10-Q 1 vabk-20240331.htm 10-Q 10-Q
Q10001572334--12-31falsehttp://fasb.org/us-gaap/2023#OtherLiabilitieshttp://fasb.org/us-gaap/2023#OtherLiabilitieshttp://fasb.org/us-gaap/2023#OtherAssetshttp://fasb.org/us-gaap/2023#OtherAssets00015723342023-01-012023-03-310001572334us-gaap:DoubtfulMemberus-gaap:ConsumerLoanMember2023-12-310001572334us-gaap:DoubtfulMemberus-gaap:ConsumerLoanMember2024-03-310001572334vabk:TwoThousandFourteenPlanMember2022-06-230001572334vabk:TwoThousandTwentyTwoPlanMember2024-03-310001572334vabk:CommercialMortgagesMemberus-gaap:FinancialAssetNotPastDueMember2024-03-310001572334us-gaap:CorporateMember2023-01-012023-03-310001572334vabk:TwoThousandFourteenPlanMember2024-01-012024-03-310001572334vabk:PublicDepositsMemberus-gaap:AssetPledgedAsCollateralWithoutRightMember2024-03-310001572334us-gaap:EmployeeStockOptionMember2024-01-012024-03-310001572334vabk:NonEmployeeDirectorsMemberus-gaap:RestrictedStockMember2024-01-012024-03-310001572334vabk:VNBTrustAndEstateServicesMember2024-01-012024-03-310001572334vabk:OneToFourFamilyResidentialMortgagesMember2024-01-012024-03-310001572334us-gaap:RetainedEarningsMember2023-03-310001572334us-gaap:ConsumerLoanMember2022-12-310001572334us-gaap:CollateralPledgedMembervabk:CommercialRealEstateNonOwnerOccupiedMember2023-12-310001572334us-gaap:SpecialMentionMemberus-gaap:ConstructionLoansMember2023-12-310001572334us-gaap:MunicipalBondsMember2024-03-310001572334us-gaap:MortgageBackedSecuritiesMember2023-12-310001572334us-gaap:RestrictedStockMembervabk:TwoThousandFourteenPlanMember2024-01-012024-03-310001572334us-gaap:AdditionalPaidInCapitalMember2024-03-310001572334us-gaap:MortgageBackedSecuritiesMember2024-03-310001572334us-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334us-gaap:FinancialAssetNotPastDueMemberus-gaap:ConstructionLoansMember2023-12-310001572334us-gaap:RestrictedStockMember2024-01-012024-03-310001572334us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001572334us-gaap:CommonStockMember2023-01-012023-03-310001572334vabk:SecuritiesAvailableForSaleMember2023-03-310001572334us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ConsumerLoanMember2024-03-310001572334us-gaap:EmployeeStockOptionMember2023-01-012023-03-310001572334us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialLoanMember2023-12-310001572334us-gaap:EmployeeStockOptionMembervabk:TwoThousandFourteenPlanMember2024-03-310001572334us-gaap:CommercialLoanMember2024-01-012024-03-310001572334vabk:CommercialMortgagesMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001572334us-gaap:SubstandardMemberus-gaap:CommercialLoanMember2024-03-310001572334us-gaap:PassMemberus-gaap:CommercialLoanMember2024-03-310001572334us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001572334vabk:PublicDepositsMemberus-gaap:AssetPledgedAsCollateralWithoutRightMember2023-12-310001572334vabk:OneToFourFamilyResidentialMortgagesMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001572334us-gaap:CollateralPledgedMembervabk:ResidentialOneToFourFamilyRealEstateMember2024-03-310001572334vabk:PurchasedImpairedLoansMembervabk:FauquierBanksharesIncMember2024-03-310001572334us-gaap:ConstructionLoansMember2023-01-012023-12-310001572334us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001572334us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001572334us-gaap:SpecialMentionMemberus-gaap:ConsumerLoanMember2023-12-310001572334us-gaap:InterestRateSwapMember2022-12-310001572334us-gaap:PassMemberus-gaap:ConstructionLoansMember2023-12-310001572334us-gaap:SubstandardMembervabk:CommercialMortgagesMember2024-03-310001572334us-gaap:RetainedEarningsMember2024-03-310001572334us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334us-gaap:DoubtfulMembervabk:OneToFourFamilyResidentialMortgagesMember2024-03-310001572334vabk:OneToFourFamilyResidentialMortgagesMember2023-01-012023-12-310001572334us-gaap:MunicipalBondsMember2023-12-310001572334us-gaap:SpecialMentionMembervabk:OneToFourFamilyResidentialMortgagesMember2023-12-310001572334us-gaap:SubstandardMembervabk:OneToFourFamilyResidentialMortgagesMember2024-03-310001572334vabk:TwoThousandTwentyTwoPlanMemberus-gaap:EmployeeStockOptionMember2024-03-310001572334us-gaap:ConsumerLoanMember2023-12-310001572334us-gaap:PassMemberus-gaap:ConsumerLoanMember2023-12-310001572334us-gaap:CoreDepositsMember2024-03-310001572334vabk:MasonryCapitalMember2024-01-012024-03-310001572334us-gaap:USGovernmentAgenciesDebtSecuritiesMember2024-03-310001572334us-gaap:ConsumerLoanMember2024-03-310001572334us-gaap:FinancialAssetNotPastDueMember2024-03-310001572334us-gaap:RestrictedStockMember2024-03-3100015723342024-05-140001572334us-gaap:FinancialAssetNotPastDueMembervabk:OneToFourFamilyResidentialMortgagesMember2024-03-310001572334us-gaap:CommonStockMember2023-12-310001572334srt:MaximumMember2024-01-012024-03-310001572334us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2024-03-310001572334us-gaap:MunicipalBondsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334vabk:OneToFourFamilyResidentialMortgagesMember2022-12-310001572334us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ConstructionLoansMember2023-12-310001572334us-gaap:SpecialMentionMembervabk:CommercialMortgagesMember2023-12-310001572334us-gaap:CommonStockMember2024-01-012024-03-310001572334vabk:ExercisePriceRangeThreeMember2024-03-310001572334srt:MaximumMembervabk:TwoThousandTwentyTwoPlanMember2024-03-310001572334us-gaap:SubstandardMemberus-gaap:ConstructionLoansMember2024-03-310001572334us-gaap:MunicipalBondsMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:StockOptionMember2023-01-012023-03-310001572334vabk:DebtSecuritiesAvailableForSaleMember2024-03-310001572334us-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001572334us-gaap:SubstandardMembervabk:CommercialMortgagesMember2023-12-310001572334us-gaap:AdditionalPaidInCapitalMember2022-12-310001572334us-gaap:PassMembervabk:CommercialMortgagesMember2024-03-310001572334us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel3Member2023-12-310001572334vabk:IndividuallyEvaluatedLoansMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MarketApproachValuationTechniqueMember2023-01-012023-12-310001572334us-gaap:CommonStockMember2024-03-3100015723342023-03-3100015723342024-01-012024-03-310001572334us-gaap:MortgagesMember2022-12-310001572334vabk:TwoThousandTwentyTwoPlanMember2022-06-230001572334us-gaap:CommonStockMember2022-12-310001572334us-gaap:EmployeeStockOptionMembervabk:TwoThousandFourteenPlanMember2024-01-012024-03-310001572334us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001572334us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001572334us-gaap:CollateralPledgedMember2024-03-310001572334us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:CommercialLoanMember2023-12-310001572334us-gaap:PassMembervabk:OneToFourFamilyResidentialMortgagesMember2024-03-310001572334us-gaap:CommonStockMember2023-03-310001572334us-gaap:SubstandardMemberus-gaap:ConsumerLoanMember2023-12-310001572334us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001572334vabk:IndividuallyEvaluatedLoansMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MarketApproachValuationTechniqueMember2023-12-310001572334us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:CommercialLoanMember2023-12-310001572334vabk:SecuritiesAvailableForSaleMember2023-01-012023-03-310001572334us-gaap:ConstructionLoansMember2024-03-310001572334us-gaap:FinancingReceivables60To89DaysPastDueMembervabk:OneToFourFamilyResidentialMortgagesMember2024-03-310001572334us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001572334us-gaap:FinancialAssetNotPastDueMemberus-gaap:ConstructionLoansMember2024-03-310001572334us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2023-12-310001572334vabk:OneToFourFamilyResidentialPropertyMember2024-03-310001572334us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:USTreasurySecuritiesMember2023-12-310001572334vabk:AccountingStandardsUpdate202302Member2024-03-310001572334vabk:SecuritiesAvailableForSaleMember2024-03-310001572334vabk:PurchasedImpairedLoansMembervabk:FauquierBanksharesIncMember2021-04-010001572334us-gaap:CoreDepositsMember2023-03-310001572334vabk:TwoThousandTwentyTwoPlanMember2024-01-012024-03-310001572334us-gaap:MortgagesMember2023-01-012023-12-310001572334us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334vabk:TwoThousandTwentyTwoPlanMemberus-gaap:RestrictedStockMember2024-01-012024-03-310001572334vabk:SecuritiesAvailableForSaleMember2024-01-012024-03-310001572334vabk:VNBTrustAndEstateServicesMember2023-01-012023-03-310001572334us-gaap:FinancialAssetNotPastDueMemberus-gaap:ConsumerLoanMember2023-12-310001572334us-gaap:PassMemberus-gaap:ConstructionLoansMember2024-03-310001572334us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334us-gaap:FinancialAssetNotPastDueMembervabk:OneToFourFamilyResidentialMortgagesMember2023-12-310001572334us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334us-gaap:PassMembervabk:OneToFourFamilyResidentialMortgagesMember2023-12-310001572334us-gaap:CorporateBondSecuritiesMember2024-03-310001572334us-gaap:DoubtfulMemberus-gaap:ConstructionLoansMember2023-12-310001572334us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-12-310001572334us-gaap:ConstructionLoansMember2023-12-310001572334vabk:TwoThousandTwentyTwoPlanMembersrt:MinimumMember2024-03-310001572334us-gaap:MunicipalBondsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334vabk:OneToFourFamilyResidentialPropertyMember2023-12-310001572334vabk:SecuritiesAvailableForSaleMember2022-12-310001572334us-gaap:InterestRateSwapMember2023-01-012023-03-310001572334us-gaap:StockOptionMember2024-01-012024-03-310001572334us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:RetainedEarningsMember2023-12-310001572334us-gaap:DoubtfulMembervabk:OneToFourFamilyResidentialMortgagesMember2023-12-310001572334us-gaap:ConsumerLoanMember2024-01-012024-03-310001572334us-gaap:ConsumerLoanMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001572334vabk:CommercialMortgagesMemberus-gaap:DoubtfulMember2023-12-310001572334us-gaap:RetainedEarningsMember2024-01-012024-03-310001572334us-gaap:DoubtfulMemberus-gaap:ConstructionLoansMember2024-03-310001572334us-gaap:USTreasuryBondSecuritiesMember2024-03-310001572334us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001572334vabk:TwoThousandFivePlanMember2024-01-012024-03-310001572334vabk:OneToFourFamilyResidentialMortgagesMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001572334us-gaap:SubstandardMembervabk:OneToFourFamilyResidentialMortgagesMember2023-12-310001572334us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001572334us-gaap:ConstructionLoansMember2024-01-012024-03-3100015723342023-01-012023-12-310001572334us-gaap:FinancialAssetNotPastDueMemberus-gaap:CommercialLoanMember2024-03-310001572334vabk:ConsumerMember2024-03-310001572334us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334us-gaap:SpecialMentionMemberus-gaap:CommercialLoanMember2023-12-310001572334us-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:CollateralPledgedMembervabk:CommercialRealEstateNonOwnerOccupiedMember2024-03-310001572334vabk:CommercialMortgagesMemberus-gaap:DoubtfulMember2024-03-310001572334vabk:ExercisePriceRangeOneMember2024-03-310001572334us-gaap:RestrictedStockMember2023-12-310001572334srt:MaximumMembervabk:TwoThousandFourteenPlanMember2024-03-310001572334us-gaap:SpecialMentionMemberus-gaap:CommercialLoanMember2024-03-310001572334us-gaap:CommercialLoanMember2022-12-310001572334us-gaap:SpecialMentionMembervabk:CommercialMortgagesMember2024-03-310001572334us-gaap:CommercialLoanMember2023-01-012023-12-310001572334us-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-3100015723342024-03-310001572334us-gaap:SpecialMentionMemberus-gaap:ConsumerLoanMember2024-03-310001572334us-gaap:SubstandardMemberus-gaap:ConsumerLoanMember2024-03-310001572334us-gaap:EmployeeStockOptionMember2024-03-310001572334us-gaap:DoubtfulMemberus-gaap:CommercialLoanMember2023-12-310001572334vabk:TwoThousandFivePlanMember2024-03-310001572334us-gaap:CollateralPledgedMembervabk:ResidentialOneToFourFamilyRealEstateMember2023-12-310001572334us-gaap:FinancingReceivables60To89DaysPastDueMember2024-03-310001572334us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334us-gaap:MortgagesMember2023-12-3100015723342023-12-310001572334vabk:CommercialMortgagesMember2023-12-310001572334us-gaap:RetainedEarningsMember2022-12-3100015723342023-07-012023-09-300001572334us-gaap:FinancialAssetNotPastDueMember2023-12-310001572334us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:CommercialLoanMember2024-03-310001572334us-gaap:AdditionalPaidInCapitalMember2023-12-310001572334us-gaap:USTreasuryAndGovernmentMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001572334us-gaap:CoreDepositsMember2023-12-310001572334srt:MinimumMembervabk:TwoThousandFourteenPlanMember2024-03-310001572334us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334vabk:EmployeesMemberus-gaap:RestrictedStockMember2024-01-012024-03-310001572334vabk:ExercisePriceRangeTwoMember2024-03-310001572334vabk:CommercialMortgagesMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2024-03-310001572334us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001572334vabk:IndividuallyEvaluatedLoansMemberus-gaap:FairValueMeasurementsNonrecurringMember2023-12-310001572334us-gaap:FinancingReceivables30To59DaysPastDueMemberus-gaap:CommercialLoanMember2024-03-310001572334us-gaap:CorporateMember2024-01-012024-03-310001572334vabk:CommercialMortgagesMember2024-01-012024-03-310001572334us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334us-gaap:ConsumerLoanMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001572334vabk:MasonryCapitalMember2023-01-012023-03-310001572334us-gaap:RetainedEarningsMember2023-01-012023-03-310001572334vabk:CommercialMortgagesMember2024-03-310001572334vabk:TwoThousandFourteenPlanMember2024-03-310001572334us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001572334vabk:ExercisePriceRangeTwoMember2024-01-012024-03-310001572334us-gaap:ConsumerLoanMember2023-01-012023-12-310001572334us-gaap:FinancingReceivables60To89DaysPastDueMembervabk:OneToFourFamilyResidentialMortgagesMember2023-12-310001572334vabk:OneToFourFamilyResidentialMortgagesMember2023-12-310001572334us-gaap:FinancingReceivables60To89DaysPastDueMemberus-gaap:ConsumerLoanMember2023-12-310001572334us-gaap:CollateralPledgedMember2023-12-310001572334us-gaap:EmployeeStockOptionMember2023-12-310001572334us-gaap:CommercialLoanMember2024-03-310001572334us-gaap:FinancingReceivables60To89DaysPastDueMember2023-12-310001572334us-gaap:DoubtfulMemberus-gaap:CommercialLoanMember2024-03-310001572334vabk:ExercisePriceRangeOneMember2024-01-012024-03-310001572334us-gaap:USTreasurySecuritiesMember2024-03-3100015723342022-07-012022-09-300001572334us-gaap:MunicipalBondsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:SubstandardMemberus-gaap:ConstructionLoansMember2023-12-310001572334us-gaap:PassMemberus-gaap:ConsumerLoanMember2024-03-3100015723342023-04-012023-06-300001572334vabk:StudentLoansPurchasedMember2023-03-310001572334us-gaap:ConstructionLoansMemberus-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-3100015723342022-12-310001572334us-gaap:CommercialLoanMember2023-12-310001572334vabk:ExercisePriceRangeThreeMember2024-01-012024-03-310001572334us-gaap:MortgageBackedSecuritiesMemberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001572334us-gaap:AdditionalPaidInCapitalMember2023-03-310001572334us-gaap:MunicipalBondsMember2023-12-310001572334us-gaap:SpecialMentionMembervabk:OneToFourFamilyResidentialMortgagesMember2024-03-310001572334us-gaap:FinancingReceivables30To59DaysPastDueMember2023-12-310001572334us-gaap:PassMemberus-gaap:CommercialLoanMember2023-12-310001572334us-gaap:SubsequentEventMember2024-01-012024-05-140001572334vabk:RealEstateConstructionAndLandMember2023-12-310001572334vabk:UnrestrictedStockMembervabk:TwoThousandFourteenPlanMember2024-01-012024-03-310001572334vabk:SecuritiesAvailableForSaleMember2023-12-310001572334vabk:StudentLoansPurchasedMember2023-01-012023-03-310001572334us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334us-gaap:FinancialAssetNotPastDueMemberus-gaap:ConsumerLoanMember2024-03-310001572334us-gaap:RestrictedStockMembervabk:EmployeeAndNonEmployeeDirectorsMember2024-01-012024-03-310001572334vabk:IndividuallyEvaluatedLoansMemberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2023-12-310001572334us-gaap:PassMembervabk:CommercialMortgagesMember2023-12-310001572334vabk:CommercialMortgagesMemberus-gaap:FinancialAssetNotPastDueMember2023-12-310001572334vabk:ConsumerMember2023-12-310001572334us-gaap:SubsequentEventMember2024-04-012024-04-010001572334us-gaap:ConstructionLoansMember2022-12-310001572334vabk:OneToFourFamilyResidentialMortgagesMember2024-03-310001572334us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsNonrecurringMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001572334us-gaap:CorporateBondSecuritiesMember2023-12-310001572334us-gaap:SubstandardMemberus-gaap:CommercialLoanMember2023-12-310001572334us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001572334vabk:TwoThousandFivePlanMember2022-06-230001572334vabk:RealEstateConstructionAndLandMember2024-03-310001572334us-gaap:MunicipalBondsMember2024-03-31iso4217:USDxbrli:sharesxbrli:purexbrli:sharesvabk:Loaniso4217:USDvabk:Item

 

`

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-40305

 

VIRGINIA NATIONAL BANKSHARES CORPORATION

(Exact Name of Registrant as Specified in its Charter)

 

 

Virginia

46-2331578

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

404 People Place

 

Charlottesville, Virginia

22911

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (434) 817-8621

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

VABK

 

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No

 

As of May 14, 2024, the registrant had 5,370,912 shares of common stock, $2.50 par value per share, outstanding.

 


 

VIRGINIA NATIONAL BANKSHARES CORPORATION

FORM 10-Q

TABLE OF CONTENTS

 

Part I. Financial Information

 

 

Item 1 Financial Statements

 

Page 4

Consolidated Balance Sheets (unaudited)

 

Page 4

Consolidated Statements of Income (unaudited)

 

Page 5

Consolidated Statements of Comprehensive Income (unaudited)

 

Page 6

Consolidated Statements of Changes in Shareholders’ Equity (unaudited)

 

Page 7

Consolidated Statements of Cash Flows (unaudited)

 

Page 8

Notes to Consolidated Financial Statements (unaudited)

 

Page 9

 

 

 

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Page 32

Application of Critical Accounting Policies and Estimates

 

Page 33

Financial Condition

 

Page 33

Results of Operations

 

Page 39

 

 

 

Item 3 Quantitative and Qualitative Disclosures About Market Risk

 

Page 44

 

 

 

Item 4 Controls and Procedures

 

Page 44

 

 

 

Part II. Other Information

 

 

Item 1 Legal Proceedings

 

Page 44

Item 1A Risk Factors

 

Page 44

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

 

Page 45

Item 3 Defaults Upon Senior Securities

 

Page 45

Item 4 Mine Safety Disclosures

 

Page 45

Item 5 Other Information

 

Page 45

Item 6 Exhibits

 

Page 46

 

 

 

Signatures

 

Page 47

 

 

2


 

 

Glossary of Acronyms and Defined Terms

2005 Plan

-

2005 Stock Incentive Plan

2014 Plan

-

2014 Stock Incentive Plan

2022 Plan

-

2022 Stock Incentive Plan

ACL

-

Allowance for credit losses

Acquired Loans

-

Loans acquired from Fauquier

AFS

-

Available for sale

ALLL

-

Allowance for loan and lease losses

ALM

-

Asset liability management

ASC

-

Accounting Standards Codification

ASC 326

-

ASU 2016-13, Financial Instruments and Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

ASC 820

-

ASC 820, Fair Value Measurements and Disclosures

ASU

-

Accounting Standards Update

ATM

-

Automated teller machine

the Bank

-

Virginia National Bank

bps

-

Basis points

CD

-

Certificate of deposit

CDARS™

-

Certificates of Deposit Account Registry Service

CECL

-

Current expected credit losses

CME

-

Chicago Mercantile Exchange

CMO

-

Collateralized mortgage obligation

the Company

-

Virginia National Bankshares Corporation and its subsidiaries

CRE

-

Commercial real estate

DCF



Discounted cash flow

EBA

-

Excess Balance Account

Effective Date

-

April 1, 2021

Exchange Act

-

Securities Exchange Act of 1934, as amended

Fauquier

-

Fauquier Bankshares, Inc. and its subsidiaries

FASB

-

Financial Accounting Standards Board

Federal Reserve

-

Board of Governors of the Federal Reserve System

Federal Reserve Bank or FRB

-

Federal Reserve Bank of Richmond

FHLB

-

Federal Home Loan Bank of Atlanta

Form 10-K

-

Annual Report on Form 10-K for the year ended December 31, 2023

FTE

-

Fully taxable equivalent

GAAP or U.S. GAAP

-

Accounting principles generally accepted in the United States

ICS®

-

Insured Cash Sweep®

IRR

-

Interest rate risk

LIBOR

-

London Interbank Offering Rate

Masonry Capital

-

Masonry Capital Management, LLC

Merger

-

Mergers of Fauquier Bankshares, Inc. and The Fauquier Bank with and into the Company and the Bank, respectively

NPA

-

Nonperforming assets

OREO

-

Other real estate owned

OTTI

-

Other than temporary impairment

PCA

-

Prompt Corrective Action

PCD

-

Purchased loan with credit deterioration

PCI

-

Purchased credit impaired

PITI

-

Principal, interest, taxes and insurance

the Plans

-

2005 Stock Incentive Plan, 2014 Stock Incentive Plan and 2022 Stock Incentive Plan

Reorganization

-

Reorganization Agreement Plan of Share Exchange dated March 6, 2013 between the Bank and the Company

ROAA

-

Return on Average Assets

ROAE

-

Return on Average Equity

SBA

-

Small Business Administration

SEC

-

U.S. Securities and Exchange Commission

SOFR

-

Secured Overnight Financing Rate

TDR

-

Troubled debt restructuring

TLM

-

Troubled loan modification

 

3


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

 

 

March 31, 2024

 

 

December 31, 2023 *

 

ASSETS

 

Unaudited

 

 

 

 

Cash and due from banks

 

$

7,158

 

 

$

18,074

 

Interest-bearing deposits in other banks

 

 

10,639

 

 

 

10,316

 

Federal funds sold

 

 

27,696

 

 

 

-

 

Securities:

 

 

 

 

 

 

Available for sale, at fair value

 

 

341,857

 

 

 

420,595

 

Restricted securities, at cost

 

 

6,192

 

 

 

8,385

 

Total securities

 

 

348,049

 

 

 

428,980

 

Loans, net of deferred fees and costs

 

 

1,128,168

 

 

 

1,092,665

 

Allowance for credit losses

 

 

(8,289

)

 

 

(8,395

)

Loans, net

 

 

1,119,879

 

 

 

1,084,270

 

Premises and equipment, net

 

 

15,860

 

 

 

16,195

 

Bank owned life insurance

 

 

39,179

 

 

 

38,904

 

Goodwill

 

 

7,768

 

 

 

7,768

 

Core deposit intangible, net

 

 

4,750

 

 

 

5,093

 

Right of use asset, net

 

 

6,652

 

 

 

6,748

 

Deferred tax asset, net

 

 

15,744

 

 

 

15,382

 

Accrued interest receivable and other assets

 

 

16,122

 

 

 

14,287

 

Total assets

 

$

1,619,496

 

 

$

1,646,017

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Demand deposits:

 

 

 

 

 

 

   Noninterest bearing

 

$

382,315

 

 

$

372,857

 

   Interest bearing

 

 

284,789

 

 

 

305,541

 

Money market and savings deposit accounts

 

 

415,311

 

 

 

412,119

 

Certificates of deposit and other time deposits

 

 

349,557

 

 

 

318,581

 

          Total deposits

 

 

1,431,972

 

 

 

1,409,098

 

Federal funds purchased

 

 

-

 

 

 

3,462

 

Borrowings

 

 

20,000

 

 

 

66,500

 

Junior subordinated debt

 

 

3,471

 

 

 

3,459

 

Lease liability

 

 

6,451

 

 

 

6,504

 

Accrued interest payable and other liabilities

 

 

5,025

 

 

 

3,954

 

        Total liabilities

 

 

1,466,919

 

 

 

1,492,977

 

Commitments and contingent liabilities

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

Preferred stock, $2.50 par value

 

 

-

 

 

 

-

 

Common stock, $2.50 par value

 

 

13,277

 

 

 

13,258

 

Capital surplus

 

 

106,195

 

 

 

106,045

 

Retained earnings

 

 

75,657

 

 

 

73,781

 

Accumulated other comprehensive loss

 

 

(42,552

)

 

 

(40,044

)

Total shareholders' equity

 

 

152,577

 

 

 

153,040

 

Total liabilities and shareholders' equity

 

$

1,619,496

 

 

$

1,646,017

 

Common shares outstanding

 

 

5,390,388

 

 

 

5,365,982

 

Common shares authorized

 

 

10,000,000

 

 

 

10,000,000

 

Preferred shares outstanding

 

 

-

 

 

 

-

 

Preferred shares authorized

 

 

2,000,000

 

 

 

2,000,000

 

 

* Derived from audited Consolidated Financial Statements

See Notes to Consolidated Financial Statements

4


 

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except share and per share data)

(Unaudited)

 

 

 

For the three months ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Interest and dividend income:

 

 

 

 

 

 

Loans, including fees

 

$

15,661

 

 

$

12,767

 

Federal funds sold

 

 

239

 

 

 

-

 

Other interest-bearing deposits

 

 

57

 

 

 

258

 

Investment securities:

 

 

 

 

 

 

Taxable

 

 

2,159

 

 

 

2,951

 

Tax exempt

 

 

326

 

 

 

327

 

Dividends

 

 

118

 

 

 

67

 

Total interest and dividend income

 

 

18,560

 

 

 

16,370

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

Demand deposits

 

 

71

 

 

 

89

 

Money market and savings deposits

 

 

2,922

 

 

 

1,773

 

Certificates and other time deposits

 

 

4,050

 

 

 

648

 

Federal funds purchased

 

 

7

 

 

 

60

 

Short-term borrowings

 

 

486

 

 

 

326

 

Junior subordinated debt

 

 

88

 

 

 

61

 

Total interest expense

 

 

7,624

 

 

 

2,957

 

Net interest income

 

 

10,936

 

 

 

13,413

 

Recovery of credit losses

 

 

(22

)

 

 

(248

)

Net interest income after recovery of credit losses

 

 

10,958

 

 

 

13,661

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

Wealth management fees

 

 

426

 

 

 

404

 

Deposit account fees

 

 

387

 

 

 

401

 

Debit/credit card and ATM fees

 

 

488

 

 

 

571

 

Bank owned life insurance income

 

 

275

 

 

 

252

 

Gains (losses) on sale of assets

 

 

39

 

 

 

(1

)

Gain on early redemption of debt

 

 

379

 

 

 

-

 

Gain on termination of interest swap

 

 

-

 

 

 

460

 

Loss on sales of AFS, net

 

 

(4

)

 

 

(206

)

Other

 

 

188

 

 

 

395

 

Total noninterest income

 

 

2,178

 

 

 

2,276

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,152

 

 

 

4,051

 

Net occupancy

 

 

972

 

 

 

1,179

 

Equipment

 

 

171

 

 

 

218

 

Bank franchise tax

 

 

340

 

 

 

324

 

Computer software

 

 

208

 

 

 

202

 

Data processing

 

 

739

 

 

 

742

 

FDIC deposit insurance assessment

 

 

195

 

 

 

100

 

Marketing, advertising and promotion

 

 

248

 

 

 

375

 

Professional fees

 

 

252

 

 

 

192

 

Core deposit intangible amortization

 

 

343

 

 

 

391

 

Other

 

 

1,199

 

 

 

1,087

 

Total noninterest expense

 

 

8,819

 

 

 

8,861

 

 

 

 

 

 

 

Income before income taxes

 

 

4,317

 

 

 

7,076

 

Provision for income taxes

 

 

671

 

 

 

1,285

 

Net income

 

$

3,646

 

 

$

5,791

 

Net income per common share, basic

 

$

0.68

 

 

$

1.08

 

Net income per common share, diluted

 

$

0.68

 

 

$

1.08

 

Weighted average common shares outstanding, basic

 

 

5,366,890

 

 

 

5,338,099

 

Weighted average common shares outstanding, diluted

 

 

5,380,081

 

 

 

5,375,619

 

 

See Notes to Consolidated Financial Statements

5


 

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)

 

 

 

For the three months ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Net income

 

$

3,646

 

 

$

5,791

 

Other comprehensive (loss) income:

 

 

 

 

 

 

Unrealized (losses) gains on securities, net of tax of ($668) and $1,597 for the three months ended March 31, 2024 and 2023, respectively

 

 

(2,511

)

 

 

6,008

 

Reclassification adjustment for realized gain on termination of interest rate swap, net of tax of $0 and ($97) for the three months ended March 31, 2024 and 2023, respectively

 

 

 

 

 

(363

)

Reclassification adjustment for realized losses on securities, net of tax of $1 and $43 for the three months ended March 31, 2024 and 2023, respectively

 

 

3

 

 

 

163

 

Unrealized gains (losses) on interest rate swaps, net of tax of $0 and ($9) for the three months ended March 31, 2024 and 2023, respectively

 

 

 

 

 

(37

)

Total other comprehensive (loss) income

 

 

(2,508

)

 

 

5,771

 

Total comprehensive income

 

$

1,138

 

 

$

11,562

 

 

See Notes to Consolidated Financial Statements

6


 

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Dollars in thousands, except per share data)

(Unaudited)

 

 

 

Common Stock

 

 

Capital Surplus

 

 

Retained Earnings

 

 

Accumulated Other Comprehensive Loss

 

 

Total

 

Balance, December 31, 2022

 

$

13,214

 

 

$

105,344

 

 

$

63,482

 

 

$

(48,624

)

 

$

133,416

 

Exercise of stock options

 

 

3

 

 

 

15

 

 

 

-

 

 

 

-

 

 

 

18

 

Stock option expense

 

 

-

 

 

 

42

 

 

 

-

 

 

 

-

 

 

 

42

 

Restricted stock grant expense

 

 

-

 

 

 

111

 

 

 

-

 

 

 

-

 

 

 

111

 

Vested restricted stock grants

 

 

21

 

 

 

(21

)

 

 

-

 

 

 

-

 

 

 

-

 

Cash dividends declared ($0.33 per share)

 

 

-

 

 

 

-

 

 

 

(1,762

)

 

 

-

 

 

 

(1,762

)

Impact of adoption of CECL

 

 

-

 

 

 

-

 

 

 

(1,890

)

 

 

-

 

 

 

(1,890

)

Net income

 

 

-

 

 

 

-

 

 

 

5,791

 

 

 

-

 

 

 

5,791

 

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,771

 

 

 

5,771

 

Balance, March 31, 2023

 

$

13,238

 

 

$

105,491

 

 

$

65,621

 

 

$

(42,853

)

 

$

141,497

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2023

 

$

13,258

 

 

$

106,045

 

 

$

73,781

 

 

$

(40,044

)

 

$

153,040

 

Stock option expense

 

 

-

 

 

 

24

 

 

 

-

 

 

 

-

 

 

 

24

 

Restricted stock grant expense

 

 

-

 

 

 

171

 

 

 

-

 

 

 

-

 

 

 

171

 

Vested restricted stock grants

 

 

21

 

 

 

(21

)

 

 

-

 

 

 

-

 

 

 

-

 

Shares repurchased

 

 

(2

)

 

 

(24

)

 

 

 

 

 

 

 

 

(26

)

Cash dividends declared ($0.33 per share)

 

 

-

 

 

 

-

 

 

 

(1,770

)

 

 

-

 

 

 

(1,770

)

Net income

 

 

-

 

 

 

-

 

 

 

3,646

 

 

 

-

 

 

 

3,646

 

Other comprehensive loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,508

)

 

 

(2,508

)

Balance, March 31, 2024

 

$

13,277

 

 

$

106,195

 

 

$

75,657

 

 

$

(42,552

)

 

$

152,577

 

See Notes to Consolidated Financial Statements

 

7


 

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

 

For the three months ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net income

 

$

3,646

 

 

$

5,791

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Recovery of credit losses

 

 

(22

)

 

 

(248

)

Net accretion of certain acquisition-related adjustments

 

 

(576

)

 

 

(1,517

)

Amortization of intangible assets

 

 

343

 

 

 

391

 

Net accretion of securities

 

 

(51

)

 

 

(576

)

Net losses on sale of AFS

 

 

4

 

 

 

206

 

Net gain on early redemption of debt

 

 

(379

)

 

 

-

 

Net (gains) losses on sale of assets

 

 

(39

)

 

 

1

 

Earnings on bank owned life insurance

 

 

(275

)

 

 

(252

)

Depreciation and other amortization

 

 

738

 

 

 

882

 

Stock option expense

 

 

24

 

 

 

42

 

Stock grant expense

 

 

171

 

 

 

111

 

Net change in:

 

 

 

 

 

 

Accrued interest receivable and other assets

 

 

(1,255

)

 

 

(200

)

Accrued interest payable and other liabilities

 

 

790

 

 

 

2,380

 

Net cash provided by operating activities

 

 

3,119

 

 

 

7,011

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

Net increase (decrease) in restricted investments

 

 

2,193

 

 

 

(613

)

Proceeds from maturities, calls, sales and principal payments of available for sale securities

 

 

75,610

 

 

 

53,596

 

Net change in loans

 

 

(34,999

)

 

 

(2,055

)

Proceeds from sale of premises and equipment

 

 

44

 

 

 

962

 

Purchase of bank premises and equipment

 

 

(31

)

 

 

(236

)

Net cash provided by investing activities

 

 

42,817

 

 

 

51,654

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

Net change in demand deposits, interest checking, money market and savings accounts

 

 

(8,102

)

 

 

(135,692

)

Net change in certificates of deposit and other time deposits

 

 

30,976

 

 

 

54,619

 

Net change in Federal funds purchased

 

 

(3,462

)

 

 

-

 

Net change in other borrowings

 

 

(46,500

)

 

 

19,250

 

Proceeds from termination of interest swap

 

 

-

 

 

 

460

 

Proceeds from stock options exercised

 

 

-

 

 

 

18

 

Repurchase of shares of stock

 

 

(26

)

 

 

-

 

Cash dividends paid

 

 

(1,770

)

 

 

(1,762

)

Net cash used in financing activities

 

 

(28,884

)

 

 

(63,107

)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

$

17,052

 

 

$

(4,442

)

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS:

 

 

 

 

 

 

Beginning of period

 

$

28,390

 

 

$

40,136

 

End of period

 

$

45,493

 

 

$

35,694

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

 

   Cash payments for:

 

 

 

 

 

 

Interest

 

$

7,099

 

 

$

2,827

 

 

 

 

 

 

 

 

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
   ACTIVITIES

 

 

 

 

 

 

Unrealized (losses) gains on available for sale securities

 

$

(3,175

)

 

$

7,812

 

Initial right-of-use assets obtained in exchange for new operating lease liabilities

 

 

(281

)

 

 

-

 

 

See Notes to Consolidated Financial Statements

8


 

VIRGINIA NATIONAL BANKSHARES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2024

 

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation: The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. The statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the Company’s Form 10-K for the year ended December 31, 2023.

Nature of Operations: The accompanying unaudited consolidated financial statements include the accounts of the Company, and its subsidiaries Virginia National Bank and Masonry Capital Management, LLC, a registered investment advisor. The Bank offers a full range of banking and related financial services to meet the needs of individuals, businesses and charitable organizations, including the fiduciary services of VNB Trust and Estate Services. Effective April 1, 2024, the Company sold the membership interests in Masonry Capital Management, LLC to an officer of the Company. Subsequent to the date of sale, the Company will receive an annual revenue-share amount for a period of six years. All significant intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation: The preparation of financial statements in conformity with GAAP and the reporting guidelines prescribed by regulatory authorities requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the ACL, accounting for business combinations, including loans acquired in the business combination, ACL on individually evaluated loans, goodwill impairment, credit losses of securities, other intangible assets, and fair value measurements. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Reclassifications: If needed, certain previously reported amounts have been reclassified to conform to current period presentation. No such reclassifications were considered material.

Note 2. Recent Significant Accounting Pronouncements

Accounting Standards Adopted in 2024: In March 2023, the FASB issued ASU 2023-02, “Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method.” These amendments allow reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. ASU 2023-02 was effective for the Company on January 1, 2024. The adoption of ASU 2023-02 did not have a material impact on the Company's consolidated financial statements.

Accounting Standards Issued but Not Yet Adopted: On March 29, 2024, the FASB issued ASU 2024-02, Codification Improvements- Amendments to Remove References to the Concepts Statements, which amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. Generally, the amendments in ASU 2024-02 are not intended to result in significant accounting changes for most entities. The ASU is effective January 1, 2025 and is not expected to have a significant impact on the Company’s financial statements.

Recently Issued Disclosure Rules: In March 2024, the SEC adopted final rules under SEC Release No. 33-11275, “The Enhancement and Standardization of Climate-Related Disclosures for Investors”. This rule will require registrants to disclose certain climate-related information in registration statements and annual reports. The disclosure requirements will start to phase in commencing with the Company's fiscal year beginning January 1, 2026.

Refer to Note 1, "Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in the 2023 Annual Report on Form 10-K for a discussion of the Company's significant accounting policies and new accounting guidance applicable to the Company that will be adopted in future periods. Other accounting standards that have been issued by the FASB or other standards-setting bodies are not currently expected to have a material effect on the Company's financial position, results of operations or cash flows.

9


 

 

Note 3. Securities

The amortized cost and fair values of securities available for sale as of March 31, 2024 and December 31, 2023 were as follows (dollars in thousands):

 

March 31, 2024

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

(Losses)

 

 

Value

 

U.S. Government treasuries

 

$

51,456

 

 

$

-

 

 

$

(324

)

 

$

51,132

 

U.S. Government agencies

 

 

42,051

 

 

 

-

 

 

 

(5,600

)

 

 

36,451

 

Mortgage-backed securities/CMOs

 

 

178,385

 

 

 

96

 

 

 

(26,821

)

 

 

151,660

 

Corporate bonds

 

 

19,705

 

 

 

-

 

 

 

(542

)

 

 

19,163

 

Municipal bonds

 

 

104,123

 

 

 

14

 

 

 

(20,686

)

 

 

83,451

 

Total Securities Available for Sale

 

$

395,720

 

 

$

110

 

 

$

(53,973

)

 

$

341,857

 

 

December 31, 2023

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

(Losses)

 

 

Value

 

U.S. Government treasuries

 

$

122,288

 

 

$

35

 

 

$

(615

)

 

$

121,708

 

U.S. Government agencies

 

 

45,131

 

 

 

-

 

 

 

(5,550

)

 

 

39,581

 

Mortgage-backed securities/CMOs

 

 

179,920

 

 

 

171

 

 

 

(24,947

)

 

 

155,144

 

Corporate bonds

 

 

19,680

 

 

 

1

 

 

 

(552

)

 

 

19,129

 

Municipal bonds

 

 

104,265

 

 

 

31

 

 

 

(19,263

)

 

 

85,033

 

Total Securities Available for Sale

 

$

471,284

 

 

$

238

 

 

$

(50,927

)

 

$

420,595

 

 

As of March 31, 2024, there were $334.5 million or 279 issues of individual securities, held in an unrealized loss position. These securities have an unrealized loss of $54.0 million and consist of 117 mortgage-backed/collateralized mortgage obligations, 125 municipal bonds, 21 agency bonds, 5 treasury bonds and 11 corporate bonds.

Accrued interest receivable on AFS securities as of March 31, 2024 amounted to $2.0 million.

The following tables summarize all securities with unrealized losses, segregated by length of time in a continuous unrealized loss position, for which no allowance for credit losses was recorded, at March 31, 2024, and December 31, 2023 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

March 31, 2024

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

U.S. Government treasuries

 

$

-

 

 

$

-

 

 

$

51,132

 

 

$

(324

)

 

$

51,132