Virginia National Bankshares Corp

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 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 and six months ended June 30, 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 a 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 June 30, 2026, and December 31, 2025, were as follows (dollars in thousands):

As of June 30, 2026, there were$226.4 million or 255 issues of individual securities, held in an unrealized loss position. These securities have an unrealized loss of$39.4 million and consist of 113 mortgage-backed/collateralized mortgage obligations,123 municipal bonds and 19 agency bonds.

Accrued interest receivable on AFS securities was $1.3 million as of June 30, 2026, and December 31, 2025. 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 whichno allowance for credit losses was recorded, at June 30, 2026 and December 31, 2025 (dollars in thousands):

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 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 June 30, 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 June 30, 2026 and December 31, 2025, respectively.

There wereno sales of AFS securities during thesix months ended June 30, 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 June 30, 2026 and December 31, 2025, are carried at cost. The Company did not consider its investment in restricted stock to be impaired at June 30, 2026 or December 31, 2025 and no impairment has been recognized.

The amortized cost and fair value of AFS debt securities at June 30, 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.

Note 4. Loans

The composition of the loan portfolio by major loan classifications at June 30, 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 June 30, 2026 and December 31, 2025, respectively, from the amortized cost basis of loans.

The balances in the table above include unamortized premiums and net deferred loan costs and fees. As of June 30, 2026 and December 31, 2025, unamortized premiums from purchases of loans (excluding loans acquired during the Merger) were $10.9 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 June 30, 2026 and December 31, 2025.

Consumer loans include$62 thousand and $82 thousand of demand deposit overdrafts as of June 30, 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 $3.9 million and $4.8 million as of June 30, 2026 and December 31, 2025, respectively, on the Acquired Loans.

The following table shows the aging of the Company's loan portfolio, by class, at June 30, 2026 (dollars in thousands):

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

The following tables show the Company's amortized cost basis of loans on nonaccrual status as of June 30, 2026 and December 31, 2025 (dollars in thousands). All nonaccrual loans are evaluated for an ACL on an individual basis. As of June 30, 2026 and December 31, 2025, no nonaccrual loans required an ACL.

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 June 30, 2026 and 2025, and the six months ended June 30, 2026 and 2025 there wereno 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 three months ended June 30, 2026 and 2025, and the six months ended June 30, 2026 and 2025, no loans which had been previously modified were considered by management to be in default of the terms of their modification. There wereno loans secured by 1-4 family properties in foreclosure as of June 30, 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 thesix months ended June 30, 2026 (dollars in thousands):

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

The following table presents a breakdown of the provision for (recovery of) credit losses for the periods indicated (dollars in thousands):

As of June 30, 2026 and December 31, 2025, the Company had $2.1 million and $2.2 million respectively, of collateral dependent loans secured by 1-4 family residential mortgages, individually evaluated for expected losses. There was no ACL allocation for the loans for either period.

Credit Quality Indicators

The Company utilizes the following credit quality indicators:

Pass -Loans with the following risk ratings are pooled by class and considered together as “Pass”:

Excellent – minimal risk loans secured by cash or fully guaranteed by a U.S. government agency

Good – low risk loans secured by marketable collateral within margin

Satisfactory – modest risk loans where the borrower has strong and liquid financial statements and more than adequate cash flow

Average – average risk loans where the borrower has reasonable debt service capacity

Marginal – acceptable risk loans where the borrower has acceptable financial statements but is leveraged

Watch -These loans have an acceptable risk but require more attention than normal servicing.

Special Mention -These potential problem loans are currently protected but are potentially weak.

Substandard -These problem loans are inadequately protected by the sound worth and paying capacity of the borrower and/or the value of any collateral pledged. If such loans are not accruing interest, they would be evaluated on an individual basis.

Doubtful -Loans with this rating have significant deterioration in the sound worth and paying capacity of the borrower and/or the value of any collateral pledged, making collection or liquidation of the loan in full highly questionable. These loans would be considered impaired and evaluated on an individual basis.

The following table presents the Company's recorded investment in loans by credit quality indicators by year of origination as of June 30, 2026 (dollars in thousands). Current period gross write-off amounts represent write-offs for the six months ended June 30, 2026.

The following table presents the Company's recorded investment in loans by credit quality indicators by year of origination as of December 31, 2025 (dollars in thousands). Current period gross write-off amounts represent write-offs for the year ended December 31, 2025.

Note 6. Goodwill and Other Intangible Assets

The carrying amount of goodwill was$7.8 million at June 30, 2026 and December 31, 2025.

The Company had$2.2 million and$2.7 million of other intangible assets as of June 30, 2026 and December 31, 2025, respectively, recognized in connection with the core deposits acquired from the Merger. The following table summarizes the gross carrying amounts and accumulated amortization of other intangible assets (dollars in thousands):

Amortization expense was$236 thousand and$284 thousand for the three months ended June 30, 2026 and 2025, respectively, and$483 thousand and$579 thousand for the six months ended June 30, 2026 and 2025, respectively.

Estimated future amortization expense as of June 30, 2026 is as follows (dollars in thousands):

Note 7. Net Income Per Share

The table below shows the weighted average number of shares used in computing net income per common share and the effect of the weighted average number of shares of potential dilutive common stock for thethree and six months ended June 30, 2026 and 2025. Diluted net income per share is computed based on the weighted average number of shares of common stock equivalents outstanding, to the extent dilutive. The Company’s common stock equivalents relate to outstanding common stock options. The recipients of unvested restricted shares have full voting and dividend rights, and as such, unvested restricted stock is included in the calculation of basic and diluted net income per share (dollars in thousands except per share data).

For the three and six months ended June 30, 2026, there were 53,520 and 56,120 option shares, respectively, considered anti-dilutive and excluded from this calculation. For the three and six months ended June 30, 2025, there were 101,864 and 119,464 option shares, respectively, considered anti-dilutive and excluded from this calculation.

Note 8. Stock Incentive Plans

The 2022 Plan permits the Company to grant both incentive and nonqualified stock options, as well as restricted stock, unrestricted stock and other stock based awards. No new grants can be issued under the previous 2014 Plan as that plan has expired. Outstanding stock options expire ten years from the grant date. Both plans had outstanding options and restricted stock at June 30, 2026. Restricted stock and stock options from both plans vest by the fourth or fifth anniversary of the date of the grant.

For the 2022 Plan, the option price for any stock options cannot be less than the fair value of the Company’s stock on the grant date. In addition,95% of the common stock authorized for issuance must have a vesting or exercise schedule of at least one year. Forthe 2014 Plan, the option price of incentive stock options could not be less than the fair value of the stock at the time an option was granted and nonqualified stock options could have been granted at prices established by the Board of Directors, including prices less than the fair value on the date of grant.

The Company accounts for all of its stock incentive plans under recognition and measurement accounting principles which require that the compensation cost relating to stock-based payment transactions be recognized in the financial statements. Stock-based compensation arrangements include stock options and restricted stock. All stock-based payments to employees are required to be valued at a fair value on the date of grant and expensed based on that fair value over the applicable vesting period.

Stock Options

Changes in the stock options outstanding related to the Plans are summarized below (dollars in thousands except per share data):

For the three months ended June 30, 2026 and 2025, the Company recognized$23 thousand and$35 thousand, respectively, in compensation expense for stock options. For the six months ended June 30, 2026, and 2025, the Company recognized$27 thousand and$69 thousand, respectively, in compensation expense for stock options. As of June 30, 2026, there was $226 thousand in unre cognized compensation expense remaining to be recognized in future reporting periods through 2030. The fair value of any stock option grant is estimated at the grant date using the Black-Scholes pricing model. There wereno stock options granted during thethree months ended June 30, 2026 compared to 2,600 shares issued during the same time period for 2025. There wereno stock options granted during the first six months of 2026 compared to 8,200 shares issued during thesix months ended June 30, 2025.

Summary information pertaining to options outstanding at June 30, 2026 is shown below.

Stock Grants

Restricted stock grants –Under the 2022 Plan, during the three months ended June 30, 2026 and 2025, no shares of restricted stock were issued; however, for the six months ended June 30, 2026 and 2025,20,900 and 21,068 restricted shares, respectively, were granted to employees and non-employee directors. The shares vest over afour-year period. For thethree months ended June 30, 2026 and 2025,$208 thousand and$212 thousand, respectively, was expensed as a result of restricted stock grants. For the six months ended June 30, 2026 and 2025,$506 thousand and$426 thousand, respectively, was expensed as a result of restricted stock grants. As of June 30, 2026, there was $1.8 million in unrecognized compensation expense for all restricted stock grants remaining to be recognized in future reporting periods through 2030.

Changes in the restricted stock grants outstanding during thesix months ended June 30, 2026 are summarized below (dollars in thousands except per share data):

Note 9. Fair Value Measurements

Determination of Fair Value

The Company follows ASC 820, “Fair Value Measurements and Disclosures,” to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. This codification clarifies that the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

The fair value guidance provides a consistent definition of fair value, which focuses on exit price in the principal or most advantageous market for the asset or liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

Fair Value Hierarchy

In accordance with this guidance, the Company groups its financial assets and financial liabilities generally measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value:

The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the consolidated financial statements:

Securities available for sale

Securities AFS are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2).

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the balances measured at fair value on a recurring basis at the dates indicated (dollars in thousands):

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain financial assets are measured at fair value on a nonrecurring basis in accordance with GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write downs of individual assets. There wereno assets measured at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025.

Fair Value of Financial Instruments

ASC 825, “Financial Instruments,” requires disclosures about fair value of financial instruments for interim periods and excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

The Company uses the exit price notion in calculating the fair values of financial instruments not measured at fair value on a recurring basis. The carrying values and estimated fair values of the Company's financial instruments at the dates indicated are as follows (dollars in thousands):

The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. Consequently, the fair values of the Company’s financial instruments will fluctuate when interest rate levels change, and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk; however, borrowers with fixed rate obligations are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.

Note 10. Accumulated Other Comprehensive Loss

The following table presents the changes in each component of accumulated other comprehensive loss during thethree months ended June 30, 2026 and 2025 (dollars in thousands).

The following table presents the changes in each component of accumulated other comprehensive loss during the six months ended June 30, 2026 and 2025 (dollars in thousands).

Note 11. Segment Reporting

For the financial periods noted in this report, the Company hastwo reportable segments. Each reportable segment is a strategic business unit that offers different products and services. They are managed separately, because each segment appeals to different markets and, accordingly, require different technology and marketing strategies. The accounting policies of the segments are the same as those described in the summary of significant accounting policies provided earlier in this report. Asset information is not disclosed because all are held at the bank level.

Thetwo reportable segments are:

•

Bank -The commercial banking segment involves making loans and generating deposits from individuals, businesses and charitable organizations. Loan fee income, service charges from deposit accounts, and other noninterest related fees, such as fees for debit cards and ATM usage and fees for treasury management services, generate additional income for the Bank segment.

•

VNB Trust & Estate Services -VNB Trust & Estate Services offers corporate trustee services, trust and estate administration, IRA administration and custody services. Revenue for this segment is generated from administration, service and custody fees, as well as management fees that are derived from Assets Under

Management. Investment management services currently are offered through in-house and third-party managers.

Segment information for thethree and six months ended June 30, 2026 and 2025 is shown in the following tables (dollars in thousands).

Note 12. Subsequent Event

In July 2026, the Company entered into an amendment to the ground lease for the Pantops headquarters property. The amendment, which is effective beginning on November 1, 2026, extends the term of the lease from five years to 20 years. The extension increases both the right-of-use asset and the lease liability by $5.2 million. This change reflects the present value of additional lease payments over the new term.