8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 28, 2022

VILLAGE BANK AND TRUST FINANCIAL CORP.

(Exact Name of Registrant as Specified in Charter)

​ of Incorporation)
Virginia (State or Other Jurisdiction of Incorporation)	0-50765 (Commission File Number)	16-1694602 (IRS Employer Identification No.)

13319 Midlothian Turnpike
Midlothian, Virginia
(Address of Principal Executive Offices) 23113
(Zip Code)

Registrant’s Telephone Number, Including Area Code: (804) 897-3900

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $4.00 per share	VBFC	Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02   Results of Operations and Financial Condition.

On July 28, 2022, Village Bank and Trust Financial Corp. issued a press release reporting its financial results for the period ended June 30, 2022. A copy of the press release is being furnished as an exhibit to this report and shall not be deemed “filed” for any purpose.

Item 9.01   Financial Statements and Exhibits.

(d)   Exhibits.

Exhibit No.	Description
99.1	Press release dated July 28, 2022.
104	Cover Page Interactive Data File – the cover page iXBRL tags are embedded within the Inline XBRL document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	VILLAGE BANK AND TRUST FINANCIAL CORP.
	(Registrant)
Date: July 28, 2022	By:	/s/ Donald M. Kaloski, Jr.
	Donald M. Kaloski, Jr.
	Executive Vice President and CFO

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EX-99.1

Exhibit 99.1

News Release

For Immediate Release

VILLAGE BANK AND TRUST FINANCIAL CORP.

REPORTS EARNINGS FOR THE SECOND QUARTER OF 2022

Midlothian, Virginia, July 28, 2022. Village Bank and Trust Financial Corp. (the “Company”) (Nasdaq symbol: VBFC), parent company of Village Bank (the “Bank”), today reported unaudited results for the second quarter of 2022. Net income for the second quarter of 2022 was $2,190,000, or $1.48 per fully diluted share, compared to net income for the second quarter of 2021 of $3,294,000, or $2.24 per fully diluted share. For the six months ended June 30, 2022, net income was $3,990,000, or $2.71 per fully diluted shared, compared to net income for the six months ended June 30, 2021, of $7,191,000, or $4.90 per fully diluted share.

Jay Hendricks, President and CEO, commented, “Our second quarter earnings are in line with current expectations given the declines in our mortgage banking segment, as well as a reduction in revenue associated with the forgiveness of the Paycheck Protection Program (“PPP”) loans. We had a strong quarter in the commercial banking segment with core loan growth of 4.96% during Q2 2022, excluding PPP loans, and credit quality remains strong.  The Commercial Banking Segment’s pre-tax, pre-provision (“PTPP”) earnings, excluding PPP income, grew 70.76% during the first six months of 2022 compared to the same period in 2021. The increase is attributable to successfully converting and expanding PPP customers into ongoing core relationships, continued deployment of excess liquidity and the reduction in our cost of interest bearing liabilities.”

“Our mortgage banking segment was negatively impacted by rapidly rising rates, lack of home supply and higher home prices during the quarter. We continue to take prudent steps to offset the reduced mortgage banking segement earnings while we navigate the challenges of the current economic environment.”

“Current market conditions will continue to present us with challenges and opportunities. Our key areas of focus are core relationship growth, further expanding relationships gained through PPP lending, remaining disciplined in managing our net interest margin (“NIM”) and completing our online and mobile banking conversion to improve our digital capabilities.  While higher rates are good for net interest income, it will start to pressure deposit pricing and is likely going to increase the cost of working capital for our customers to a point that it reduces loan demand. We are well positioned for a rising rate environment and will address the rising rates through our disciplined approach to balance sheet management and prudent risk taking.”

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Operating Results

The following table presents quarterly results for the indicated periods (in thousands):

GAAP Operating Results by Segment
	Q2 2022		Q1 2022		Q4 2021		Q3 2021		Q2 2021
Pre-tax earnings (loss) by segment
Commercial banking	$	2,677	$	2,459	$	2,433	$	2,688	$	3,236
Mortgage banking		68		(252)		559		963		961
Income before income tax expense		2,745		2,207		2,992		3,651		4,197
Commercial banking income tax expense		540		460		512		550		701
Mortgage banking income tax expense (benefit)		15		(53)		117		202		202
Net income	$	2,190	$	1,800	$	2,363	$	2,899	$	3,294

Three months ended June 30, 2022 vs. three months ended June 30, 2021.

The Commercial Banking Segment posted net income of $2,137,000 for Q2 2022 compared to $2,535,000 for Q2 2021.

The following are variances of note for the three months ended June 30, 2022 compared to the three months ended June 30, 2021:

● NIM compressed by 27 basis points to 3.57% for Q2 2022 compared to 3.84% for Q2 2021. The compression was driven by the following:

o The Commercial Banking Segement recorded U.S. Small Business Administration (“SBA”) fee income, net of deferred costs, of $472,000 for Q2 2022 compared to $1,320,000 for Q2 2021, through interest income as a result of normal amortization and the receipt of funds from PPP loans forgiven by the SBA. In addition, the Commercial Banking Segment recorded interest income associated with PPP loans of $16,000 for Q2 2022 compared to $348,000 for Q2 2021. Total income associated with PPP loans was $488,000 for Q2 2022 compared to $1,668,000 for Q2 2021.

o The yield on average earning assets compressed by 39 basis points, 3.80% for Q2 2022 vs. 4.19% for Q2 2021, as a result of an $104,385,000 increase in the average balance of liquid assets (i.e. interest bearing due from other institutions and investment securities). The increased level of liquidity was driven by the $96,548,000 reduction in PPP loan balances because of loan forgiveness, which was partially offset by the $72,439,000 growth in total loans, excluding PPP loans, and the $36,557,000 increase in total deposits. This increased level of liquidity will have a negative impact on our net interest margin. However, we believe that through our disciplined risk-based approach to the investment portfolio, deposit pricing, and core loan growth, our balance sheet remains well positioned to capitalize on the rising rate environment.

o The cost of interest bearing liabilities dropped by 19 basis points to 0.40% for Q2 2022 compared to 0.59% for Q2 2021, because of the shift in our deposit mix from higher cost time deposits to lower cost relationship deposits. Time deposits decreased $29,654,000, or 35.07%, from Q2 2021, and low cost relationship depsits and non-interest bearing deposits together increased $66,211,000, or 11.96%, from Q2 2021.

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● The Commercial Banking Segment did not record a provision for loan loss expenses for Q2 2022 compared to a recovery of provision for loan loss expense of $500,000 for Q2 2021. The lack of a provision expense for Q2 2022 was due to stable asset quality. The recovery of provision for loan loss expense, during Q2 2021, resulted from a reduction in the qualitative factors driven by improving economic factors, improved credit metrics, and reductions in loan deferrals. While variants of the COVID-19 virus and economic challenges due to higher inflation remain risks to credit quality, we believe our current level of allowance for loan losses is sufficient.

● The Commercial Banking Segment posted noninterest income of $893,000 for Q2 2022 compared to $733,000 for Q2 2021. The increase in noninterest income was driven by an increase in fee income as consumer and business spending remained strong during the quarter, and the recognition of $79,000 in gains on the sale of SBA loan guarantee strips during the quarter, compared to no gains during Q2 2021.

● The Commercial Banking Segment posted noninterest expense of $4,458,000 for Q2 2022 compared to $4,287,000 for Q2 2021. The increase in noninterest expense was driven by increased staffing costs and the deferral of $88,900 in salary and benefits costs during the three months ended June 30, 2021 associated with the volume of PPP loan originations during the period.

The Mortgage Banking Segment posted net income of $53,000 for Q2 2022 compared to net income of $759,000 for Q2 2021. Mortgage originations were $51,253,000 for Q2 2022, down 29.93% from $73,145,000 for Q2 2021. The drop in mortgage orginations during Q2 2022 is the result of the sharp rise in mortgage rates, the historically low inventory of homes for sale, and compressed gain on sale margins during the first half of 2022.

Six months ended June 30, 2022 vs. six months ended June 30, 2021.

The Commercial Banking Segment posted net income of $4,136,000 for Q2 2022 compared to $4,824,000 for Q2 2021.

The following are variances of note for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:

● NIM compressed by 41 basis points to 3.47% for the six months ended June 30, 2022 compared to 3.88% for the six months ended June 30, 2021. The compression was driven by the following:

o The Commercial Banking Segement recorded SBA fee income, net of deferred costs, of $950,000 for the six months ended June 30, 2022 compared to $2,825,000 for the six months ended June 30, 2021, through interest income as a result of normal amortization and the receipt of funds from PPP loans forgiven by the SBA. In addition, the Commercial Banking Segment recorded interest income associated with PPP loans of $78,000 for the six months ended June 30, 2022 compared to $728,000 for the six months ended June 30, 2021. Total income associated with PPP loans was $1,028,000 for the six months ended June 30, 2022 compared to $3,563,000 for the six months ended June 30, 2021.

o The yield on average earning assets compressed by 55 basis points, 3.70% for the six months ended June 30, 2022 vs. 4.25% for the six months ended June 30, 2021, as a result of an $113,947,000 increase in the average balance of liquid assets (i.e. interest bearing due from other institutions and investment securities). The increased level of liquidity was driven by the

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$96,548,000 reduction in PPP loan balances because of loan forgiveness, which was partially offset by the $72,439,000 growth in total loans, excluding PPP loans, and the $36,557,000 increase in total deposits. This increased level of liquidity will have a negative impact on our net interest margin. However, we believe that through our disciplined risk-based approach to the investment portfolio, deposit pricing, and core loan growth, our balance sheet remains well positioned to capitalize on the rising rate environment.

o The cost of interest bearing liabilities dropped by 22 basis points to 0.40% for the six months ended June 30, 2022 compared to 0.62% for the six months ended June 30, 2021, because of the shift in our deposit mix from higher cost time deposits to lower cost relationship deposits. Time deposits decreased $29,654,000, or 35.07%, from Q2 2021, and low cost relationship depsits and non-interest bearing deposits together increased $66,211,000, or 11.96%, from Q2 2021.

● The Commercial Banking Segment recorded a recovery of provision for loan loss expenses of $400,000 and $500,000 for the six months ended June 30, 2022 and June 30, 2021, respectively. The recovery of provision for loan loss expense, during the six months ended June 30, 2022 and June 30, 2021, resulted from reductions in the qualitative factors driven by improving economic factors, improved credit metrics, and reductions in loan deferrals. While variants of the COVID-19 virus and economic challenges due to higher inflation remain risks to credit quality, we believe our current level of allowance for loan losses is sufficient.

● The Commercial Banking Segment posted noninterest income of $1,688,000 for the six months ended June 30, 2022 compared to $1,456,000 for the six months ended June 30, 2021. The increase in noninterest income was driven by an increase in fee income as consumer and business spending picked up during the six months ended June 30, 2022, and the recognition of $79,000 in gains on the sale of SBA loan guarantee strips during the six months ended June 30, 2022, compared to no gains during the six months ended June 30, 2021.

● The Commercial Banking Segment posted noninterest expense of $9,011,000 for the six months ended June 30, 2022 compared to $8,276,000 for the six months ended June 30, 2021. The increase in noninterest expense was primarilly driven by the deferral of $1,052,000 in salary and benefits costs during the six months ended June 30, 2021 associated with the volume of PPP loan originations during the period.

The Mortgage Banking Segment posted a net loss of $146,000 for the six months ended June 30, 2022 compared to net income of $2,367,000 for the six months ended June 30, 2021. Mortgage originations were $96,267,000 for the six months ended June 30, 2022, down 41.43% from $164,349,000 for the six months ended June 30, 2021. The drop in mortgage orginations during the six months ended June 30, 2022 is the result of the sharp rise in mortgage rates, the historically low inventory of homes for sale, and compressed gain on sale margins during the first half of 2022.

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Pre-Tax Pre-Provision Earnings by Segment

The following table presents the PTPP earnings by segment for the indicated periods (in thousands):

Pre-Tax Earnings by Segment
	YTD 2022		YTD 2021		Q2 2022		Q1 2022		Q4 2021		Q3 2021		Q2 2021
Pre-Tax Earnings by Segment
Commercial banking - PTPP (ex. PPP)	$	3,708	$	2,172	$	2,189	$	1,519	$	1,364	$	1,286	$	1,068
Commercial banking - PPP Income		1,028		3,562		488		540		1,069		1,402		1,668
Commercial banking income before provision for (recovery of) loan losses and income tax expense		4,736		5,734		2,677		2,059		2,433		2,688		2,736
Mortgage banking income (loss) before income tax expense (benefit)		(184)		2,996		68		(252)		559		963		961
Income before provision for (recovery of) loan losses and income tax expense		4,552		8,730		2,745		1,807		2,992		3,651		3,697
Provision for (recovery of) loan losses		(400)		(500)		—		(400)		—		—		(500)
GAAP income before income tax expense	$	4,952	$	9,230	$	2,745	$	2,207	$	2,992	$	3,651	$	4,197

The Commercial Banking Segment recorded PTPP earnings of $2,678,000 for Q2 2022 compared to $2,736,000 for Q2 2021. For the six months ended June 30, 2022, PTPP earnings were $4,737,000, compared to $5,734,000 for the six months ended June 30, 2021. Excluding income from PPP loans, the Commercial Banking Segment’s Q2 2022 PTPP earnings grew $1,122,000, or 105.06%, from Q2 2021 and the six months ended June 30, 2022 PTPP earnings grew $1,537,000, or 70.76%, from the six months ended June 30, 2021. The growth in the Commercial Banking Segement’s PTPP earnings was the result of growth in the core loan portfolio and the investment portfolio and the reduction in our cost of interest bearing liabilities.

The Company believes that reporting PTPP earnings, excluding income from PPP loans, provides a useful illustration of the Company’s core operating performance over the reported periods.  PTPP earnings, excluding PPP loans, is determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”).  Non-GAAP measures 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.

Financial Highlights

Highlights for the three and six months ended June 30, 2022 and June 30, 2021 are as follows:

	Three Months Ended				Six Months Ended
Metric	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Consolidated
Return on average equity	14.40	%	22.79	%	12.92	%	25.81	%
Return on average assets	1.16	%	1.85	%	1.07	%	2.05	%
Commercial Banking Segment
Return on average equity	14.05	%	17.54	%	13.40	%	17.32	%
Return on average assets	1.14	%	1.42	%	1.11	%	1.37	%
Net interest income to average assets	3.32	%	3.53	%	3.23	%	3.58	%
Provision for (recovery of) loan losses to average assets	—	%	(0.28)	%	(0.11)	%	(0.14)	%
Noninterest income to average assets	0.47	%	0.41	%	0.45	%	0.41	%
Noninterest expense to average assets	2.37	%	2.41	%	2.41	%	2.36	%
Mortgage Banking Segment
Return on average equity	0.35	%	5.25	%	(0.47)	%	8.50	%
Return on average assets	0.03	%	0.43	%	(0.04)	%	0.67	%
Net income before tax to average assets	0.04	%	0.54	%	(0.05)	%	0.85	%

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Loans and Asset Quality

The following table provides the composition of our gross loan portfolio at the dates indicated (in thousands):

Loans Outstanding
Loan Type	Q2 2022		Q1 2022		Q4 2021		Q3 2021		Q2 2021
C&I + Owner occupied commercial real estate	$	208,546	$	187,897	$	180,928	$	164,819	$	151,444
PPP Loans		1,069		17,023		32,601		56,809		97,617
Nonowner occupied commercial real estate		169,773		146,530		142,429		143,993		140,182
Acquisition, development and construction		37,028		42,691		49,149		50,791		44,073
Total commercial loans		416,416		394,141		405,107		416,412		433,316
Consumer/Residential		83,969		96,411		92,372		87,284		86,533
Student		23,413		24,693		25,975		27,624		28,601
Other		3,758		3,397		3,003		2,986		3,214
Total loans	$	527,556	$	518,642	$	526,457	$	534,306	$	551,664

Core loans, which are total loans, excluding PPP loans, increased by $24,868,000, or 4.96%, from Q1 2022, and increased by $72,439,000, or 15.95%, from Q2 2021.  Core loan growth continues to be product of our success in converting non-customer PPP borrowers into new core relationships and overall organic growth.

PPP loans decreased by $15,954,000, or 93.72%, from Q1 2022 and decreased by $96,548,000, or 98.90%, from Q2 2021.

Asset quality

The Bank’s asset quality metrics continue to compare favorably to our peers as follows:

Asset Quality Metrics
	Village					Peer Group
Metric	Q2 2022	Q1 2022	Q4 2021	Q3 2021	Q2 2021	Q1 2022(1)
Allowance for Loan and Lease Losses/Nonperforming Loans	280.87%	260.49%	251.94%	233.82%	221.77%	218.43%
Net Charge-offs (recoveries) to Average Loans(2)	(0.01%)	(0.29%)	0.01%	(0.01%)	0.04%	(4.00%)
Nonperforming Loans/Loans (excluding Guaranteed Loans)	0.26%	0.29%	0.30%	0.34%	0.38%	0.73%
Nonperforming Assets/Bank Total Assets (3)	0.16%	0.17%	0.18%	0.20%	0.22%	0.36%
(1) Source - S&P Global data for VA Banks <$1 Billion in assets as of March 31, 2022.
(2) Annualized.
(3) Nonperforming assets excluding performing troubled debt restructurings.

Deposits

The following table provides the composition of our deposits at the dates indicated (in thousands):

Deposits Outstanding
Deposit Type	Q2 2022		Q1 2022		Q4 2021		Q3 2021		Q2 2021
Noninterest-bearing demand	$	278,260	$	279,756	$	268,804	$	270,397	$	252,756
Interest checking		88,630		92,534		89,599		76,693		77,828
Money market		198,157		196,718		187,942		183,096		178,602
Savings		54,702		55,489		54,106		46,750		44,351
Time deposits		54,892		59,176		63,597		69,116		84,546
Total deposits	$	674,641	$	683,673	$	664,048	$	646,052	$	638,083

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Total deposits decreased by $9,032,000, or 1.32%, from Q1 2022, and increased by $36,558,000, or 5.73%, from Q2 2021. Variances of note are as follows:

● Noninterest bearing demand account balances decreased $1,496,000 from Q1 2022 and increased $25,504,000 from Q2 2021, and represented 41.25% of total deposits compared to 40.92% as of Q1 2022 and 39.61% as of Q2 2021. The decrease from Q1 2022 is the result of seasonal fluctuations in customer accounts. The increase from Q2 2021 is the result of core relationship growth and continued success at converting non-customer PPP loan applicants into customers.

● Low cost relationship deposits (i.e. interest checking, money market, and savings) balances decreased $3,252,000, or 0.94%, from Q1 2022 and increased $40,708,000, or 13.53%, from Q2 2021. The decrease from Q1 2022 is the result of seasonal fluctuations in customer accounts. The increase from Q2 2021 in these accounts is the result of growth in core relationships, continued growth in accounts from non-customer PPP loan applicants and the migration of customer funds from time deposits.

● Time deposits decreased by $4,284,000, or 7.24%, from Q1 2022 and $29,654,000, or 35.07%, from Q2 2021. The decrease in time deposits continues to be primarily driven by the migration of customers from time deposits to lower cost deposit products.

Capital

Shareholders’ equity at June 30, 2022 was $60,053,000 compared to $63,401,000 at December 31, 2021, which resulted in a tangible common equity ratio of 7.98% and 8.47%, as of June 30, 2022 and December 31, 2021, respectively. The $3,347,000 decrease in shareholders’ equity during the six months ended June 30, 2022 was primarily due to the $7,139,000 increase in accumulated other comprehensive loss associated with the unrealized holding losses arising during the period, which were the result of the movement in interest rates during the three months ended June 30, 2022. The increase in the unrealized holding losses was partially offset by net income of $3,990,000 during the six months ended June 30, 2022.

The Bank continues to maintain a strong, well-capitalized position. The following table presents the regulatory capital ratios for the Bank at the dates indicated:

Bank Regulatory Capital Ratios
Ratios	Q2 2022		Q1 2022		Q4 2021		Q3 2021		Q2 2021
Common equity tier 1		13.91%		14.07%		14.01%		13.96%		13.88%
Tier 1		13.91%		14.07%		14.01%		13.96%		13.88%
Total capital		14.52%		14.69%		14.66%		14.63%		14.57%
Tier 1 leverage		10.22%		10.13%		9.86%		9.96%		9.72%

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About Village Bank and Trust Financial Corp.

Village Bank and Trust Financial Corp. was organized under the laws of the Commonwealth of Virginia as a bank holding company whose activities consist of investment in its wholly-owned subsidiary, Village Bank.  Village Bank is a full-service Virginia-chartered community bank headquartered in Midlothian, Virginia with deposits insured by the Federal Deposit Insurance Corporation (“FDIC”).  The Bank has nine branch offices. Village Bank and its wholly-owned subsidiary, Village Bank Mortgage Corporation, offer a complete range of financial products and services, including commercial loans, consumer credit, mortgage lending, checking and savings accounts, certificates of deposit, and 24-hour banking.

Forward-Looking Statements

In addition to historical information, this press release may contain forward-looking statements.  For this purpose, any statement, that is not a statement of historical fact may be deemed to be a forward-looking statement.  These forward-looking statements may include statements regarding profitability, liquidity, allowance for loan losses, interest rate sensitivity, market risk, growth strategy and financial and other goals.  Forward-looking statements often use words such as “believes,” “expects,” “plans,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends” or other words of similar meaning.  You can also identify them by the fact that they do not relate strictly to historical or current facts.  Forward-looking statements are subject to numerous assumptions, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements.

There are many factors that could have a material adverse effect on the operations and future prospects of the Company including, but not limited to:

● the impacts of the ongoing COVID-19 pandemic;

● changes in assumptions underlying the establishment of allowances for loan losses, and other estimates;

● the risks of changes in interest rates on levels, composition and costs of deposits, loan demand, and the values and liquidity of loan collateral, securities, and interest sensitive assets and liabilities;

● the effects of future economic, business and market conditions;

● our inability to maintain our regulatory capital position;

● the Company’s computer systems and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance, or other disruptions despite security measures implemented by the Company;

● changes in market conditions, specifically declines in the residential and commercial real estate market, volatility and disruption of the capital and credit markets, soundness of other financial institutions we do business with;

● risks inherent in making loans such as repayment risks and fluctuating collateral values;

● changes in operations of Village Bank Mortgage Corporation as a result of the activity in the residential real estate market;

● legislative and regulatory changes, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and other changes in banking, securities, and tax laws and regulations and their application by our regulators, and changes in scope and cost of FDIC insurance and other coverages;

● exposure to repurchase loans sold to investors for which borrowers failed to provide full and accurate information on or related to their loan application or for which appraisals have not been acceptable or when the loan was not underwritten in accordance with the loan program specified by the loan investor;

● governmental monetary and fiscal policies;

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● geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, negatively impacting business and economic conditions in the U.S. and abroad;

● changes in accounting policies, rules and practices;

● reliance on our management team, including our ability to attract and retain key personnel;

● competition with other banks and financial institutions, and companies outside of the banking industry, including those companies that have substantially greater access to capital and other resources;

● demand, development and acceptance of new products and services;

● problems with technology utilized by us;

● changing trends in customer profiles and behavior; and

● other factors described from time to time in our reports filed with the Securities and Exchange Commission (“SEC”).

Additional factors, that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available on the SEC’s Web site at www.sec.gov.

For further information contact Donald M. Kaloski, Jr., Executive Vice President and CFO at 804-897-3900 or dkaloski@villagebank.com.

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Financial Highlights
(Dollars in thousands, except per share amounts)
	June 30,		March 31,		December 31,		September 30,		June 30,
	2022		2022		2021		2021		2021
	(Unaudited)		(Unaudited)		*		(Unaudited)		(Unaudited)
Balance Sheet Data
Total assets	$	752,597	$	764,417	$	748,401	$	730,061	$	717,932
Investment securities		131,623		139,866		93,699		88,549		48,752
Loans held for sale		7,963		7,507		5,141		13,275		16,374
Loans, net		528,130		518,764		526,024		532,905		549,086
Allowance for loan losses		(3,423)		(3,403)		(3,423)		(3,443)		(3,429)
Deposits		674,641		683,673		664,048		646,052		638,083
Borrowings		14,440		14,432		14,424		14,416		14,408
Shareholders' equity		60,053		61,480		63,401		61,730		58,981
Book value per share	$	40.68	$	41.64	$	43.03	$	42.09	$	40.21
Total shares outstanding		1,476,165		1,476,392		1,473,469		1,466,765		1,466,800
Asset Quality Ratios
Allowance for loan losses to:
Loans, net of deferred fees and costs		0.65%		0.66%		0.65%		0.65%		0.62%
Loans, net of deferred fees and costs (excluding PPP loans)		0.65%		0.68%		0.69%		0.72%		0.75%
Nonperforming loans		280.87%		260.49%		251.94%		233.82%		221.77%
Net charge-offs (recoveries) to average loans(1)		(0.01%)		(0.29%)		0.01%		(0.01%)		0.04%
Nonperforming assets to total assets		0.16%		0.17%		0.18%		0.20%		0.22%
Bank Capital Ratios
Common equity tier 1		13.91%		14.07%		14.01%		13.96%		13.88%
Tier 1		13.91%		14.07%		14.01%		13.96%		13.88%
Total capital		14.52%		14.69%		14.66%		14.63%		14.57%
Tier 1 leverage		10.22%		10.13%		9.86%		9.96%		9.72%

	Three Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
	2022		2022		2021		2021		2021
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Selected Operating Data
Interest income	$	6,731	$	6,268	$	6,743	$	6,921	$	6,972
Interest expense		410		407		445		492		580
Net interest income before
provision for (recovery of) loan losses		6,321		5,861		6,298		6,429		6,392
Provision for (recovery of) loan losses		—		(400)		—		—		(500)
Noninterest income		1,938		1,628		2,462		2,859		2,852
Noninterest expense		5,514		5,682		5,768		5,637		5,547
Income before income tax expense		2,745		2,207		2,992		3,651		4,197
Income tax expense		555		407		629		752		903
Net income	$	2,190	$	1,800	$	2,363	$	2,899	$	3,294
Earnings per share
Basic	$	1.48	$	1.22	$	1.61	$	1.97	$	2.24
Diluted	$	1.48	$	1.22	$	1.61	$	1.97	$	2.24
Performance Ratios
Return on average assets(1)		1.16%		0.97%		1.26%		1.59%		1.85%
Return on average equity(1)		14.40%		11.48%		14.78%		18.81%		22.79%
Net interest margin(1)		3.57%		3.36%		3.56%		3.74%		3.84%
* Derived from audited consolidated financial statements.
(1) Annualized.

10

Financial Highlights
(Dollars in thousands, except per share amounts)
	Six Months Ended
	June 30,		June 30,
	2022		2021
	(Unaudited)		(Unaudited)
Selected Operating Data
Interest income	$	12,999	$	14,003
Interest expense		818		1,235
Net interest income before
provision for (recovery of) loan losses		12,181		12,768
Provision for (recovery of) loan losses		(400)		(500)
Noninterest income		3,567		7,023
Noninterest expense		11,196		11,062
Income before income tax expense		4,952		9,229
Income tax expense		962		2,038
Net income	$	3,990	$	7,191
Earnings per share
Basic	$	2.71	$	4.90
Diluted	$	2.71	$	4.90
Performance Ratios
Return on average assets(1)		1.07%		2.05%
Return on average equity(1)		12.92%		25.81%
Net interest margin(1)		3.47%		3.88%
* Derived from audited consolidated financial statements.
(1) Annualized.

11

XML

Document and Entity Information	Jul. 28, 2022
Document and Entity Information [Abstract]
Document Type	8-K
Document Period End Date	Jul. 28, 2022
Entity File Number	0-50765
Entity Registrant Name	VILLAGE BANK AND TRUST FINANCIAL CORP.
Entity Incorporation, State or Country Code	VA
Entity Tax Identification Number	16-1694602
Entity Address State Or Province	VA
Entity Address, Address Line One	13319 Midlothian Turnpike
Entity Address, City or Town	Midlothian
Entity Address, Postal Zip Code	23113
City Area Code	804
Local Phone Number	897-3900
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $4.00 per share
Trading Symbol	VBFC
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001290476
Amendment Flag	false