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

            October 25, 2017        
Date of Report
(Date of earliest event reported)

Access National Corporation
(Exact name of registrant as specified in its charter)

         Virginia         
    000-49929    
        82-0545425        
(State or other
jurisdiction of incorporation)
(Commission
File Number)
(IRS Employer Identification No.)


           1800 Robert Fulton Drive, Suite 300, Reston, VA  20191           
(Address of principal executive offices) (Zip Code)

                                (703) 871-2100                               
(Registrant’s telephone number, including area code)

                                                  n/a                                                   
(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 ( see General Instruction A.2. below):
 
☐
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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company                            ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period 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.

Access National Corporation (the “Company”) (Nasdaq: ANCX) issued a press release (the “Press Release”) announcing its unaudited financial results on October 25, 2017 for the quarter ended September 30, 2017.  A copy of the Press Release detailing the summary results is attached hereto as Exhibit 99.1.


Item 5.02           Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The Company held its Annual Meeting of Shareholders on October 26, 2017 (the “Annual Meeting”), at which four (4) proposals were submitted to the Company’s shareholders. The proposals are described in detail in the Company’s proxy statement for the 2017 Annual Meeting of Shareholders filed with the Securities and Exchange Commission on September 7, 2017 (the “2017 Proxy Statement”).

At the Annual Meeting, the Company’s shareholders approved the Access National Corporation 2017 Equity Compensation Plan (the “2017 Plan”), which the Company’s Board of Directors (the “Board”) had adopted, subject to shareholder approval, on August 24, 2017, based on the recommendation of the Compensation Committee of the Company’s Board (the “Committee”).  The 2017 Plan is described in detail in the 2017 Proxy Statement. The 2017 Plan, which became effective upon shareholder approval at the Annual Meeting, replaces the Company’s 2009 Stock Option Plan (the “2009 Plan”). Awards previously granted under the 2009 Plan will remain outstanding and valid in accordance with their terms, but no new awards will be granted under the 2009 Plan following the Annual Meeting.

The purpose of the 2017 Plan is to promote the success of the Company and its subsidiaries by providing incentive to certain key employees, non-employee directors, consultants and advisors to associate their personal interests with the long-term financial success of the Company and with growth in shareholder value, consistent with the Company’s risk management practices. The 2017 Plan is designed to provide flexibility to the Company in its ability to attract, retain the services of and motivate key employees, non-employee directors, consultants and advisors upon whose judgment, interest and special effort the successful conduct of the Company’s operations largely depends.

The 2017 Plan authorizes the granting of stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance cash awards. Awards may be granted under the 2017 Plan to key employees, non-employee directors, consultants and advisors to the Company and certain of its subsidiaries, as determined by the Committee, which has been appointed to administer the 2017 Plan.

Subject to the right of the Board to terminate the 2017 Plan at any time, awards may be granted under the 2017 Plan until October 25, 2027, after which date no further awards may be granted under the 2017 Plan. Any awards granted under the 2017 Plan that are outstanding on October 25, 2027 will remain outstanding and valid in accordance with their terms.

Subject to adjustment in the event of certain changes in the Company’s capital structure, the maximum number of shares of the Company’s common stock that may be issued under the 2017 Plan is 1,500,000. Shares of common stock related to awards that terminate, expire or lapse for any reason other than as a result of exercise or settlement and shares of common stock issued pursuant to awards that are forfeited will not count against this maximum.

Under the 2017 Plan, the maximum number of shares with respect to which awards may be granted in any calendar year to a key employee, consultant or advisor is 50,000 shares in the aggregate and the maximum number of shares with respect to which awards may be granted in any calendar year to a non-employee director is 10,000 in the aggregate. The maximum dollar amount of cash awards that may be granted in any calendar year to any participant is $200,000 in the aggregate. No fractional shares will be issued or delivered pursuant to the 2017 Plan or any award under the 2017 Plan.

The Committee has the authority under the 2017 Plan to select participants and to grant awards on terms the Committee considers appropriate. Subject to the terms of the 2017 Plan, the Committee also has the authority, among other things, to construe and interpret the 2017 Plan and the award agreements, to establish, amend or waive rules or regulations for the 2017 Plan’s administration, to accelerate in certain circumstances the exercisability of any award or the termination of any period of restriction and to make all other determinations and take all other actions for the administration of the 2017 Plan. The Committee may delegate its authority under the 2017 Plan to the Company’s Chief Executive Officer or joint authority to the Company’s Chief Financial Officer and Chief Banking Officer to grant awards under the 2017 Plan, except in the case of awards to directors and certain executive officers.
 
The 2017 Plan is intended to permit the Company to grant awards that qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code, as well as awards that do not so qualify. The 2017 Plan does not require that awards actually qualify as performance-based compensation under Section 162(m).

All awards under the 2017 Plan, whether vested or unvested, are subject to such recovery or clawback as may be required pursuant to applicable law or regulation, applicable stock exchange listing standard, or the terms of the Company’s recoupment, clawback or similar policy as may be in effect from time to time, which could in certain circumstances require repayment or forfeiture of awards or any shares of common stock or other cash or property received with respect to the awards, including any value received from a disposition of the shares acquired upon payment of the awards.  The Committee may also impose additional clawback provisions on awards granted under the 2017 Plan.

The foregoing description of the 2017 Plan is qualified in its entirety by reference to the full text of the 2017 Plan, which is attached as Exhibit 10.18 to this Current Report on Form 8-K and is incorporated herein by reference.
 
Item 5.07           Submission of Matters to a Vote of Security Holders.

At the Annual Meeting, four (4) proposals were submitted to the Company’s shareholders, including the proposal to approve the 2017 Plan. The proposals are described in detail in the 2017 Proxy Statement. Below are the final results for each proposal.

Proposal 1
The Company’s shareholders elected four (4) Class I directors to serve until the 2018 Annual Meeting of Shareholders, one (1) Class II director to serve until the 2019 Annual Meeting of Shareholders, and four (4) Class III directors to serve until the 2020 Annual Meeting of Shareholders. The votes regarding these director nominees were as follows:
 
 
For
Withhold
Broker Non-Votes
Class I
     
Michael G. Anzilotti
14,521,744
   417,954
3,905,877
Gary D. LeClair
11,953,962
2,985,736
3,905,877
Janet A. Neuharth
11,919,948
3,019,750
3,905,877
Gary R. Shook
11,080,105
3,859,593
3,905,877
       
Class II
     
Childs F. Burden
11,577,775
3,361,923
3,905,877
       
Class III
     
John W. Edgemond, IV
13,777,586
1,162,112
3,905,877
Martin S. Friedman
14,543,336
   396,362
3,905,877
John C. Lee, IV
11,821,891
3,117,807
3,905,877
Mary Leigh McDaniel
14,544,003
   395,695
3,905,877

The following Class I and Class II directors, whose terms expire in 2018 and 2019, respectively, continued in office: Class I – Michael W. Clarke; Class II – J. Randolph Babbitt, Thomas M. Kody and Robert C. Shoemaker.

Proposal 2
The Company’s shareholders approved the Access National Corporation 2017 Equity Compensation Plan.  The votes regarding this proposal were as follows:
 
For
Against
Abstain
Broker Non-Votes
14,316,763
283,499
339,436
3,905,877
 
Proposal 3
The Company’s shareholders approved the advisory proposal regarding the compensation of the Company’s named executive officers as described in the 2017 Proxy Statement.  The votes regarding this proposal were as follows:

For
Against
Abstain
Broker Non-Votes
12,803,061
1,901,248
235,389
3,905,877

 

Proposal 4
The Company’s shareholders ratified the selection of BDO USA, LLP to serve as independent public accountants for the fiscal year ending December 31, 2017. The votes regarding this proposal were as follows:
 
For
Against
Abstain
Broker Non-Votes
18,235,597
582,308
27,670
-0-
 
No other matters were voted on at the meeting.


Item 7.01           Regulation FD Disclosure.

The Company also announced on October 25, 2017 that its Board of Directors declared a cash dividend of $0.15 per share to shareholders of record as of November 9, 2017, for payment on November 24, 2017.  A copy of the press release summarizing the announcement is attached hereto as Exhibit 99.1.
 
 
Item 9.01           Financial Statements and Exhibits.
 
(a) - Not applicable.  
       
(b) - Not applicable.  
       
(c) - Not applicable.  
       
(d)  
Exhibits.
 
       
   
Exhibit Number
Description
       
   
       
   
 


 
Signatures

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

 
 
ACCESS NATIONAL CORPORATION
 
    (Registrant)  
       
       
Date:  October 31, 2017
By:
/s/ Michael W. Clarke  
 
Name:
Michael W. Clarke
 
 
Title:
President & Chief Executive Officer
 
Exhibit 10.18
 

Access National Corporation
2017 Equity Compensation Plan

ARTICLE I
Establishment, Purpose and Duration

1.1           Establishment of the Plan .

(a)               Access National Corporation, a Virginia corporation (the “Company”), hereby establishes the Access National Corporation 2017 Equity Compensation Plan (the “Plan”).  Unless otherwise defined herein, all capitalized terms shall have the meanings set forth in Section 2.1.  The Plan permits the grant of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Cash Awards to Key Employees of the Company or its Subsidiaries and the grant of Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Cash Awards to Non-Employee Directors of the Company or its Subsidiaries or to Consultants or Advisors to the Company or its Subsidiaries.

(b)               The Plan was adopted by the Board of Directors of the Company on August 24, 2017 and shall become effective on October 26, 2017 (the “Effective Date”), subject to the approval of the Plan by the Company’s shareholders.

1.2           Purpose of the Plan .  The purpose of the Plan is to promote the success of the Company and its subsidiaries by providing incentives to Key Employees, Non-Employee Directors, Consultants and Advisors that will promote the identification of their personal interests with the long-term financial success of the Company and with growth in shareholder value, consistent with the Company’s risk management practices.  The Plan is designed to provide flexibility to the Company, including its subsidiaries, in its ability to attract, retain the services of, and motivate Key Employees, Non-Employee Directors, Consultants and Advisors upon whose judgment, interest, and special effort the successful conduct of its operation is largely dependent.

1.3            Duration of the Plan .  The terms of this Plan shall become effective on   the Effective Date, as described in Section 1.1(b).  No Award may be granted under the Plan after October 25, 2027.  Awards outstanding on such date shall remain valid in accordance with their terms.  The Board shall have the right to terminate the Plan at any time pursuant to Article XVI.

ARTICLE II
Definitions

2.1           Definitions .  The following terms shall have the meanings set forth below:

(a)               “Advisor” means a natural person who provides bona fide advisory services to the Company or its Subsidiaries, provided the services are not in connection with a capital-raising transaction and the person does not directly or indirectly promote or maintain a market for the Company’s securities.

(b)               “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Exchange Act.

(c)               “Agreement” means a written agreement or other instrument or document, which may be in electronic format, implementing the grant of an Award and setting forth the specific terms of an Award, and which is signed or acknowledged (including a signature or acknowledgment in electronic format) by an authorized officer of the Company and the   Participant.  The Company’s Chief Executive Officer, Chief Financial Officer, Chairman of the Committee, Chairman of the Board, and such other directors or officers of the Company as shall be designated by the Committee are hereby authorized to execute or acknowledge Agreements on behalf of the Company (including a signature or acknowledgment in electronic format) and to cause Agreements to be delivered to each Participant (including delivery in electronic format).

(d)               “Award” means a grant under this Plan of an Incentive Stock Option, Nonqualified Stock Option, Restricted Stock, Restricted Stock Unit, Stock Appreciation Right, Performance Unit and/or Performance Cash Award.

(e)               “Award Date” means the date on which an Award is made (also referred to as “granted”) by the Committee under this Plan.

(f)                “Beneficiary” means the person designated by a Participant pursuant to Section 17.11.

(g)               “Board” means the Board of Directors of the Company, unless otherwise indicated.

(h)               “Cause” has the meaning set forth in any employment agreement, or, if none, in any change of control agreement, then in effect between the Participant and the Company or a subsidiary, if applicable, and, if the Participant has no such agreement or if such agreement does not define the term, “Cause” means the Participant’s (i) personal dishonesty, (ii) incompetence, (iii) willful misconduct, (iv) breach of a fiduciary duty involving personal profit, (v) intentional failure to perform stated duties, (vi) willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, (vii) conviction of a felony or of a misdemeanor involving moral turpitude, or (viii) misappropriation of the Company’s assets (determined on a reasonable basis and solely by the Board) or those of a subsidiary.

(i)                “Change of Control” shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied at any time after the Effective Date:

(i)   any person, including a “group” as defined in Section 13(d)(3) of the Exchange Act, becomes the owner or beneficial owner of Company securities having fifty percent (50%) or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company’s directors other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases is a majority at the time the purchases are made; or

(ii)                as the direct or indirect result of, or in connection with, a tender or exchange offer, a merger or other business combination, a sale of assets, a contested election of directors, or any combination of these events, the persons who were directors of the Company before such events, or whose appointment or election to the Board after such events was approved by persons who constituted a majority of the Company’s Board immediately before the date of the appointment or election, cease to constitute a majority of the Company’s Board, or any successor’s board, within the twelve (12)-month period of the last of such transactions.

For purposes of this definition, a Change of Control occurs on the date on which an event described in (i) or (ii) occurs, provided that if a Change of Control occurs on account of a series of transactions or events, the Change of Control occurs on the date of the last of such transactions or events.

For purposes of this definition only, the term “person” means any individual, entity or group (within the meaning of Section 13(d)(3) of the Exchange Act), other than any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliated company, and “beneficial ownership” has the meaning given the term in Rule 13d-3 under the Exchange Act.

(j)                 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

(k)               “Committee” means the committee of the Board appointed by the Company to administer the Plan pursuant to Article III, which shall be the Compensation Committee of the Board of Directors of the Company, unless a subcommittee is required as provided below or unless the Board of Directors of the Company determines otherwise.  All members of the Committee shall be “independent directors” under applicable listing standards of any national securities exchange or system on which the Stock is then listed or reported.  For actions which require that all of the members of the Committee constitute “non‑employee directors” as defined in Rule 16b‑3, or any similar or successor rule, or “outside directors” within the meaning of Code Section 162(m)(4)(C)(i), as amended from time to time, the Committee shall consist of a subcommittee of at least two members of the Compensation Committee meeting such qualifications. In the event the Board of Directors of the Company exercises the authority of the Committee in connection with the Plan or an Award as contemplated by Section 3.1(a), the term “Committee” shall refer to the Board of Directors of the Company in connection with the Plan or with regard to that Award.
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(l)                 “Company” means Access National Corporation or any successor thereto.

(m)               “Consultant” means a natural person who provides bona fide consulting services to the Company or its Subsidiaries, provided the services are not in connection with a capital-raising transaction and the person does not directly or indirectly promote or maintain a market for the Company’s securities.

(n)                “Disability” or “Disabled” means with respect to an Incentive Stock Option, a Disability within the meaning of Code Section 22(e)(3).  As to all other Awards, the Committee shall determine whether a Disability exists and such determination shall be conclusive.

(o)               “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

(p)                “Fair Market Value” of a Share means (i) the per Share price at the close of business on the applicable principal U.S. market on the relevant date if it is a trading date, or, if not, on the most recent date on which the Stock was traded prior to such date, as reported by the national securities exchange or system for the applicable principal U.S. market, or (ii) if, in the opinion of the Committee, this method is inapplicable or inappropriate for any reason, the fair market value as determined pursuant to a reasonable method adopted by the Committee in good faith for such purpose.

(q)               “Good Reason” has the meaning set forth in any employment agreement, or, if none, in any change of control agreement, then in effect between the Participant and the Company or a subsidiary, if applicable, and, if the Participant has no such agreement or if such agreement does not define the term, “Good Reason” means (i) a material diminution in the Participant’s authority, duties or responsibilities; (ii) a material diminution in the Participant’s base compensation; or (iii) a relocation of the primary location at which the Participant must perform services to a location that is more than fifty (50) miles away.  The Participant is required to provide notice to the Company of the existence of a condition described in this Section 2.1(q) within a ninety (90) day period of the initial existence of the condition, upon the notice of which the Company shall have thirty (30) days to remedy the condition.  If the condition is remedied within thirty (30) days, then “Good Reason” does not exist.  If the condition is not remedied within thirty (30) days, then the Participant must resign within ninety (90) days   of the expiration of the remedy period for “Good Reason” to exist .
(r)                 “Incentive Stock Option” or “ISO” means an option to purchase Stock, granted under Article VI, which is designated as an incentive stock option and is intended to meet the requirements of, and qualify for favorable federal income tax treatment under, Code Section 422.

(s)               “Key Employee” means an officer or other key employee of the Company or its Subsidiaries, who, in the opinion of the Committee, can contribute significantly to the growth and profitability of, or perform services of major importance to, the Company and its Subsidiaries.

(t)                “Non-Employee Director” means an individual who is a member of the board of directors of the Company or any Subsidiary thereof who is not an employee of the Company or any Subsidiary thereof.

(u)               “Nonqualified Stock Option” means an option to purchase Stock, granted under Article VI, which is not intended to be an Incentive Stock Option and is so designated.

(v)               “Option” means an Incentive Stock Option or a Nonqualified Stock Option.
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(w)              “Participant” means a Key Employee, Non-Employee Director, Consultant or Advisor who has been granted an Award under the Plan and whose Award remains outstanding.

(x)                “Performance-Based Compensation Award” means any Award for which exercise, full enjoyment or receipt thereof by the Participant is contingent on satisfaction or achievement of the Performance Goal(s) applicable thereto.  If a Performance-Based Compensation Award is intended to be “performance‑based compensation” within the meaning of Code Section 162(m)(4)(C), the grant of the Award, the establishment of the Performance Goal(s), the making of any modifications or adjustments and the determination of satisfaction or achievement of the Performance Goal(s) shall be made during the period or periods required under and in conformity with the requirements of Code Section 162(m) therefor.  The terms and conditions of each Performance-Based Compensation Award, including the Performance Goal(s) and Performance Period, shall be set forth in an Agreement or in a subplan of the Plan that is incorporated by reference into an Agreement.

(y)               “Performance Cash Award” means an Award of cash granted to a Participant pursuant to Article XI.

(z)                “Performance Goal” means one or more performance measures or goals set by the Committee in its discretion for each grant of a Performance-Based Compensation Award.  The extent to which such performance measures or goals are met will determine the amount or value of the Performance-Based Compensation Award that a Participant is entitled to exercise, receive or retain.  For purposes of the Plan, a Performance Goal may be particular to a Participant, and may include any one or more of the following performance criteria, either individually, alternatively or in any combination, subset or component, applied to the performance of the Company as a whole or to the performance of a Subsidiary, division, strategic business unit, line of business or business segment, measured either quarterly, annually or cumulatively over a period of years or partial years, in each case as specified by the Committee in the Award:  (i) Stock value or increases therein, (ii) total shareholder return, (iii) operating revenue, (iv) commodity revenue, (v) tangible book value or tangible book value growth, tangible book value per share or growth in tangible book value per share, (vi) earnings per share or earnings per share growth (before or after one or more of taxes, interest, depreciation and/or amortization), (vii) diluted earnings per share or earnings per share growth (before or after one or more of taxes, interest, depreciation and/or amortization), including fully diluted earnings per share after extraordinary events, (viii) net earnings, (ix) earnings and/or earnings growth (before or after one or more of taxes, interest, depreciation and/or amortization), operating earnings and/or operating earnings growth, (x) profits or profit growth (net profit, gross profit, operating profit, net operating profit, economic profit, profit margins or other corporate profit measures), (xi) cash flow, operating cash flow or free cash flow (either before or after dividends), (xii) cash from operations, (xiii) operating or other expenses or growth thereof, (xiv) operating efficiency, (xv) return on equity, (xvi) return on tangible equity or return on tangible common equity, (xvii) return on assets, net assets, capital or investment (including return on total capital or return on invested capital), (xviii) return on operating revenue, (xix) sales or revenues or growth thereof, (xx) deposits, loan and/or equity levels or growth thereof, (xxi) working capital targets, (xxii) assets under management or growth thereof, (xxiii) cost control measures, (xxiv) regulatory compliance, (xxv) gross, operating or other margins, (xxvi) efficiency ratio (as generally recognized and used for bank financial reporting and analysis), (xvii) operating ratio, (xxviii) income or net income, (xxix) operating income, (xxx) interest income, (xxxi) net interest income, (xxxii) net interest margin, (xxxiii) non‑interest income, (xxxiv) non-interest expense, (xxxv) credit quality, net charge-offs and/or non-performing assets (excluding such loans or classes of loans as may be designated for exclusion), (xxxvi) percentage of non-accrual loans to total loans or net charge-off ratio, (xxxvii) provision expense, (xxxviii) productivity, (xxxix) customer satisfaction, (xl) satisfactory internal or external audits, (xli) improvement of financial ratings, (xlii) achievement of balance sheet or income statement objectives, (xliii) quality measures, (xliv) regulatory exam results, (xlv) achievement of risk management objectives, (xlvi) achievement of strategic performance objectives, (xlvii) achievement of merger or acquisition objectives, (xlviii) implementation , management or completion of critical projects or processes, (xlix) market capitalization, (l) total enterprise value (market capitalization plus debt), (li) economic value added, (lii) debt leverage (debt to capital), (lii) market share, or (liv) any component or components of the foregoing (including, without limitation, determination thereof, in the Committee’s sole discretion, with or without the effect of discontinued operations and dispositions of business units or segments, non‑recurring items, material extraordinary items that are both unusual and infrequent, non-budgeted items, special charges, accruals for acquisitions, reorganization and restructuring programs and/or changes in tax law, accounting principles or other such laws or provisions affecting the Company’s reported results). Performance Goals may include a threshold level of performance below which no payment or vesting may occur, levels of performance at which specified payments or specified vesting will occur, and a maximum level of performance above which no additional payment or vesting will occur.  Performance Goals may be absolute in their terms or measured against or in relationship to a pre-established target, the Company’s budget or budgeted results, previous period results, a market index, a designated comparison group of other companies comparably, similarly or otherwise situated, or any combination thereof.  The Committee shall determine the Performance Period during which a Performance Goal must be met, and attainment of Performance Goals shall be subject to certification by the Committee. The Committee retains the discretion to adjust the compensation or economic benefit due upon attainment of Performance Goals and to adjust the Performance Goals themselves, provided that, with respect to an Award intended to be “performance‑based compensation” within the meaning of Code Section 162(m)(4)(C), any such adjustment shall be made only in conformity with the requirements of Code Section 162(m).
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(aa)             “Performance Period” means the time period during which a Performance Goal must be met in connection with a Performance-Based Compensation Award.  Such time period shall be set by the Committee, provided, however, that the Performance Period shall not be less than one year, subject to applicable provisions regarding accelerated vesting events.

(bb)             “Performance Unit” means an Award, designated as a Performance Unit, granted to a Participant pursuant to Article X, valued by reference to the Fair Market Value of Stock or valued as a fixed dollar amount, and subject to achievement or satisfaction of one or more Performance Goals.  Performance Units are payable in cash, Stock or a combination thereof.  Even to the extent a Performance Unit is denoted by reference to Shares of Stock and is payable in Stock, the receipt of a Performance Unit Award does not constitute receipt of the underlying Shares.

(cc)              “Period of Restriction” means the period during which Shares of Restricted Stock are subject to a substantial risk of forfeiture and/or subject to limitations on transfer, pursuant to Article VII, or the period during which Restricted Stock Units are subject to vesting requirements, pursuant to Article VIII.  The relevant restriction may lapse based on a period of time or after meeting performance criteria specified by the Committee, or both.  When a Period of Restriction lapses solely based on a period of time, the length of such period of time shall not be less than one year, subject to applicable provisions regarding accelerated vesting.

(dd)             “Restricted Stock” means an Award of Stock granted to a Participant pursuant to Article VII, which is subject to a substantial risk of forfeiture and/or subject to limitations on transferability until the designated conditions for the lapse of such restrictions are satisfied.

(ee)              “Restricted Stock Unit” or “RSU” means an Award designated as a Restricted Stock Unit, which is a bookkeeping entry granted to a Participant pursuant to Article VIII, valued by reference to the Fair Market Value of Stock, and subject to vesting requirements.  Restricted Stock Units are payable in cash, Stock or a combination thereof.  Even to the extent a Restricted Stock Unit is denoted by reference to Shares of Stock and is payable in Stock, the receipt of a Restricted Stock Unit Award does not constitute receipt of the underlying Shares.

(ff)               “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, including any corresponding subsequent rule or any amendments enacted after the Effective Date.

(gg)             “Stock” or “Shares” means the common stock of the Company.

(hh)             “Stock Appreciation Right” or “SAR” means an Award, designated as a stock appreciation right, granted to a Participant pursuant to Article IX, and payable in cash, Stock or a combination thereof.
(ii)               “10% Shareholder” means a person who owns, directly or indirectly, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company.  Indirect ownership of stock shall be determined in accordance with Code Section 424(d).

(jj)               For purposes of Incentive Stock Options, “Subsidiary” shall mean a corporation at least fifty percent (50%) of the   total combined voting power of all classes of stock of which is owned by the Company, either directly or through one or more of its Subsidiaries.  For purposes of all Awards other than Incentive Stock Options, “Subsidiary” shall mean any entity that would be considered a single employer with the Company within the meaning of Code Section 414(b) or Code Section 414(c), except to the extent a different definition is required under Code Section 409A.
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ARTICLE III
Administration

3.1            The Committee .

(a)                The Plan shall be administered by the Committee which shall have all powers necessary or desirable for such administration.  To the extent required by Rule 16b-3, all Awards shall be made by members of the Committee who are “non-employee directors” as that term is defined in Rule 16b-3, or by the Board.  Awards that are intended to be “performance‑based compensation” within the meaning of Code Section 162(m)(4)(C) shall be made by the Committee, or subcommittee of the Committee, comprised solely of two or more “outside directors” as that term is defined for purposes of Code Section 162(m)(4)(C)(i).  In the event the Board determines that a member of the Committee (or any applicable subcommittee) was not an “independent director” under applicable listing standards of any national securities exchange or system on which the Stock is then listed or reported, was not a “non‑employee director” as defined in Rule 16b‑3, and/or was not an “outside director” as that term is defined for purposes of Code Section 162(m)(4)(C)(i), as applicable, on the Award Date, such determination shall not invalidate the Award and the Award shall remain valid in accordance with its terms.  Except as required under Section 2.1(x), any authority granted to the Committee may also be exercised by the full Board.

(b)               The express grant in this Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee.  In addition to any other powers and, subject to the provisions of the Plan, the Committee shall have the following specific powers:  (i) to determine the terms and conditions upon which the Awards may be made and exercised; (ii) to determine all terms and provisions of each Agreement, which need not be identical; (iii) to construe and interpret the Agreements and the Plan, including the ability to resolve any ambiguities and define any terms; (iv) to establish, amend or waive rules or regulations for the Plan’s administration; (v) in limited circumstances, generally involving death, disability, termination of employment (including retirement) or a Change of Control, to accelerate the exercisability of any Award or the termination of any Period of Restriction or other restrictions imposed under the Plan to the extent permitted by Code Section 409A; and (vi) to make all other determinations and take all other actions necessary or advisable for the administration of the Plan.  The interpretation and construction of any provisions of the Plan or an Agreement by the Committee shall be final and conclusive.  In the event of a conflict or inconsistency between the Plan and any Agreement, the Plan shall govern, and the Agreement shall be interpreted to minimize or eliminate any such conflict or inconsistency.
    (c)                The Committee may consult with counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.
    (d)               The Committee, in its discretion, may delegate to the Chief Executive Officer of the Company (acting alone) or to the Chief Financial Officer and the Chief Banking Officer of the Company (acting jointly) all or part of the Committee’s authority and duties with respect to Awards to individuals who are not subject to the reporting and other provisions of Section 16 of the Exchange Act. The Committee may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Committee’s delegee or delegees that were consistent with the terms of the Plan.
3.2           Selection of Participants .  The Committee shall have the authority to grant Awards under the Plan, from time to time, to such Key Employees, Non-Employee Directors, Consultants and Advisors as may be selected by the Committee.  Each Award shall be evidenced by an Agreement.

3.3           Decisions Binding .  All determinations and decisions made by the Board or the Committee pursuant to the provisions of the Plan shall be final, conclusive and binding.
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3.4           Rule l6b-3 Requirements .  Notwithstanding any provision of the Plan to the contrary, the Board or the Committee may impose such conditions on any Award, and amend the Plan in any such respects, as may be required to satisfy the requirements of Rule 16b-3.

3.5           Code Section 162(m) .  Notwithstanding any provision of the Plan to the contrary, the Plan is intended to give the Committee the authority to grant Awards that qualify as performance‑based compensation under Code Section 162(m)(4)(C) as well as Awards that do not so qualify.   Any provision of the Plan that would prevent an Award that the Committee intends to qualify as performance-based compensation under Code Section 162(m)(4)(C) from so qualifying shall be administered, interpreted, and construed to carry out such intention, and any provision that cannot be so administered, interpreted, and construed shall to that extent be disregarded.

3.6           Indemnification of Committee .  In addition to such other rights of indemnification as they may have as directors or as members of the Committee, the members of the Committee shall be indemnified by the Company against reasonable expenses, including attorneys’ fees, actually and reasonably incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted or made hereunder, and against all amounts reasonably paid by them in settlement thereof or paid by them in satisfaction of a judgment in any such action, suit or proceeding, if such members acted in good faith and in a manner which they believed to be in, and not opposed to, the best interests of the Company and its Subsidiaries.

ARTICLE IV
Stock Subject to the Plan

4.1           Number of Shares .

(a)                Subject to adjustment as provided in Article XIII, the maximum aggregate number of Shares that may be issued pursuant to Awards made under the   Plan shall not exceed 1,500,000.  Except as provided in Section 4.2, the issuance of Shares in connection with the exercise of, or as other payment for, Awards under the Plan shall reduce the number of Shares available for future Awards under the Plan.

(b)                Subject to adjustment as provided in Article XIII, no more than an aggregate of 1,500,000 Shares may be issued pursuant to the exercise of Incentive Stock Options granted under the Plan (including shares issued pursuant to the exercise of Incentive Stock Options that are the subject of disqualifying dispositions within the meaning of Code Sections 421 and 422).

4.2           Lapsed Awards or Forfeited Shares .  If any Award granted under this Plan terminates, expires, or lapses for any reason other than by virtue of exercise or settlement of the Award, or if Shares issued pursuant to Awards are forfeited, any Stock subject to such Award again shall be available for the grant of an Award under the Plan.

4.3           Use of Shares as Payment of Exercise Price or Taxes .  Shares withheld by the Company, delivered by the Participant, or otherwise used to pay the Option Price pursuant to the exercise of an Option or the SAR Exercise Price pursuant to the exercise of a SAR shall not be available for future Awards under the Plan.  Shares withheld by the Company, delivered by the Participant, or otherwise used to satisfy payment of withholding taxes associated with an Award shall not be available for future Awards under the Plan.  To the extent Shares are delivered or withheld pursuant to the exercise of an Option or a SAR, the number of underlying Shares as to which the exercise related shall be counted against the number of Shares available for future Awards under the Plan, as opposed to counting only those Shares issued upon exercise.

4.4           Per-Participant Annual Limit .  The maximum number of Shares with respect to which Awards may be granted in any calendar year to any Participant during such calendar year shall be 50,000 in the aggregate, provided, however, that the maximum number of Shares with respect to which Awards may be granted in any calendar year to any Non-Employee Director shall be 10,000 in the aggregate.  The maximum dollar amount of cash Awards granted in any calendar year to any Participant shall be $200,000 in the aggregate.
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4.5           No Fractional Shares .  No fractional Shares shall be issued or delivered pursuant to the Plan or any Award thereunder.  The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

4.6           Holding Period .  Shares acquired by an “executive officer” of the Company (as defined in Rule 3b-7 of the Exchange Act) in connection with an Award under the Plan shall be subject to a holding period following the applicable payment, vesting or exercise date of the Award in accordance with the terms of the Company’s Stock Ownership and Patronage Policy or similar policy as such may be in effect from time to time (typically 36 months).  If at any time there is no such policy in effect at the Company or such policy does not provide for a minimum holding period, the terms of any holding period will be set forth in the Award Agreement.

ARTICLE V
Eligibility

Persons eligible to participate in the Plan include (i) all   employees of the Company and its Subsidiaries (including any entity that becomes a Subsidiary after the Effective Date) who, in the opinion of the Committee, are Key Employees, (ii) all Non-Employee Directors, and (iii) all individuals providing bona fide consulting or advisory services to the Company or its Subsidiaries (including any entity that becomes a Subsidiary after the Effective Date) who, in the opinion of the Committee, are Consultants or Advisors.  The grant of an Award shall not obligate the Company to pay a Key Employee, Non-Employee Director, Consultant or Advisor any particular amount of remuneration, to continue the employment of a Key Employee or the service of a Non-Employee Director, Consultant or Advisor after the grant, or to make further grants to a Key Employee, Non-Employee Director, Consultant or Advisor at any time thereafter.

ARTICLE VI
Stock Options

6.1           Grants of Options .  Subject to the terms and provisions of the Plan, Options may be granted to such Key Employees, Non-Employee Directors, Consultants or Advisors at any time and from time to time as shall be determined by the Committee.  The Committee shall have complete discretion in determining the number of Shares subject to Options granted to each Participant, provided, however, that only Nonqualified Stock Options may be granted to Non-Employee Directors, Consultants and Advisors.

6.2           Option Agreement .  Each Option grant shall be evidenced by an Agreement that shall specify the type of Option granted, the Option Price (as hereinafter defined), the duration of the Option, the number of Shares to which the Option pertains, any conditions imposed upon the exercisability of the Option, and such other provisions as the Committee shall determine, provided, however, that, if the exercisability of an Option is subject solely to time-based conditions, the length of such period of time shall not be less than one year, subject to applicable provisions regarding accelerated vesting.  The Agreement shall specify whether the Option is intended to be an Incentive Stock Option or Nonqualified Stock Option, provided, however, that if an Option is intended to be an Incentive Stock Option but fails to be such for any reason, it shall continue in full force and effect as a Nonqualified Stock Option.  No Option may be exercised after the expiration of its term or, except as set forth in the Participant’s stock option Agreement, after the termination of the Participant’s employment or service.  The Committee shall set forth in the Participant’s Agreement when, and under what circumstances, an Option may be exercised after termination of the Participant’s employment or period of service, provided that no Incentive Stock Option may be exercised after (a) three months from the Participant’s termination of employment with the Company for reasons other than Disability or death, or (b) one year from the Participant’s termination of employment on account of Disability or death.  The Committee may, in its sole discretion, amend a previously granted Incentive Stock Option to provide for more liberal exercise provisions, provided, however, that if the Incentive Stock Option as amended no longer meets the requirements of Code Section 422, and, as a result the Option no longer qualifies for favorable federal income tax treatment under Code Section 422, the amendment shall not become effective without the written consent of the Participant.

6.3           Option Price .  The exercise price per share of Stock covered by an Option (“Option Price”) shall be determined by the Committee subject to the limitations described in this Section 6.3 and the Plan.  The Option Price shall not be less than 100% of the Fair Market Value of such Stock on the Award Date.  In addition, an ISO granted to a Key Employee who, at the time of grant, is a 10% Shareholder, shall have an Option Price which is at least equal to 110% of the Fair Market Value of the Stock on the Award Date.
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6.4           Duration of Options .  Each Option shall expire at such time as the Committee shall determine at the time of grant, provided, however, that no Option shall be exercisable later than the fifth (5 th ) anniversary of its Award Date.  In no event shall an ISO granted to a Key Employee who, at the time of grant, is a 10% Shareholder, be exercisable later than the fifth (5 th ) anniversary of its Award Date.

6.5           Exercisability .

(a)               Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall determine, which need not be the same for all Participants.

(b)               An Incentive Stock Option, by its terms, shall be exercisable in any calendar year only to the extent that the aggregate Fair Market Value (determined at the Award Date) of the Stock with respect to which Incentive Stock Options are exercisable by the Participant for the first time during the calendar year does not exceed $100,000 (the “Limitation Amount”).  Incentive Stock Options granted under the Plan and all other plans of the Company and any Subsidiary shall be aggregated for purposes of determining whether the Limitation Amount has been exceeded.  The Committee may impose such conditions as it deems appropriate on an Incentive Stock Option to ensure that the foregoing requirement is met.  If Incentive Stock Options that first become exercisable in a calendar year exceed the Limitation Amount, the excess Options will be treated as Nonqualified Stock Options to the extent permitted by law.

6.6           Method of Exercise .  Options shall be exercised by the delivery of a written notice to the Company in the form (which may be electronic) prescribed by the Committee (or its delegee) setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares and payment of (or an arrangement satisfactory to the Company for the Participant to pay) any tax withholding required in connection with the Option exercise.  The Option Price shall be payable to the Company in full either (a) in cash, (b) by delivery of Shares of Stock that the Participant has previously acquired and owned valued at Fair Market Value at the time of exercise, (c) by delivery of a properly executed exercise notice together with irrevocable instructions to a broker to deliver promptly to the Company, from the sale proceeds with respect to the sale of Stock, the amount necessary to pay the Option Price and, if necessary, applicable withholding taxes, (d) by the Company withholding Shares otherwise issuable upon the exercise valued at Fair Market Value at the time of exercise, or (e) by a combination of the foregoing. As soon as practicable, after receipt of written notice and payment of the Option Price and completion of payment of (or an arrangement satisfactory to the Company for the Participant to pay) any tax withholding required in connection with the Option exercise, the Company shall, in the Committee’s discretion, either deliver to the Participant stock certificates in an appropriate amount based upon the number of Options exercised, issued in the Participant’s name, or deliver the appropriate number of Shares in book-entry or electronic form.

6.7           Restrictions on Stock Transferability .  The Committee shall impose such restrictions on any Shares acquired pursuant to the exercise of an Option under the Plan as it may deem advisable, including, without limitation, restrictions under the applicable federal securities law, under the requirements of any national securities exchange or system on which the Stock is then listed or reported, and under any blue sky or state securities laws applicable to such Shares.  The Committee may specify in an Agreement that Stock delivered on exercise of an Option is Restricted Stock or Stock subject to a buyback right by the Company in the amount of, or based on, the Option Price therefor in the event the Participant does not complete a specified service period after exercise.

6.8           Nontransferability of Options .

(a)                In general, no Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than upon the death of the Participant in accordance with Section 17.11.  Further, Options granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant or his guardian or legal representative.

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(b)               Notwithstanding the provisions of Section 6.8(a) and subject to federal and state securities laws, including Rule 16b-3, the Committee may grant or amend Nonqualified Stock Options that permit a Participant to transfer the Options to his spouse, lineal ascendants and/or lineal descendants, to a trust for the benefit of such persons, or to a partnership, limited liability company, or other entity the only partners, members, or interest-holders of which are such persons, provided that the Nonqualified Stock Option may not again be transferred other than to the Participant originally receiving the Option or to an individual, trust, partnership, limited liability company or other entity to which such Participant could have transferred the Option pursuant to this Section 6.8(b).  Consideration may not be paid for the transfer of Options.  The transferee of an Option shall be subject to all conditions applicable to the Option prior to its transfer.  The Agreement granting the Option shall set forth the transfer conditions and restrictions.  The Committee may impose on any transferable Option and on Stock issued upon the exercise of an Option such limitations and conditions as the Committee deems appropriate.  Any such transfer supersedes any Beneficiary designation made under Section 17.11 with respect to the transferred Nonqualified Stock Options.

6.9           Disqualifying Disposition of Shares Issued on Exercise of an ISO .  If a Participant makes a “disposition” (within the meaning of Code Section 424(c)) of Shares issued upon exercise of an ISO within two (2) years from the Award Date or within one (1) year from the date the Shares are transferred to the Participant, the Participant shall, within ten (10) days of disposition, notify the Committee (or its delegee) in order that any income realized as a result of such disposition can be properly reported by the Company on IRS forms W-2 or 1099.

6.10          Shareholder Rights .  A Participant holding Options shall have no right to vote the underlying Shares, no right to receive dividends on the underlying Shares, and no other rights as a shareholder until after the exercise of the Options and the issuance of the underlying Shares.

ARTICLE VII
Restricted Stock

7.1           Grant of Restricted Stock .  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant shares of Restricted Stock under the Plan to such Key Employees, Non-Employee Directors, Consultants or Advisors and in such amounts as it shall determine.  Participants receiving Restricted Stock Awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services.  If determined by the Committee, custody of Shares of Restricted Stock may be retained by the Company until the termination of the Period of Restriction pertaining thereto.

7.2           Restricted Stock Agreement .  Each Restricted Stock Award shall be evidenced by an Agreement that shall specify the Period of Restriction, the number of Restricted Stock Shares granted, and, if applicable, any Performance Period and Performance Goal(s), and such other provisions as the Committee shall determine.

7.3           Transferability .  Except as provided in this Article VII and subject to the limitation in the next sentence, the Shares of Restricted Stock granted hereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the termination of the applicable Period of Restriction or upon earlier satisfaction of other conditions as specified by the Committee in its sole discretion and set forth in the Agreement.  All rights with respect to the Restricted Stock granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant or his guardian or legal representative.

7.4           Other Restrictions .  The Committee shall impose such other restrictions on any Shares of Restricted Stock granted pursuant to the Plan as it may deem advisable including, without limitation, restrictions under applicable federal or state securities laws, and may legend the certificates representing Restricted Stock to give appropriate notice of such restrictions or otherwise denote the Restricted Stock as restricted, if issued in book-entry or electronic form.
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7.5           Certificate Legend .  In addition to any other legends placed on certificates, or to which Shares of Restricted Stock issued in book-entry or electronic form are made subject, pursuant to Section 7.4, any Award of Restricted Stock issued in book-entry or electronic form shall be subject to the following legend, and any certificates representing shares of Restricted Stock granted pursuant to the Plan shall bear the following legend:

The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer set forth in the Access National Corporation 2017 Equity Compensation Plan, in the rules and administrative procedures adopted pursuant to such Plan, and in a restricted stock agreement dated <<date of grant>>.  A copy of the Plan, such rules and procedures, and such restricted stock agreement may be obtained from the Corporate Secretary of Access National Corporation.

7.6           Removal of Restrictions .  Except as otherwise provided in this Article VII, the Agreement, or applicable law or regulation, Shares of Restricted Stock covered by each Restricted Stock Award made under the Plan shall become freely transferable by the Participant after the last day of the Period of Restriction, and, where applicable, after a determination of the satisfaction or achievement of any applicable Performance Goal(s).  Once the Shares are released from the restrictions, the Participant shall be entitled to have the legend required by Section 7.5 removed from his Stock certificate or similar notation removed from such Shares if issued in book-entry or electronic form.

7.7           Voting Rights .  During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares.

7.8           Dividends and Other Distributions .  During the Period of Restriction, all dividends and other distributions paid with respect to Shares of Restricted Stock (whether in cash, property or Shares) shall be registered in the name of the recipient of the Restricted Stock Award and held by the Company until payable or forfeited pursuant to the terms of the Award.  Such dividends and other distributions shall be subject to the same restrictions on transferability and vesting as the Shares of Restricted Stock with respect to which they were paid and shall, to the extent vested, be paid when and to the extent the underlying Shares of Restricted Stock are vested and freed of restrictions (subject to any delay in payment required by Code Section 409A, if applicable).  The Committee is expressly authorized to provide for dividend accumulation that results in deferred compensation covered by Code Section 409A, as well as dividend accumulation that does not result in deferred compensation covered by Code Section 409A.

ARTICLE VIII
Restricted Stock Units

8.1           Grant of Restricted Stock Units .  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Restricted Stock Units under the Plan (with one Unit representing one Share) to such Key Employees, Non-Employee Directors, Consultants or Advisors and in such amounts as it shall determine.  Participants receiving Restricted Stock Unit Awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services.  The Committee is expressly authorized to grant Restricted Stock Units that are deferred compensation covered by Code Section 409A, as well as Restricted Stock Units that are not deferred compensation covered by Code Section 409A.

8.2           Restricted Stock Unit Agreement .  Each Restricted Stock Unit Award shall be evidenced by an Agreement that shall specify the Period of Restriction, the number of Restricted Stock Units granted, and if applicable, any Performance Period and Performance Goal(s), and such other provisions as the Committee shall determine.

A participant holding Restricted Stock Units shall have no right to deemed dividends or other distributions with respect to such Restricted Stock Units unless the Committee provides otherwise in the Agreement.  The Committee may provide in the Agreement for deemed dividends or distributions with respect to Restricted Stock Units, provided that any such deemed dividends or distributions shall be subject to the same restrictions, vesting and payment as the Restricted Stock Units to which they are attributable and provided further that any such deemed dividends or distributions may be accumulated but not paid unless and until the Period of Restriction applicable to the Restricted Stock Units has ended and any applicable Performance Goals have been met (subject to any delay in payment required by Code Section 409A, if applicable).  A Participant holding Restricted Stock Units shall have no right to vote the Shares represented by such Restricted Stock Units unless and until the Participant actually receives such Shares.
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8.3           Payment after Lapse of Restrictions .  Subject to the provisions of the Agreement, upon the lapse of restrictions with respect to a Restricted Stock Unit, the Participant is entitled to receive, without any payment to the Company (other than required tax withholding), an amount (the “RSU Value”) equal to the product of multiplying (a) the number of Shares equal to the number of Restricted Stock Units with respect to which the restrictions lapse by (b) the Fair Market Value per Share on the date the restrictions lapse.

The Agreement may provide for payment of the RSU Value at the time of the lapse of restrictions or, on an elective or non‑elective basis, for payment of the RSU Value at a later date, adjusted (if so provided in the Agreement) from the date of the lapse of restrictions based on an interest, dividend equivalent, earnings, or other basis (including deemed investment of the RSU Value in Shares) set out in the Agreement (the “adjusted RSU Value”).

Payment of the RSU Value or adjusted RSU Value to the Participant shall be made in Shares, in cash or a combination thereof as determined by the Committee, either at the time of the Award or thereafter, and as provided in the Agreement.  To the extent payment of the RSU Value or adjusted RSU Value to the Participant is made in Shares, such Shares shall be valued at the Fair Market Value on the date the restrictions therefor lapse in the case of an immediate payment or at the Fair Market Value on the date of settlement in the event of an elective or non‑elective delayed payment.  The Committee may specify in a Restricted Stock Unit Agreement that the Shares which are delivered upon payment of the RSU Value or adjusted RSU Value may be Restricted Stock pursuant to Article VII and subject to such further restrictions and vesting as provided in the Restricted Stock Unit Agreement.

8.4           Nontransferability of Restricted Stock Units .  No Restricted Stock Unit granted under the Plan, and no right to receive payment in connection therewith, may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than upon the death of the Participant in accordance with Section 17.11.  Further, all Restricted Stock Units, and rights in connection therewith, granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant or his guardian or legal representative.

ARTICLE IX
Stock Appreciation Rights

9.1           Grant of Stock Appreciation Rights .  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Stock Appreciation Rights under the Plan to such Key Employees, Non-Employee Directors, Consultants or Advisors and in such amounts as it shall determine.

9.2           SAR Agreement .  Each SAR grant shall be evidenced by an Agreement that shall specify its terms and conditions, which terms and conditions shall be determined by the Committee, subject to the limitations set forth in this Section 9.2.  The per Share exercise price of a SAR (the “SAR Exercise Price”) shall not be less than 100% of the Fair Market Value of a Share on the Award Date.  If the exercisability of a SAR is subject solely to time-based conditions, the length of such period of time shall not be less than one year, subject to applicable provisions regarding accelerated vesting.

9.3           Exercisability of SARs .  SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon such SARs, subject to the limitations set forth in Section 9.2.

9.4           Other Conditions Applicable to SARs .  In no event shall the term of any SAR granted under the Plan exceed ten (10) years from the Award Date.  A SAR may be exercised only when the Fair Market Value of a Share exceeds the SAR Exercise Price.  A SAR shall be exercised by delivery to the Committee (or its delegee) of a written notice of exercise in the form (which may be electronic) prescribed by the Committee (or its delegee).

9.5           Payment after Exercise of SARs .  Subject to the provisions of the Agreement, upon the exercise of a SAR, the Participant is entitled to receive, without any payment to the Company therefor (except for required tax withholding), an amount (the “SAR Value”) equal to the product of multiplying (i) the number of Shares with respect to which the SAR is exercised by (ii) an amount equal to the excess of (A) the Fair Market Value per Share on the date of exercise of the SAR over (B) the SAR Exercise Price.

Payment of the SAR Value to the Participant shall be made at the time of exercise in Shares, in cash or in a combination thereof as determined by the Committee.  To the extent payment of the SAR Value to the Participant is made in Shares, such Shares shall be valued at the Fair Market Value on the date of exercise.  The Committee may specify in a SAR Agreement that the Shares which are delivered upon payment of the SAR Value may be Restricted Stock pursuant to Article VII and subject to such further restrictions and vesting as provided in the SAR Agreement.

9.6           Nontransferability of SARs .  No SAR granted under the Plan, and no right to receive payment in connection therewith, may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than upon the death of the Participant in accordance with Section 17.11.  Further, all SARs, and rights in connection therewith, granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant or his guardian or legal representative.
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ARTICLE X
Performance Units

10.1          Grant of Performance Units .  Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Performance Units under the Plan to such Key Employees, Non-Employee Directors, Consultants or Advisors and in such amounts as it shall determine.  Participants receiving such Awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services.  The Committee is expressly authorized to grant Performance Units that are deferred compensation covered by Code Section 409A, as well as Performance Units that are not deferred compensation covered by Code Section 409A.

10.2         Performance Unit Agreement . Each Performance Unit is intended to be a Performance-Based Compensation Award, and the terms and conditions of each such Award, including the Performance Goal(s) and Performance Period, shall be set forth in an Agreement or in a subplan of the Plan that is incorporated by reference into an Agreement. The Committee shall set the Performance Goal(s) in its discretion for each Participant who is granted a Performance Unit.

A Participant holding Performance Units shall have no right to dividend equivalents with respect to such Performance Units unless the Committee provides otherwise in the Agreement.  The Committee may provide in the Agreement for dividend equivalents with respect to Performance Units, provided that any such dividend equivalents shall be subject to the same restrictions, vesting and payment as the Performance Units to which they are attributable and provided further that any such dividend equivalents may be accumulated but not paid unless and until the applicable Performance Goals have been met (subject to any delay in payment required by Code Section 409A, if applicable).  A Participant holding Performance Units shall have no right to vote the Shares represented by such Performance Units unless and until the Participant actually receives such Shares.

10.3         Settlement of Performance Units .  After a Performance Period has ended, the holder of a Performance Unit shall be entitled to receive the value thereof based on the degree to which the Performance Goal(s) and other conditions established by the Committee and set forth in the Agreement (or in a subplan of the Plan that is incorporated by reference into an Agreement) have been satisfied.  Payment of the amount to which a Participant shall be entitled upon the settlement of a Performance Unit shall be made in cash, Stock or a combination thereof as determined by the Committee.

10.4         Nontransferability of Performance Units .  No Performance Unit granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than upon the death of the Participant in accordance with Section 17.11.  All rights with respect to Performance Units granted to a Participant under the Plan shall be exercisable during his lifetime only by such Participant or his guardian or legal representative.

ARTICLE XI
Performance Cash Awards

A Performance Cash Award may be granted upon the attainment during a Performance Period of one or more Performance Goals.  Subject to the terms and conditions of the Plan, Performance Cash Awards may be granted to such Key Employees, Non-Employee Directors, Consultants or Advisors at any time and from time to time as shall be determined by the Committee.  The terms and conditions of any Performance Cash Award, including the Performance Goal(s) and Performance Period, shall be determined by the Committee in its discretion and shall be set forth in an Agreement or in a subplan of the Plan that is incorporated by reference into an Agreement.  The Committee is expressly authorized to grant Performance Cash Awards that are deferred compensation covered by Code Section 409A, as well as Performance Cash Awards that are not deferred compensation covered by Code Section 409A.
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ARTICLE XII
Termination of Employment or Service

12.1         Termination Due to Retirement .  Unless otherwise provided in the Agreement, in the event that a Participant terminates his employment or service with the Company or one of its Subsidiaries due to retirement (as defined in such applicable rules or policy of the Company in effect at the time), then, provided no Cause exists to terminate such Participant’s employment or service, (a) all Options or Stock Appreciation Rights held by the Participant that are not already vested or exercisable shall be automatically vested and exercisable, (b) any remaining Period of Restriction applicable to the unvested portion of each Award of Restricted Stock or Restricted Stock Units held by the Participant that is solely based on a period of time shall automatically lapse, and (c) the unvested portion of each Award held by the Participant that is subject to achievement or satisfaction of any Performance Goal(s) during any Performance Period shall be automatically forfeited to the Company.

12.2         Termination Due to Death or Disability .  Unless otherwise provided in the Agreement, in the event a Participant’s employment or service is terminated because of death or Disability, (a) all Options or Stock Appreciation Rights held by the Participant that are not already vested or exercisable shall be automatically vested and exercisable, (b) any remaining Period of Restriction applicable to the unvested portion of each Award of Restricted Stock or Restricted Stock Units held by the Participant that is solely based on a period of time shall automatically lapse, and (c) the unvested portion of each Award held by the Participant that is subject to achievement or satisfaction of any Performance Goal(s) during any Performance Period shall be automatically forfeited to the Company.

12.3         Involuntary Termination or Termination for Good Reason .  Unless otherwise provided in the Agreement, upon an involuntary separation from employment or service of a Participant (excluding a termination for Cause but including a voluntary resignation for Good Reason) not occurring in connection with a Change of Control, the Committee may, in its sole discretion, waive the automatic forfeiture of any or all of the unvested portion of each Award held by the Participant and provide for such vesting as its deems appropriate.

12.4         Termination for Cause .  Unless otherwise provided in the Agreement, in the event a Participant’s employment or service is terminated for Cause, the unvested portion and the vested portion not yet paid or exercised of each Award held by the Participant shall be automatically forfeited to the Company and no further exercise of an Option or a SAR shall be allowed.

12.5         Termination for Other Reasons .  Unless otherwise provided in the Agreement, upon a voluntary or involuntary separation from employment or service of a Participant where none of Sections 12.1, 12.2, 12.3, or 12.4 applies, the unvested portion of each Award held by the Participant shall be automatically forfeited to the Company, the vested portion not yet exercised of each Option or SAR held by the Participant shall be automatically forfeited to the Company and no further exercise of an Option or a SAR shall be allowed.

Article XIII
Change in Capital Structure

13.1          Effect of Change in Capital Structure .  In the event of a stock dividend, stock split or combination of shares, spin-off, recapitalization or merger in which the Company is the surviving corporation, or other change in the Company’s capital stock (including, but not limited to, the creation or issuance to shareholders generally of rights, options or warrants for the purchase of common stock or preferred stock of the Company), the number and kind of Shares or securities of the Company to be issued under the Plan (under outstanding Awards and Awards to be granted in the future), the Option Price of Options and/or SAR Exercise Price of SARs, the annual limits on and the aggregate number and kind of Shares for which Awards thereafter may be made, and other relevant provisions shall be proportionately, equitably and appropriately adjusted by the Committee, whose determination shall be binding on all persons.  If the adjustment would produce fractional shares with respect to any Award, the Committee may adjust appropriately the number of shares covered by the Award so as to eliminate the fractional shares.  Where an Award being adjusted is an ISO or is subject to or falls under an exemption from Code Section 409A, the adjustment shall also be effected so as to comply with Code Section 424(a) and not to constitute a modification within the meaning of Code Section 424(h) or Code Section 409A, as applicable.
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13.2         Authority .  Notwithstanding any provision of the Plan to the contrary, the Committee may take the foregoing actions without the consent of any Participant, and the Committee’s determination shall be conclusive and binding on all persons for all purposes.

13.3         Manner of Adjustment .  Adjustments made by the Committee pursuant to this Article XIII to outstanding Awards shall be made as appropriate to maintain favorable tax and/or accounting treatment.

ARTICLE XIV
Change of Control

14.1         Effect of Change of Control .  In the event of a Change of Control of the Company, the Committee, as constituted before such Change of Control, in its sole discretion and without the consent of the Participant, may, as to any outstanding Award, either at the time the Award is made or any time thereafter, take any one or more of the following actions: (i) provide for the purchase, settlement or cancellation of any such Award by the Company, for an amount of cash equal to the amount which could have been obtained upon the exercise of such Award or realization of such Participant’s rights had such Award been currently exercisable or payable; (ii) make such adjustment to any such Award then outstanding as the Committee deems appropriate to reflect such Change of Control and to retain the economic value of the Award; or (iii) cause any such Award then outstanding to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation in such Change of Control.  Where an Award is subject to or falls under an exemption from Code Section 409A, this Article XIV will be applied in a manner so as to comply with Code Section 409A or to maintain the exemption from Code Section 409A, as applicable.

14.2         Acceleration Principles in the Event of a Change of Control .  The Committee may provide in each applicable Award Agreement or any subplan governing an Award for acceleration of the vesting, delivery and exercisability of, and the lapse of vesting restrictions with respect to, an Award, and for the replacement of a stock-settled Award with a cash-settled Award, in connection with a Change of Control.

(a)                Awards Subject to Time-Based Vesting .  In the event of a Change of Control, any Award for which exercise or vesting is subject solely to time-based conditions shall become fully vested without regard to any other terms of the Award but only if either (1) the successor company does not assume, convert, continue, or otherwise replace the Award on proportionate and equitable terms or (2) the successor company does assume, convert, continue, or otherwise replace the Award on proportionate and equitable terms and the Participant is terminated without cause on or within twenty-four (24) months following the Change of Control.
(b)                Awards Subject to Performance-Based Vesting .  In the event of a Change of Control prior to the end of any Performance Period, the unvested portion of any Award held by a Participant that is subject to achievement or satisfaction of any Performance Goal(s) during such Performance Period shall be forfeited to the Company .
ARTICLE XV
Amendment, Modification, and Substitution of Awards

15.1         Amendment, Modification and Substitution .  Subject to the terms and provisions and within the limitations of the Plan, the Committee may amend or modify the terms of any outstanding Award or accelerate the vesting thereof.  In addition, the Committee may cancel or accept the surrender of outstanding Awards (to the extent not yet exercised) granted under the Plan or outstanding awards granted under any other equity compensation plan of the Company and authorize the granting of new Awards pursuant to the Plan in substitution therefor so long as the new or substituted awards do not specify a lower exercise price than the cancelled or surrendered Awards or awards, and otherwise the new Awards may be of a different type than the cancelled or surrendered Awards or awards, may specify a longer term than the cancelled or surrendered Awards or awards, may provide for more rapid vesting and exercisability than the cancelled or surrendered Awards or awards, and may contain any other provisions that are authorized by the Plan.  The Committee shall continue to have the authority to amend or modify the terms of any outstanding Award after October 25, 2027, provided that no amendment or modification will extend the original term of the Award beyond that set forth in the applicable Award Agreement.  Notwithstanding the foregoing, however, but subject to Article XIV, no amendment or modification of an Award, shall, without the consent of the Participant, adversely affect the rights or obligations of the Participant.  Notwithstanding any provision of the Plan to the contrary, the Committee shall not amend, modify, or substitute an Award in a manner that violates Code Section 409A, or causes an Award that previously qualified for an exemption from Section 409A to become subject to Code Section 409A, and the Committee shall not amend, modify, or substitute an Award that satisfies the requirements of Rule 16b-3 in a manner that causes any exemption pursuant to Rule 16b-3 to become no longer available.
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15.2         Option and SAR Repricing .  Notwithstanding any provision of the Plan to the contrary, neither the Committee nor the Board shall have the right or authority, without obtaining shareholder approval, to amend or modify the Option Price of any outstanding Option or the SAR Exercise Price of any outstanding SAR, or to cancel an outstanding Option or SAR, at a time when the Option Price or SAR Exercise Price, as applicable, is greater than the Fair Market Value of a Share in exchange for cash, another Award, or other securities, except in connection with a corporate transaction involving the Company in accordance with Article XIII or Article XIV.

ARTICLE XVI
Termination, Amendment and Modification of the Plan

16.1         Termination, Amendment and Modification .  At any time and from time to time, the Board may terminate, amend, or modify the Plan.  Such amendment or modification may be without shareholder approval except to the extent that such approval is required by the Code, pursuant to the rules under Section 16 of the Exchange Act, by any national securities exchange or system on which the Stock is then listed or reported, by any regulatory body having jurisdiction with respect thereto or under any other applicable laws, rules or regulations.

16.2         Awards Previously Granted .  No termination, amendment or modification of the Plan other than pursuant to Article XIII or Article XIV shall in any manner adversely affect any Award theretofore granted under the Plan, without the written consent of the Participant.

ARTICLE XVII
General

17.1          Applicable Withholding Taxes .  Each Participant shall agree, as a condition of receiving an Award, to pay to the Company, or make arrangements satisfactory to the Company regarding the payment of,   all applicable federal, state and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any grant, exercise, or payment made under or as a result of the Plan.  Until the applicable withholding taxes have been paid or arrangements satisfactory to the Company have been made, no stock certificates (or, in the case of Restricted Stock, no stock certificates free of a restrictive legend) shall be issued to the Participant and no issuance in book-entry or electronic form (or, in the case of Restricted Stock, no issuance in book-entry or electronic form free of a restrictive legend or notation) shall be made for the Participant.  As an alternative to making a cash payment to the Company to satisfy applicable withholding tax obligations, Participants may elect or the Committee may require Participants to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares of Stock having a Fair Market Value equal to the amount required to be withheld, or by delivering to the Company Shares of Stock having a Fair Market Value equal to the amount required to be withheld.  The value of any Shares so withheld or delivered shall be based on the Fair Market Value of the Shares on the date that the amount of tax to be withheld is to be determined.  All elections by Participants shall be irrevocable and be made in writing and in such manner as determined by the Committee (or its delegee) in advance of the day that the transaction becomes taxable.

17.2         Requirements of Law .  The granting of Awards and the issuance of Shares of Stock under this Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or self regulatory organizations as may be required.
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17.3         Effect of Plan .  The establishment of the Plan shall not confer upon any Key Employee, Non-Employee Director, Consultant or Advisor any legal or equitable right against the Company, a Subsidiary or the Committee, except as expressly provided in the Plan.  The Plan does not constitute an inducement or consideration for the employment or service of any Key Employee, Non-Employee Director, Consultant or Advisor, nor is it a contract between the Company or any of its Subsidiaries and any Key Employee, Non-Employee Director, Consultant or Advisor.  Participation in the Plan shall not give any Key Employee, Non-Employee Director, Consultant or Advisor any right to be engaged or retained in the service of the Company or any of its Subsidiaries.  No Key Employee, Non-Employee Director, Consultant or Advisor shall have rights as a shareholder of the Company prior to the date Shares are issued to him pursuant to the Plan.

17.4         Creditors .  The interests of any Participant under the Plan or any Agreement are not subject to the claims of creditors and may not, in any way, be assigned, alienated or encumbered.

17.5         Successors .  All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company.

17.6         Securities Law Restrictions .   The Committee may require each Participant purchasing or acquiring Shares pursuant to an Option or other Award to represent to and agree with the Company in writing that such Participant is acquiring the Shares for investment and not with a view to the distribution thereof.  All Shares delivered under the Plan shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any national securities exchange or system on which the Stock is then listed or reported, and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions or otherwise denote the Shares as being subject to such restrictions, if issued in book-entry or electronic form.  No Shares shall be issued hereunder unless the Company shall have determined that such issuance is in compliance with, or pursuant to an exemption from, all applicable federal and state securities laws.

17.7         Governing Law .  The Plan, and all Agreements hereunder, shall be construed and administered in accordance with and governed by the laws of the Commonwealth of Virginia and the intention of the Company is that ISOs granted under the Plan qualify as such under Code Section 422.  The Plan and Awards are subject to all present and future applicable provisions of the Code.  If any provision of the Plan or an Award conflicts with any such Code provision, the Committee shall cause the Plan to be amended, and shall modify the Award, so as to comply, or if for any reason amendments cannot be made, that provision of the Plan or the Award shall be void and of no effect.

17.8         Severability .  In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

17.9          Unfunded Status of Plan .  The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation.  With respect to any payments as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Company.

17.10       Share Certificates and Book Entry .  To the extent that the Plan provides for issuance of stock certificates to represent shares of Stock, the issuance may be effected on a non-certificated basis to the extent permitted by applicable law and the applicable rules of any national securities exchange or system on which the Stock is then listed or reported.  Notwithstanding any provision of the Plan to the contrary, in its discretion the Committee may satisfy any obligation to deliver Shares represented by stock certificates by delivering Shares in book-entry or electronic form.  If the Company issues any Shares in book-entry or electronic form that are subject to terms, conditions and restrictions on transfer, a notation shall be made in the records of the transfer agent with respect to any such Shares describing all applicable terms, conditions and restrictions on transfer.  In the case of Restricted Stock granted under the Plan, such notation shall be substantially in the form of the legend contained in Section 7.5.
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17.11       Beneficiary Designations .  A Participant may designate a Beneficiary to receive any Options or SARs that may be exercised after his death or to receive any other Award that may be paid after his death, as provided for in the Agreement.  Such designation and any change or revocation of such designation shall be made in writing in the form and manner prescribed by the Committee (or its delegee). In the event that the designated Beneficiary dies prior to the Participant, or in the event that no Beneficiary has been designated, any Awards that may be exercised or paid following the Participant’s death shall be transferred or paid in accordance with the Participant’s will or the laws of descent and distribution.  If the Participant and his Beneficiary shall die in circumstances that cause the Committee (or its delegee), in its discretion, to be uncertain which shall have been the first to die, the Participant shall be deemed to have survived the Beneficiary.

17.12       Electronic Transmissions and Records .  Subject to limitations under applicable law, the Committee (and its delegee) is authorized in its discretion to issue Awards and/or to deliver and accept notices, elections, consents, designations and/or other forms or communications to or from Participants by electronic or similar means, including, without limitation, transmissions through e‑mail or specialized software, recorded messages on electronic telephone systems, and other permissible methods, on such basis and for such purposes as it determines from time to time, and all such communications will be deemed to be “written” for purposes of the Plan.

17.13       Clawback .  All Awards granted under the Plan (whether vested or unvested) shall be subject to such recovery or clawback as may be required pursuant to any applicable federal or other law or regulation, any applicable listing standard of any national securities exchange or system on which the Stock is then listed or reported or the terms of the Company’s recoupment, clawback or similar policy as such may be in effect from time to time, which could in certain circumstances require repayment or forfeiture of Awards or any Shares or other cash or property received with respect to the Awards (including any value received from a disposition of the Shares acquired upon payment of the Awards).  In addition, and to the extent permitted by law, the Committee may provide in the Agreement for a Participant to repay to the Company the cash value of any Shares acquired in connection with the payment, vesting or exercise of an Award under the Plan if such payment, vesting or exercise occurred within 6 months prior to the termination of the Participant’s employment for any reason other than death, Disability or retirement (as defined in such applicable rules or policy of the Company in effect at the time).

17.14       Banking Regulatory Provision .  All Awards shall be subject to any condition, limitation or prohibition under any financial institution regulatory policy or rule to which the Company or any subsidiary thereof is subject.

ARTICLE XVIII
Omnibus Code Section 409A Provision

18.1         Intent of Awards .  It is intended that Awards that are granted under the Plan shall be exempt from treatment as “deferred compensation” subject to Code Section 409A unless otherwise specified by the Committee.  Towards that end, all Awards under the Plan are intended to contain such terms as will qualify the Awards for an exemption from Code Section 409A unless otherwise specified by the Committee.  The terms of the Plan and all Awards granted hereunder shall be construed consistent with the foregoing intent.  Notwithstanding any provision of the Plan to the contrary, the Committee may amend any outstanding Award without the Participant’s consent if, as determined by the Committee, in its sole discretion, such amendment is required either to (a) confirm exemption under Code Section 409A, (b) comply with Code Section 409A or (c) prevent the Participant from being subject to any tax or penalty under Code Section 409A.  Notwithstanding the foregoing, however, neither the Company nor any of its Affiliates nor the Committee shall be liable to the Participant or any other person or entity if an Award that is subject to Code Section 409A or the Participant or any other person or entity is otherwise subject to any additional tax, interest or penalty under Code Section 409A.  Each Participant is solely responsible for the payment of any tax liability (including any taxes, penalties and interest that may arise under Code Section 409A) that may result from an Award.

18.2         409A Awards .  The Committee may grant an Award under the Plan that is subject to Code Section 409A and is intended to comply with Code Section 409A (a “409A Award”).  The terms of such 409A Award, including any authority by the Company and the rights of the Participant with respect to such 409A Award, will be subject to such rules and limitations and shall be interpreted in a manner as to comply with Code Section 409A.
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18.3         Time of Payment .  The time and form of payment of a 409A Award, including application of a six-month delay for specified employees in certain circumstances, shall be as set forth in the applicable Agreement.  A 409A Award may only be paid in connection with a separation from service, a fixed time, death, Disability, a Change of Control or an unforeseeable emergency within the meaning of Code Section 409A.  The time of distribution of the 409A Award must be fixed by reference to the specified payment event.  Notwithstanding the foregoing, if the time of distribution of the 409A Award is not set forth in the applicable Agreement, then the time of distribution of the 409A Award shall be within two and one-half (2½) months of the end of the later of the calendar year or the fiscal year of the Company or Affiliate that employs the Participant in which the 409A Award becomes vested and no longer subject to a substantial risk of forfeiture within the meaning of Code Section 409A.  For purposes of Code Section 409A, each installment payment will be treated as the entitlement to a single payment. 

18.4          Acceleration or Deferral .  The Company shall have no authority to accelerate or delay or change the form of any distributions relating to 409A Awards except as permitted under Code Section 409A.

18.5         Distribution Requirements .  Any distribution of a 409A Award triggered by a Participant’s termination of employment shall be made only at the time that the Participant has had a separation from service within the meaning of Code Section 409A.  A separation from service shall occur where it is reasonably anticipated that no further services will be performed after that date or that the level of bona fide services the Participant will perform after that date (whether as an employee or independent contractor of the Company or an Affiliate) will permanently decrease to less than twenty percent (20%) of the average level of bona fide services performed over the immediately preceding thirty-six (36) month period.  Continued services solely as a director of the Company or an Affiliate shall not prevent a separation from service from occurring by an employee as permitted by Code Section 409A.

18.6          Scope and Application of this Provision .  For purposes of this Article XVIII, references to a term or event (including any authority or right of the Company or a Participant) being “permitted” under Code Section 409A means that the term or event will not cause the Participant to be deemed to be in constructive receipt of compensation relating to the 409A Award prior to the distribution of cash, Shares or other property or to be liable for payment of interest or a tax penalty under Code Section 409A. 

Approved by the Board of Directors on August 24, 2017 and by the shareholders on October 26, 2017.
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Exhibit 99.1

Access National Announces Third Quarter 2017 Earnings

RESTON, Va.--(BUSINESS WIRE)--October 25, 2017-- Access National Corporation (NASDAQ: ANCX) (the “Corporation” or “Access”), parent company for Access National Bank (the “Bank”) and Middleburg Investment Group, reported third quarter 2017 net income of $7.0 million, or $0.34 per diluted share. Excluding merger related one-time charges and impairment charges, net income was $8.62 million or $0.42 per diluted share. This represents the Corporation’s 69 th consecutive quarterly profit over its 71 quarter history. Consistent with management’s stated objective of a 40% to 50% dividend payout ratio against core earnings, the Board of Directors declared a dividend of $0.15 per share for common shareholders of record as of November 9, 2017 and payable on November 24, 2017.

Highlights

The transformative combination of Access National with Middleburg Financial continues on a successful progression. “While the recent quarter contained many integration related distractions, we are pleased to report meaningful organic growth in loans and core deposits that generate long-term value. The positive migration of the acquired customer base is best reflected in the deposit growth and composition. We will continue to sharpen our retail focus on the consumer market that values a relationship based approach to private banking,” said Michael Clarke, President and Chief Executive Officer of Access. He continued, “While realization of expected cost savings is choppy, we remain confident in fulfilling our objectives for 2017 and 2018 such that we meet or exceed EPS accretion estimates in 2018 and beyond.”

Third quarter 2017 pre-tax earnings were $9.4 million, up $3.5 million from second quarter 2017, and included pre-tax merger related costs of $993 thousand. The commercial banking segment’s net interest income grew $294 thousand when compared to the second quarter of 2017 while other revenues grew by $274 thousand due mainly to an increase in miscellaneous loan fees. An increase in the commercial banking segment’s other expense of $802 thousand when compared to the second quarter of 2017 was due mainly to accelerated amortization on abandoned leasehold improvements related to branch restructuring, and was complimented by a decrease in salaries and employee benefits of $906 thousand when compared to the second quarter of 2017.

The earnings and balance sheet impact of departed wealth services personnel and loss of select underpriced accounts was reflected in the current quarter’s financial results. When comparing the third quarter of 2017 to the second quarter of 2017, the wealth services segment saw a $206 thousand decrease in revenue as well as a $359 thousand decrease in salaries and employee benefits which was offset by an increase in operating expenses of $1.4 million due to a $1.5 million impairment of goodwill connected with the unprofitable operations of the legacy Access segment. While management believes the full impact from these changes is reflected in this reporting period, continued analysis of goodwill impairment will be made to determine if the complete write-off remains warranted and will make any recapture adjustments in the fourth quarter. According to Access CEO Michael Clarke, “The loss of subject wealth services personnel and related accounts enables a sharper focus of the organization on the go-forward strategy, closely aligning the marketing and delivery of wealth and banking services to a common target market. The leadership of Middleburg Investment Group and the expanded capabilities resulting from the merger are enhancing the client value proposition in a way that management expects will produce consistent and growing fee income in future periods.”

The net interest margin on a fully tax equivalent (non-GAAP) basis decreased to 3.86% from 3.97% when comparing third quarter to second quarter 2017. Third quarter net interest margin on a fully tax equivalent (non-GAAP) basis exclusive of the $1.2 million credit mark accretion for the acquired loan portfolio and the $19 thousand in liability discount amortization was 3.68% for the three months ended September 30, 2017.

Total assets were $2.9 billion at September 30, 2017, up from $2.8 billion at June 30, 2017 due mainly to growth in the interest-bearing balances of $70.3 million and loans held for investment portfolio of $40.3 million. Organic growth in loans held for investment was $42.7 million on a linked quarter basis due mainly to growth in commercial real estate.

Total deposits at September 30, 2017 were $2.3 billion, an increase of $99.0 million when compared to June 30, 2017. At September 30, 2017, non-interest bearing deposits, which represent 31.1% of the deposit portfolio, were $710.7 million, an increase of $50.2 million from the linked quarter. While non-interest bearing demand deposits remain the largest and most attractive source of funding for the Corporation, the combination of legacy Middleburg’s significant low cost interest-bearing demand deposits and legacy Access’ non-interest bearing demand deposits accounted for $1.2 billion or 52.6% of total deposits at September 30, 2017. Interest-bearing deposits totaled $1.6 billion at September 30, 2017, an increase of $48.8 million from the prior quarter. Brokered deposits as a percentage of the deposit portfolio decreased quarter over quarter, from 4.6% of the portfolio at June 30, 2017 to 3.1% at September 30, 2017. The go-forward strategy places a high priority on the maintenance and expansion of core deposits, particularly high value demand deposit relationships.

Non-performing assets (“NPAs”) decreased to $7.8 million at September 30, 2017 from $9.0 million at June 30, 2017, representing 0.27% and 0.32% of total assets, respectively. Included in the NPAs total is $2.0 million in other real estate owned. The allowance for loan loss was $15.7 million and $14.7 million at September 30, 2017 and June 30, 2017, respectively, and represented 0.80% and 0.76% of total loans held for investment at September 30, 2017 and June 30, 2017, respectively. The remaining credit and fair value marks on the loans acquired in the merger totaled $13.1 million at September 30, 2017.

Tangible book value 2 per common share increased from $11.32 at June 30, 2017 to $11.64 at September 30, 2017. The tangible common equity ratio for Access National Corporation and its subsidiary bank was 8.85% at September 30, 2017, within the Corporation’s target range of 8.00% to 10.50%.

Access National Corporation is the parent company of Access National Bank and Middleburg Investment Group serving Northern and Central Virginia. Additional information is available on our website at www.AccessNationalBank.com . Shares of Access National Corporation are traded on the NASDAQ Global Market under the symbol "ANCX".

Forward-Looking Statements

The information presented herein contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding expectations or predictions of future financial or business performance or conditions. Forward-looking statements may be identified by words such as "may," "could," "will," "expect," "believe," "anticipate," "forecast," "intend," "plan," "prospects," "estimate," "potential," or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. Forward-looking statements in this report may include, but are not limited to, statements about projected impacts of and financial results generated by the merger of Access and Middleburg Financial Corporation (“Middleburg”). Forward-looking statements speak only as of the date they are made and Access assumes no duty to update forward-looking statements.

In addition to factors previously disclosed in Access's reports filed with the SEC and those identified elsewhere in this release, the following factors, among others, could cause actual results to differ materially from the results expressed in or implied by forward-looking statements and historical performance: changes in asset quality and credit risk; changes in interest rates and capital markets; the introduction, timing and success of business initiatives; competitive conditions; and the inability to recognize cost savings or revenues or to implement integration plans associated with the merger of Access and Middleburg.

______________

1   Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.
2 Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.
 
 
 
     
Access National Corporation
Consolidated Balance Sheet
             
September 30, December 31, September 30,
2017 2016 2016
(In Thousands Except for Share and Per Share Data)   (Unaudited)   (Audited)   (Unaudited)
 
ASSETS
 
Cash and due from banks $ 12,774 $ 9,186 $ 14,109
 
Interest-bearing balances and federal funds sold 117,159 81,873 67,801
 
Investment securities:
Available-for-sale, at fair value 395,040 194,090 190,265
Held-to-maturity, at amortized cost (fair value of $16,416, $9,293 and $9,475)   15,778     9,200     9,214
Total investment securities 410,818 203,290 199,479
 
Restricted Stock, at amortized cost 14,447 10,092 6,309
 
Loans held for sale - at fair value 26,234 35,676 70,998
 

Loans held for investment net of allowance for loan losses of $15,692, $16,008 and $14,696, respectively

1,953,968 1,033,690 951,849
 
Premises, equipment and land, net 26,400 7,084 6,875
 
Goodwill and intangible assets 182,156 1,833 1,845
 
Other assets 129,113 47,984 43,573
     
Total assets $ 2,873,069   $ 1,430,708   $ 1,362,838
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
LIABILITIES
Noninterest-bearing deposits $ 710,691 $ 362,036 $ 409,558
 
Interest-bearing demand deposits 490,759 126,189 134,858
 
Savings and interest-bearing deposits 658,799 314,396 302,007
 
Time deposits   425,963     251,706     268,630
 
Total deposits 2,286,212 1,054,327 1,115,053
 
Short-term borrowings 79,527 186,009 41,336
 
Long-term borrowings 60,000 60,000 75,000
 
Trust preferred debentures 3,863 - -
 
Other liabilities and accrued expenses 23,294 9,842 10,118
     
Total Liabilities   2,452,896     1,310,178     1,241,507
 
SHAREHOLDERS' EQUITY

Common stock $0.835 par value; 60,000,000 authorized; issued and outstanding, 20,449,738, 10,636,242 and 10,610,279, respectively

17,076 8,881 8,860
 
Additional paid in capital 305,682 21,779 21,159
 
Retained earnings 98,607 91,439 90,026
 
Accumulated other comprehensive income (loss), net (1,192 ) (1,569 ) 1,286
     
Total shareholders' equity   420,173     120,530     121,331
     
Total liabilities and shareholders' equity $ 2,873,069   $ 1,430,708   $ 1,362,838
 
 
 
 
Access National Corporation
Consolidated Statement of Operations
 
    Three Months Ended     Nine Months Ended
September 30, 2017     September 30, 2016 September 30, 2017     September 30, 2016
(In Thousands Except for Share and Per Share Data)     (unaudited)     (unaudited)
 
INTEREST INCOME
Interest and fees on loans $ 24,306 $ 11,647 $ 60,251 $ 33,877
 
Interest on federal funds sold and bank balances 394 98 746 264
 
Interest and dividends on securities   2,992   1,033   7,388   2,954
Total interest income 27,692 12,778 68,385 37,095
 
INTEREST EXPENSE
Interest on deposits 2,639 1,349 6,560 3,774
 
Interest on other borrowings   459   286   1,366   867
Total interest expense   3,098   1,635   7,926   4,641
Net interest income 24,594 11,143 60,459 32,454
 
Provision for loan losses   900   750   3,200   870
Net interest income after provision for loan losses 23,694 10,393 57,259 31,584
 
NONINTEREST INCOME
Service charges and fees 560 249 1,509 748
 
Gain on sale of loans 5,594 8,316 14,985 19,419
 
Other Income   2,369   120   6,917   4,510
Total noninterest income 8,523 8,685 23,411 24,677
 
NONINTEREST EXPENSE
Salaries and benefits 11,100 8,208 31,800 24,283
 
Occupancy and equipment 3,019 768 5,820 2,278
 
Other operating expense   8,674   3,193   23,594   9,040
Total noninterest expense   22,793   12,169   61,214   35,601
Income before income tax 9,424 6,909 19,456 20,660
 
Income tax expense   2,422   2,484   6,001   7,262
NET INCOME   7,002   4,425   13,455   13,398
 
Earnings per common share:
Basic $ 0.34 $ 0.42 $ 0.77 $ 1.27
Diluted $ 0.34 $ 0.41 $ 0.77 $ 1.26
 
Average outstanding shares:
Basic 20,409,696 10,595,599 17,156,521 10,575,088
Diluted 20,508,875 10,689,167 17,273,367 10,644,897
 
 
 
 
Performance and Capital Ratios
 
  Three Months   Three Months   Three Months   Nine Months   Nine Months   Twelve Months
Ended Ended Ended Ended Ended Ended
September 30, June 30, March 31, September 30, September 30, December 31,
(Dollars In Thousands)   2017   2017   2017   2017   2016   2016
 
Return on average assets (annualized) 0.96 % 0.55 % 0.74 % 0.75 % 1.41 % 1.27 %
Return on average equity (annualized) 6.69 % 3.73 % 8.57 % 4.72 % 15.56 % 14.11 %
Return on average tangible equity (annualized) (1) 11.89 % 6.73 % 8.70 % 6.96 % 15.81 % 14.33 %
Net interest margin - fully tax equivalent basis (1) 3.86 % 3.97 % 3.52 % 3.91 % 3.55 % 3.55 %
Net interest margin 3.76 % 3.91 % 3.46 % 3.84 % 3.54 % 3.52 %
Efficiency ratio - Bank only 57.56 % 59.23 % 53.26 % 57.41 % 50.48 % 49.59 %
Total average equity to earning assets 16.00 % 16.68 % 8.99 % 18.10 % 9.38 % 9.36 %
Tangible common equity ratio (1) 8.85 % 8.97 % 8.65 % 8.85 % 8.78 % 8.31 %
 
Averages
Assets $ 2,922,105 $ 2,789,088 $ 1,401,652 $ 2,396,103 $ 1,267,482 $ 1,288,582
Loans held for investment 2,002,842 1,896,824 1,052,167 1,614,893 922,821 939,837
Loans held for sale 28,734 28,254 24,461 27,165 47,935 47,060
Interest-bearing deposits & federal funds sold 136,222 121,572 64,628 103,360 69,860 67,457
Investment securities 437,628 422,792 209,533 343,360 184,479 189,585
Earning assets 2,617,443 2,471,036 1,353,360 2,101,947 1,223,798 1,242,923
Interest-bearing deposits 1,566,286 1,523,997 761,075 1,257,364 648,844 662,271
Total deposits 2,277,759 2,163,567 1,096,309 1,810,139 998,183 1,021,624
Repurchase agreements & federal funds purchased 58,149 53,949 28,369 46,209 15,433 16,270
FHLB short term borrowings 59,697 57,824 86,200 67,774 58,467 56,522
FHLB long-term borrowings 82,790 79,892 59,556 73,040 71,332 68,525
Trust Preferred debt 3,029 3,824 - 2,289 - -
Equity $ 418,678 $ 412,146 $ 121,724 $ 380,378 $ 114,838 $ 116,296
Tangible equity (1) $ 235,526 $ 228,480 $ 119,896 $ 257,919 $ 112,973 $ 114,437
 
Allowance for loan losses $ 15,692 $ 14,671 $ 13,727 $ 15,692 $ 14,696 $ 16,008
Allowance for loan losses/loans held for investment 0.80 % 0.76 % 1.28 % 0.80 % 1.52 % 1.53 %
Remaining fair value marks on purchased performing loans $ 12,444 $ 13,584 NA $ 12,444 NA NA
Purchased credit impaired loans $ 5,184 $ 7,237 NA $ 5,184 NA NA
Remaining fair value marks on purchased credit impaired loans $ 694 $ 2,296 NA $ 694 NA NA
Total NPA $ 7,817 $ 8,954 $ 5,244 $ 7,817 $ 5,845 $ 6,922
NPA to total assets 0.27 % 0.32 % 0.37 % 0.27 % 0.43 % 0.48 %
 
Mortgage loan originations and brokered loans $ 107,706 $ 116,958 $ 94,500 $ 319,164 $ 429,418 $ 544,866
Gain on sale of mortgage loans net hedging activity $ 5,371 $ 10,792 $ 3,416 $ 14,208 $ 16,936 $ 23,835
Allowance for losses on mortgage loans sold $ 987 $ 1,029 $ 1,029 $ 987 $ 1,029 $ 1,029
 
Wealth Services segment - assets under management $ 1,935,780 $ 1,927,629 $ 676,865 $ 1,935,780 $ 655,000 $ 667,300
 
Book value per common share $ 20.55 $ 20.36 $ 11.40 $ 20.55 $ 11.44 $ 11.33
 
Tangible book value per common share (1) $ 11.64 $ 11.32 $ 11.23 $ 11.64 $ 11.26 $ 11.16
                         
 
(1) Non-GAAP financial information. See "Reconciliation of Non-GAAP Financial Measures" at end of release.
 
 
 
                 
Composition of Loan Portfolio
                                         
    September 30, 2017   June 30, 2017   March 31, 2017   December 31, 2016   September 30, 2016
(Dollars In Thousands)   Amount   Percentage of Total   Amount   Percentage of Total   Amount   Percentage of Total   Amount   Percentage of Total   Amount   Percentage of Total
 
Commercial real estate - owner occupied $ 443,128 22.50 % $ 401,853 20.84 % $ 262,431 24.46 % $ 250,440 23.87 % $ 238,224 24.65 %
Commercial real estate - non-owner occupied 435,181 22.09 377,037 19.55 205,452 19.15 184,688 17.59 174,342 18.04
Residential real estate 512,621 26.03 525,649 27.26 212,007 19.76 204,413 19.47 202,605 20.96
Commercial 449,450 22.82 476,055 24.69 294,451 27.45 311,486 29.67 264,794 27.40
Real estate construction 104,193 5.29 124,186 6.44 91,614 8.54 91,822 8.75 79,621 8.24
Consumer   25,087   1.27     23,565   1.22     6,836   0.64     6,849   0.65     6,959   0.71  
Total loans $ 1,969,660 100.00 % $ 1,928,345 100.00 % $ 1,072,791 100.00 % $ 1,049,698 100.00 % $ 966,545 100.00 %
Less allowance for loan losses   15,692   14,671   13,727   16,008   14,696
$ 1,953,968 $ 1,913,674 $ 1,059,064 $ 1,033,690 $ 951,849
 
                 
Composition of Deposits
                                         
    September 30, 2017   June 30, 2017   March 31, 2017   December 31, 2016   September 30, 2016
(Dollars In Thousands)   Amount   Percentage of Total   Amount   Percentage of Total   Amount   Percentage of Total   Amount   Percentage of Total   Amount   Percentage of Total
 
Demand deposits $ 710,691 31.09 % $ 660,481 30.20 % $ 376,674 32.56 % $ 362,036 34.34 % $ 409,558 36.73 %
Interest-bearing demand deposits 480,620 21.02 454,675 20.79 141,981 12.27 126,189 11.97 124,856 11.20
Savings and money market 616,596 26.97 562,581 25.72 284,182 24.56 270,310 25.64 265,308 23.79
CDARS time deposits 37,836 1.65 39,746 1.82 41,369 3.58 34,290 3.25 36,948 3.31
CDARS/ICS non-maturity deposits 47,219 2.07 44,009 2.01 42,960 3.71 40,925 3.88 46,156 4.14
Brokered deposits 71,090 3.11 101,419 4.64 110,254 9.53 57,389 5.44 68,483 6.14
Time deposits   322,160   14.09       324,295   14.82       159,570   13.79       163,188   15.48       163,744   14.69  
Total Deposits $ 2,286,212   100.00 %   $ 2,187,206   100.00 %   $ 1,156,990   100.00 %   $ 1,054,327   100.00 %   $ 1,115,053   100.00 %
 
 
 
 
Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities
Three Months Ended
                         

 

September 30, 2017

 

September 30, 2016

 

Average

  Income /   Yield /   Average   Income /  

Yield /

(Dollars In Thousands)  

Balance

  Expense   Rate   Balance   Expense  

Rate

 
Assets:
Interest-earning assets:
Securities $ 449,645 $ 2,992 2.66 % $ 191,794 $ 1,033 2.15 %
Loans held for sale 28,734 299 4.16 % 63,667 574 3.61 %
Loans (1) 2,002,842 24,007 4.79 % 947,622 11,073 4.67 %
Interest-bearing balances and federal funds sold   136,222       394   1.16 %   72,680       98   0.54 %
Total interest-earning assets 2,617,443 27,692 4.23 % 1,275,763 12,778 4.01 %
Noninterest-earning assets:
Cash and due from banks 36,260 13,251
Premises, land and equipment 30,382 6,819
Other assets 253,424 42,642
Less: allowance for loan losses   (15,404 )   (13,964 )
Total noninterest-earning assets   304,662     48,748  
Total Assets $ 2,922,105   $ 1,324,511  
 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Interest-bearing demand deposits $ 483,370 $ 412 0.34 % $ 137,387 $ 127 0.37 %
Money market deposit accounts 435,241 821 0.75 % 224,548 257 0.46 %
Savings accounts 199,109 90 0.18 % 37,892 47 0.50 %
Time deposits   448,566       1,316   1.17 %   277,014       918   1.33 %
Total interest-bearing deposits 1,566,286 2,639 0.67 % 676,841 1,349 0.80 %
Borrowings:
FHLB short-term borrowings and subordinated debt 62,726 242 1.54 % 38,043 69 0.73 %
Securities sold under agreements to repurchase and federal funds purchased 58,149 16 0.11 % 14,881 4 0.11 %
FHLB long-term borrowings   82,790       201   0.97 %   75,000       213   1.14 %
Total borrowings   203,665       459   0.90 %   127,924       286   0.89 %
Total interest-bearing deposits and borrowings 1,769,951 3,098 0.70 % 804,765 1,635 0.81 %
Noninterest-bearing liabilities:
Demand deposits 711,474 390,997
Other liabilities   22,002     10,095  
Total liabilities 2,503,427 1,205,857
Shareholders' Equity   418,678     118,654  
Total Liabilities and Shareholders' Equity $ 2,922,105   $ 1,324,511  
 
Interest Spread (2) 3.53 % 3.19 %
 
Net Interest Margin (3) $ 24,594   3.76 % $ 11,143   3.49 %
 
                         

(1) Loans placed on nonaccrual status are included in loan balances.

(2) Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities.

(3) Net interest margin is net interest income, expressed as a percentage of average earning assets.

 
 
 
 
Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities
Nine Months Ended
                         
    September 30, 2017   September 30, 2016
  Average   Income /   Yield /   Average   Income /   Yield /
(Dollars In Thousands)   Balance   Expense   Rate   Balance   Expense   Rate
 
Assets:
Interest-earning assets:
Securities $ 354,529 $ 7,388 2.78 % $ 183,182 $ 2,954 2.15 %
Loans held for sale 27,165 846 4.15 % 47,935 1,355 3.77 %
Loans (1) 1,614,893 59,405 4.90 % 922,821 32,522 4.70 %
Interest-bearing balances and federal funds sold   105,360       746   0.94 %   69,860       264   0.50 %
Total interest-earning assets 2,101,947 68,385 4.34 % 1,223,798 37,095 4.04 %
Noninterest-earning assets:
Cash and due from banks 21,552 12,493
Premises, land and equipment 21,692 6,782
Other assets 265,578 38,142
Less: allowance for loan losses   (14,666 )   (13,733 )
Total noninterest-earning assets   294,156     43,684  
Total Assets $ 2,396,103   $ 1,267,482  
 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Interest-bearing demand deposits $ 352,647 $ 910 0.34 % $ 131,859 $ 360 0.36 %
Money market deposit accounts 352,525 1,644 0.62 % 185,839 522 0.37 %
Savings accounts 146,773 392 0.36 % 35,047 137 0.52 %
Time deposits   405,419       3,614   1.19 %   296,099       2,755   1.24 %
Total interest-bearing deposits 1,257,364 6,560 0.70 % 648,844 3,774 0.78 %
Borrowings:
FHLB short-term borrowings and subordinated debt 70,063 739 1.41 % 58,467 280 0.64 %
Securities sold under agreements to repurchase and federal funds purchased 46,209 58 0.17 % 15,433 11 0.10 %
FHLB long-term borrowings   73,040       569   1.04 %   71,332       576   1.08 %
Total borrowings   189,312       1,366   0.96 %   145,232       867   0.80 %
Total interest-bearing deposits and borrowings 1,446,676 7,926 0.73 % 794,076 4,641 0.78 %
Noninterest-bearing liabilities:
Demand deposits 552,775 349,339
Other liabilities   16,274     9,229  
Total liabilities 2,015,725 1,152,644
Shareholders' Equity   380,378     114,838  
Total Liabilities and Shareholders' Equity $ 2,396,103   $ 1,267,482  
 
Interest Spread (2) 3.61 % 3.26 %
 
Net Interest Margin (3) $ 60,459   3.84 % $ 32,454   3.54 %
 
                         
(1) Loans placed on nonaccrual status are included in loan balances.

(2) Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities.

(3) Net interest margin is net interest income, expressed as a percentage of average earning assets.
 
 
 
                         
Segment Reporting
           
Three Months Ended Commercial Mortgage Trust & Wealth Consolidated
September 30, 2017   Banking Banking Management   Other Eliminations Totals
(In Thousands)
Revenues:
Interest income $ 27,429 $ 299 $ 4 $ 5 $ (45 ) $ 27,692
Gain on sale of loans - 5,594 - - - 5,594
Other revenues   1,977   (740 )   1,617     312     (237 )   2,929
Total revenues   29,406   5,153     1,621     317     (282 )   36,215
 
Expenses:
Interest expense 3,072 (25 ) - 96 (45 ) 3,098
Salaries and employee benefits 7,334 2,898 868 - - 11,100
Other expenses   8,724   1,149     1,850     1,107     (237 )   12,593
Total operating expenses   19,130   4,022     2,718     1,203     (282 )   26,791
 
Income (loss) before income taxes $ 10,276 $ 1,131   $ (1,097 ) $ (886 ) $ -   $ 9,424
 
Total assets $ 2,810,037   $ 26,485     $ 41,002     $ 19,756     $ (24,211 ) $ 2,873,069
 
 
Three Months Ended Commercial Mortgage Wealth Consolidated
September 30, 2016   Banking Banking Management   Other Eliminations Totals
(In Thousands)
Revenues:
Interest income $ 12,531 $ 574 $ - $ 5 $ (332 ) $ 12,778
Gain on sale of loans - 8,316 - - - 8,316
Other revenues   682   (1,060 )   773     289     (315 )   369
Total revenues   13,213   7,830     773     294     (647 )   21,463
 
Expenses:
Interest expense 1,640 261 - 66 (332 ) 1,635
Salaries and employee benefits 3,977 3,664 567 - - 8,208
Other expenses   2,578   1,491     233     724     (315 )   4,711
Total operating expenses   8,195   5,416     800     790     (647 )   14,554
 
Income (loss) before income taxes $ 5,018 $ 2,414   $ (27 ) $ (496 ) $ -   $ 6,909
 
Total assets $ 1,290,518 $ 74,195   $ 2,894   $ 18,420   $ (23,189 ) $ 1,362,838
 
                         
Segment Reporting
           
Nine Months Ended Commercial Mortgage Trust & Wealth Consolidated
September 30, 2017   Banking Banking Management Other Eliminations Totals
(In Thousands)
Revenues:
Interest income $ 67,740 $ 846 $ 7 $ 17 $ (225 ) $ 68,385
Gain on sale of loans - 14,985 - - - 14,985
Other revenues   4,445   (306 )   4,195     975     (883 )   8,426
Total revenues   72,185   15,525     4,202     992     (1,108 )   91,796
 
Expenses:
Interest expense 7,796 18 - 337 (225 ) 7,926
Salaries and employee benefits 19,992 9,122 2,686 - - 31,800
Other expenses   20,173   3,246     2,541     7,537     (883 )   32,614
Total operating expenses   47,961   12,386     5,227     7,874     (1,108 )   72,340
 
Income (loss) before income taxes $ 24,224 $ 3,139   $ (1,025 ) $ (6,882 ) $ -   $ 19,456
 
Total assets $ 2,810,037 $ 26,485   $ 41,002   $ 19,756   $ (24,211 ) $ 2,873,069
 
 
Nine Months Ended Commercial Mortgage Wealth Consolidated
September 30, 2016   Banking Banking Management Other Eliminations Totals
(In Thousands)
Revenues:
Interest income $ 36,379 $ 1,355 $ - $ 15 $ (654 ) $ 37,095
Gain on sale of loans - 19,419 - - - 19,419
Other revenues   2,908   53     2,269     978     (950 )   5,258
Total revenues   39,287   20,827     2,269     993     (1,604 )   61,772
 
Expenses:
Interest expense 4,656 439 - 200 (654 ) 4,641
Salaries and employee benefits 12,065 10,563 1,655 - - 24,283
Other expenses   6,285   4,127     783     1,943     (950 )   12,188
Total operating expenses   23,006   15,129     2,438     2,143     (1,604 )   41,112
 
Income (loss) before income taxes $ 16,281 $ 5,698   $ (169 ) $ (1,150 ) $ -   $ 20,660
 
Total assets $ 1,290,518 $ 74,195   $ 2,894   $ 18,420   $ (23,189 ) $ 1,362,838
 
 
 

Reconciliation of Non-GAAP Financial Measures

The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are “tangible book value per common share”, “tangible common equity ratio”, and “net interest margin on a fully tax equivalent basis.” This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Corporation’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.

           
Three Months Three Months Three Months Nine Months Nine Months Twelve Months
Ended Ended Ended Ended Ended Ended
September 30, June 30, March 31, September 30, September 30, December 31,
(Dollars In Thousands)   2017   2017   2017   2017   2016   2016
 
 
Book value per common share $ 20.55 $ 20.36 $ 11.40 $ 20.55 $ 11.44 $ 11.33
Effect of intangible assets $ (8.91 ) $ (9.04 ) $ (0.17 ) $ (8.91 ) $ (0.18 ) $ (0.17 )
Tangible book value per common share $ 11.64 $ 11.32 $ 11.23 $ 11.64 $ 11.26 $ 11.16
 
Common equity ratio 14.62 % 15.05 % 8.77 % 14.62 % 8.90 % 8.42 %
Effect of intangible assets -5.77 % -6.08 % -0.12 % -5.77 % -0.12 % -0.11 %
Tangible common equity ratio 8.85 % 8.97 % 8.65 % 8.85 % 8.78 % 8.31 %
 
Net interest margin 3.76 % 3.91 % 3.46 % 3.84 % 3.54 % 3.52 %
Effect of tax exempt securities and loans 0.10 % 0.06 % 0.06 % 0.07 % 0.01 % 0.03 %
Net interest margin - fully tax equivalent basis 3.86 % 3.97 % 3.52 % 3.91 % 3.55 % 3.55 %
 
Return on average equity 6.69 % 3.73 % 8.57 % 4.72 % 15.56 % 14.11 %
Effect of intangible assets 5.20 % 3.00 % 0.13 % 2.24 % 0.25 % 0.22 %
Return on average tangible equity 11.89 % 6.73 % 8.70 % 6.96 % 15.81 % 14.33 %
 
Average equity $ 418,678 $ 412,146 $ 121,724 $ 380,378 $ 114,838 $ 116,296
Effect of average intangible assets $ 183,152 $ 183,666 $ 1,828 $ 122,459 $ 1,865 $ 1,859
Average tangible equity $ 235,526 $ 228,480 $ 119,896 $ 257,919 $ 112,973 $ 114,437

CONTACT:
Access National Corporation
Michael Clarke, 703-871-2100