Not immune: VNB corporate profit falls 42 percent
Virginia National Bank, long seen as one of the bulwarks of the local financial services industry, saw its net income fall 42 percent last year, according to an earnings report released Friday.
The new report, released January 27, shows that in addition to suffering a drop in profit, VNB found itself making greater allowances for loan losses– due in no small part to one customer which cost the bank $426,000 last year. As previously reported, VNB lent over $300,000 to the father of accused murderer George W. Huguely V for an ill-fated land speculation on Morgantown Road in Ivy, but that appears not to be last year's jumbo loss.
However, President Glenn Rust says he feels good about the overall results particularly because the bank itself achieved a gain– with its profit rising from $1.94 million to $2.0 million– and saw what Rust calls a "healthy" increase in average deposits of seven percent.
The total profit downturn, from $4.03 million to $2.34 million, Rust says, stemmed primarily from lower "performance fees" at VNBTrust, the wholly-owned subsidiary providing investment advice to institutions and wealthy individuals, which enjoyed a stellar 2010.
"It's pretty hard to put record earnings back to back," says Rust. "Last year was record earnings, and this year was solid earnings."
One thing the bank lost late year was four members of its board when chairman Mark Giles led an exodus over what the bank termed a dispute over the board's "composition." Two remaining board members, Hunter Craig and Wick McNeely, have pledged their shares and, separately, in a controversial quest to obtain taxpayer money to fund an ill-fated land speculation of their own, sued the state. (Replaced on the bank board by William Dittmar, Giles retained his separate seat as chair of VNBTrust.)
In another component of the new report, the bank increased the amount of what bankers call OREO, Other Real Estate Owned, which jumped from $329,000 at the end of 2010 to $4.2 million at the end of 2011. Rust says the bank has plans to put those foreclosed properties on the market and calls both the bank's charge-off rate of .18 percent and its loan loss provision of 1.28 percent "very healthy."
Amid some private shareholder grumbling that the bank spends too much on overhead, Rust notes that such expenses fell over half a million dollars last year, even as cash donations to non-profits reached $323,000.
"We haven't backed off our charitable giving," says Rust. "It's the right thing to do."Read more on: Virginia National Bank