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` `

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, 2026


☐	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.

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 7, 2026, the registrant had 5,422,513 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 25
Application of Critical Accounting Policies and Estimates		Page 26
Financial Condition		Page 26
Results of Operations		Page 32

Item 3 Quantitative and Qualitative Disclosures About Market Risk		Page 37

Item 4 Controls and Procedures		Page 37

Part II. Other Information
Item 1 Legal Proceedings		Page 37
Item 1A Risk Factors		Page 37
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		Page 38
Item 3 Defaults Upon Senior Securities		Page 38
Item 4 Mine Safety Disclosures		Page 38
Item 5 Other Information		Page 38
Item 6 Exhibits		Page 38

Signatures		Page 39


Glossary of Acronyms and Defined Terms
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
ASC	-	Accounting Standards Codification
ASC 820	-	ASC 820, Fair Value Measurements and Disclosures
ASU	-	Accounting Standards Update
the Bank	-	Virginia National Bank
BOLI	-	Bank-owned life insurance
bps	-	Basis points
CBBFC	-	Community Bankers' Bank Financial Corporation
CBLR	-	Community Bank Leverage Ratio
CDARS™	-	Certificates of Deposit Account Registry Service
CECL	-	Current expected credit losses
CET1	-	Common equity tier 1
CFPB	-	Consumer Financial Protection Bureau
CME	-	Chicago Mercantile Exchange
CMO	-	Collateralized mortgage obligation
the Company	-	Virginia National Bankshares Corporation and its subsidiary
CRA	-	Community Reinvestment Act of 1977
CRE	-	Commercial real estate
Dodd-Frank Act	-	Dodd-Frank Wall Street Reform and Consumer Protection Act of 2018
Effective Date	-	April 1, 2021
EPS	-	Earnings per common share
Exchange Act	-	Securities Exchange Act of 1934, as amended
Fauquier	-	Fauquier Bankshares, Inc. and its subsidiaries
FASB	-	Financial Accounting Standards Board
FBS	-	Fauquier Bank Services, Inc
Federal Reserve	-	Board of Governors of the Federal Reserve System
Federal Reserve Act	-	Federal Reserve Act of 1913, as amended
Federal Reserve Bank or FRB	-	Federal Reserve Bank of Richmond
FHLB	-	Federal Home Loan Bank of Atlanta
FOMC	-	Federal Open Market Committee
Form 10-K	-	Annual Report on Form 10-K for the year ended December 31, 2025
FTE	-	Fully taxable equivalent
GAAP or U.S. GAAP	-	Accounting principles generally accepted in the United States
ICS®	-	Insured Cash Sweep®
MBS	-	Mortgage-Backed Securities
Merger	-	Mergers of Fauquier Bankshares, Inc. and The Fauquier Bank with and into the Company and the Bank, respectively
Nasdaq	-	The Nasdaq Stock Market, LLC
NPA	-	Nonperforming assets
OCC	-	Office of the Comptroller of the Currency
PCA	-	Prompt Corrective Action
PCD	-	Purchased loan with credit deterioration
ROAA	-	Return on Average Assets
ROAE	-	Return on Average Equity
Reorganization	-	Reorganization Agreement and Plan of Share Exchange dated March 6, 2013 between the Bank and the Company
SBA	-	Small Business Administration
SCC	-	Virginia State Corporation Commission
SEC	-	U.S. Securities and Exchange Commission
Securities Act	-	Securities Act of 1993, as amended
SOFR	-	Secured Overnight Financing Rate

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)


	March 31, 2026			December 31, 2025 *
ASSETS	Unaudited
Cash and due from banks	$	8,500		$	5,798
Interest-bearing deposits in other banks		10,608			10,552
Federal funds sold		57,758			54,264
Securities:
Available for sale, at fair value		240,424			247,992
Restricted securities, at cost		6,195			6,172
Total securities		246,619			254,164
Loans, net of deferred fees and costs		1,237,669			1,237,577
Allowance for credit losses		(7,981	)		(8,270	)
Loans, net	$	1,229,688		$	1,229,307
Premises and equipment, net		11,660			11,687
Bank owned life insurance		41,621			41,302
Goodwill		7,768			7,768
Core deposit intangible, net		2,435			2,682
Right-of-use asset, net		5,925			6,297
Deferred tax asset, net		12,419			12,079
Accrued interest receivable and other assets		13,163			13,842
Total assets	$	1,648,164		$	1,649,742
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Demand deposits:
Noninterest bearing	$	355,475		$	362,322
Interest bearing		279,470			308,295
Money market and savings deposit accounts		505,291			469,815
Certificates of deposit and other time deposits		286,492			291,299
Total deposits		1,426,728			1,431,731
Borrowings		20,000			20,000
Junior subordinated debt, net		3,566			3,554
Lease liability		5,835			6,192
Accrued interest payable and other liabilities		5,538			4,104
Total liabilities		1,461,667			1,465,581
Commitments and contingent liabilities
Shareholders' equity:
Preferred stock, $2.50 par value		-			-
Common stock, $2.50 par value		13,393			13,327
Capital surplus		107,573			107,337
Retained earnings		97,475			94,165
Accumulated other comprehensive loss		(31,944	)		(30,668	)
Total shareholders' equity		186,497			184,161
Total liabilities and shareholders' equity	$	1,648,164		$	1,649,742

Common shares outstanding		5,422,513			5,393,140
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

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)


	For the three months ended
	March 31, 2026			March 31, 2025
Interest and dividend income:
Loans, including fees	$	16,833		$	17,033
Federal funds sold		494			184
Other interest-bearing deposits		35			42
Investment securities:
Taxable		1,065			1,309
Tax exempt		360			323
Dividends		90			115
Total interest and dividend income		18,877			19,006

Interest expense:
Demand deposits		71			69
Money market and savings deposits		3,053			3,003
Certificates and other time deposits		2,585			3,054
Borrowings		192			509
Federal funds purchased		-			7
Junior subordinated debt		70			70
Total interest expense		5,971			6,712
Net interest income		12,906			12,294
Recovery of credit losses		(336	)		(160	)
Net interest income after recovery of credit losses		13,242			12,454

Noninterest income:
Wealth management fees		220			229
Deposit account fees		366			307
Debit/credit card and ATM fees		251			370
Bank owned life insurance income		319			293
Gains on sale of assets, net		5			278
Other		328			283
Total noninterest income		1,489			1,760

Noninterest expense:
Salaries and employee benefits		3,999			3,936
Net occupancy		779			1,016
Equipment		186			186
Bank franchise tax		468			339
Computer software		214			256
Data processing		550			735
FDIC deposit insurance assessment		175			145
Marketing, advertising and promotion		267			254
Professional fees		348			256
Core deposit intangible amortization		247			295
Other		966			1,406
Total noninterest expense		8,199			8,824

Income before income taxes		6,532			5,390
Provision for income taxes		1,273			901
Net income	$	5,259		$	4,489
.
Net income per common share, basic	$	0.97		$	0.83
Net income per common share, diluted	$	0.97		$	0.83
Weighted average common shares outstanding, basic		5,409,543			5,378,871
Weighted average common shares outstanding, diluted		5,443,437			5,402,936

See Notes to Consolidated Financial Statements

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

(Unaudited)


	For the three months ended
	March 31, 2026			March 31, 2025
Net income	$	5,259		$	4,489
Other comprehensive (loss) income, net of tax:
Securities available for sale		(1,276	)		3,521
Total comprehensive income	$	3,983		$	8,010

See Notes to Consolidated Financial Statements

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(Dollars in thousands, except per share data)

(Unaudited)


	Common Stock			Capital Surplus			Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance, December 31, 2024	$	13,263		$	106,394		$	82,507		$	(41,862	)	$	160,302
Stock option expense		-			34			-			-			34
Restricted stock grant expense		-			214			-			-			214
Vested stock grants		33			(33	)		-			-			-
Cash dividends declared ($0.33 per share)		-			-			(1,779	)		-			(1,779	)
Net income		-			-			4,489			-			4,489
Other comprehensive income		-			-			-			3,521			3,521
Balance, March 31, 2025	$	13,296		$	106,609		$	85,217		$	(38,341	)	$	166,781

Balance, December 31, 2025	$	13,327		$	107,337		$	94,165		$	(30,668	)	$	184,161
Shares surrendered in connection with stock option exercise		(42	)		(630	)		-			-			(672	)
Stock options exercised		63			609			-			-			672
Stock option expense		-			4			-			-			4
Restricted stock grant expense		-			298			-			-			298
Vested stock grants		45			(45	)		-			-			-
Cash dividends declared ($0.36 per share)		-			-			(1,949	)		-			(1,949	)
Net income		-			-			5,259			-			5,259
Other comprehensive loss		-			-			-			(1,276	)		(1,276	)
Balance, March 31, 2026	$	13,393		$	107,573		$	97,475		$	(31,944	)	$	186,497

See Notes to Consolidated Financial Statements

VIRGINIA NATIONAL BANKSHARES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	For the three months ended
	March 31, 2026			March 31, 2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,259		$	4,489
Adjustments to reconcile net income to net cash provided by operating activities:
Recovery of credit losses		(336	)		(160	)
Net accretion of certain acquisition-related adjustments		(398	)		(531	)
Amortization of intangible assets		247			295
Net amortization of securities		191			200
Net gains on sale of assets		(5	)		(278	)
Earnings on bank owned life insurance		(319	)		(293	)
Depreciation and other amortization		547			766
Stock option expense		4			34
Restricted stock expense		298			214
Net change in:
Accrued interest receivable and other assets		679			(2,923	)
Accrued interest payable and other liabilities		1,077			279
Net cash provided by operating activities		7,244			2,092

CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in restricted investments		(23	)		21
Proceeds from maturities, calls, sales and principal payments of available for sale securities		5,761			4,870
Net change in loans		365			(5,953	)
Proceeds from sale of premises and equipment		64			3,047
Purchase of bank premises and equipment		(207	)		(259	)
Net cash provided by investing activities		5,960			1,726

CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in demand deposits, money market and savings accounts		(196	)		20,612
Net change in certificates of deposit and other time deposits		(4,807	)		(9,945	)
Net change in Federal funds purchased		-			(236	)
Cash dividends paid		(1,949	)		(1,779	)
Net cash (used in) provided by financing activities		(6,952	)		8,652
NET INCREASE IN CASH AND CASH EQUIVALENTS	$	6,252		$	12,470

CASH AND CASH EQUIVALENTS:
Beginning of period	$	70,614		$	17,103
End of period	$	76,866		$	29,573

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest	$	6,021		$	6,852
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Unrealized (losses) gains on available for sale securities	$	(1,616	)	$	4,457

See Notes to Consolidated Financial Statements

VIRGINIA NATIONAL BANKSHARES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

March 31, 2026

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, 2025.

Nature of Operations: The accompanying unaudited consolidated financial statements include the accounts of the Company, and its subsidiary Virginia National Bank. 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, a division of the Bank. 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 allowance for credit losses. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

The Company's significant accounting policies followed in the preparation of unaudited consolidated financial statements are disclosed in Note 1 of the audited financial statements and notes for the year ended December 31, 2025 and are contained in the Company's 2025 Annual Report on Form 10-K. There have been no significant changes to the application of significant accounting policies since December 31, 2025.

Reclassifications: If needed, certain previously reported amounts have been reclassified to conform to current period presentation. The results of reclassifications are not considered material to shareholders' equity and net income.

Note 2. Recent Significant Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specified information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. The FASB subsequently issued ASU 2025-01, “Income Statement—Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date”, which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in ASU 2024-03 in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. The Company does not expect the adoption of ASU 2024-03 to have a material impact on its consolidated financial statements.

In December 2025, the Financial Accounting Standards Board issued ASU 2025-12, “Codification Improvements.” The amendments in this ASU update the FASB Accounting Standards Codification for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments in this ASU are effective for annual periods beginning after December 15, 2026, and interim periods within those annual periods. Early adoption is permitted in both interim and annual periods in which financial statements have not yet been issued or made available for issuance. If an entity adopts the amendments in this ASU in an interim period, it must adopt them as of the beginning of the annual period that includes that interim period. An entity may elect to early adopt the amendments on an issue-by-issue basis. The Company does not expect the adoption of ASU 2025-12 to have a material impact on its consolidated financial statements.

Note 3. Securities

The amortized cost and fair values of available for sale securities as of March 31, 2026 and December 31, 2025 were as follows (dollars in thousands):


March 31, 2026			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. Government agencies	$	34,498	$	-	$	(3,553	)	$	30,945
Mortgage-backed/CMOs		136,606		4		(18,448	)		118,162
Corporate bonds		7,888		33		-			7,921
Municipal bonds		101,868		2		(18,474	)		83,396
Total	$	280,860	$	39	$	(40,475	)	$	240,424


December 31, 2025			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
U.S. Government agencies	$	34,707	$	-	$	(3,444	)	$	31,263
Mortgage-backed/CMOs		141,731		11		(18,237	)		123,505
Corporate bonds		7,868		32		(1	)		7,899
Municipal bonds		102,506		19		(17,200	)		85,325
Total	$	286,812	$	62	$	(38,882	)	$	247,992

As of March 31, 2026, there were $229.3 million or 255 issues of individual securities, held in an unrealized loss position. These securities have an unrealized loss of $40.5 million and consist of 113 mortgage-backed/collateralized mortgage obligations, 123 municipal bonds and 19 agency bonds.

Accrued interest receivable on AFS securities as of March 31, 2026 and December 31, 2025 amounted to $1.1 million and $1.3 million, respectively. The Company has elected to exclude accrued interest receivable from the amortized cost basis.

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, 2026 or December 31, 2025 (dollars in thousands):



	Less than 12 Months				12 Months or More				Total
March 31, 2026	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Government agencies	$	-	$	-	$	30,908	$	3,553	$	30,908	$	3,553
Mortgage-backed/CMOs		3,642		57		113,371		18,391		117,013		18,448
Municipal bonds		4,978		40		76,406		18,434		81,384		18,474
Total	$	8,620	$	97	$	220,685	$	40,378	$	229,305	$	40,475



	Less than 12 Months				12 Months or More				Total
December 31, 2025	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Government agencies	$	-	$	-	$	31,220	$	3,444	$	31,220	$	3,444
Mortgage-backed/CMOs		-		-		122,085		18,237		122,085		18,237
Corporate bonds		-		-		1,996		1		1,996		1
Municipal bonds		-		-		81,422		17,200		81,422		17,200
Total	$	-	$	-	$	236,723	$	38,882	$	236,723	$	38,882

The Company’s securities portfolio is primarily made up of fixed rate instruments, the prices of which move inversely with interest rates. Any unrealized losses are considered by management to be driven by increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the instruments approach their maturity date or repricing date or if market yields for such investments decline. At the end of any accounting period, the portfolio may have both unrealized gains and losses.

Impairment of debt securities occurs when the fair value of a security is less than its amortized cost. For debt securities AFS, impairment is recognized in its entirety in net income if either, (i) we intend to sell the security; or, (ii) it is more-likely-than-not that we will be required to sell the security before recovery of its amortized cost basis. If, however, the Company does not intend to sell the security and it is not more-likely-than-not that the Company will be required to sell the security before recovery, the Company evaluates unrealized losses to determine whether a decline in fair value below amortized cost basis is a result of a credit loss, which occurs when the amortized cost basis of the security exceeds the present value of the cash flows expected to be collected from the security, or other factors such as changes in market interest rates. If a credit loss exists, an ACL is recorded that reflects the amount of the impairment related to credit losses, limited by the amount by which the security’s amortized cost basis exceeds its fair value. Changes in the ACL are recorded in net income in the period of change and are included in the provision for credit losses. Changes in the fair value of debt securities AFS not resulting from credit losses are recorded in other comprehensive income (loss). The Company regularly reviews unrealized losses in its investments in securities and cash flows expected to be collected from impaired securities based on criteria including the extent to which market value is below amortized cost, the financial health of and specific prospects for the issuer, the Company’s intention with regard to holding the security to maturity and the likelihood that the Company would be required to sell the security before recovery.

Management does not believe any of the securities in an unrealized loss position are impaired due to credit quality. In addition, issuers have continued to make timely payments of principal and interest. Accordingly, as of March 31, 2026, management believes the impairments detailed in the table above are temporary, and no credit loss has been realized in the Company’s consolidated statements of income. Additionally, management has the intent and ability to hold any security with an unrealized loss until maturity or until such time as the value of the security has recovered from its unrealized loss position.

Securities pledged as collateral to secure public deposits and to facilitate borrowing from the FRB had carrying values of $23.2 million and $23.3 million at March 31, 2026 and December 31, 2025, respectively.

There were no sales of AFS securities during the three months ended March 31, 2026 and 2025.

Restricted securities are securities with limited marketability and consist of stock in the FRB, the Federal Home Loan Bank of Atlanta, CBB Financial Corporation (the holding company for Community Bankers' Bank) and an investment in an SBA loan fund. These restricted securities, totaling $6.2 million as of March 31, 2026 and December 31, 2025, are carried at cost. The Company did not consider its investment in restricted stock to be impaired at March 31, 2026 or December 31, 2025 and no impairment has been recognized.

The amortized cost and fair value of AFS debt securities at March 31, 2026 are presented below based upon contractual maturities, by major investment categories (dollars in thousands). Expected maturities may differ from contractual maturities because issuers have the right to call or prepay obligations.


	Amortized Cost		Fair Value
U.S. Government agencies
After one year to five years	$	26,118	$	23,855
After five years to ten years		8,380		7,090
	$	34,498	$	30,945
Mortgage-backed/CMOs
One year or less	$	1,533	$	1,513
After one year to five years		1,650		1,573
After five years to ten years		13,323		12,213
Ten years or more		120,100		102,863
	$	136,606	$	118,162
Corporate bonds
One year or less	$	1,999	$	2,000
After one year to five years		5,889		5,921
	$	7,888	$	7,921
Municipal bonds
After one year to five years	$	8,510	$	8,338
After five years to ten years		26,640		24,286
Ten years or more		66,718		50,772
	$	101,868	$	83,396

Total AFS Debt Securities	$	280,860	$	240,424

Note 4. Loans

The composition of the loan portfolio by major loan classifications at March 31, 2026 and December 31, 2025, stated at their face amount, net of deferred fees and costs and discounts, including fair value marks, appears below (dollars in thousands). The Company has elected to exclude accrued interest receivable, totaling $4.7 million and $4.8 million as of March 31, 2026 and December 31, 2025, respectively, from the amortized cost basis of loans.


	March 31,			December 31,
	2026			2025
Commercial loans	$	262,941		$	265,393
Real estate construction and land		29,873			35,000
1-4 family residential mortgages		294,158			297,589
Commercial mortgages		625,581			613,443
Consumer loans		25,116			26,152
Total loans		1,237,669			1,237,577
Less: Allowance for credit losses		(7,981	)		(8,270	)
Net loans	$	1,229,688		$	1,229,307

The balances in the table above include unamortized premiums and net deferred loan costs and fees. As of March 31, 2026 and December 31, 2025, unamortized premiums from purchases of loans (excluding loans acquired during the Merger) were $11.2 million, and $11.6 million, respectively, due primarily to purchases of government-guaranteed loans. Net deferred loan fees net of costs totaled $2.9 million as of March 31, 2026 and December 31, 2025.

Consumer loans include $45 thousand and $82 thousand of demand deposit overdrafts as of March 31, 2026 and December 31, 2025, respectively.

Loans acquired in business combinations are recorded in the consolidated balance sheets at fair value at the acquisition date under the acquisition method of accounting. The fair value mark as of the Effective Date was $23.1 million. The table above includes a remaining net fair value mark of $4.3 million as of March 31, 2026 on the Acquired Loans.

The following table shows the aging of the Company's loan portfolio, by class, at March 31, 2026 (dollars in thousands):


	30-59 Days		60-89 Days		90 Days or More Past Due and Still Accruing		Nonaccrual Loans		Current Loans		Total Loans

Commercial loans	$	5,069	$	-	$	3,749	$	-	$	254,123	$	262,941
Real estate construction and land		-		-		-		-		29,873		29,873
1-4 family residential mortgages		176		182		-		2,147		291,653		294,158
Commercial mortgages		428		108		-		-		625,045		625,581
Consumer loans		58		12		92		-		24,954		25,116
Total Loans	$	5,731	$	302	$	3,841	$	2,147	$	1,225,648	$	1,237,669

The following table shows the aging of the Company's loan portfolio, by class, at December 31, 2025 (dollars in thousands):


	30-59 Days		60-89 Days		90 Days or More Past Due and Still Accruing		Nonaccrual Loans		Current Loans		Total Loans

Commercial loans	$	3,103	$	2,882	$	6,565	$	-	$	252,843	$	265,393
Real estate construction and land		-		-		-		-		35,000		35,000
1-4 family residential mortgages		256		221		391		2,198		294,523		297,589
Commercial mortgages		113		-		-		-		613,330		613,443
Consumer loans		162		73		86		-		25,831		26,152
Total Loans	$	3,634	$	3,176	$	7,042	$	2,198	$	1,221,527	$	1,237,577

The following tables show the Company's amortized cost basis of loans on nonaccrual status as of March 31, 2026 and December 31, 2025 (dollars in thousands). All nonaccrual loans are evaluated for an ACL on an individual basis. As of March 31, 2026 and December 31, 2025, no nonaccrual loans required an ACL.


	March 31, 2026
	Nonaccrual Loans with No Allowance		Nonaccrual Loans with an Allowance		Total Nonaccrual Loans
Commercial loans	$	-	$	-	$	-
Real estate construction and land		-		-		-
1-4 family residential mortgages		2,147		-		2,147
Commercial mortgages		-		-		-
Consumer loans		-		-		-
Total Nonaccrual Loans	$	2,147	$	-	$	2,147


	December 31, 2025
	Nonaccrual Loans with No Allowance		Nonaccrual Loans with an Allowance		Total Nonaccrual Loans
Commercial loans	$	-	$	-	$	-
Real estate construction and land		-		-		-
1-4 family residential mortgages		2,198		-		2,198
Commercial mortgages		-		-		-
Consumer loans		-		-		-
Total Nonaccrual Loans	$	2,198	$	-	$	2,198

Troubled loan modifications

From time to time, the Company modifies loans to borrowers who are experiencing financial difficulties by providing term extensions, interest rate reductions or other-than-insignificant payment delays. As the effect of most modifications is already included in the ACL due to the measurement methodologies used in its estimate, the ACL is typically not adjusted upon modification. For the three months ended March 31, 2026 and 2025 there were no loans that were modified to borrowers who were experiencing financial difficulty.

The Company closely monitors the performance of all modified loans to understand the effectiveness of its modification efforts. Upon determination, if applicable, that all or a portion of a modified loan is uncollectible, that amount is charged against the ACL. During the quarters ended March 31, 2026 and December 31, 2025, no loans which had been previously modified were considered by management to be in default of the terms of their modification. There were no loans secured by 1-4 family properties in foreclosure as of March 31, 2026 or December 31, 2025.

Note 5. Allowance for Credit Losses

The ACL on the loan portfolio is a material estimate for the Company. The Company estimates an ACL on its loan portfolio on a quarterly basis and uses this analysis to assess the sufficiency of the ACL on loans and to determine the necessary provision for credit losses. The portfolio is segmented into categories based on common risk factors.

The following table shows the ACL activity by loan portfolio for the three months ended March 31, 2026 (dollars in thousands):


	Commercial Loans			Real Estate Construction and Land			1-4 Family Residential Mortgages			Commercial Mortgages		Consumer Loans			Total
Allowance for Credit Losses:
Balance as of December 31, 2025	$	481		$	930		$	2,482		$	3,840	$	537		$	8,270
Charge-offs		-			-			-			-		(93	)		(93	)
Recoveries		8			-			-			1		76			85
(Recovery of) provision for credit losses		(57	)		(193	)		(135	)		120		(16	)		(281	)
Balance as of March 31, 2026	$	432		$	737		$	2,347		$	3,961	$	504		$	7,981

The following table shows the ACL activity by loan portfolio for the three months ended March 31, 2025 (dollars in thousands):


	Commercial Loans			Real Estate Construction and Land		1-4 Family Residential Mortgages		Commercial Mortgages		Consumer Loans		Total
Allowance for Credit Losses:
Balance as of December 31, 2024	$	760		$	737	$	2,551	$	3,533	$	874	$	8,455
Charge-offs		(6	)		-		-

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Virginia National Bankshares Corp 10-Q