Breaking Down Virginia National Bankshares Corporation (VABK) Financial Health: Key Insights for Investors

You're looking at Virginia National Bankshares Corporation (VABK) and wondering if their recent performance signals a true opportunity or just a pause in the regional banking volatility, and honestly, the Q3 2025 numbers show a bank that's defintely navigating the rate environment with skill. For the nine months ended September 30, 2025, the company pulled in a net income of $13.3 million, which translates to a solid $2.45 per diluted share, a nice jump from last year. Here's the quick math: they've managed to cut their cost of funds by 30 basis points year-over-year, helping to push the net interest margin to 3.43% in the third quarter. Still, you need to be a realist: while total assets sit at $1.61 billion, the nonperforming assets have climbed to $6.8 million, a near-term risk that demands scrutiny, plus the $42.0 million in unrealized losses on their Available-for-Sale (AFS) securities portfolio is a factor that won't disappear until rates move. The bank is efficient, with an improved efficiency ratio of 57.9%, so let's dig into whether that operational strength can offset the balance sheet risks and make this a buy.

Revenue Analysis

You need to know where the money is coming from at Virginia National Bankshares Corporation (VABK) to properly assess its risk and growth profile. The direct takeaway is that VABK is a classic spread lender, meaning its revenue stream is heavily concentrated in Net Interest Income (NII)-the difference between what it earns on loans and what it pays on deposits.

For the twelve months ending September 30, 2025, the company generated a total revenue of $56.51 million, marking a strong year-over-year growth of 10.39%. That's a solid jump, especially in a volatile rate environment. The core of this revenue comes from its subsidiary, Virginia National Bank, which offers a full range of commercial and retail banking services to individuals and businesses across Virginia.

Here's the quick math on the most recent quarter, Q3 2025, which shows just how dominant the lending business is:

• Net Interest Income (NII): This was the primary driver at $13.1 million.
• Non-Interest Income: This totaled approximately $0.99 million (calculated from total revenue of $14.09 million minus NII).

This means roughly 93.0% of the company's Q3 2025 revenue came from NII, with only about 7.0% from non-interest sources like service fees, wealth management through VNB Trust and Estate Services, or Sturman Wealth Advisors. You can see the importance of a diversified revenue base, and VABK is defintely leaning on its core banking function.

Growth Drivers and Segment Contribution

The story of VABK's 2025 revenue growth isn't just about volume; it's about smart cost management. The year-over-year NII growth for Q3 2025 was 8.7%, which is healthy. But the real lever was the cost of funds-what the bank pays on deposits and borrowings. For the first nine months of 2025, the cost of funds declined by 30 basis points year-over-year, which is a significant factor in widening the net interest margin (NIM).

The company's focus on loan growth, particularly in the first quarter, also helped. Gross loans outstanding reached $1.2 billion as of September 30, 2025. This is the asset base generating the interest income. The improvement in the net interest margin (NIM) to 3.43% in Q3 2025, up from 3.24% a year earlier, clearly shows the success of managing both loan yields and funding costs.

To see the quarter-by-quarter trend in their main revenue engine, look at the NII figures for the first three quarters of 2025:

What this table hides is the strategic shift. The sequential NII growth slowed from Q2 to Q3, but the year-over-year figures remain strong, driven by the earlier success in reducing interest expense. This is a common pattern for regional banks managing a shifting rate cycle. If you want to dig deeper into the company's long-term strategy, you should review their Mission Statement, Vision, & Core Values of Virginia National Bankshares Corporation (VABK).

Profitability Metrics

You want to know if Virginia National Bankshares Corporation (VABK) is truly profitable or just surviving on market tailwinds. The short answer is they are demonstrating solid, consistent profitability for a regional bank, with a net margin that's notably strong and operational efficiency that continues to improve in 2025.

Net Profit Margins and Trends

Virginia National Bankshares Corporation's net profitability is a clear strength. For the nine months ended September 30, 2025, the company reported net income of $13.3 million, a solid jump from $12.4 million in the same period a year prior. Their trailing twelve-month (TTM) net profit margin for 2025 stands at 31.8%, which is an uptick from 30.4% in the prior year. That kind of margin, near one-third of total revenue converting to bottom-line profit, is a signal of quality in the regional banking space.

The trend is one of steady, persistent growth. Annual earnings growth has averaged 14.7% over the last five years and matched that rate again this year. This consistency is defintely what attracts long-term investors, especially when sector risks are elevated. The bank is generating more profit from each dollar of revenue.

Operational Efficiency and Gross Margin Analysis

For a bank, the closest thing to a gross margin is the Net Interest Margin (NIM), which measures the spread between interest earned on loans and interest paid on deposits. VABK is managing this spread well. The Net Interest Margin (FTE) improved to 3.43% in the third quarter of 2025, up from 3.24% in the third quarter of 2024. This expansion is primarily due to a decrease in the cost of funds-they are paying less for deposits and other funding sources. That's good cost management.

Operational efficiency, measured by the efficiency ratio (non-interest expense as a percentage of revenue), is also moving in the right direction. The efficiency ratio improved to 57.9% for the third quarter of 2025, down from 58.6% in the same period in 2024. A lower number is better here, showing they are spending less to generate revenue. On a year-to-date basis, the ratio is 60.5%, down from 62.6% in 2024. That's a clear focus on expense management driving earnings.

• Improve efficiency: Q3 2025 ratio is 57.9%.
• Expand NIM: Q3 2025 Net Interest Margin is 3.43%.
• Grow net income: Q3 2025 net income was $4.6 million.

Peer Comparison: VABK vs. Industry

When we stack VABK up against its regional bank peers, the picture is favorable, suggesting the stock might be undervalued (trading at a discount to its intrinsic value). Here's the quick math on key ratios as of late 2025:

The Return on Average Equity (ROAE) of 10.48% is right in line with the broader industry's recent performance, which was around 11% in late 2024. What's interesting is the valuation: VABK's P/E ratio of 11x is lower than the peer average of 12.61x, suggesting the market hasn't fully priced in the bank's strong profitability and improving efficiency. This indicates a potential opportunity for investors seeking value in the regional banking sector. To dig deeper into the full picture, you should check out the complete analysis: Breaking Down Virginia National Bankshares Corporation (VABK) Financial Health: Key Insights for Investors. Your next step should be to model how a return to the peer average P/E would impact your target price.

Debt vs. Equity Structure

Virginia National Bankshares Corporation (VABK) maintains a conservative and healthy capital structure, relying significantly more on shareholder equity than on external debt financing for its operations. This is a deliberate, low-leverage approach that provides a strong cushion against market volatility, which is exactly what you want to see in a regional bank.

The company's debt-to-equity (D/E) ratio, which measures total liabilities against shareholder equity, stood at approximately 0.38 for the quarter ended June 2025. This is a defintely a low figure. For context, the industry average D/E ratio for Regional Banks typically hovers between 0.50 and 0.5753, meaning VABK is using significantly less debt per dollar of equity than its peers. A lower ratio signals lower financial risk.

The Role of Debt in VABK's Funding

For a bank, debt often takes the form of Federal Home Loan Bank (FHLB) borrowings and other short-term funding sources, not just corporate bonds. As of September 30, 2025, VABK's outstanding borrowings from the FHLB were approximately $30.0 million. This is a relatively small amount when compared to the total shareholders' equity, which had risen to $177.4 million as of the same date. Here's the quick math: the bulk of VABK's funding comes from deposits and retained earnings, not wholesale debt.

The company also maintains substantial capacity to borrow if needed, which is a key liquidity metric. As of March 31, 2025, VABK had unused borrowing facilities totaling approximately $206.3 million. This is your safety net in a liquidity crunch.

• Debt-to-Equity (Q2 2025): 0.38
• Shareholders' Equity (Q3 2025): $177.4 million
• FHLB Borrowings (Q3 2025): $30.0 million

Managing the Cost of Borrowing

VABK has been actively managing its cost of funds, which includes its borrowings. The cost of FHLB borrowings decreased from 4.86% in the third quarter of 2024 to 4.77% in the third quarter of 2025. This modest reduction in the cost of debt is a direct benefit to the net interest margin (NIM), especially in a fluctuating interest rate environment.

The company's strategy clearly favors equity funding-retaining earnings and growing book value-over aggressive debt issuance. Book value per share increased to $32.89 as of September 30, 2025, up from $30.89 a year prior. This consistent growth in equity is the primary way VABK finances its balance sheet expansion, keeping the debt load light. What this estimate hides is the potential for higher returns if they took on more debt, but VABK prioritizes stability.

For a deeper dive into the bank's overall performance, you should review Breaking Down Virginia National Bankshares Corporation (VABK) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You want to know if Virginia National Bankshares Corporation (VABK) has the cash to cover its near-term obligations, and honestly, for a bank, the traditional liquidity ratios tell a misleading story. We need to look past the simple math and focus on the core banking metrics.

The standard Current Ratio, which measures current assets against current liabilities, was 0.88 for the 2024 fiscal year. The Quick Ratio, which strips out less-liquid assets like inventory (not a major factor for a bank anyway), was 0.0x for the same period. These low numbers are typical for a bank because their primary assets are long-term loans, while their liabilities are short-term deposits. Don't panic over these; they don't mean the bank is illiquid. What matters more is the quality of their loan portfolio and their access to funding.

Working Capital and Funding Trends

The real measure of VABK's operational liquidity-their working capital-is how well they manage their deposits and loans. The bank has been actively managing its funding mix to reduce overall costs, a smart move in a high-rate environment.

• Gross loans outstanding totaled $1.2 billion as of September 30, 2025.
• Deposit balances were $1.38 billion as of Q3 2025.
• The Loan-to-Deposit (LTD) ratio remained stable at 89% in Q3 2025.

A stable LTD ratio of 89% is a good sign; it means that for every dollar of loans they have, they have about $1.12 in deposits to fund it. That's a healthy balance. They also decreased their total deposit balances by $38.7 million since year-end 2024, but this was a strategic move to reduce the cost of funds, not a sign of a funding crisis. They're swapping out expensive deposits for cheaper funding sources. You can see more on the shareholder base in Exploring Virginia National Bankshares Corporation (VABK) Investor Profile: Who's Buying and Why?.

Cash Flow Drivers and Liquidity Strengths

While we don't have the full 2025 annual cash flow statement yet, the trends are clear. Cash flow from operating activities is primarily driven by net income, which was strong at $13.3 million for the nine months ended September 30, 2025. This positive cash generation is what fuels their growth and dividend payments.

The cash flow from investing activities is dominated by loan originations, which grew strongly in the first quarter of 2025, and securities management. On the financing side, they are managing their debt well. A key liquidity strength is their access to external funding, which acts as a crucial buffer.

• VABK had unused borrowing facilities of approximately $206.3 million as of March 31, 2025.
• The bank held no brokered deposits as of March 31, 2025, which are often a higher-cost and less stable funding source.

Here's the quick math: $206.3 million in accessible funding plus the $1.38 billion in core deposits gives them a defintely strong liquidity cushion to handle any unexpected deposit withdrawals or fund new lending opportunities.

Near-Term Risk Check

The main risk you need to watch is the rise in nonperforming assets (NPAs), which are loans not generating interest payments. NPAs increased to $6.8 million as of September 30, 2025, up from $3.0 million at the end of 2024. This is a metric that needs monitoring, but as a percentage of total assets, it's still low at 0.42%. The bank's management is focused on strong credit standards, which should mitigate this risk going forward. For now, VABK's liquidity position is solid, backed by strong capital and ample access to external funding lines.

Valuation Analysis

You are looking at Virginia National Bankshares Corporation (VABK) and asking the right question: is this regional bank a value play or a warning sign? My take is that, based on the 2025 fiscal year data, the stock appears undervalued relative to its peers, but you must factor in the recent stock price decline. The valuation multiples are attractive, but the market has been punishing the regional banking sector, so you need to be a trend-aware realist here.

Here's the quick math on why Virginia National Bankshares Corporation (VABK) looks cheap right now. We look at three core ratios to gauge if a stock is overvalued or undervalued. For a bank, the Price-to-Earnings (P/E) and Price-to-Book (P/B) ratios are most critical, but we'll look at Enterprise Value-to-EBITDA (EV/EBITDA) for a broader view of the business (Enterprise Value is the total value of the company, and EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization-a proxy for operating cash flow).

• Price-to-Earnings (P/E) Ratio: The P/E ratio for Virginia National Bankshares Corporation (VABK) stands at approximately 9.02. This is a low multiple, especially when compared to the broader market and even some regional bank peers, suggesting its earnings power is not fully priced in.
• Price-to-Book (P/B) Ratio: At about 1.19, the P/B ratio indicates the stock trades slightly above its book value per share. For a well-run bank, trading at or slightly above this level is often considered a fair or undervalued position, as it means you are buying the assets for close to their recorded value.
• EV/EBITDA Ratio: The Enterprise Value-to-EBITDA is reported at 8.76. This is a defintely solid number for a stable financial institution, pointing to a reasonable valuation of the operating business.

The stock has had a rough ride over the past 12 months, which is why the valuation looks so favorable. The share price has seen a decline of 6.70% over the last year, with the current price hovering around $39.00. This decline contrasts sharply with the S&P 500's performance, which has seen positive returns in the same period. This is the risk mapped to the opportunity: the regional banking landscape has been volatile, and Virginia National Bankshares Corporation (VABK) has not been immune to that market sentiment, even if its underlying financials are stable. You are buying a discount driven by sector-wide fear.

When you look at the income stream, Virginia National Bankshares Corporation (VABK) offers a compelling dividend. The annual dividend is $1.44 per share, which translates to a dividend yield of around 3.71%. The payout ratio-the percentage of earnings paid out as dividends-is a healthy 42.73%. This is a sustainable level, well below the 75% threshold that often flags a dividend as risky. A payout ratio this low means the bank retains most of its earnings to fund growth and build capital, plus still gives you a strong yield.

Lastly, let's talk about the consensus. Analyst coverage on Virginia National Bankshares Corporation (VABK) is not extensive, but the current market analyst rating is a Buy. This forecast suggests positive growth potential, even with some reservations about the broader sector. The low valuation multiples, combined with a sustainable, high-yield dividend, suggest a clear opportunity for patient investors who believe the regional banking sector will stabilize. What this estimate hides is the potential for further interest rate volatility, which can impact a bank's net interest margin. For a more detailed look at the bank's operational health, you can read our full report: Breaking Down Virginia National Bankshares Corporation (VABK) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Virginia National Bankshares Corporation (VABK) and seeing solid Q3 2025 earnings, but a seasoned analyst knows to look past the headline net income of $4.6 million. The real story is in the balance sheet risks, particularly those driven by the current interest rate environment and asset quality trends.

The biggest near-term financial risk is the unrealized loss on the securities portfolio. As of September 30, 2025, VABK's available-for-sale (AFS) securities had a fair value of $252.9 million, but they also carried $42.0 million in unrealized losses. This is a direct hit to shareholders' equity (Other Comprehensive Income, or OCI) and a common issue across the banking sector. It means if VABK had to sell those assets today, they would crystallize that loss. Still, the shareholders' equity rose to $177.4 million from $160.3 million at year-end, which shows capital is holding up despite the marks.

Here's the quick math on the key risks we see:

• Credit Quality Deterioration: Nonperforming assets (NPAs) jumped to $6.8 million as of September 30, 2025, a significant rise from $3.0 million at the end of 2024.
• Funding Pressure: Deposit balances decreased by $38.7 million since December 31, 2024, forcing management to actively manage the deposit mix to stabilize the cost of funds.
• Noninterest Income Headwinds: Q3 2025 saw lower noninterest income, specifically from reduced wealth management fees and debit card usage, pointing to competitive pressure on fee-based services.

To be fair, the credit risk is still contained. The nonperforming assets as a percentage of total assets is only 0.42% as of September 30, 2025. But that jump from 0.19% at year-end is defintely a trend to watch, especially since the nonaccrual loans are concentrated in 1-4 family residential mortgages. That's a key segment of their loan book.

The external risks are just as critical. VABK operates in a competitive regional market, and the broader regulatory environment is always a factor. While the FDIC's 2025 Risk Review highlights general industry concerns like commercial real estate (CRE) asset quality weakening, VABK's nonaccrual concentration is currently in residential. You also have to consider the constant pressure from non-bank financial institutions (FinTech) chipping away at their fee-based income, which is already showing up in lower wealth management and debit card fees.

Management's mitigation strategies focus on liquidity and capital strength. They have substantial unused borrowing facilities of approximately $223.0 million available as of September 30, 2025, and they hold no brokered deposits, which is a sign of a stable, relationship-based funding model. That's a strong defensive position. For a deeper look at the company's long-term vision, you can review their Mission Statement, Vision, & Core Values of Virginia National Bankshares Corporation (VABK).

Here is a snapshot of the asset quality trend you need to track:

What this estimate hides is the potential for a recession to accelerate the NPA trend, especially if local employment in their Virginia markets were to unexpectedly weaken. The current allowance for credit losses (ACL) is only slightly up at 0.69% of total loans, suggesting management is still confident in the overall credit quality of the $1.23 billion net loan portfolio, but the NPA increase warrants caution.

Growth Opportunities

You're looking at Virginia National Bankshares Corporation (VABK) and seeing steady performance, but the real question for any investor is: where does the growth come from next? For VABK, the near-term story isn't about massive acquisitions or new product lines; it's about a relentless focus on operational efficiency and a strong defense on credit quality, which is defintely the right play in this economic cycle.

The core growth driver in the 2025 fiscal year has been financial discipline. Specifically, the bank has successfully lowered its cost of funds, which is the interest rate it pays on deposits and borrowings. This cost declined by a significant 30 basis points year-over-year, which directly expands the Net Interest Margin (NIM)-the profit engine of any bank.

Earnings and Efficiency Projections

Based on the latest reports, VABK is on track for a solid year. For the nine months ended September 30, 2025, the company reported net income of $13.3 million, or $2.45 per diluted share. Here's the quick math: assuming a stable fourth quarter net income of around $4.6 million (consistent with Q3 2025 results), we can project a full-year 2025 net income of roughly $17.9 million. That's a strong performance driven by internal levers.

This efficiency focus is clearly visible in the key performance indicators (KPIs). The efficiency ratio improved to 57.9% for the third quarter of 2025, down from 62.6% year-to-date in 2024, meaning the bank is spending less to earn a dollar of revenue.

• Net Interest Margin (Q3 2025): 3.43%.
• Return on Average Equity (Q3 2025): 10.48%.
• Book Value per Share (Sep 30, 2025): $32.89.

The book value is growing, and that's a clean signal of retained earnings and compounding value for shareholders.

Strategic Focus and Competitive Edge

VABK's strategic initiatives for growth are less about splashy market expansions and more about deepening their roots in their existing, high-value markets like Charlottesville, Richmond, and the surrounding counties. Their competitive advantage lies in their community bank model, which has allowed them to grow their assets to $1.6 billion and become one of the more profitable community banks in Virginia.

The bank's focus is on two main areas:

• Credit Standards: Maintaining a sharp focus on strong credit standards, even as gross loans reached approximately $1.2 billion. This capital preservation focus is crucial when economic uncertainty is high.
• Fiduciary Services: Leveraging their VNB Trust and Estate Services to capture fee-based income, which diversifies revenue away from purely interest-based lending.

A minor but important strategic move was the planned CFO transition in November 2025, bringing in Cathy W. Liles. This kind of seamless executive transition, where the outgoing CFO serves as a Senior Advisor indefinitely, speaks to a strong, deliberate governance structure. It's a sign of stability, not disruption.

What this estimate hides is the potential for loan growth to pick up if interest rates decline further in 2026, which would provide an additional tailwind beyond the current efficiency gains. For a deeper dive into the bank's core financial health metrics, you should check out our full analysis: Breaking Down Virginia National Bankshares Corporation (VABK) Financial Health: Key Insights for Investors.