitations and restrictions imposed by the CFPB may produce significant, material effects on the Company's business, financial condition, and results of operations.
Removed
The Company is a “smaller reporting company” as defined in federal securities laws, and will remain a smaller reporting company until the fiscal year following the determination that the market value of its voting and non-voting common shares held by non-affiliates is more than $250 million measured on the last business day of its second fiscal quarter, or its annual revenues are less than $100 million during the most recently completed fiscal year and the market value of its voting and non-voting common shares held by non-affiliates is more than $700 million measured on the last business day of its second fiscal quarter.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeKey components of the Company's cybersecurity program: • Risk Management: The Company continuously assesses and mitigates cybersecurity risks across the organization by leveraging industry best practices and frameworks such as NIST Cybersecurity Framework. • Governance and Oversight: The Company's Board of Directors (the Board) regularly reviews cybersecurity matters, ensuring alignment with business objectives and regulatory requirements.
Biggest changeKey components of the Company's cybersecurity program: • Risk Management: The Company continuously assesses and mitigates cybersecurity risks across the organization by leveraging industry best practices and frameworks such as NIST Cybersecurity Framework. • Governance and Oversight: The Company's Board regularly reviews cybersecurity matters, ensuring alignment with business objectives and regulatory requirements.
Implementation of new technologies, practices, and infrastructures to target security vulnerabilities is ongoing. • Compliance and Reporting: The Company adheres to relevant cybersecurity regulations and standards applicable to the Company's industry and maintains transparency by disclosing material cybersecurity incidents or risks in accordance with regulatory obligations. The Company had no material cybersecurity incidents in 2024. 31
Implementation of new technologies, practices, and infrastructures to target security vulnerabilities is ongoing. • Compliance and Reporting: The Company adheres to relevant cybersecurity regulations and standards applicable to the Company's industry and maintains transparency by disclosing material cybersecurity incidents or risks in accordance with regulatory obligations. The Company had no material cybersecurity incidents in 2025. 31

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition to the Company’s use of this building as outlined in the preceding paragraph, a portion of the additional space is leased to tenants. The drive-through location at 301 East Water Street, Charlottesville, which is a limited-service banking facility, and the adjoining office space located at 112 Third Street, SE, Charlottesville Virginia is leased from East Main Investments, LLC.
Biggest changeThe drive-through location at 301 East Water Street, Charlottesville, which is a limited-service banking facility, and the adjoining office space located at 112 Third Street, SE, Charlottesville Virginia is leased from East Main Investments, LLC. Hunter E. Craig, a director of the Company and the Bank, serves as manager of East Main Investments, LLC, which is owned by Mr.
Item 2. PR OPERTIES. The Company and its subsidiaries currently occupy twelve full-service and one limited-service banking facilities in the cities of Charlottesville, Manassas, Richmond and Winchester, and the counties of Albemarle, Fauquier and Prince William. The Company’s main office, a full-service banking facility and operations are located at 404 People Place, Charlottesville, Virginia.
Item 2. PR OPERTIES. The Company and its subsidiaries currently occupy twelve full-service and one limited-service banking facilities in the cities of Charlottesville, Manassas, Richmond and Winchester, and the counties of Albemarle, Fauquier and Prince William. The Company’s main office, a full-service banking facility and operations center, is located at 404 People Place, Charlottesville, Virginia.
Leases with affiliates are described below. The five-story building located at 404 People Place, Charlottesville, Virginia, just east of the Charlottesville city limits on Pantops Mountain, was constructed by the Bank on a pad site leased in 2005 from Pantops Park, LLC for a term of twenty years, with seven five-year renewal options. William D.
The five-story building located at 404 People Place, Charlottesville, Virginia, just east of the Charlottesville city limits on Pantops Mountain, was constructed by the Bank on a pad site leased in 2005 from Pantops Park, LLC for a term of twenty years, with seven five-year renewal options.
VNB Trust and Estate Services is located at 103 Third Street, SE, Charlottesville, Virginia. Of the thirteen locations used as bank branches, five of the buildings are owned by the Company, six are leased from nonaffiliates and two are leased from affiliates described below. One former branch location is currently under contract to be sold.
VNB Trust and Estate Services is located at 103 Third Street, SE, Charlottesville, Virginia. Of the thirteen locations used as bank branches, five of the buildings are owned by the Company, six are leased from nonaffiliates and two are leased from affiliates described below. Leases with affiliates are described below.
Financial Statements and Supplementary Data for information with respect to the amounts at which the Company’s premises and equipment are carried and commitments under long-term leases. All of the Company's properties are in good operating condition and are adequate for the Company's present and anticipated future needs.
Craig and his spouse. See Note 6 – Premises and Equipment and Note 7 – Leases in the Notes to Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for information with respect to the amounts at which the Company’s premises and equipment are carried and commitments under long-term leases.
Dittmar, Jr., a director of the Company and the Bank, is the manager and indirect owner of Pantops Park, LLC. The building, consisting of approximately 43,000 square feet, was completed in early 2008, and the Bank opened this full-service office in April 2008.
The building, consisting of approximately 43,000 square feet, was completed in early 2008, and the Bank opened this full-service office in April 2008. In addition to the Company’s use of this building as outlined in the preceding paragraph, a portion of the additional space is leased to tenants.
Removed
Hunter E. Craig, a director of the Company and the Bank, serves as manager of East Main Investments, LLC, which is owned by Mr. Craig and his spouse. See Note 6 – Premises and Equipment and Note 7 – Leases in the Notes to Consolidated Financial Statements in Item 8.
Added
During the second quarter of 2025, the Company extended the ground lease associated with the Pantops headquarters for an additional five-year period. William D. Dittmar, Jr., a director of the Company and the Bank, is the manager and indirect owner of Pantops Park, LLC.
Added
The Company believes its properties are in good operating condition and are adequate for the Company's present and anticipated future needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−2 removed2 unchanged
Biggest changeOn June 28, 2023, the Company's Board of Directors approved a share repurchase plan of up to 5% of outstanding common stock. The program was announced in a Current Report on Form 8-K on July 17, 2023. The first repurchases of stock under this plan occurred in February 2024.
Biggest changeThe program was announced in a Current Report on Form 8-K on July 17, 2023 with an expiration date of July 31, 2025. The first repurchases of stock under this plan occurred in February 2024. There were no shares of the Company's common stock repurchased during the three months or year ended December 31, 2025.
As of December 31, 2024, the Company had issued and outstanding 5,370,912 shares of common stock, which included 65,889 shares of restricted stock that have not yet vested. As of March 26, 2025, there were approximately 660 shareholders of record.
As of December 31, 2025, the Company had issued and outstanding 5,393,140 shares of common stock, which included 62,468 shares of restricted stock that have not yet vested. As of March 26, 2025, there were approximately 541 shareholders of record.
Recent Issuances of Unregistered Securities No unregistered shares were issued in 2024 or 2023.
Equiniti Trust Company, LLC (formerly American Stock Transfer and Trust Company) is the Company’s stock transfer agent and registrar. Recent Issuances of Unregistered Securities No unregistered shares were issued in 2025 or 2024.
Removed
There were no shares of the Company's common stock repurchased during the three months ending December 31, 2024. The data in the table below represents the high sales and low sales prices that occurred between January 1, 2023 and December 31, 2024 as reported by Nasdaq. Additionally, the table shows the dividends declared per quarter in 2024 and 2023.
Added
Dividends of $1.41 and $1.32 per share were paid for the years ended December 31, 2025 and 2024, respectively. On June 28, 2023, the Company's Board of Directors approved a share repurchase plan of up to 5% of outstanding common stock.
Removed
Dividends Declared 2024 2023 2024 2023 High Low High Low First Quarter $ 37.21 $ 27.50 $ 41.74 $ 34.69 $ 0.33 $ 0.33 Second Quarter $ 32.96 $ 24.06 $ 36.77 $ 27.30 $ 0.33 $ 0.33 Third Quarter $ 42.00 $ 29.80 $ 38.49 $ 30.01 $ 0.33 $ 0.33 Fourth Quarter $ 44.00 $ 37.50 $ 43.08 $ 24.96 $ 0.33 $ 0.33 Total $ 1.32 $ 1.32 Equiniti Trust Company, LLC (formerly American Stock Transfer and Trust Company) is the Company’s stock transfer agent and registrar.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeConsolidated Average Balance Sheets and Analysis of Net Interest Income (FTE) 2024 2023 2022 Interest Average Interest Average Interest Average (Dollars in thousands) Average Balance Income Expense Yield/ Cost Average Balance Income Expense Yield/ Cost Average Balance Income Expense Yield/ Cost ASSETS Interest earning assets: Securities Taxable securities $ 249,858 $ 7,120 2.85 % $ 400,189 $ 11,921 2.98 % $ 373,680 $ 8,696 2.33 % Tax exempt securities 1 66,399 1,649 2.48 % 66,895 1,655 2.47 % 65,861 1,582 2.40 % Total securities 1 316,257 8,769 2.77 % 467,084 13,576 2.91 % 439,541 10,278 2.34 % Loans: Real estate 908,356 51,532 5.67 % 839,326 47,996 5.72 % 847,238 38,011 4.49 % Commercial 220,276 12,430 5.64 % 100,122 5,121 5.11 % 81,410 3,583 4.40 % Consumer 37,013 2,572 6.95 % 41,140 2,936 7.14 % 49,619 2,637 5.31 % Total Loans 1,165,645 66,534 5.71 % 980,588 56,053 5.72 % 978,267 44,231 4.52 % Fed funds sold 14,663 765 5.22 % 3,825 207 5.41 % 100,033 1,088 1.09 % Other interest bearing deposits 8,220 206 2.51 % 15,489 501 3.23 % 161,260 1,467 0.91 % Total earning assets 1,504,785 76,274 5.07 % 1,466,986 70,337 4.79 % 1,679,101 57,064 3.40 % Less: Allowance for credit losses (8,350 ) (7,907 ) (5,702 ) Total non-earning assets 109,500 115,908 124,525 Total assets $ 1,605,935 $ 1,574,987 $ 1,797,924 LIABILITIES AND SHAREHOLDERS' EQUITY Interest bearing liabilities: Interest bearing deposits: Interest checking $ 269,136 $ 272 0.10 % $ 321,154 $ 346 0.11 % $ 409,504 $ 230 0.06 % Money market and savings deposits 425,386 11,803 2.77 % 421,083 9,673 2.30 % 563,374 2,097 0.37 % Time deposits 333,139 15,410 4.63 % 220,348 8,617 3.91 % 144,564 657 0.45 % Total interest bearing deposits 1,027,661 27,485 2.67 % 962,585 18,636 1.94 % 1,117,442 2,984 0.27 % Borrowings 36,111 1,691 4.68 % 37,286 1,934 5.19 % - - - Federal Funds Purchased 489 29 5.93 % 2,632 138 5.24 % - - - Junior subordinated debt 3,482 346 9.94 % 3,436 313 9.11 % 3,389 200 5.90 % Total interest bearing liabilities 1,067,743 29,551 2.77 % 1,005,939 21,021 2.09 % 1,120,831 3,184 0.28 % Non-interest bearing liabilities: Demand deposits 370,178 418,091 526,389 Other liabilities 10,597 9,989 9,581 Total liabilities 1,448,518 1,434,019 1,656,801 Shareholders' equity 157,417 139,443 141,123 Total liabilities & shareholders' equity $ 1,605,935 $ 1,573,462 $ 1,797,924 Net interest income (FTE) $ 46,723 $ 49,316 $ 53,880 Interest rate spread 2 2.30 % 2.70 % 3.12 % Cost of funds 2.06 % 1.48 % 0.19 % Interest expense as a percentage of average earning assets 1.96 % 1.43 % 0.19 % Net interest margin (FTE) 3 3.10 % 3.36 % 3.21 % (1) Tax-exempt income for investment securities has been adjusted to a fully tax-equivalent basis (FTE), using a Federal income tax rate of 21%.
Biggest changeConsolidated Average Balance Sheets and Analysis of Net Interest Income (FTE) (non-GAAP) 2025 2024 2023 Interest Average Interest Average Interest Average (Dollars in thousands) Average Balance Income Expense Yield/ Cost Average Balance Income Expense Yield/ Cost Average Balance Income Expense Yield/ Cost ASSETS Interest earning assets: Securities Taxable securities $ 198,401 $ 5,379 2.71 % $ 249,858 $ 7,120 2.85 % $ 400,189 $ 11,921 2.98 % Tax exempt securities 1 65,364 1,629 2.49 % 66,399 1,649 2.48 % 66,895 1,655 2.47 % Total securities 1 263,765 7,008 2.66 % 316,257 8,769 2.77 % 467,084 13,576 2.91 % Loans: Real estate 943,389 55,119 5.84 % 908,356 51,532 5.67 % 839,326 47,996 5.72 % Commercial 258,713 12,418 4.80 % 220,276 12,430 5.64 % 100,122 5,121 5.11 % Consumer 30,015 2,034 6.78 % 37,013 2,572 6.95 % 41,140 2,936 7.14 % Total Loans 1,232,117 69,571 5.65 % 1,165,645 66,534 5.71 % 980,588 56,053 5.72 % Fed funds sold 19,957 835 4.18 % 14,663 765 5.22 % 3,825 207 5.41 % Other interest bearing deposits 8,099 174 2.15 % 8,220 206 2.51 % 15,489 501 3.23 % Total earning assets 1,523,938 77,588 5.09 % 1,504,785 76,274 5.07 % 1,466,986 70,337 4.79 % Less: Allowance for credit losses (8,516 ) (8,350 ) (7,907 ) Total non-earning assets 109,084 109,500 114,393 Total assets $ 1,624,506 $ 1,605,935 $ 1,573,472 LIABILITIES AND SHAREHOLDERS' EQUITY Interest bearing liabilities: Interest bearing deposits: Interest checking $ 267,222 $ 270 0.10 % $ 269,136 $ 272 0.10 % $ 321,154 $ 346 0.11 % Money market and savings deposits 467,612 12,014 2.57 % 425,386 11,803 2.77 % 421,083 9,673 2.30 % Time deposits 296,218 11,264 3.80 % 333,139 15,410 4.63 % 220,348 8,617 3.91 % Total interest bearing deposits 1,031,052 23,548 2.28 % 1,027,661 27,485 2.67 % 962,585 18,636 1.94 % Borrowings 40,005 1,860 4.65 % 36,111 1,691 4.68 % 37,286 1,934 5.19 % Federal funds purchased 569 28 4.92 % 489 29 5.93 % 2,632 138 5.24 % Junior subordinated debt 3,529 301 8.53 % 3,482 346 9.94 % 3,436 313 9.11 % Total interest bearing liabilities 1,075,155 25,737 2.39 % 1,067,743 29,551 2.77 % 1,005,939 21,021 2.09 % Non-interest bearing liabilities: Demand deposits 367,066 370,178 418,091 Other liabilities 10,134 10,597 9,989 Total liabilities 1,452,355 1,448,518 1,434,019 Shareholders' equity 172,151 157,417 139,453 Total liabilities & shareholders' equity $ 1,624,506 $ 1,605,935 $ 1,573,472 Net interest income (FTE) (non-GAAP) $ 51,851 $ 46,723 $ 49,316 Interest rate spread 2 2.70 % 2.30 % 2.70 % Cost of funds 1.78 % 2.06 % 1.48 % Interest expense as a percentage of average earning assets 1.69 % 1.96 % 1.43 % Net interest margin (FTE) 3 (non-GAAP) 3.40 % 3.10 % 3.36 % (1) Tax-exempt income for investment securities has been adjusted to a fully tax-equivalent basis (FTE), using a Federal income tax rate of 21%.
Subsequent to the date of sale, the Company will receive an annual revenue-share amount for a period of six years. No expenses have been or will be incurred by the Company related to Masonry Capital subsequent to April 1, 2024.
Subsequent to the date of sale, the Company will receive an annual revenue-share amount for a period of six years. No expenses have been or will be incurred by the Company related to Masonry subsequent to April 1, 2024.
Management believes that the use of these non-GAAP measures provides meaningful information about operating performance by enhancing comparability with other financial periods, other financial institutions, and between different sources of interest income.
Management believes that the use of these non-GAAP measures provides meaningful information about operating performance by enhancing comparability with other financial periods, other financial institutions, and between different 34 sources of interest income.
Furthermore, this sensitivity analysis does not reflect actions that the ALCO might take in responding to or anticipating changes in interest rates. 52 In simulating the effects of upward and downward changes in market rates to net interest income over a rolling two-year horizon, the model utilizes a “static” balance sheet approach where balance sheet composition or mix as of the measurement date is maintained over the two-year horizon.
Furthermore, this sensitivity analysis does not reflect actions that the ALCO might take in responding to or anticipating changes in interest rates. 51 In simulating the effects of upward and downward changes in market rates to net interest income over a rolling two-year horizon, the model utilizes a “static” balance sheet approach where balance sheet composition or mix as of the measurement date is maintained over the two-year horizon.
The tax-equivalent yield is based upon a federal tax rate of 21%. Refer to the Reconcilement of Non-GAAP Measures table within the Non-GAAP Presentations section earlier in Item 7. Maturity Distribution and Average Yields Contractual Maturities of Debt Securities at December 31, 2024 (Dollars in thousands) Amortized Cost Fair Value Weighted Average Yield (FTE) % of Debt Securities U.S.
The tax-equivalent yield is based upon a federal tax rate of 21%. Refer to the Reconcilement of Non-GAAP Measures table within the Non-GAAP Presentations section earlier in Item 7. Maturity Distribution and Average Yields Contractual Maturities of Debt Securities at December 31, 2025 (Dollars in thousands) Amortized Cost Fair Value Weighted Average Yield (FTE) % of Debt Securities U.S.
The following table presents the maturity/repricing distribution of the Company’s loans at December 31, 2024. The table also presents the portion of loans that have fixed interest rates or variable/floating interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index such as the Wall Street Journal prime rate or U.S.
The following table presents the maturity/repricing distribution of the Company’s loans at December 31, 2025. The table also presents the portion of loans that have fixed interest rates or variable/floating interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index such as the Wall Street Journal prime rate or U.S.
The Bank exceeds the thresholds to be considered well capitalized as of December 31, 2024. On September 17, 2019 the FDIC finalized a rule that introduced an optional simplified measure of capital adequacy for qualifying community banking organizations, referred to as, the community bank leverage ratio framework, as required by the EGRRCPA.
The Bank exceeds the thresholds to be considered well capitalized as of December 31, 2025. On September 17, 2019 the FDIC finalized a rule that introduced an optional simplified measure of capital adequacy for qualifying community banking organizations, referred to as, the community bank leverage ratio framework, as required by the EGRRCPA.
Revenue for this segment is generated from management fees which are derived from Assets Under Management and incentive income which is based on the investment returns generated on performance-based Assets Under Management. Note that the membership interests in this business line were sold to an officer of the Company effective April 1, 2024.
Revenue for this segment is generated from management fees which are derived from Assets Under Management and incentive income which is based on the investment returns generated on performance-based Assets Under Management. Note that the membership interests in this business line were sold to an officer of Masonry effective April 1, 2024.
The decrease in 2024 is primarily the result of the impact of declining expected loss rates on most of the pools of loans within the CECL segmentation.
The decrease in 2024 is primarily the of the impact of declining expected loss rates on most of the pools of loans within the CECL segmentation.
Financial Statements and Supplementary Data. 42 BALANCE SHEET ANALYSIS Securities The investment securities portfolio has a primary role in the management of the Company’s liquidity requirements and interest rate sensitivity, as well as generating significant interest income. Investment securities also play a key role in diversifying the Company’s balance sheet.
Financial Statements and Supplementary Data. 41 BALANCE SHEET ANALYSIS Securities The investment securities portfolio has a primary role in the management of the Company’s liquidity requirements and interest rate sensitivity, as well as generating significant interest income. Investment securities also play a key role in diversifying the Company’s balance sheet.
Yields on tax-exempt securities have been computed on a tax-equivalent basis using the federal corporate income tax rate of 21%. As stated, the preceding table reflects the distribution of the contractual maturities of the investment portfolio at December 31, 2024.
Yields on tax-exempt securities have been computed on a tax-equivalent basis using the federal corporate income tax rate of 21%. As stated, the preceding table reflects the distribution of the contractual maturities of the investment portfolio at December 31, 2025.
Business.” In addition, information regarding the Company’s risk-based capital at December 31, 2024 and December 31, 2023 is presented in Note 15 – Capital Requirements of the Notes to Consolidated Financial Statements, contained in Item 8. Financial Statements and Supplementary Data.
Business.” In addition, information regarding the Company’s risk-based capital at December 31, 2025 and December 31, 2024 is presented in Note 15 – Capital Requirements of the Notes to Consolidated Financial Statements, contained in Item 8. Financial Statements and Supplementary Data.
Using the most recent capital requirements, the Bank’s capital ratios remain above the levels designated by bank regulators as "well capitalized" at December 31, 2024. 54 Impact of Inflation and Changing Prices The Company’s financial statements included herein have been prepared in accordance with GAAP, which requires the financial position and operating results to be measured principally in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation.
Using the most recent capital requirements, the Bank’s capital ratios remain above the levels designated by bank regulators as "well capitalized" at December 31, 2025. 53 Impact of Inflation and Changing Prices The Company’s financial statements included herein have been prepared in accordance with GAAP, which requires the financial position and operating results to be measured principally in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation.
The effective income tax rates for 2024 and 2023 were lower than the U.S. statutory rate of 21% due to the effect of tax-exempt income from municipal bonds and tax-exempt interest from bank owned life insurance policies.
The effective income tax rates for 2025 and 2024 were lower than the U.S. statutory rate of 21% due to the effect of tax-exempt income from municipal bonds and tax-exempt interest from bank owned life insurance policies.
Cash flow projections are subject to change based upon changes to market interest rates. 44 Loan Portfolio The Company’s objective is to maintain the historically strong credit quality of the loan portfolio by maintaining rigorous underwriting standards.
Cash flow projections are subject to change based upon changes to market interest rates. 43 Loan Portfolio The Company’s objective is to maintain the historically strong credit quality of the loan portfolio by maintaining rigorous underwriting standards.
Details of the changes in the various components of net income are further discussed below. 37 Net Interest Income Net interest income is computed as the difference between the interest income on earning assets and the interest expense on deposits and other interest bearing liabilities.
Details of the changes in the various components of net income are further discussed below. 36 Net Interest Income Net interest income is computed as the difference between the interest income on earning assets and the interest expense on deposits and other interest bearing liabilities.
Net aggregate unrealized gains or losses on these securities are included, net of taxes, as a component of shareholders’ equity. All of the Company’s unrestricted securities were investment grade or better as of December 31, 2024.
Net aggregate unrealized gains or losses on these securities are included, net of taxes, as a component of shareholders’ equity. All of the Company’s unrestricted securities were investment grade or better as of December 31, 2025.
Restricted stock holdings are recorded at cost. 43 The table shown below details the amortized cost and fair value of AFS securities at December 31, 2024 based upon contractual maturities, by major investment categories. Expected maturities may differ from contractual maturities because issuers have the right to call or prepay obligations.
Restricted stock holdings are recorded at cost. 42 The table shown below details the amortized cost and fair value of AFS securities at December 31, 2025 based upon contractual maturities, by major investment categories. Expected maturities may differ from contractual maturities because issuers have the right to call or prepay obligations.
Simultaneously, the trust used the proceeds of that sale to purchase $4.0 million principal amount of the Fauquier’s Floating Rate Junior Subordinated Deferrable Interest Debentures due 2036. As of December 31, 2024, total capital securities were $3.5 million, as adjusted to fair value as of the date of the Merger.
Simultaneously, the trust used the proceeds of that sale to purchase $4.0 million principal amount of the Fauquier’s Floating Rate Junior Subordinated Deferrable Interest Debentures due 2036. As of December 31, 2025, total capital securities were $3.6 million, as adjusted to fair value as of the date of the Merger.
(3) Net interest margin (FTE) is net interest income (FTE) expressed as a percentage of average earning assets. 38 The purpose of the volume and rate analysis below is to describe the impact on the net interest income (FTE) of the Company resulting from changes in average balances and average interest rates for the periods indicated.
(3) Net interest margin (FTE) is net interest income (FTE) expressed as a percentage of average earning assets. 37 The purpose of the volume and rate analysis below is to describe the impact on the net interest income (FTE) (non-GAAP) of the Company resulting from changes in average balances and average interest rates for the periods indicated.
These non-GAAP financial measures should not be considered an alternative to GAAP-basis financial statements, and other banks and bank holding companies may define or calculate these or similar measures differently.
These non-GAAP financial measures should not be considered an alternative to, or more important than, GAAP-basis financial statements, and other banks and bank holding companies may define or calculate these or similar measures differently.
These deposits have been provided predominantly by individuals, businesses and charitable organizations in the Charlottesville/Albemarle County, Fauquier County, Manassas, Prince William County, Richmond and Winchester market areas. Depository accounts held by the Company as of December 31, 2024, totaled $1.4 billion, an increase of $14.4 million or 1.0% compared to the December 31, 2023 balance.
These deposits have been provided predominantly by individuals, businesses and charitable organizations in the Charlottesville/Albemarle County, Fauquier County, Manassas, Prince William County, Richmond and Winchester market areas. Depository accounts held by the Company as of December 31, 2025, totaled $1.4 billion, an increase of $8.2 million or 0.6% compared to the December 31, 2024 balance.
The Company’s real estate loan portfolio increased by $42.0 million to a balance of $944.1 million at December 31, 2024 from $902.1 million at December 31, 2023. This category comprises 76.4% of all loans, and these loans are secured by mortgages on real property located principally in the Company's market area.
The Company’s real estate loan portfolio increased by $1.9 million to a balance of $946.0 million at December 31, 2025 from $944.1 million at December 31, 2024. This category comprises 76.4% of all loans, and these loans are secured by mortgages on real property located principally in the Company's market area.
This decrease was the result of a $2.6 million decrease in net interest income and a $1.5 million decrease in noninterest income, offset by a $397.0 thousand decrease in noninterest expense. Each component of such year-over-year changes are described in more detail below.
This increase was the result of a $5.1 million increase in net interest income and a $1.5 million decrease in noninterest income, offset by a $282.0 thousand decrease in noninterest expense. Each component of such year-over-year changes are described in more detail below.
Consumer loans, comprised of student loans purchased, revolving credit, and other fixed payment loans, totaled $34.2 million as of December 31, 2024 or 2.8% of all loans. Consumer loans ended 2024 with balances $3.8 million lower than the prior year-end, primarily due to normal amortization within the student loan portfolio.
Consumer loans, comprised of student loans purchased, revolving credit, and other fixed payment loans, totaled $26.2 million as of December 31, 2025 or 2.1% of all loans. Consumer loans ended 2025 with balances $8.1 million lower than the prior year-end, primarily due to normal amortization within the student loan portfolio.
The predominant market area for loans includes Charlottesville, Albemarle County, Fauquier County, Prince William County, Winchester, Frederick County, Manassas, and Richmond, as well as other areas in Virginia, Maryland, West Virginia and the District of Columbia. The Company’s loan portfolio totaled $1.2 billion as of December 31, 2024 or 76.4% of total assets.
The predominant market area for loans includes Charlottesville, Albemarle County, Fauquier County, Prince William County, Winchester, Frederick County, Manassas, and the Richmond metropolitan area, as well as other areas in Virginia, Maryland, West Virginia and the District of Columbia. The Company’s loan portfolio totaled $1.2 billion as of December 31, 2025 or 75.0% of total assets.
Management has evaluated whether the decline in fair value is the result of credit losses and has determined that no credit loss provision is required as of December 31, 2024 related to the AFS portfolio. AFS securities included gross unrealized losses of $53.0 million as of December 31, 2024.
Management has evaluated whether the decline in fair value is the result of credit losses and has determined that no credit loss provision is required as of December 31, 2025 related to the AFS portfolio. AFS securities included gross unrealized losses of $38.9 million as of December 31, 2025.
This represents approximately 28% of the investment portfolio’s AFS balance at December 31, 2024 that will be available to support the future liquidity needs of the Company.
This represents approximately 33% of the investment portfolio’s AFS balance at December 31, 2025 that will be available to support the future liquidity needs of the Company.
At December 31, 2024 and 2023, the Company had loans classified as non-accrual with balances of $2.3 million and $1.9 million, respectively. The non-accrual balance as of December 31, 2024 consists of twelve loans to eleven borrowers and 100% of such balance is secured by real estate.
At December 31, 2025 and 2024, the Company had loans classified as non-accrual with balances of $2.2 million and $2.3 million, respectively. The non-accrual balance as of December 31, 2025 consists of fourteen loans to twelve borrowers and 100% of such balance is secured by real estate.
The Company’s low-cost deposit accounts, which include both non-interest and interest bearing checking accounts as well as money market accounts, represented 78.3% of total deposit account balances at December 31, 2024 compared to 77.4% of total deposit account balances at December 31, 2023.
The Company’s low-cost deposit accounts, which include both non-interest and interest bearing checking accounts as well as money market accounts, represented 79.7% of total deposit account balances at December 31, 2025 compared to 78.3% of total deposit account balances at December 31, 2024.
At December 31, 2024, the Company had 146 full-time equivalent employees compared to 155 at December 31, 2023. 41 Core deposit intangible amortization expense is a result of the Merger and amounted to $1.3 million in 2024 and $1.5 million in 2023.
At December 31, 2025, the Company had 144 full-time equivalent employees compared to 146 at December 31, 2024. Core deposit intangible amortization expense is a result of the Merger and amounted to $1.1 million in 2025 and $1.3 million in 2024.
Of this amount, approximately $313.6 million represented loans on 1-4 family residential properties. Commercial real estate loans totaled $593.5 million as of December 31, 2024. Sources of repayment are from the borrower’s operating profits, cash flows and liquidation of pledged collateral.
Of this amount, approximately $297.6 million represented loans on 1-4 family residential properties. Commercial real estate loans totaled $613.4 million as of December 31, 2025. Sources of repayment are from the borrower’s operating profits, cash flows and liquidation of pledged collateral.
Certificates of deposit and other time deposit balances decreased $10.1 million to $308.4 million at December 31, 2024 from the balance of $318.6 million at December 31, 2023. Included in this deposit total were reciprocal relationships under CDARS™, whereby depositors can obtain FDIC insurance on deposits up to $50 million.
Certificates of deposit and other time deposit balances decreased $17.1 million to $291.3 million at December 31, 2025 from the balance of $308.4 million at December 31, 2024. Included in this deposit total were reciprocal relationships under CDARS™, whereby depositors can obtain FDIC insurance on deposits up to $50 million.
The efficiency ratio (FTE) was 62.0% for the year ended December 31, 2024, compared to 58.3% for the same period of 2023, increasing due to the fluctuations in net interest income, noninterest income and noninterest expense noted above. 36 The Company had three reportable segments during the periods presented: the Bank, VNB Trust and Estate Services and Masonry Capital. • Bank - The Bank’s commercial banking activities involve making loans, taking deposits and offering related services to individuals, businesses and charitable organizations.
The efficiency ratio (FTE) (non-GAAP) was 57.6% for the year ended December 31, 2025, compared to 62.0% for the same period of 2024, increasing due to the fluctuations in net interest income, noninterest income and noninterest expense noted above. 35 The Company had two reportable segments during the 2025 period: the Bank and VNB Trust and Estate Services and three in the 2024 period: the Bank, VNB Trust and Estate Services and Masonry Capital. • Bank - The Bank’s commercial banking activities involve making loans, taking deposits and offering related services to individuals, businesses and charitable organizations.
For 2024, the Company provided $3.9 million for Federal income taxes, resulting in an effective income tax rate of 18.8%. In 2023, the Company provided $4.0 million for Federal income taxes, resulting in an effective income tax rate of 17.2%.
For 2025, the Company provided $4.8 million for Federal income taxes, resulting in an effective income tax rate of 20.0%. In 2024, the Company provided $3.9 million for Federal income taxes, resulting in an effective income tax rate of 18.8%.
Net income is discussed in Management’s Discussion and Analysis on a GAAP basis unless noted as “non-GAAP.” 35 A reconcilement of the non-GAAP financial measures used by the Company to evaluate and measure the Company's performance to the most directly comparable GAAP financial measures is presented below: (Dollars in thousands, except per share data) Reconcilement of Non-GAAP Measures: Year Ended December 31 2024 2023 Fully taxable-equivalent measures Net interest income $ 46,376 $ 48,969 Fully taxable-equivalent adjustment 347 347 Net interest income (FTE) 1 $ 46,723 $ 49,316 Efficiency ratio 2 62.4 % 58.7 % Impact of FTE adjustment -0.4 % -0.4 % Efficiency ratio (FTE) 3 62.0 % 58.3 % Net interest margin 3.08 % 3.34 % Fully tax-equivalent adjustment 0.02 % 0.02 % Net interest margin (FTE) 1 3.10 % 3.36 % Other financial measures Book value per share $ 29.85 $ 28.52 Impact of intangible assets (2.15 ) (2.40 ) Tangible book value per share (non-GAAP) $ 27.70 $ 26.12 1 FTE calculations use a Federal income tax rate of 21%. 2 The efficiency ratio, GAAP basis, is computed by dividing noninterest expense by the sum of net interest income and noninterest income. 3 The efficiency ratio, FTE, is computed by dividing noninterest expense by the sum of net interest income (FTE) and noninterest income.
Net income is discussed in Management’s Discussion and Analysis on a GAAP basis unless noted as “non-GAAP.” A reconcilement of the non-GAAP financial measures used by the Company to evaluate and measure the Company's performance to the most directly comparable GAAP financial measures is presented below: (Dollars in thousands, except per share data) Reconcilement of Non-GAAP Measures: Year Ended December 31 2025 2024 Fully taxable-equivalent measures Net interest income (GAAP) $ 51,509 $ 46,376 Fully taxable-equivalent adjustment 342 347 Net interest income (FTE) 1 (non-GAAP) $ 51,851 $ 46,723 Efficiency ratio 2 (GAAP) 58.0 % 62.4 % Impact of FTE adjustment -0.4 % -0.4 % Efficiency ratio (FTE) 3 (non-GAAP) 57.6 % 62.0 % Net interest margin (GAAP) 3.38 % 3.08 % Fully tax-equivalent adjustment 0.02 % 0.02 % Net interest margin (FTE) 1 (non-GAAP) 3.40 % 3.10 % Other financial measures Book value per share (GAAP) $ 34.15 $ 29.85 Impact of intangible assets (1.94 ) (2.15 ) Tangible book value per share (non-GAAP) $ 32.21 $ 27.70 1 FTE calculations use a Federal income tax rate of 21%. 2 The efficiency ratio, GAAP basis, is computed by dividing noninterest expense by the sum of net interest income and noninterest income. 3 The efficiency ratio, FTE, is computed by dividing noninterest expense by the sum of net interest income (FTE) and noninterest income.
In 2024 and 2023, leasing/rental expenditures of $562 thousand and $543 thousand respectively, (including reimbursements for taxes, insurance, and other expenses) were paid to an entity indirectly owned by a director of the Company.
In 2025 and 2024, leasing/rental expenditures of $595 thousand and $5 62 thousand respectively, (including reimbursements for taxes, insurance, and other expenses) were paid to an entity indirectly owned by a director of the Company.
This category, representing approximately 20.8% of all loans, includes loans made to individuals and small to medium-sized businesses, as well as loans purchased in the government guaranteed market. As of December 31, 2024 and December 31, 2023, the portfolio of government guaranteed loans, included in the commercial loan balance, was $218.3 million and $109.7 million, respectively.
This category, representing approximately 21.4% of all loans, includes loans made to individuals and small to medium-sized businesses, as well as loans purchased in the government guaranteed market. As of December 31, 2025 and December 31, 2024, the portfolio of government guaranteed loans, included in the commercial loan balance, was $227.5 million and $218.3 million, respectively.
Another indication of the investment portfolio’s liquidity potential is shown by the projected annual principal cash flow from maturities, callable bonds, and monthly principal repayments. For the next three years, the principal cash flows are estimated to be $33.5 million for 2025, $24.4 million for 2026, and $30.9 million for 2027, based upon rates remaining at current levels.
Another indication of the investment portfolio’s liquidity potential is shown by the projected annual principal cash flow from maturities, callable bonds, and monthly principal repayments. For the next three years, the principal cash flows are estimated to be $26.4 million for 2026, $32.6 million for 2027, and $23.3 million for 2028, based upon rates remaining at current levels.
To illustrate the difference between contractual maturity and average life, consider the difference for the fixed rate mortgage-backed securities (MBS) component of this portfolio. At December 31, 2024, the weighted average maturity of the fixed rate MBS sector was 15.6 years, and the projected average life for this group of securities is 6.0 years.
To illustrate the difference between contractual maturity and average life, consider the difference for the fixed rate mortgage-backed securities (MBS) component of this portfolio. At December 31, 2025, the weighted average maturity of the fixed rate MBS sector was 14.7 years, and the projected average life for this group of securities is 5.4 years.
Loan balances increased $143.3 million, or 13.1%, from the balance of $1.1 billion as of December 31, 2023. Note that all loan balances are presented net of credit and other fair value discounts, when applicable.
Loan balances increased $1.6 million, or 0.1%, from the balance of $1.2 billion as of December 31, 2024. Note that all loan balances are presented net of credit and other fair value discounts, when applicable.
Net interest income represents the principal source of revenue for the Company and accounted for 85.9% of the total revenue in 2024. Net interest margin (FTE) is the ratio of taxable-equivalent net interest income to average earning assets for the period.
Net interest income represents the principal source of revenue for the Company and accounted for 89.4% of the total revenue in 2025. Net interest margin (FTE) (non-GAAP) is the ratio of taxable-equivalent net interest income to average earning assets for the period.
No CRE loans were over 90 days past due as of December 31, 2024. 45 The following table details the Company's levels of non-owner occupied commercial real estate as of December 31, 2024, along with the average loan size and % of risk ratings for each category: Loan Type (dollars in thousands) Balance % of Total CRE Average Loan Size Special Mention Sub- standard Nonaccrual Hotels $ 45,840 14.80 % $ 5,730 0.00 % 0.00 % 0.00 % Office Building 61,893 19.98 % $ 764 0.00 % 0.00 % 0.00 % Warehouses/Industrial 61,243 19.77 % $ 2,112 0.00 % 0.00 % 0.00 % Retail 120,655 38.95 % $ 1,856 0.89 % 0.00 % 0.00 % Day Cares / Schools 10,606 3.42 % $ 1,178 14.25 % 0.00 % 0.00 % All Other Commercial Buildings 9,520 3.07 % $ 865 0.00 % 0.00 % 0.00 % Total Non-Owner Occupied CRE $ 309,757 As of December 31, 2024, the Company’s commercial and industrial loan portfolio totaled $257.7 million, a $105.2 million increase from the $152.5 million balance at year-end 2023.
No CRE loans were over 90 days past due as of December 31, 2025. 44 The following table details the Company's levels of non-owner occupied commercial real estate as of December 31, 2025 and 2024, and along with the average loan size and % of risk ratings for each category: As of December 31, 2025 Loan Type (dollars in thousands) Balance % of Total CRE Average Loan Size Special Mention Sub- standard Nonaccrual Hotels $ 42,870 12.85 % $ 5,359 0.00 % 0.00 % 0.00 % Office Building 77,908 23.35 % $ 962 0.00 % 0.00 % 0.00 % Warehouses/Industrial 63,622 19.07 % $ 2,194 0.87 % 0.00 % 0.00 % Retail 128,548 38.52 % $ 1,978 3.04 % 0.00 % 0.00 % Day Cares / Schools 11,655 3.49 % $ 1,295 0.00 % 0.00 % 0.00 % All Other Commercial Buildings 9,091 2.72 % $ 826 0.00 % 0.00 % 0.00 % Total Non-Owner Occupied CRE $ 333,694 As of December 31, 2024 Loan Type (dollars in thousands) Balance % of Total CRE Average Loan Size Special Mention Sub- standard Nonaccrual Hotels $ 45,840 14.80 % $ 5,730 0.00 % 0.00 % 0.00 % Office Building 61,893 19.98 % $ 764 0.00 % 0.00 % 0.00 % Warehouses/Industrial 61,243 19.77 % $ 2,110 0.00 % 0.00 % 0.00 % Retail 120,655 38.95 % $ 1,856 0.89 % 0.00 % 0.00 % Day Cares / Schools 10,606 3.42 % $ 1,178 14.25 % 0.00 % 0.00 % All Other Commercial Buildings 9,520 3.08 % $ 865 0.00 % 0.00 % 0.00 % Total Non-Owner Occupied CRE $ 309,757 As of December 31, 2025, the Company’s commercial and industrial loan portfolio totaled $265.4 million, a $7.7 million increase from the $257.7 million balance at year-end 2024.
Non-GAAP Presentations The accounting and reporting policies of the Company conform to GAAP and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the evaluation of the Company’s performance. These include adjusted tangible book value per share and the following fully-taxable equivalent measures: net interest income-FTE, efficiency ratio-FTE and net interest margin-FTE.
However, certain non-GAAP measures are used by management to supplement the evaluation of the Company’s performance. These include tangible book value per share and the following fully-taxable equivalent measures: net interest income-FTE, efficiency ratio-FTE and net interest margin-FTE.
The average balance for loans as a percentage of earnings assets for 2024 was 77.5%, compared to 66.8% and 58.3% in 2023 and 2022, respectively. 39 The 2024 net interest margin (FTE) declined 26 bps to 3.10% from 3.36% in 2023. The 2023 net interest margin (FTE) improved 15 bps from 3.21% in 2022.
The average balance for loans as a percentage of earnings assets for 2025 was 80.9%, compared to 77.5% and 66.8% in 2024 and 2023, respectively. The 2025 net interest margin (FTE) (non-GAAP) improved 30 bps to 3.40% from 3.10% in 2024 . The 2024 net interest margin (FTE) (non-GAAP) declined 26 bps from 3.36% in 2023.
Management proactively manages the mix of earning assets and cost of funds to maximize the earning capacity of the Company. In accordance with ASC 320, “Investments - Debt and Equity Securities,” the Company has categorized its unrestricted securities portfolio as Available for Sale. Securities classified as AFS may be sold in the future, prior to maturity.
In accordance with ASC 320, “Investments - Debt and Equity Securities,” the Company has categorized its unrestricted securities portfolio as Available for Sale. Securities classified as AFS may be sold in the future, prior to maturity.
Results of Operations Consolidated Return on Assets and Equity and Other Key Ratios The ratio of net income to average total assets and average shareholders' equity and certain other ratios for the years indicated are as follows: 2024 2023 Return on average assets 1.06 % 1.22 % Return on average equity 10.78 % 13.81 % Average equity to average assets 9.80 % 8.85 % Cash dividend payout ratio 41.80 % 33.47 % Efficiency ratio (FTE) 62.00 % 58.30 % Net income for the year ended December 31, 2024 was $17.0 million, or $3.15 per diluted share, an 11.9% decrease compared to $19.3 million, or $3.58 per diluted share for the year ended December 31, 2023.
Results of Operations Consolidated Return on Assets and Equity and Other Key Ratios The ratio of net income to average total assets and average shareholders' equity and certain other ratios for the years indicated are as follows: 2025 2024 Return on average assets 1.19 % 1.06 % Return on average equity 11.19 % 10.78 % Average equity to average assets 10.60 % 9.80 % Cash dividend payout ratio 39.48 % 41.80 % Efficiency ratio (FTE) (non-GAAP) 57.60 % 62.00 % Net income for the year ended December 31, 2025 was $19.3 million, or $3.55 per diluted share, a 13.5% increase compared to $17.0 million, or $3.15 per diluted share for the year ended December 31, 2024.
Based on management’s continuing evaluation of the loan portfolio in 2024, the Company recorded a net recovery of provision for credit losses of $600 thousand, which is net of a $118 thousand provision for unfunded commitments, compared to provision expense of $734 thousand, which includes a $38 thousand provision for unfunded commitments, in 2023 and provision expense of $106 thousand in 2022.
Based on management's continuing evaluation of the loan portfolio in 2025, the Company recorded a provision for credit losses of $137 thousand, which includes a $75 thousand provision for unfunded commitments, compared to a net recovery of provision expense of $600 thousand, which included a $118 thousand provision for unfunded commitments, in 2024.
Following is a schedule of future minimum rental payments under non-cancelable operating leases that have initial or remaining terms in excess of one year as of December 31, 2024: (Dollars in thousands) 1 year or less 1-3 years 3-5 years After 5 years Total Operating lease obligations $ 1,497 $ 2,222 $ 1,458 $ 654 $ 5,831
Following is a schedule of future minimum rental payments under non-cancelable operating leases that have initial or remaining terms in excess of one year as of December 31, 2025: (Dollars in thousands) 1 year or less 1-3 years 3-5 years After 5 years Total Operating lease obligations $ 1,642 $ 3,000 $ 1,662 $ 480 $ 6,784
The level of interest rates and the volume and mix of earning assets and interest bearing liabilities impact net interest income (FTE) and net interest margin (FTE). The following table details the average balance sheet, including an analysis of net interest income (FTE) for earning assets and interest bearing liabilities, for the years ended December 31, 2024, 2023, and 2022.
The following table details the average balance sheet, including an analysis of net interest income (FTE) (non-GAAP) for earning assets and interest bearing liabilities, for the years ended December 31, 2025, 2024, and 2023.
The Company’s holdings of restricted securities totaled $6.2 million and $8.4 million at December 31, 2024 and December 31, 2023, respectively, and consisted of stock in the Federal Reserve Bank, stock in the FHLB, and stock in CBB Financial Corporation, the holding company for Community Bankers’ Bank, and an investment in an SBA loan fund.
The Company held no issues that exceeded 10% of the Company’s shareholders' equity at December 31, 2025.The Company’s holdings of restricted securities totaled $6.2 million at December 31, 2025 and 2024, and consisted of stock in the Federal Reserve Bank, stock in the FHLB, and stock in CBB Financial Corporation, the holding company for Community Bankers’ Bank, and an investment in an SBA loan fund.
The following table presents the outstanding principal balance and the carrying amount of purchased loans as of December 31, 2024: (Dollars in thousands) December 31, 2024 Acquired Loans - Purchased Credit Deteriorated Acquired Loans - Purchased Performing Acquired Loans - Total Outstanding principal balance $ 25,598 $ 228,376 $ 253,974 Carrying amount: Commercial $ 14 $ 3,915 $ 3,929 Real estate construction and land 564 1,605 2,169 1-4 family residential mortgages 9,380 128,386 137,766 Commercial mortgages 11,199 91,826 103,025 Consumer 23 277 300 Total acquired loans $ 21,180 $ 226,009 $ 247,189 Loan Asset Quality Intrinsic to the lending process is the possibility of loss.
The following table presents the outstanding principal balance and the carrying amount of purchased loans as of December 31, 2025 and 2024: (Dollars in thousands) December 31, 2025 Acquired Loans - Purchased Credit Deteriorated Acquired Loans - Non-Purchased Credit Deteriorated Acquired Loans - Total Outstanding principal balance $ 22,048 $ 184,250 $ 206,298 Carrying amount: Commercial loans $ - $ 2,946 $ 2,946 Real estate construction and land 48 389 437 1-4 family residential mortgages 9,087 113,356 122,443 Commercial mortgages 9,688 65,926 75,614 Consumer 16 88 104 Total acquired loans $ 18,839 $ 182,705 $ 201,544 (Dollars in thousands) December 31, 2024 Acquired Loans - Purchased Credit Deteriorated Acquired Loans - Non-Purchased Credit Deteriorated Acquired Loans - Total Outstanding principal balance $ 25,598 $ 228,376 $ 253,974 Carrying amount: Commercial loans $ 14 $ 3,915 $ 3,929 Real estate construction and land 564 1,605 2,169 1-4 family residential mortgages 9,380 128,386 137,766 Commercial mortgages 11,199 91,826 103,025 Consumer 23 277 300 Total acquired loans $ 21,180 $ 226,009 $ 247,189 Loan Asset Quality Intrinsic to the lending process is the possibility of loss.
During 2023, there were $721 thousand in loan balances charged off, with a total of $377 thousand in recoveries of previously charged-off balances, resulting in net charge-offs of $344 thousand. The ratio of net charge-offs to average loans was 0.07% (net recovery) and 0.04% for 2024 and 2023, respectively.
During 2024, there were $759 47 thousand in loan balances charged off, with a total of $1.5 million in recoveries of previously charged-off balances, resulting in net charge-offs of $778 thousand. The ratio of net charge-offs to average loans was 0.02% and -0.07% (net recovery) for 2025 and 2024, respectively.
The level of these borrowings is determined by various factors, including customer demand and the Company's ability to earn a favorable spread on the funds obtained. The Company has a collateral dependent line of credit with the FHLB.
The level of these borrowings is determined by various factors, including customer demand and the Company's ability to earn a favorable spread on the funds obtained. The Company has a collateral dependent line of credit with the FHLB. As of December 31, 2025 and 2024, the Company had $20.0 million in outstanding advances from the FHLB .
Net interest income (FTE) for 2023 totaled $49.3 million, a $4.6 million decrease over the 2022 total of $53.9 million. Average earning assets increased $37.8 million or 2.6% in 2024 compared to 2023 and decreased $212.1 million or 12.6% in 2023 compared to 2022.
Net interest income (FTE) (non-GAAP) for 2024 totaled $46.7 million, a $2.6 million decrease over the 2023 total of $49.3 million. Average earning assets increased $19.2 million or 1.3% in 2025 compared to 2024 and increased $37.8 million or 2.6% in 2024 compared to 2023.
At December 31, 2024, the balances of non-interest bearing demand deposits were $374.1 million or 26.3% of total deposits, a 0.3% increase from $372.9 million at December 31, 2023. Interest bearing transaction and money market accounts totaled $741.0 million at December 31, 2024, an increase of $23.4 million compared to $717.7 million at December 31, 2023.
At December 31, 2025, the balances of non-interest bearing demand deposits were $362.3 million or 25.3% of total deposits, a 3.1% decrease from $374.1 million at December 31, 2024. Interest bearing transaction and money market accounts totaled $778.1 million at December 31, 2025, an increase of $37.1 million compared to $741.0 million at December 31, 2024.
(Dollars in thousands) December 31, 2024 December 31, 2023 Amount Percent Amount Percent U.S. Treasury securities $ 1,493 1 % $ 121,708 29 % U.S.
(Dollars in thousands) December 31, 2025 December 31, 2024 Amount Percent Amount Percent U.S. Treasury securities $ - 0 % $ 1,493 1 % U.S.
Allocation of the Allowance for Credit Losses December 31, 2024 (Dollars in thousands) Allowance Percentage of loans in each category to total loans Commercial loans $ 760 20.85 % Real estate construction and land 737 2.99 % 1-4 family residential mortgages 2,551 25.37 % Real estate mortgages 3,533 48.02 % Consumer 874 2.77 % Total $ 8,455 100.00 % 48 December 31, 2023 (Dollars in thousands) Allowance Percentage of loans in each category to total loans Commercial loans $ 193 13.95 % Real estate construction and land 462 3.08 % 1-4 family residential mortgages 1,492 29.07 % Real estate mortgages 5,261 50.42 % Consumer 987 3.48 % Total $ 8,395 100.00 % Deposits Depository accounts represent the Company’s primary source of funding and are comprised of demand deposits, interest bearing checking accounts, money market deposit accounts and time deposits.
Allocation of the Allowance for Credit Losses December 31, 2025 (Dollars in thousands) Allowance Percentage of loans in each category to total loans Commercial loans $ 481 21.44 % Real estate construction and land 930 2.83 % 1-4 family residential mortgages 2,482 24.05 % Commercial mortgages 3,840 49.57 % Consumer 537 2.11 % Total $ 8,270 100.00 % December 31, 2024 (Dollars in thousands) Allowance Percentage of loans in each category to total loans Commercial loans $ 760 20.85 % Real estate construction and land 737 2.99 % 1-4 family residential mortgages 2,551 25.37 % Commercial mortgages 3,533 48.02 % Consumer 874 2.77 % Total $ 8,455 100.00 % Deposits Depository accounts represent the Company’s primary source of funding and are comprised of demand deposits, interest bearing checking accounts, money market deposit accounts and time deposits.
The Company offers ICS ® , which allows customers access to multi-million-dollar FDIC insurance on funds placed into demand deposit and/or money market deposit accounts. As of December 31, 2024, the reciprocal ICS ® balances included in demand deposit and money market accounts were $44.5 million and $122.1 million, respectively.
The Company offers ICS ® , which allows customers access to multi-million-dollar FDIC insurance on funds placed into demand deposit and/or money market deposit accounts. As of December 31, 2025, the reciprocal ICS ® balances included in demand deposit and money market acc ounts were $60.8 million and $139.6 million, r espectively.
At December 31, 2024, the securities issued by political subdivisions or agencies were highly rated with 93% of the municipal bonds having A+ or higher ratings. Approximately 63% of the municipal bonds are general obligation bonds, and issuers are geographically diverse. The Company held no issues that exceeded 10% of the Company’s shareholders' equity at December 31, 2024.
At December 31, 2025, the securities issued by political subdivisions or agencies were highly rated with 98% of the municipal bonds having A+ or higher ratings. Approximately 63% of the municipal bonds are general obligation bonds, and issuers are geographically diverse.
The Bank segment earned net income of $17.2 million in 2024, a $2.2 million decrease compared to the $19.4 million netted in 2023. VNB Trust and Estate Services realized a net loss of $275.0 thousand in 2024, compared to a net loss of $307.0 thousand in 2023.
The Bank segment earned net income of $19.6 million in 2025, a $2.3 million increase compared to the $17.2 million netted in 2024. VNB Trust and Estate Services realized a net loss of $306 thousand in 2025, compared to a net loss of $275 thousand in 2024. Masonry Capital realized a net loss of $2 thousand in 2024.
The tax-equivalent yield on average earning assets for 2024 of 5.07% was 28 bps higher than the 2023 yield of 4.79%. The 2023 tax-equivalent yield on average earning assets was 139 bps higher than the comparable 2022 yield of 3.40%. Loan yields for 2024 were 5.71%, declining only 1 bp from the loan yield of 5.72% for 2023.
The tax-equivalent yield on average earning assets for 2025 of 5.09% was 2 bps higher than the 2024 yield of 5.07%. The 2024 tax-equivalent yield on average earning assets was 28 bps higher than the comparable 2023 yield of 4.79%. Loan yields for 2025 were 5.65%, declining 6 bps from the loan yield of 5.71% for 2024.
Borrowings, excluding federal funds purchased, consist of the following as of December 31, 2024, 2023, and 2022: (Dollars in thousands) 2024 2023 Federal funds purchased $ 236 $ 3,462 FHLB advances 20,000 66,500 Total borrowings $ 20,236 $ 69,962 Maximum amount at any month-end during the year $ 55,702 $ 80,808 Annual average balance outstanding $ 36,600 $ 39,917 Annual average interest rate paid 4.70 % 5.19 % Annual average interest rate, including impact of fair value mark 4.82 % 4.92 % Details on available borrowing lines can be found later under Liquidity in the Asset/Liability Management section. 50 Junior Subordinated Debt In 2006, a subsidiary of Fauquier, Fauquier Statutory Trust II, privately issued $4.0 million face amount of the trust’s Floating Rate Capital Securities in a pooled capital securities offering.
(Dollars in thousands) 2025 2024 Federal funds purchased $ - $ 236 FHLB advances 20,000 20,000 Total borrowings $ 20,000 $ 20,236 Maximum amount at any month-end during the year $ 51,000 $ 55,702 Annual average balance outstanding $ 40,573 $ 36,600 Annual average interest rate paid 4.65 % 4.70 % Annual interest rate at end of period 3.84 % 4.82 % Details on available borrowing lines can be found later under Liquidity in the Asset/Liability Management section. 49 Junior Subordinated Debt In 2006, a subsidiary of Fauquier, Fauquier Statutory Trust II, privately issued $4.0 million face amount of the trust’s Floating Rate Capital Securities in a pooled capital securities offering.
Government agencies 29,635 11 % 39,581 9 % MBS/CMOs 132,811 50 % 155,144 37 % Corporate bonds 17,591 7 % 19,129 5 % Municipal bonds 82,007 31 % 85,033 20 % Total available for sale securities at fair value $ 263,537 100 % $ 420,595 100 % All mortgage-backed securities included in the above tables were issued by U.S. government agencies and corporations.
Government agencies 31,263 13 % 29,635 11 % MBS/CMOs 123,505 50 % 132,811 50 % Corporate bonds 7,899 3 % 17,591 7 % Municipal bonds 85,325 34 % 82,007 31 % Total available for sale securities at fair value $ 247,992 100 % $ 263,537 100 % All mortgage-backed securities included in the above tables were issued by U.S. government agencies and corporations.
The Tier 1, common equity Tier 1, total capital to risk-weighted assets, and leverage ratios of the Bank were 17.77%, 17.77%, 18.60% and 11.55%, respectively, as of December 31, 2024, exceeding the minimum requirements.
The Tier 1, common equity Tier 1, total capital to risk-weighted assets, and leverage ratios of the Bank were 19.36%, 19.36%, 20.19% and 12.36%, respectively, as of December 31, 2025, exceeding the minimum requirements.
The remaining real estate loans were comprised of construction and land development loans which totaled $37.0 million as of December 31, 2024. Of the $593.5 million of commercial mortgages held on the balance sheet as of December 31, 2024, $309.8 million consists of non-owner occupied commercial real estate, $107.2 million of multifamily, and $176.5 million of owner occupied CRE.
The remaining real estate loans were comprised of construction and land development loans which totaled $35.0 million as of December 31, 2025. Of the $613.4 million of commercial mortgages held on the balance sheet as of December 31, 2025, $333.7 million consists of non-owner occupied commercial real estate, $127.8 million of multifamily, and $151.9 million of owner occupied CRE.
The table below shows the composition of the loan portfolio: (Dollars in thousands) As of December 31, 2024 2023 Commercial loans $ 257,671 $ 152,517 Real estate mortgage: Construction and land 36,977 33,682 1-4 family residential mortgages 313,610 317,558 Commercial 593,496 550,867 Total real estate mortgage $ 944,083 $ 902,107 Consumer 34,215 38,041 Total loans $ 1,235,969 $ 1,092,665 Less: Allowance for credit losses (8,455 ) (8,395 ) Net loans $ 1,227,514 $ 1,084,270 At December 31, 2024, the loan-to-deposit ratio stood at 86.8%, compared to 77.5% at December 31, 2023.
The table below shows the composition of the loan portfolio: (Dollars in thousands) As of December 31, 2025 2024 Commercial loans $ 265,393 $ 257,671 Real estate mortgage: Construction and land 35,000 36,977 1-4 family residential mortgages 297,589 313,610 Commercial mortgages 613,443 593,496 Total real estate mortgage $ 946,032 $ 944,083 Consumer 26,152 34,215 Total loans $ 1,237,577 $ 1,235,969 Less: Allowance for credit losses (8,270 ) (8,455 ) Net loans $ 1,229,307 $ 1,227,514 At December 31, 2025, the loan-to-deposit ratio stood at 86.4%, compared to 86.8% at December 31, 2024.
The significant contractual obligations include the leasing of certain of its banking and operations offices under operating lease agreements on terms ranging from 1 to 10 years, most with renewal options.
The significant contractual obligations include the leasing of certain of its banking and operations offices under operating lease agreements on terms ranging from 1 to 10 years, most with renewal options. During the second quarter of 2025, the Company extended the ground lease associated with the Pantops headquarters for an additional five-year period.
(Dollars in thousands) 2024 2023 2022 Average Balance % of Total Deposits Average Balance % of Total Deposits Average Balance % of Total Deposits Non-interest demand deposits $ 370,178 26.5 % $ 418,091 30.3 % $ 526,389 32.0 % Interest checking accounts 269,136 19.3 % 321,154 23.2 % 409,504 24.9 % Money market and savings deposit accounts 425,386 30.4 % 421,083 30.5 % 563,374 34.3 % Total non-interest and low-cost deposit accounts $ 1,064,700 76.2 % $ 1,160,328 84.0 % $ 1,499,267 91.2 % Time deposits 333,139 23.8 % 220,348 16.0 % 144,564 8.8 % Total deposit account balances $ 1,397,839 100.0 % $ 1,380,676 100.0 % $ 1,643,831 100.0 % Provision for Credit Losses The level of the ACL reflects changes in the size of the portfolio or in any of its components, as well as management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, and economic, political and regulatory conditions.
(Dollars in thousands) 2025 2024 Average Balance % of Total Deposits Average Balance % of Total Deposits Non-interest demand deposits $367,066 26.3% $370,178 26.5% Interest checking accounts 267,222 19.1% 269,136 19.3% Money market and savings deposit accounts 467,612 33.4% 425,386 30.4% Total non-interest and low-cost deposit accounts $1,101,900 78.8% $1,064,700 76.2% Time deposits 296,218 21.2% 333,139 23.8% Total deposit account balances $1,398,118 100.0% $1,397,839 100.0% Provision for Credit Losses The level of the ACL reflects changes in the size of the portfolio or in any of its components, as well as management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio quality, and economic, political and regulatory conditions.
Revenue for this segment is generated from administration, service and custody fees, as well as management fees which are derived from Assets Under Management. Investment management services currently are offered through affiliated and third-party managers. • Masonry Capital - Masonry Capital offers investment management services for separately managed accounts and a private investment fund employing a value-based, catalyst-driven investment strategy.
Investment management services currently are offered through affiliated and third-party managers. • Masonry Capital (Masonry) - Masonry Capital offers investment management services for separately managed accounts and a private investment fund employing a value-based, catalyst-driven investment strategy.
Maturities of time deposits in excess of FDIC insurance limits as of December 31, 2024 were as follows: (Dollars in thousands) Amount Percentage Three months or less $ 43,967 43.0 % Over three months to six months 31,217 30.6 % Over six months to one year 14,976 14.7 % Over one year 11,938 11.7 % Totals $ 102,098 100.0 % Borrowings Borrowings, consisting primarily of FHLB advances and federal funds purchased, are additional sources of funds for the Company.
Maturities of time deposits in excess of FDIC insurance limits as of December 31, 2025 were as follows: (Dollars in thousands) Amount Percentage Three months or less $ 48,225 50.0 % Over three months to six months 29,327 30.3 % Over six months to one year 17,877 18.5 % Over one year 1,163 1.2 % Totals $ 96,592 100.0 % Borrowings Borrowings, consisting primarily of FHLB advances and federal funds purchased, are additional sources of funds for the Company.
The following is a summary of the changes in the ACL for the years ended December 31, 2024, 2023, and 2022: (Dollars in thousands) 2024 2023 2022 Allowance for credit losses, January 1 $ 8,395 $ 5,552 $ 5,984 Impact of ASC 326 adoption - 2,491 - Charge-offs (759 ) (721 ) (1,255 ) Recoveries 1,537 377 717 Provision for (recovery of) credit losses (718 ) 696 106 Allowance for credit losses, December 31 $ 8,455 $ 8,395 $ 5,552 Allowance for credit losses as a percentage of period-end total loans 0.68 % 0.77 % 0.59 % 40 Noninterest Income The major components of noninterest income are detailed below.
The ACL as a percentage of total loans was 0.67% at December 31, 2025 compared to 0.68% at December 31, 2024. 39 The following is a summary of the changes in the ACL for the years ended December 31, 2025 and 2024: (Dollars in thousands) 2025 2024 Allowance for credit losses, January 1 $ 8,455 $ 8,395 Charge-offs (453 ) (759 ) Recoveries 206 1,537 Provision for (recovery of) credit losses 62 (718 ) Allowance for credit losses, December 31 $ 8,270 $ 8,455 Allowance for credit losses as a percentage of period-end total loans 0.67 % 0.68 % Noninterest Income The major components of noninterest income are detailed below.
Loans 90 days or more past due and still accruing interest amounted to $754 thousand as of December 31, 2024, compared to $879 thousand as of December 31, 2023. The 2024 balance includes three loans totaling $705 thousand which are 100% government-guaranteed, and three student loans totaling $49 thousand.
Loans 90 days or more past due and still accruing interest amounted to $7.0 million as of December 31, 2025, compared to $754 thousand as of December 31, 2024. The 2025 balance includes seven loans totaling $6.6 million which are 100% government-guaranteed, one loan for $391 thousand fully secured by residential real estate, and three student loans totaling $86 thousand.
During the years ended December 31, 2024, and December 31, 2023, $40.0 million and $49.8 million of securities were sold incurring pre-tax losses of $4 thousand and $206 thousand, respectively. All of these sales were part of strategic decisioning to reinvest proceeds into higher yielding assets.
During the year ended December 31, 2024, $49.8 million of securities were sold incurring a pre-tax loss of $4 thousand. These sales were part of strategic decisioning to reinvest proceeds into higher yielding assets. Management proactively manages the mix of earning assets and cost of funds to maximize the earning capacity of the Company.
As of December 31, 2024, the Company’s investment portfolio totaled $269.7 million, with obligations of U.S. government corporations and government-sponsored enterprises amounting to $163.9 million, or approximately 61% of the total. The Company’s investment portfolio totaled $429.0 million as of December 31, 2023.
As of December 31, 2025, the Company’s investment portfolio totaled $254.2 million, with obligations of U.S. government corporations and government-sponsored enterprises amounting to $154.8 million, or approximately 61% of the total. The Company’s investment portfolio totaled $269.7 million as of December 31, 2024 . During the year ended December 31, 2025, the Company did not sell any securities.
The increase in the average balance of loans in the real estate and commercial categories were the primary drivers of the increase in interest income from 2023 to 2024.
The increase in the average balance of loans in the real estate and commercial categories was the primary driver of the increase in interest income from 2024 to 2025, whereas the 2023 to 2024 change in interest 38 income was primarily driven by interest rate changes.
Allowance for Credit Losses The relationship of the ACL to total loans and nonaccrual loans appears below: (Dollars in thousands) 2024 2023 Total loans $ 1,235,969 $ 1,092,665 Nonaccrual loans $ 2,267 $ 1,852 Allowance for credit losses $ 8,455 $ 8,395 Nonaccrual loans to total loans 0.18 % 0.17 % ACL to total loans 0.68 % 0.77 % ACL to nonaccrual loans 372.96 % 453.29 % See Note 4 – Loans and Note 5 – Allowance for Credit Losses in the accompanying Notes to Consolidated Financial Statements included in Item 8.
No CRE loans were 90 days or more past due as of December 31, 2025. 46 Allowance for Credit Losses The relationship of the ACL to total loans and nonaccrual loans appears below: (Dollars in thousands) 2025 2024 Total loans $ 1,237,577 $ 1,235,969 Nonaccrual loans $ 2,198 $ 2,267 Allowance for credit losses $ 8,270 $ 8,455 Nonaccrual loans to total loans 0.18 % 0.18 % ACL to total loans 0.67 % 0.68 % ACL to nonaccrual loans 376.25 % 372.96 % See Note 4 – Loans and Note 5 – Allowance for Credit Losses in the accompanying Notes to Consolidated Financial Statements included in Item 8.
Average Balances and Rates Paid (Dollars in thousands) Years Ended December 31 2024 2023 Average Average Average Average Balance Rate Balance Rate Non-interest bearing demand deposits $ 370,178 $ 418,091 Interest bearing deposits: Interest checking 269,136 0.10 % 321,154 0.11 % Money market and savings deposits 425,386 2.77 % 421,083 2.30 % Time deposits 333,139 4.63 % 220,348 3.91 % Total interest bearing deposits $ 1,027,661 2.67 % $ 962,585 1.94 % Total deposits $ 1,397,839 $ 1,380,676 49 As of December 31, 2024 and 2023, the estimated amounts of total uninsured deposits were $389.6 million and $360.0 million, respectively.
These reciprocal CDARS™ deposits totaled $5.8 million and $4.9 million at December 31, 2025 and 2024, respectively. 48 Deposits Average Balances and Rates Paid Years Ended December 31 2025 2024 Average Average Average Average (Dollars in thousands) Balance Rate Balance Rate Non-interest bearing demand deposits $ 367,066 $ 370,178 Interest bearing deposits: Interest checking 267,222 0.10 % 269,136 0.10 % Money market and savings deposits 467,612 2.57 % 425,386 2.77 % Time deposits 296,218 3.80 % 333,139 4.63 % Total interest bearing deposits $ 1,031,052 2.28 % $ 1,027,661 2.67 % Total deposits $ 1,398,118 $ 1,397,839 As of December 31, 2025 and 2024, the estimated amounts of total uninsured deposits were $392.0 million and $389.6 million, respectively.
On the liability side of the balance sheet, the Company maintained an average of $36.1 million in FHLB advances and $489 thousand in federal funds purchased during 2024. On December 31, 2024 the Company had a $20 million balance in FHLB advances and a $236 thousand balance outstanding in federal funds purchased.
The Company maintained an average of $20.0 million outstanding in federal funds sold, and an average of $7.8 million at the Federal Reserve during 2025. On the liability side of the balance sheet, the Company maintained an average of $40.0 million in FHLB advances and $569 thousand in federal funds purchased during 2025.
(Dollars in thousands) Change in Net Interest Income Change in Yield Curve Percentage Amount +400 bps -3.73 % $ (3,975 ) +300 bps -3.12 % (3,332 ) +200 bps -2.48 % (2,646 ) +100 bps -1.89 % (2,012 ) Base case 0.00 % - -100 bps 0.89 % 944 -200 bps 0.71 % 754 -300 bps 2.66 % 2,842 -400 bps 1.88 % 2,006 In addition to monitoring the effects to interest income, the model computes the effects to the economic value of equity using the same “static” balance sheet with immediate and parallel rate changes for the same rate change horizons.
(Dollars in thousands) Change in Net Interest Income Change in Yield Curve Percentage Amount +400 bps 10.19 % $ 11,948 +300 bps 7.01 % 8,217 +200 bps 4.19 % 4,907 +100 bps 2.28 % 2,670 Base case 0.00 % - -100 bps -2.18 % (2,559 ) -200 bps -2.41 % (2,826 ) -300 bps -2.92 % (3,424 ) -400 bps -4.29 % (5,024 ) In addition to monitoring the effects to interest income, the model computes the effects to the economic value of equity using the same “static” balance sheet with immediate and parallel rate changes for the same rate change horizons.

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