Virginia National Bankshares Corp (VABK) stock intrinsic value fair value estimate & owner earnings analysis

Virginia National Bankshares is the holding company for Virginia National Bank, a community bank headquartered in Charlottesville, Virginia. It takes deposits and makes commercial and consumer loans in Charlottesville, Winchester, Manassas and Richmond and the surrounding counties, and also offers trust and estate services. In April 2021 it merged with Fauquier Bankshares, which roughly doubled the share count to about 5.4 million shares, so we treat 2022 onward as the business as it exists today and set 2021 aside as a partial-year combination. How we measured earnings. We start from cash generated by operations, remove swings in working capital, deduct stock compensation (about $1.0 million a year, a real cost to shareholders) and deduct capital spending on branches and equipment, which is small. Owner earnings per share were $4.51 in 2022, $2.41 in 2023, $2.92 in 2024 and $3.78 in 2025. Non-cash charges such as the roughly $1.1 million of yearly intangible amortization are added back because they are sunk acquisition costs; non-cash income such as the roughly $2.0 million of acquisition-related loan accretion in 2025 is already stripped out of operating cash flow, so it does not flatter the result. We use the median of the four post-merger years, $3.35 per share, as the earnings level. Earlier years (2016 to 2020, $2.72 to $3.96 per share on about 2.4 to 2.7 million shares) describe the smaller pre-merger bank and are not used. Growth. Owner earnings rose about 29% in 2025 ($2.92 to $3.78), yet we assume no growth in year one and beyond in the base case, so the base case sits below the 2025 result. Loan growth, better lending margins and market conditions are not contracted or repeated on a steady schedule here: owner earnings per share have gone up and down since the merger rather than compounding, so we credit none. Earnings that the bank retains after its $1.41 per share dividend are also not credited as growth. Base case, about $55.80 per share. Earnings hold at $3.35 per share for the next ten years and after. What continues them is the deposit and lending franchise across its Virginia markets, which produced positive owner earnings in every year we examined, including 2016 to 2025. Bear case, about $28.90 per share. Owner earnings stay at the weakest post-merger level, $2.41 per share (2023, when funding costs pressured the bank), for ten years and then fall to half of that. A bank holds far more in loans and securities than in shareholder equity, so modest loan losses or a squeeze on deposit costs move earnings materially. We include no specific credit problem because none is evident in what we reviewed, but the shortfall to the base case reflects that leverage. We also note that the Q2 2026 10-Q shows a jump in quarterly profit to $9.0 million that we could not explain from the data we reviewed and therefore did not use. Bull case, about $70.80 per share. Owner earnings settle at $4.25 per share, between 2025 ($3.78) and 2022 ($4.51), both levels the bank has actually produced, and stay there. What would make this wrong. Deposit costs rising faster than loan yields, credit losses in the Virginia loan book, or a fade of the earnings recorded in 2022 and 2025 back toward the 2023 low. Owner earnings are also unusually volatile from year to year, partly because of working-capital timing that we strip out, and we could not fully reconcile the 2022 peak. Share price was not considered in reaching these values. Margin-of-safety price. A substantial cushion below the base value is applied because the bank is small, thinly traded on the Nasdaq Capital Market and exposed to credit and interest-rate swings, so the margin-of-safety price of $28 is set at roughly the bear-case value.