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VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES RECORD 2022 FOURTH QUARTER AND RECORD FULL YEAR EARNINGS
VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES RECORD 2022 FOURTH QUARTER AND RECORD FULL YEAR EARNINGS
PR Newswire
CHARLOTTESVILLE, Va., Jan. 31, 2023
CHARLOTTESVILLE, Va., Jan. 31, 2023 /PRNewswire/ — Virginia National Bankshares Corporation…
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VIRGINIA NATIONAL BANKSHARES CORPORATION ANNOUNCES RECORD 2022 FOURTH QUARTER AND RECORD FULL YEAR EARNINGS
PR Newswire
CHARLOTTESVILLE, Va., Jan. 31, 2023
CHARLOTTESVILLE, Va., Jan. 31, 2023 /PRNewswire/ -- Virginia National Bankshares Corporation (NASDAQ: VABK) (the "Company") today reported record quarterly net income of $7.1 million, or $1.32 per diluted share, for the quarter ended December 31, 2022, which represents a 35% increase over net income of $5.2 million, or $0.98 per diluted share, recognized for the quarter ended December 31, 2021. For the twelve months ended December 31, 2022, record net income of $23.4 million, or $4.38 per diluted share, was recognized, compared to $10.1 million, or $2.14 per diluted share, for the twelve months ended December 31, 2021. Note that pre-tax merger and merger-related expenses of $7.4 million were incurred in the year-to-date period ended December 31, 2021, in connection with the April 1, 2021 mergers of Fauquier Bankshares, Inc. ("Fauquier") and The Fauquier Bank ("TFB") with and into the Company and Virginia National Bank (the "Bank"), respectively.
"We are proud to post record results for the fourth quarter and calendar year of 2022," commented President and Chief Executive Officer, Glenn W. Rust. "Our earn back period for the 2021 merger with Fauquier was less than two years and we continue to reap the benefits of an effectively managed overhead cost structure. We posted a return on average assets of 1.30% for 2022 and we continue to maintain a strong credit discipline."
Fourth Quarter 2022 Highlights
- Return on average assets ("ROAA") for the three months ended December 31, 2022 increased to 1.65% compared to 1.06% realized in the same period in the prior year.
- Return on average equity ("ROAE") for the three months ended December 31, 2022 improved to 22.23% compared to 12.86% realized in same period in the prior year.
- The efficiency ratio on a fully tax equivalent basis ("FTE") (a non-GAAP financial measure)1 was 51.7% for the three months ended December 31, 2022, an improvement over 57.7% for the same period in the prior year.
- The Company did not incur any merger or merger-related expenses in 2022, compared to $7.4 million incurred during 2021.
- The Company is realizing significant savings in salaries and employee benefits, data processing and professional fees associated with the merger. Full-time equivalent employee headcount was 215 as of April 1, 2021, the effective date of the merger, and is down to 157 as of December 31, 2022. In addition, the Company closed two branches in the fourth quarter of 2022, reducing future operating costs.
- During the fourth quarter of 2022, the Company sold its interest in Sturman Wealth Advisors, resulting in a gain on sale of the line of business of $404 thousand. All goodwill and unamortized intangible assets associated with the 2016 purchase of this business line have been eliminated from the Company's balance sheet.
Loans and Asset Quality
- Credit performance remains strong with nonperforming assets as a percentage of total assets of 0.08% as of December 31, 2022, compared to 0.10% as of December 31, 2021. Nonperforming assets have been reduced to $1.4 million as of December 31, 2022, compared to $1.9 million as of December 31, 2021, and the Company currently holds no other real estate owned.
- Four loans to three borrowers are in non-accrual status, totaling $673 thousand, as of December 31, 2022, compared to $495 thousand as of December 31, 2021. Loans acquired from TFB ("acquired loans") that otherwise would be in non-accrual status are not included in this figure, as they earn interest through the yield accretion.
- Loans 90 days or more past due and still accruing interest amounted to $705 thousand as of December 31, 2022, compared to $800 thousand as of December 31, 2021. The portfolio includes three non-insured student loans that are 90 days or more past due and still accruing interest, amounting to $59 thousand. Acquired loans that are greater than 90 days past due and still accruing interest are included in this figure, net of their fair value mark.
- The period-end allowance for loan losses ("ALLL") as a percentage of total loans was 0.59% as of December 31, 2022 and 0.56% as of December 31, 2021. The fair value mark that was allocated to the acquired loans was $21.3 million as of April 1, 2021 with a remaining balance of $15.9 million as of December 31, 2022. The ALLL as a percentage of gross loans, excluding the impact of the acquired loans and fair value mark (a non-GAAP financial measure)1, would have been 0.90% as of December 31, 2022 and 0.95% as of December 31, 2021. The total of the ALLL and the fair value mark as a percentage of gross loans (a non-GAAP financial measure)1 amounted to 2.29% as of December 31, 2022 and 2.30% as of December 31, 2021.
- A provision for loan losses of $136 thousand was recognized during the three months ended December 31, 2022, compared to $537 thousand recognized in the three months ended December 31, 2021.
- Gross loans outstanding at December 31, 2022 totaled $936.4 million, a decrease of $124.8 million, or 12%, compared to December 31, 2021. Loans originated and funded during 2022 were offset by: 1) paydowns of legacy organic loans due mainly to business sales, property sales and participation fluctuations, 2) workouts and paydowns of loans, the majority of which originated from legacy Fauquier, and 3) the forgiveness of Small Business Administration Paycheck Protection Program loans.
Net Interest Income
- Net interest income for the three months ended December 31, 2022 of $15.4 million increased $3.0 million, or 24%, compared to the three months ended December 31, 2021, due primarily to the increase in average balances of securities, positively impacting net interest income through rate and volume, offset by the reduction in average balances of loans.
- The fair value accretion on acquired loans positively impacted net interest income by 21 basis points ("bps") during the current quarter.
- The overall cost of funds, including noninterest deposits, of 23 bps incurred in the three months ended December 31, 2022 increased 8 bps from 22 bps in the same period in the prior year. Overall, the cost of interest-bearing deposits increased period over period, from a cost of 30 bps to 32 bps. Average balances in noninterest-bearing deposits remained relatively flat period over period.
- Low-cost deposits, which include noninterest checking accounts and interest-bearing checking, savings and money market accounts, remained in excess of 91% of total deposits at December 31, 2022 and 2021.
Noninterest Income
Noninterest income for the three months ended December 31, 2022 decreased $100 thousand, or 3%, compared to the three months ended December 31, 2021, primarily due to the decline in wealth management fees, due to an anticipated reduction in the number of accounts served by the Trust & Estate segment and the decline in performance fees collected by Masonry Capital Management. In the fourth quarter of 2022, the Company received a $267 thousand recovery of unearned premiums related to the loss of insurance on the student loan portfolio, bringing the total recovered life-to-date to over $1 million. The Company also closed on the sale of Sturman Wealth Advisors, as noted above, in the current period.
Noninterest Expense
Noninterest expense for the three months ended December 31, 2022 increased $592 thousand, or 7%, compared to the three months ended December 31, 2021, due to combination of several variances, including an increase in losses due to fraud and an impairment charge on an asset held for sale, offset by reduced plastics expense as a result of changing vendors and lower salaries and employee benefits as a result of efficiencies gained from the merger. In addition, the fourth quarter of 2021 noninterest expense included a favorable adjustment to merger and merger-related expenses after receiving a refund from a third-party vendor for system implementation credits and adjusting merger-related accrued bonuses.
Book Value
Book value per share was $25.05 as of December 31, 2022 and $30.50 as of December 31, 2021, and tangible book value per share (a non-GAAP financial measure)1 was $22.36 as of December 31, 2022 compared to $27.36 as of December 31, 2021. These values declined due to the increase in unrealized losses on the investment portfolio period over period.
Income Taxes
The effective tax rate for the twelve months ended December 31, 2022 amounted to 17.9% compared to 15.5% for the twelve months ended December 31, 2021, which are both lower than the statutory rate due to the recognition of low-income housing tax credits and the effect of tax-exempt income from municipal bonds and bank owned life insurance policies. The 2021 effective tax rate was also impacted by the non-deductibility of certain merger-related expenses for tax purposes.
Dividends
Cash dividends of $1.6 million, or $0.30 per share, were declared during the current quarter, and $6.4 million, or $1.20 per share, were declared during the current year.
1 See "Reconciliation of Certain Non-GAAP Financial Measures" at the end of this release.
About Virginia National Bankshares Corporation
Virginia National Bankshares Corporation, headquartered in Charlottesville, Virginia, is the bank holding company for Virginia National Bank. The Bank has nine banking offices throughout Fauquier and Prince William counties, three banking offices in Charlottesville and Albemarle County, and banking offices in Winchester and Richmond, Virginia. 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. Investment management services are offered through Masonry Capital Management, LLC, a registered investment adviser and wholly-owned subsidiary of the Company.
The Company's common stock trades on the Nasdaq Capital Market under the symbol "VABK." Additional information on the Company is also available at www.vnbcorp.com.
Non-GAAP Financial Measures
The accounting and reporting policies of the Company conform to U.S. generally accepted accounting principles ("GAAP") and prevailing practices in the banking industry. However, management uses certain non-GAAP measures to supplement the evaluation of the Company's performance. Management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company's core businesses. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of GAAP to non-GAAP measures are included at the end of this release.
Forward-Looking Statements; Other Information
Certain statements in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, statements with respect to the Company's operations, performance, future strategy and goals, and are often characterized by use of qualified words such as "expect," "believe," "estimate," "project," "anticipate," "intend," "will," "should," or words of similar meaning or other statements concerning the opinions or judgement of the Company and its management about future events. While Company management believes such statements to be reasonable, future events and predictions are subject to circumstances that are not within the control of the Company and its management. Actual results may differ materially from those included in the forward-looking statements due to a number of factors, including, without limitation, the effects of and changes in: general economic and market conditions, including the effects of declines in real estate values, an increase in unemployment levels and general economic contraction as a result of COVID-19 or other pandemics; fluctuations in interest rates, deposits, loan demand, and asset quality; assumptions that underlie the Company's allowance for loan losses; the potential adverse effects of unusual and infrequently occurring events, such as weather-related disasters, terrorist acts or public health events (e.g., COVID-19 or other pandemics), and of governmental and societal responses thereto; the performance of vendors or other parties with which the Company does business; competition; technology; changes in laws, regulations and guidance; changes in accounting principles or guidelines; performance of assets under management; expected revenue synergies and cost savings from the recently completed merger with Fauquier may not be fully realized or realized within the expected timeframe; the businesses of the Company and Fauquier may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; revenues following the merger may be lower than expected; customer and employee relationships and business operations may be disrupted by the merger; and other factors impacting financial services businesses. Many of these factors and additional risks and uncertainties are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and other reports filed from time to time by the Company with the Securities and Exchange Commission. These statements speak only as of the date made, and the Company does not undertake to update any forward-looking statements to reflect changes or events that may occur after this release.
VIRGINIA NATIONAL BANKSHARES CORPORATION | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(dollars in thousands, except per share data) | |||||||
December 31, 2022 | December 31, 2021* | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Cash and due from banks | $ | 20,993 | $ | 20,345 | |||
Interest-bearing deposits in other banks | 19,098 | 336,032 | |||||
Federal funds sold | 45 | 152,463 | |||||
Securities: | |||||||
Available for sale, at fair value | 538,186 | 303,817 | |||||
Restricted securities, at cost | 5,137 | 4,950 | |||||
Total securities | 543,323 | 308,767 | |||||
Loans, net of deferred fees and costs | 936,415 | 1,061,211 | |||||
Allowance for loan losses | (5,552) | (5,984) | |||||
Loans, net | 930,863 | 1,055,227 | |||||
Premises and equipment, net | 17,808 | 25,093 | |||||
Assets held for sale | 965 | - | |||||
Bank owned life insurance | 38,552 | 31,234 | |||||
Goodwill | 7,768 | 8,140 | |||||
Core deposit intangible, net | 6,586 | 8,271 | |||||
Other intangible assets, net | - | 274 | |||||
Other real estate owned, net | - | 611 | |||||
Right of use asset, net | 6,536 | 7,583 | |||||
Deferred tax asset, net | 17,165 | 4,840 | |||||
Accrued interest receivable and other assets | 13,151 | 13,304 | |||||
Total assets | $ | 1,622,853 | $ | 1,972,184 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Liabilities: | |||||||
Demand deposits: | |||||||
Noninterest-bearing | $ | 495,649 | $ | 522,281 | |||
Interest-bearing | 399,983 | 446,314 | |||||
Money market and savings deposit accounts | 467,600 | 665,530 | |||||
Certificates of deposit and other time deposits | 115,106 | 162,045 | |||||
Total deposits | 1,478,338 | 1,796,170 | |||||
Junior subordinated debt, net | 3,413 | 3,367 | |||||
Lease liability | 6,173 | 7,108 | |||||
Accrued interest payable and other liabilities | 1,513 | 3,552 | |||||
Total liabilities | 1,489,437 | 1,810,197 | |||||
Commitments and contingent liabilities | |||||||
Shareholders' equity: | |||||||
Preferred stock, $2.50 par value | - | - | |||||
Common stock, $2.50 par value | 13,214 | 13,178 | |||||
Capital surplus | 105,344 | 104,584 | |||||
Retained earnings | 63,482 | 46,436 | |||||
Accumulated other comprehensive loss | (48,624) | (2,211) | |||||
Total shareholders' equity | 133,416 | 161,987 | |||||
Total liabilities and shareholders' equity | $ | 1,622,853 | $ | 1,972,184 | |||
Common shares outstanding | 5,337,271 | 5,308,335 | |||||
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
VIRGINIA NATIONAL BANKSHARES CORPORATION | ||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the three months ended | For the twelve months ended | |||||||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||
Interest and dividend income: | ||||||||||||||||
Loans, including fees | $ | 11,828 | $ | 11,995 | $ | 44,231 | $ | 43,899 | ||||||||
Federal funds sold | 426 | 61 | 1,088 | 139 | ||||||||||||
Other interest-bearing deposits | 494 | 139 | 1,467 | 233 | ||||||||||||
Investment securities: | ||||||||||||||||
Taxable | 3,116 | 804 | 8,416 | 2,810 | ||||||||||||
Tax exempt | 324 | 292 | 1,249 | 1,021 | ||||||||||||
Dividends | 88 | 49 | 280 | 170 | ||||||||||||
Total interest and dividend income | 16,276 | 13,340 | 56,731 | 48,272 | ||||||||||||
Interest expense: | ||||||||||||||||
Demand and savings deposits | 682 | 710 | 2,327 | 2,308 | ||||||||||||
Certificates and other time deposits | 158 | 222 | 657 | 1,108 | ||||||||||||
Junior subordinated debt | 52 | 49 | 200 | (132) | ||||||||||||
Total interest expense | 892 | 981 | 3,184 | 3,284 | ||||||||||||
Net interest income | 15,384 | 12,359 | 53,547 | 44,988 | ||||||||||||
Provision for loan losses | 136 | 537 | 106 | 1,014 | ||||||||||||
Net interest income after provision for loan losses | 15,248 | 11,822 | 53,441 | 43,974 | ||||||||||||
Noninterest income: | ||||||||||||||||
Wealth management fees | 721 | 1,455 | 2,440 | 3,508 | ||||||||||||
Advisory and brokerage income | 131 | 246 | 770 | 1,154 | ||||||||||||
Deposit account fees | 433 | 477 | 1,799 | 1,459 | ||||||||||||
Debit/credit card and ATM fees | 648 | 509 | 2,794 | 2,070 | ||||||||||||
Earnings/increase in value of bank owned life insurance | 254 | 201 | 963 | 708 | ||||||||||||
Resolution of commercial dispute | - | - | 2,400 | - | ||||||||||||
Gain on sale of business line | 404 | - | 404 | - | ||||||||||||
Gains (losses) on sale of assets, net | (74) | 1 | 1,043 | 81 | ||||||||||||
Other | 411 | 139 | 1,048 | 1,485 | ||||||||||||
Total noninterest income | 2,928 | 3,028 | 13,661 | 10,465 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Salaries and employee benefits | 4,191 | 4,424 | 17,260 | 16,129 | ||||||||||||
Net occupancy | 729 | 932 | 4,526 | 3,575 | ||||||||||||
Equipment | 111 | 305 | 897 | 966 | ||||||||||||
Bank franchise tax | 304 | 214 | 1,216 | 1,136 | ||||||||||||
Computer software | 229 | 276 | 1,136 | 1,020 | ||||||||||||
Data processing | 805 | 620 | 2,954 | 2,793 | ||||||||||||
FDIC deposit insurance assessment | 90 | 264 | 511 | 858 | ||||||||||||
Marketing, advertising and promotion | 351 | 216 | 1,224 | 922 | ||||||||||||
Merger and merger-related expenses | - | (664) | - | 7,423 | ||||||||||||
Plastics expense | 72 | 389 | 394 | 978 | ||||||||||||
Professional fees | 306 | 244 | 1,357 | 1,117 | ||||||||||||
Core deposit intangible amortization | 403 | 544 | 1,684 | 1,389 | ||||||||||||
Impairment on assets held for sale | 242 | - | 242 | - | ||||||||||||
Other | 1,683 | 1,160 | 5,155 | 4,216 | ||||||||||||
Total noninterest expense | 9,516 | 8,924 | 38,556 | 42,522 | ||||||||||||
Income before income taxes | 8,660 | 5,926 | 28,546 | 11,917 | ||||||||||||
Provision for income taxes | 1,603 | 707 | 5,108 | 1,846 | ||||||||||||
Net income | $ | 7,057 | $ | 5,219 | $ | 23,438 | $ | 10,071 | ||||||||
Net income per common share, basic | $ | 1.32 | $ | 0.98 | $ | 4.40 | $ | 2.16 | ||||||||
Net income per common share, diluted | $ | 1.32 | $ | 0.98 | $ | 4.38 | $ | 2.14 | ||||||||
Weighted average common shares outstanding, basic | 5,333,902 | 5,308,108 | 5,324,740 | 4,668,761 | ||||||||||||
Weighted average common shares outstanding, diluted | 5,362,220 | 5,338,088 | 5,351,358 | 4,695,405 | ||||||||||||
VIRGINIA NATIONAL BANKSHARES CORPORATION | ||||||||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
At or For the Three Months Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, 2022 | March 31, | December 31, | ||||||||||||||||
Common Share Data: | ||||||||||||||||||||
Net income per weighted average share, basic | $ | 1.32 | $ | 1.08 | $ | 1.07 | $ | 0.93 | $ | 0.98 | ||||||||||
Net income per weighted average share, diluted | $ | 1.32 | $ | 1.08 | $ | 1.06 | $ | 0.92 | $ | 0.98 | ||||||||||
Weighted average shares outstanding, basic | 5,333,902 | 5,326,543 | 5,326,271 | 5,311,983 | 5,308,108 | |||||||||||||||
Weighted average shares outstanding, diluted | 5,362,220 | 5,348,900 | 5,347,008 | 5,343,564 | 5,338,088 | |||||||||||||||
Actual shares outstanding | 5,327,271 | 5,327,271 | 5,326,271 | 5,326,271 | 5,308,335 | |||||||||||||||
Tangible book value per share at period end | $ | 22.36 | $ | 20.77 | $ | 22.24 | $ | 24.37 | $ | 27.36 | ||||||||||
Key Ratios: | ||||||||||||||||||||
Return on average assets 1 | 1.65 | % | 1.30 | % | 1.27 | % | 1.03 | % | 1.06 | % | ||||||||||
Return on average equity 1 | 22.23 | % | 16.50 | % | 16.16 | % | 12.53 | % | 12.86 | % | ||||||||||
Net interest margin (FTE) 2 | 3.91 | % | 3.47 | % | 3.02 | % | 2.59 | % | 2.72 | % | ||||||||||
Efficiency ratio (FTE) 3 | 51.7 | % | 57.0 | % | 58.3 | % | 62.0 | % | 57.7 | % | ||||||||||
Loan-to-deposit ratio | 63.3 | % | 59.0 | % | 60.1 | % | 56.8 | % | 59.1 | % | ||||||||||
Net Interest Income: | ||||||||||||||||||||
Net interest income | $ | 15,384 | $ | 14,277 | $ | 12,461 | $ | 11,425 | $ | 12,359 | ||||||||||
Net interest income (FTE) 2 | $ | 15,470 | $ | 14,361 | $ | 12,543 | $ | 11,490 | $ | 12,437 | ||||||||||
Capital Ratios: | ||||||||||||||||||||
Tier 1 leverage ratio | 9.77 | % | 9.17 | % | 8.79 | % | 8.03 | % | 7.61 | % | ||||||||||
Total risk-based capital ratio | 17.64 | % | 16.97 | % | 16.51 | % | 15.66 | % | 14.56 | % | ||||||||||
Assets and Asset Quality: | ||||||||||||||||||||
Average earning assets | $ | 1,568,765 | $ | 1,644,124 | $ | 1,668,471 | $ | 1,802,461 | $ | 1,817,010 | ||||||||||
Average gross loans | $ | 938,740 | $ | 959,086 | $ | 984,883 | $ | 1,031,593 | $ | 1,088,278 | ||||||||||
Paycheck Protection Program loans, end of period | $ | 234 | $ | 254 | $ | 1,925 | $ | 9,976 | $ | 24,482 | ||||||||||
Fair value mark on acquired loans | $ | 15,887 | $ | 17,046 | $ | 17,502 | $ | 17,920 | $ | 18,466 | ||||||||||
Allowance for loan losses: | ||||||||||||||||||||
Beginning of period | $ | 5,485 | $ | 5,503 | $ | 5,834 | $ | 5,984 | $ | 5,623 | ||||||||||
Provision for (recovery of) loan losses | 136 | 39 | (217) | 148 | 537 | |||||||||||||||
Charge-offs | (472) | (119) | (191) | (473) | (230) | |||||||||||||||
Recoveries | 403 | 62 | 77 | 175 | 54 | |||||||||||||||
Net charge-offs | (69) | (57) | (114) | (298) | (176) | |||||||||||||||
End of period | $ | 5,552 | $ | 5,485 | $ | 5,503 | $ | 5,834 | $ | 5,984 | ||||||||||
Non-accrual loans 4 | $ | 673 | $ | 607 | $ | 511 | $ | 518 | $ | 495 | ||||||||||
Loans 90 days or more past due and still accruing 5 | 705 | 859 | 626 | 837 | 800 | |||||||||||||||
OREO | - | - | - | 611 | 611 | |||||||||||||||
Total nonperforming assets (NPA) | $ | 1,378 | $ | 1,466 | $ | 1,137 | $ | 1,966 | $ | 1,906 | ||||||||||
NPA as a % of total assets | 0.08 | % | 0.08 | % | 0.07 | % | 0.10 | % | 0.10 | % | ||||||||||
NPA as a % of gross loans plus OREO | 0.15 | % | 0.16 | % | 0.12 | % | 0.20 | % | 0.18 | % | ||||||||||
ALLL to gross loans | 0.59 | % | 0.58 | % | 0.57 | % | 0.58 | % | 0.56 | % | ||||||||||
ALLL + fair value mark to gross loans (non-GAAP) | 2.29 | % | 2.38 | % | 2.39 | % | 2.35 | % | 2.30 | % | ||||||||||
Non-accruing loans to gross loans 4 | 0.07 | % | 0.06 | % | 0.05 | % | 0.05 | % | 0.05 | % | ||||||||||
Net charge-offs to average loans 1 | 0.03 | % | 0.02 | % | 0.05 | % | 0.12 | % | 0.06 | % | ||||||||||
1 | Ratio is computed on an annualized basis. |
2 | The net interest margin and net interest income are reported on a fully tax-equivalent basis (FTE) basis, using a Federal income tax rate of 21%. |
3 | The efficiency ratio (FTE) is computed as a percentage of noninterest expense divided by the sum of net interest income (FTE) and noninterest income. This is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information should not be viewed as a substitute for GAAP. Comparison of our efficiency ratio with those of other companies may not be possible because other companies may calculate them differently. Refer to the Reconciliation of Certain Non-GAAP Financial (FTE) Measures at the end of this release. |
4 | Acquired loans which otherwise would be in non-accrual status are not included in this figure, as they earn interest through the yield accretion. |
5 | Past due loans from the acquired portfolio are included at fair value. |
VIRGINIA NATIONAL BANKSHARES CORPORATION | ||||||||||||||||||||||||
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) | ||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
For the three months ended | ||||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
Interest | Interest | |||||||||||||||||||||||
Average | Income/ | Average | Average | Income/ | Average | |||||||||||||||||||
Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable Securities | $ | 471,566 | $ | 3,204 | 2.72 | % | $ | 225,757 | $ | 853 | 1.51 | % | ||||||||||||
Tax Exempt Securities 1 | 67,090 | 410 | 2.44 | % | 63,083 | 370 | 2.35 | % | ||||||||||||||||
Total Securities 1 | 538,656 | 3,614 | 2.68 | % | 288,840 | 1,223 | 1.69 | % | ||||||||||||||||
Loans: | ||||||||||||||||||||||||
Real Estate | 820,751 | 10,322 | 4.99 | % | 923,040 | 10,456 | 4.49 | % | ||||||||||||||||
Commercial | 71,730 | 785 | 4.34 | % | 109,024 | 846 | 3.08 | % | ||||||||||||||||
Consumer | 46,259 | 721 | 6.18 | % | 56,214 | 693 | 4.89 | % | ||||||||||||||||
Total Loans | 938,740 | 11,828 | 5.00 | % | 1,088,278 | 11,995 | 4.37 | % | ||||||||||||||||
Fed Funds Sold | 46,042 | 426 | 3.67 | % | 152,435 | 61 | 0.16 | % | ||||||||||||||||
Other interest-bearing deposits | 45,327 | 494 | 4.32 | % | 287,457 | 139 | 0.19 | % | ||||||||||||||||
Total Earning Assets | 1,568,765 | 16,362 | 4.14 | % | 1,817,010 | 13,418 | 2.93 | % | ||||||||||||||||
Less: Allowance for Loan Losses | (5,395) | (5,704) | ||||||||||||||||||||||
Total Non-Earning Assets | 135,015 | 140,539 | ||||||||||||||||||||||
Total Assets | $ | 1,698,385 | $ | 1,951,845 | ||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||
Interest Bearing Liabilities: | ||||||||||||||||||||||||
Interest Bearing Deposits: | ||||||||||||||||||||||||
Interest Checking | $ | 403,570 | $ | 55 | 0.05 | % | $ | 421,372 | $ | 70 | 0.07 | % | ||||||||||||
Money Market and Savings Deposits | 500,397 | 627 | 0.50 | % | 660,438 | 639 | 0.38 | % | ||||||||||||||||
Time Deposits | 125,334 | 158 | 0.50 | % | 162,584 | 222 | 0.54 | % | ||||||||||||||||
Total Interest-Bearing Deposits | 1,029,301 | 840 | 0.32 | % | 1,244,394 | 931 | 0.30 | % | ||||||||||||||||
Borrowings | 2 | — | — | — | — | — | ||||||||||||||||||
Junior subordinated debt | 3,406 | 52 | 6.06 | % | 3,360 | 50 | 5.90 | % | ||||||||||||||||
Total Interest-Bearing Liabilities | 1,032,709 | 892 | 0.34 | % | 1,247,754 | 981 | 0.31 | % | ||||||||||||||||
Non-Interest-Bearing Liabilities: | ||||||||||||||||||||||||
Demand deposits | 531,719 | 532,397 | ||||||||||||||||||||||
Other liabilities | 8,019 | 10,741 | ||||||||||||||||||||||
Total Liabilities | 1,572,447 | 1,790,892 | ||||||||||||||||||||||
Shareholders' Equity | 125,938 | 160,953 | ||||||||||||||||||||||
Total Liabilities & Shareholders' Equity | $ | 1,698,385 | $ | 1,951,845 | ||||||||||||||||||||
Net Interest Income (FTE) | $ | 15,470 | $ | 12,437 | ||||||||||||||||||||
Interest Rate Spread 2 | 3.80 | % | 2.62 | % | ||||||||||||||||||||
Cost of Funds | 0.23 | % | 0.22 | % | ||||||||||||||||||||
Interest Expense as a Percentage of | 0.23 | % | 0.21 | % | ||||||||||||||||||||
Net Interest Margin (FTE) 3 | 3.91 | % | 2.72 | % | ||||||||||||||||||||
1 | Tax-exempt income for investment securities has been adjusted to a fully tax-equivalent basis (FTE), using a Federal income tax rate of 21%. |
Refer to the Reconcilement of Non-GAAP Measures table at the end of this release. | |
2 | Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. |
3 | Net interest margin (FTE) is net interest income expressed as a percentage of average earning assets. |
VIRGINIA NATIONAL BANKSHARES CORPORATION | ||||||||||||||||||||||||
AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS) | ||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
For the twelve months ended | ||||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
Interest | Interest | |||||||||||||||||||||||
Average | Income/ | Average | Average | Income/ | Average | |||||||||||||||||||
Balance | Expense | Yield/Cost | Balance | Expense | Yield/Cost | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Interest Earning Assets: | ||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable Securities | $ | 373,680 | $ | 8,696 | 2.33 | % | $ | 198,450 | $ | 2,980 | 1.50 | % | ||||||||||||
Tax Exempt Securities 1 | 65,861 | 1,582 | 2.40 | % | 53,716 | 1,292 | 2.41 | % | ||||||||||||||||
Total Securities 1 | 439,541 | 10,278 | 2.34 | % | 252,166 | 4,272 | 1.69 | % | ||||||||||||||||
Loans: | ||||||||||||||||||||||||
Real Estate | 847,238 | 38,011 | 4.49 | % | 808,707 | 35,303 | 4.37 | % | ||||||||||||||||
Commercial | 81,410 | 3,583 | 4.40 | % | 145,462 | 5,731 | 3.94 | % | ||||||||||||||||
Consumer | 49,619 | 2,637 | 5.31 | % | 63,039 | 2,865 | 4.54 | % | ||||||||||||||||
Total Loans | 978,267 | 44,231 | 4.52 | % | 1,017,208 | 43,899 | 4.32 | % | ||||||||||||||||
Fed Funds Sold | 100,033 | 1,088 | 1.09 | % | 109,104 | 139 | 0.13 | % | ||||||||||||||||
Other interest-bearing deposits | 161,260 | 1,467 | 0.91 | % | 160,960 | 233 | 0.14 | % | ||||||||||||||||
Total Earning Assets | 1,679,101 | 57,064 | 3.40 | % | 1,539,438 | 48,543 | 3.15 | % | ||||||||||||||||
Less: Allowance for Loan Losses | (5,702) | (5,297) | ||||||||||||||||||||||
Total Non-Earning Assets | 124,525 | 115,193 | ||||||||||||||||||||||
Total Assets | $ | 1,797,924 | $ | 1,649,334 | ||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||
Interest Bearing Liabilities: | ||||||||||||||||||||||||
Interest Bearing Deposits: | ||||||||||||||||||||||||
Interest Checking | $ | 409,504 | $ | 230 | 0.06 | % | $ | 355,419 | $ | 261 | 0.07 | % | ||||||||||||
Money Market and Savings Deposits | 563,374 | 2,097 | 0.37 | % | 529,027 | 2,047 | 0.39 | % | ||||||||||||||||
Time Deposits | 144,564 | 657 | 0.45 | % | 152,211 | 1,108 | 0.73 | % | ||||||||||||||||
Total Interest-Bearing Deposits | 1,117,442 | 2,984 | 0.27 | % | 1,036,657 | 3,416 | 0.33 | % | ||||||||||||||||
Borrowings | — | — | — | 23,700 | (280) | -1.18 | % | |||||||||||||||||
Junior subordinated debt | 3,389 | 200 | 5.90 | % | 2,565 | 148 | 5.77 | % | ||||||||||||||||
Total Interest-Bearing Liabilities | 1,120,831 | 3,184 | 0.28 | % | 1,062,922 | 3,284 | 0.31 | % | ||||||||||||||||
Non-Interest-Bearing Liabilities: | ||||||||||||||||||||||||
Demand deposits | 526,389 | 434,989 | ||||||||||||||||||||||
Other liabilities | 9,581 | 10,875 | ||||||||||||||||||||||
Total Liabilities | 1,656,801 | 1,508,786 | ||||||||||||||||||||||
Shareholders' Equity | 141,123 | 140,548 | ||||||||||||||||||||||
Total Liabilities & Shareholders' Equity | $ | 1,797,924 | $ | 1,649,334 | ||||||||||||||||||||
Net Interest Income (FTE) | $ | 53,880 | $ | 45,259 | ||||||||||||||||||||
Interest Rate Spread 2 | 3.11 | % | 2.84 | % | ||||||||||||||||||||
Cost of Funds | 0.19 | % | 0.22 | % | ||||||||||||||||||||
Interest Expense as a Percentage of | 0.19 | % | 0.21 | % | ||||||||||||||||||||
Net Interest Margin (FTE) 3 | 3.21 | % | 2.94 | % | ||||||||||||||||||||
1 | Tax-exempt income for investment securities has been adjusted to a fully tax-equivalent basis (FTE), using a Federal income tax rate of 21%. |
Refer to the Reconcilement of Non-GAAP Measures table at the end of this release. | |
2 | Interest spread is the average yield earned on earning assets less the average rate paid on interest-bearing liabilities. |
3 | Net interest margin (FTE) is net interest income expressed as a percentage of average earning assets. |
VIRGINIA NATIONAL BANKSHARES CORPORATION | ||||||||||||||||||||
RECONCILIATION OF CERTAIN QUARTERLY NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, 2022 | March 31, 2022 | December 31, | ||||||||||||||||
Fully tax-equivalent measures | ||||||||||||||||||||
Net interest income | $ | 15,384 | $ | 14,277 | $ | 12,461 | $ | 11,425 | $ | 12,359 | ||||||||||
Fully tax-equivalent adjustment | 86 | 83 | 82 | 65 | 78 | |||||||||||||||
Net interest income (FTE) 1 | $ | 15,470 | $ | 14,360 | $ | 12,543 | $ | 11,490 | $ | 12,437 | ||||||||||
Efficiency ratio 2 | 52.0 | % | 57.3 | % | 58.6 | % | 62.3 | % | 58.0 | % | ||||||||||
Fully tax-equivalent adjustment | -0.3 | % | -0.3 | % | -0.3 | % | -0.3 | % | -0.3 | % | ||||||||||
Efficiency ratio (FTE) 3 | 51.7 | % | 57.0 | % | 58.3 | % | 62.0 | % | 57.7 | % | ||||||||||
Net interest margin | 3.89 | % | 3.45 | % | 3.00 | % | 2.57 | % | 2.70 | % | ||||||||||
Fully tax-equivalent adjustment | 0.02 | % | 0.02 | % | 0.02 | % | 0.02 | % | 0.02 | % | ||||||||||
Net interest margin (FTE) 1 | 3.91 | % | 3.47 | % | 3.02 | % | 2.59 | % | 2.72 | % | ||||||||||
As of | ||||||||||||||||||||
December 31, | September 30, | June 30, 2022 | March 31, 2022 | December 31, | ||||||||||||||||
Other financial measures | ||||||||||||||||||||
ALLL to gross loans | 0.59 | % | 0.58 | % | 0.57 | % | 0.58 | % | 0.56 | % | ||||||||||
Impact of acquired loans and fair value mark | 0.31 | % | 0.32 | % | 0.34 | % | 0.37 | % | 0.39 | % | ||||||||||
ALLL to gross loans, excluding acquired loans and | 0.90 | % | 0.90 | % | 0.91 | % | 0.95 | % | 0.95 | % | ||||||||||
ALLL to gross loans | 0.59 | % | 0.58 | % | 0.57 | % | 0.58 | % | 0.56 | % | ||||||||||
Fair value mark to gross loans | 1.70 | % | 1.80 | % | 1.82 | % | 1.77 | % | 1.74 | % | ||||||||||
ALLL + fair value mark to gross loans (non-GAAP) | 2.29 | % | 2.38 | % | 2.39 | % | 2.35 | % | 2.30 | % | ||||||||||
Book value per share | $ | 25.05 | $ | 23.65 | $ | 25.20 | $ | 27.42 | $ | 30.50 | ||||||||||
Impact of intangible assets | (2.69) | (2.88) | (2.96) | (3.05) | $ | (3.14) | ||||||||||||||
Tangible book value per share (non-GAAP) | $ | 22.36 | $ | 20.77 | $ | 22.24 | $ | 24.37 | $ | 27.36 | ||||||||||
1 | FTE calculations use a Federal income tax rate of 21%. |
2 | The efficiency ratio, GAAP basis, is computed by dividing noninterest expense by the sum of net interest income and noninterest income. |
3 | The efficiency ratio, FTE, is computed by dividing noninterest expense by the sum of net interest income (FTE) and noninterest income. |
VIRGINIA NATIONAL BANKSHARES CORPORATION | ||||||||
RECONCILIATION OF CERTAIN ANNUAL NON-GAAP FINANCIAL MEASURES | ||||||||
(dollars in thousands, except per share data) | ||||||||
(Unaudited) | ||||||||
For the Twelve Months Ended | ||||||||
December 31, 2022 | December 31, 2021 | |||||||
Fully tax-equivalent measures | ||||||||
Net interest income | $ | 53,547 | $ | 44,988 | ||||
Fully tax-equivalent adjustment | 333 | 271 | ||||||
Net interest income (FTE) 1 | $ | 53,880 | $ | 45,259 | ||||
Efficiency ratio 2 | 57.4 | % | 76.7 | % | ||||
Fully tax-equivalent adjustment | -0.3 | % | -0.4 | % | ||||
Efficiency ratio (FTE) 3 | 57.1 | % | 76.3 | % | ||||
Net interest margin | 3.19 | % | 2.92 | % | ||||
Fully tax-equivalent adjustment | 0.02 | % | 0.02 | % | ||||
Net interest margin (FTE) 1 | 3.21 | % | 2.94 | % | ||||
1 | FTE calculations use a Federal income tax rate of 21%. |
2 | The efficiency ratio, GAAP basis, is computed by dividing noninterest expense by the sum of net interest income and noninterest income. |
3 | The efficiency ratio, FTE, is computed by dividing noninterest expense by the sum of net interest income (FTE) and noninterest income. |
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SOURCE Virginia National Bankshares Corporation
Uncategorized
Mortgage rates fall as labor market normalizes
Jobless claims show an expanding economy. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
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Everyone was waiting to see if this week’s jobs report would send mortgage rates higher, which is what happened last month. Instead, the 10-year yield had a muted response after the headline number beat estimates, but we have negative job revisions from previous months. The Federal Reserve’s fear of wage growth spiraling out of control hasn’t materialized for over two years now and the unemployment rate ticked up to 3.9%. For now, we can say the labor market isn’t tight anymore, but it’s also not breaking.
The key labor data line in this expansion is the weekly jobless claims report. Jobless claims show an expanding economy that has not lost jobs yet. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
From the Fed: In the week ended March 2, initial claims for unemployment insurance benefits were flat, at 217,000. The four-week moving average declined slightly by 750, to 212,250
Below is an explanation of how we got here with the labor market, which all started during COVID-19.
1. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.
2. Early in the labor market recovery, when we saw weaker job reports, I doubled and tripled down on my assertion that job openings would get to 10 million in this recovery. Job openings rose as high as to 12 million and are currently over 9 million. Even with the massive miss on a job report in May 2021, I didn’t waver.
Currently, the jobs openings, quit percentage and hires data are below pre-COVID-19 levels, which means the labor market isn’t as tight as it once was, and this is why the employment cost index has been slowing data to move along the quits percentage.
3. I wrote that we should get back all the jobs lost to COVID-19 by September of 2022. At the time this would be a speedy labor market recovery, and it happened on schedule, too
Total employment data
4. This is the key one for right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, which would have been in line with the job growth rate in February 2020. Today, we are at 157,808,000. This is important because job growth should be cooling down now. We are more in line with where the labor market should be when averaging 140K-165K monthly. So for now, the fact that we aren’t trending between 140K-165K means we still have a bit more recovery kick left before we get down to those levels.
From BLS: Total nonfarm payroll employment rose by 275,000 in February, and the unemployment rate increased to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing.
Here are the jobs that were created and lost in the previous month:
In this jobs report, the unemployment rate for education levels looks like this:
- Less than a high school diploma: 6.1%
- High school graduate and no college: 4.2%
- Some college or associate degree: 3.1%
- Bachelor’s degree or higher: 2.2%
Today’s report has continued the trend of the labor data beating my expectations, only because I am looking for the jobs data to slow down to a level of 140K-165K, which hasn’t happened yet. I wouldn’t categorize the labor market as being tight anymore because of the quits ratio and the hires data in the job openings report. This also shows itself in the employment cost index as well. These are key data lines for the Fed and the reason we are going to see three rate cuts this year.
recession unemployment covid-19 fed federal reserve mortgage rates recession recovery unemploymentUncategorized
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Last month we though that the January…
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Last month we though that the January jobs report was the "most ridiculous in recent history" but, boy, were we wrong because this morning the Biden department of goalseeked propaganda (aka BLS) published the February jobs report, and holy crap was that something else. Even Goebbels would blush.
What happened? Let's take a closer look.
On the surface, it was (almost) another blockbuster jobs report, certainly one which nobody expected, or rather just one bank out of 76 expected. Starting at the top, the BLS reported that in February the US unexpectedly added 275K jobs, with just one research analyst (from Dai-Ichi Research) expecting a higher number.
Some context: after last month's record 4-sigma beat, today's print was "only" 3 sigma higher than estimates. Needless to say, two multiple sigma beats in a row used to only happen in the USSR... and now in the US, apparently.
Before we go any further, a quick note on what last month we said was "the most ridiculous jobs report in recent history": it appears the BLS read our comments and decided to stop beclowing itself. It did that by slashing last month's ridiculous print by over a third, and revising what was originally reported as a massive 353K beat to just 229K, a 124K revision, which was the biggest one-month negative revision in two years!
Of course, that does not mean that this month's jobs print won't be revised lower: it will be, and not just that month but every other month until the November election because that's the only tool left in the Biden admin's box: pretend the economic and jobs are strong, then revise them sharply lower the next month, something we pointed out first last summer and which has not failed to disappoint once.
In the past month the Biden department of goalseeking stuff higher before revising it lower, has revised the following data sharply lower:
— zerohedge (@zerohedge) August 30, 2023
- Jobs
- JOLTS
- New Home sales
- Housing Starts and Permits
- Industrial Production
- PCE and core PCE
To be fair, not every aspect of the jobs report was stellar (after all, the BLS had to give it some vague credibility). Take the unemployment rate, after flatlining between 3.4% and 3.8% for two years - and thus denying expectations from Sahm's Rule that a recession may have already started - in February the unemployment rate unexpectedly jumped to 3.9%, the highest since February 2022 (with Black unemployment spiking by 0.3% to 5.6%, an indicator which the Biden admin will quickly slam as widespread economic racism or something).
And then there were average hourly earnings, which after surging 0.6% MoM in January (since revised to 0.5%) and spooking markets that wage growth is so hot, the Fed will have no choice but to delay cuts, in February the number tumbled to just 0.1%, the lowest in two years...
... for one simple reason: last month's average wage surge had nothing to do with actual wages, and everything to do with the BLS estimate of hours worked (which is the denominator in the average wage calculation) which last month tumbled to just 34.1 (we were led to believe) the lowest since the covid pandemic...
... but has since been revised higher while the February print rose even more, to 34.3, hence why the latest average wage data was once again a product not of wages going up, but of how long Americans worked in any weekly period, in this case higher from 34.1 to 34.3, an increase which has a major impact on the average calculation.
While the above data points were examples of some latent weakness in the latest report, perhaps meant to give it a sheen of veracity, it was everything else in the report that was a problem starting with the BLS's latest choice of seasonal adjustments (after last month's wholesale revision), which have gone from merely laughable to full clownshow, as the following comparison between the monthly change in BLS and ADP payrolls shows. The trend is clear: the Biden admin numbers are now clearly rising even as the impartial ADP (which directly logs employment numbers at the company level and is far more accurate), shows an accelerating slowdown.
But it's more than just the Biden admin hanging its "success" on seasonal adjustments: when one digs deeper inside the jobs report, all sorts of ugly things emerge... such as the growing unprecedented divergence between the Establishment (payrolls) survey and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 275K payrolls were added, the Household survey found that the number of actually employed workers dropped for the third straight month (and 4 in the past 5), this time by 184K (from 161.152K to 160.968K).
This means that while the Payrolls series hits new all time highs every month since December 2020 (when according to the BLS the US had its last month of payrolls losses), the level of Employment has not budged in the past year. Worse, as shown in the chart below, such a gaping divergence has opened between the two series in the past 4 years, that the number of Employed workers would need to soar by 9 million (!) to catch up to what Payrolls claims is the employment situation.
There's more: shifting from a quantitative to a qualitative assessment, reveals just how ugly the composition of "new jobs" has been. Consider this: the BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs. Well, that's great... until you look back one year and find that in February 2023 the US had 133.2 million full-time jobs, or more than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).
Here is a summary of the labor composition in the past year: all the new jobs have been part-time jobs!
But wait there's even more, because now that the primary season is over and we enter the heart of election season and political talking points will be thrown around left and right, especially in the context of the immigration crisis created intentionally by the Biden administration which is hoping to import millions of new Democratic voters (maybe the US can hold the presidential election in Honduras or Guatemala, after all it is their citizens that will be illegally casting the key votes in November), what we find is that in February, the number of native-born workers tumbled again, sliding by a massive 560K to just 129.807 million. Add to this the December data, and we get a near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!
The offset? A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!
Said otherwise, not only has all job creation in the past 6 years has been exclusively for foreign-born workers...
... but there has been zero job-creation for native born workers since June 2018!
This is a huge issue - especially at a time of an illegal alien flood at the southwest border...
... and is about to become a huge political scandal, because once the inevitable recession finally hits, there will be millions of furious unemployed Americans demanding a more accurate explanation for what happened - i.e., the illegal immigration floodgates that were opened by the Biden admin.
Which is also why Biden's handlers will do everything in their power to insure there is no official recession before November... and why after the election is over, all economic hell will finally break loose. Until then, however, expect the jobs numbers to get even more ridiculous.
Uncategorized
Economic Earthquake Ahead? The Cracks Are Spreading Fast
Economic Earthquake Ahead? The Cracks Are Spreading Fast
Authored by Brandon Smith via Alt-Market.us,
One of my favorite false narratives…
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Authored by Brandon Smith via Alt-Market.us,
One of my favorite false narratives floating around corporate media platforms has been the argument that the American people “just don’t seem to understand how good the economy really is right now.” If only they would look at the stats, they would realize that we are in the middle of a financial renaissance, right? It must be that people have been brainwashed by negative press from conservative sources…
I have to laugh at this notion because it’s a very common one throughout history – it’s an assertion made by almost every single political regime right before a major collapse. These people always say the same things, and when you study economics as long as I have you can’t help but throw up your hands and marvel at their dedication to the propaganda.
One example that comes to mind immediately is the delusional optimism of the “roaring” 1920s and the lead up to the Great Depression. At the time around 60% of the U.S. population was living in poverty conditions (according to the metrics of the decade) earning less than $2000 a year. However, in the years after WWI ravaged Europe, America’s economic power was considered unrivaled.
The 1920s was an era of mass production and rampant consumerism but it was all fueled by easy access to debt, a condition which had not really existed before in America. It was this illusion of prosperity created by the unchecked application of credit that eventually led to the massive stock market bubble and the crash of 1929. This implosion, along with the Federal Reserve’s policy of raising interest rates into economic weakness, created a black hole in the U.S. financial system for over a decade.
There are two primary tools that various failing regimes will often use to distort the true conditions of the economy: Debt and inflation. In the case of America today, we are experiencing BOTH problems simultaneously and this has made certain economic indicators appear healthy when they are, in fact, highly unstable. The average American knows this is the case because they see the effects everyday. They see the damage to their wallets, to their buying power, in the jobs market and in their quality of life. This is why public faith in the economy has been stuck in the dregs since 2021.
The establishment can flash out-of-context stats in people’s faces, but they can’t force the populace to see a recovery that simply does not exist. Let’s go through a short list of the most faulty indicators and the real reasons why the fiscal picture is not a rosy as the media would like us to believe…
The “miracle” labor market recovery
In the case of the U.S. labor market, we have a clear example of distortion through inflation. The $8 trillion+ dropped on the economy in the first 18 months of the pandemic response sent the system over the edge into stagflation land. Helicopter money has a habit of doing two things very well: Blowing up a bubble in stock markets and blowing up a bubble in retail. Hence, the massive rush by Americans to go out and buy, followed by the sudden labor shortage and the race to hire (mostly for low wage part-time jobs).
The problem with this “miracle” is that inflation leads to price explosions, which we have already experienced. The average American is spending around 30% more for goods, services and housing compared to what they were spending in 2020. This is what happens when you have too much money chasing too few goods and limited production.
The jobs market looks great on paper, but the majority of jobs generated in the past few years are jobs that returned after the covid lockdowns ended. The rest are jobs created through monetary stimulus and the artificial retail rush. Part time low wage service sector jobs are not going to keep the country rolling for very long in a stagflation environment. The question is, what happens now that the stimulus punch bowl has been removed?
Just as we witnessed in the 1920s, Americans have turned to debt to make up for higher prices and stagnant wages by maxing out their credit cards. With the central bank keeping interest rates high, the credit safety net will soon falter. This condition also goes for businesses; the same businesses that will jump headlong into mass layoffs when they realize the party is over. It happened during the Great Depression and it will happen again today.
Cracks in the foundation
We saw cracks in the narrative of the financial structure in 2023 with the banking crisis, and without the Federal Reserve backstop policy many more small and medium banks would have dropped dead. The weakness of U.S. banks is offset by the relative strength of the U.S. dollar, which lures in foreign investors hoping to protect their wealth using dollar denominated assets.
But something is amiss. Gold and bitcoin have rocketed higher along with economically sensitive assets and the dollar. This is the opposite of what’s supposed to happen. Gold and BTC are supposed to be hedges against a weak dollar and a weak economy, right? If global faith in the dollar and in the U.S. economy is so high, why are investors diving into protective assets like gold?
Again, as noted above, inflation distorts everything.
Tens of trillions of extra dollars printed by the Fed are floating around and it’s no surprise that much of that cash is flooding into the economy which simply pushes higher right along with prices on the shelf. But, gold and bitcoin are telling us a more honest story about what’s really happening.
Right now, the U.S. government is adding around $600 billion per month to the national debt as the Fed holds rates higher to fight inflation. This debt is going to crush America’s financial standing for global investors who will eventually ask HOW the U.S. is going to handle that growing millstone? As I predicted years ago, the Fed has created a perfect Catch-22 scenario in which the U.S. must either return to rampant inflation, or, face a debt crisis. In either case, U.S. dollar-denominated assets will lose their appeal and their prices will plummet.
“Healthy” GDP is a complete farce
GDP is the most common out-of-context stat used by governments to convince the citizenry that all is well. It is yet another stat that is entirely manipulated by inflation. It is also manipulated by the way in which modern governments define “economic activity.”
GDP is primarily driven by spending. Meaning, the higher inflation goes, the higher prices go, and the higher GDP climbs (to a point). Eventually prices go too high, credit cards tap out and spending ceases. But, for a short time inflation makes GDP (as well as retail sales) look good.
Another factor that creates a bubble is the fact that government spending is actually included in the calculation of GDP. That’s right, every dollar of your tax money that the government wastes helps the establishment by propping up GDP numbers. This is why government spending increases will never stop – It’s too valuable for them to spend as a way to make the economy appear healthier than it is.
The REAL economy is eclipsing the fake economy
The bottom line is that Americans used to be able to ignore the warning signs because their bank accounts were not being directly affected. This is over. Now, every person in the country is dealing with a massive decline in buying power and higher prices across the board on everything – from food and fuel to housing and financial assets alike. Even the wealthy are seeing a compression to their profit and many are struggling to keep their businesses in the black.
The unfortunate truth is that the elections of 2024 will probably be the turning point at which the whole edifice comes tumbling down. Even if the public votes for change, the system is already broken and cannot be repaired without a complete overhaul.
We have consistently avoided taking our medicine and our disease has gotten worse and worse.
People have lost faith in the economy because they have not faced this kind of uncertainty since the 1930s. Even the stagflation crisis of the 1970s will likely pale in comparison to what is about to happen. On the bright side, at least a large number of Americans are aware of the threat, as opposed to the 1920s when the vast majority of people were utterly conned by the government, the banks and the media into thinking all was well. Knowing is the first step to preparing.
The second step is securing your own financial future – that’s where physical precious metals can play a role. Diversifying your savings with inflation-resistant, uninflatable assets whose intrinsic value doesn’t rely on a counterparty’s promise to pay adds resilience to your savings. That’s the main reason physical gold and silver have been the safe haven store-of-value assets of choice for centuries (among both the elite and the everyday citizen).
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As the world moves away from dollars and toward Central Bank Digital Currencies (CBDCs), is your 401(k) or IRA really safe? A smart and conservative move is to diversify into a physical gold IRA. That way your savings will be in something solid and enduring. Get your FREE info kit on Gold IRAs from Birch Gold Group. No strings attached, just peace of mind. Click here to secure your future today.
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