National Bankshares, Inc. Reports Second Quarter And First

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News Desk 2018

Jul 24, 2014 at 4:30 PM

National Bankshares, Inc. Reports Second Quarter And First Half Earnings

BLACKSBURG, VA--(Marketwired - Jul 24, 2014) - Today, National Bankshares, Inc. ( NASDAQ : NKSH ) announced net income of over $8.51 million for the six months ended June 30, 2014 compared to $8.65 million for the same period in 2013. Basic earnings per share were $1.23 at June 30, 2014 compared to $1.25 at June 30, 2013. The return on average assets for the six months ending June 30, 2014 was 1.54% compared to 1.59% in 2013. The return on average equity was 11.22% and 11.42% for the same two periods.

For the three month ending June 30, 2014, net income was $4.11 million. The Company had total assets of almost $1.13 billion at June 30, 2014.

National Bankshares' Chairman, President & CEO James G. Rakes commented, "While the interest rate environment and competitive pressures remain very challenging, we are positioning the Bank to take advantage of opportunities on the horizon as economic conditions in our market area improve. We pride ourselves in our community banking philosophy which leads to exceptional service and strong customer relationships. These principles provide a competitive advantage when meeting the needs of our customers."

National Bankshares, Inc., headquartered in Blacksburg, Virginia, is the parent company of The National Bank of Blacksburg, which does business as National Bank, and of National Bankshares Financial Services, Inc. National Bank is a community bank operating from 25 offices throughout Southwest Virginia. National Bankshares Financial Services, Inc. is an investment and insurance subsidiary operating in the same trade area. The Company's stock is traded on the NASDAQ Capital Market under the symbol "NKSH." Additional information is available at www.nationalbankshares.com .

Forward-Looking Statements

Certain statements in this press release may be "forward-looking statements." Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results that are not statements of historical fact and that involve significant risks and uncertainties. Although the Company believes that its expectations with regard to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual Company results will not differ materially from any future results implied by the forward-looking statements. Actual results may be materially different from past or anticipated results because of many factors, some of which may include changes in economic conditions, the interest rate environment, legislative and regulatory requirements, new products, competition, changes in the stock and bond markets and technology. The Company does not update any forward-looking statements that it may make.



National Bankshares, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)

($ in thousands, except for share and per share data)				June 30, 2014			June 30, 2013			December 31, 2013
Assets
Cash and due from banks				$	15,917		$	13,474		$	13,283
Interest-bearing deposits					106,112			64,278			98,066
Federal funds sold					---			---			---
Securities available for sale, at fair value					195,407			204,096			181,712
Securities held to maturity					162,956			166,915			163,983
Restricted stock					1,089			1,414			1,414
	Total securities				359,452			372,425			347,109
Mortgage loans held for sale					383			1,950			1,276
Loans:
	Loans, net of unearned income and deferred fees				593,400			588,061			595,690
	Less allowance for loan losses				(7,971	)		(7,952	)		(8,227	)
		Loans, net			585,429			580,109			587,463
Premises and equipment, net					9,482			10,222			9,951
Accrued interest receivable					5,798			6,291			5,949
Other real estate owned					5,293			969			4,712
Intangible assets and goodwill					7,761			8,837			8,299
Bank-owned life insurance					21,491			20,858			21,181
Other assets					11,361			11,673			13,341
			Total assets	$	1,128,479		$	1,091,086		$	1,110,630

Liabilities and Stockholders' Equity
Noninterest-bearing deposits				$	146,727		$	144,164		$	142,645
Interest-bearing demand deposits					510,304			461,662			501,541
Savings deposits					79,255			73,095			74,141
Time deposits					231,177			259,600			241,709
			Total deposits		967,463			938,521			960,036
Other borrowed funds					---			---			---
Accrued interest payable					71			126			92
Other liabilities					4,149			6,901			4,610
Total liabilities					971,683			945,548			964,738

Stockholders' Equity
Preferred stock, no par value, 5,000,000 shares authorized; none issued and outstanding					---			---			---
Common stock of $1.25 par value. Authorized 10,000,000 shares; issued and outstanding, 6,947,974 shares in 2014 and 2013					8,685			8,685			8,685
Retained earnings					158,863			149,061			154,171
Accumulated other comprehensive loss, net					(10,752	)		(12,208	)		(16,964	)
			Total stockholders' equity		156,796			145,538			145,892
			Total liabilities and stockholders' equity	$	1,128,479		$	1,091,086		$	1,110,630

National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)

		Three Months Ended				Six Months Ended
($ in thousands, except for share and per share data)		June 30, 2014		June 30, 2013		June 30, 2014			June 30, 2013
Interest Income
Interest and fees on loans		$	7,819	$	8,192	$	15,754		$	16,511
Interest on federal funds			---		---		---			---
Interest on interest-bearing deposits			64		58		129			116
Interest on securities - taxable			1,697		1,694		3,350			3,206
Interest on securities - nontaxable			1,474		1,618		2,974			3,266
	Total interest income		11,054		11,562		22,207			23,099
Interest Expense
Interest on time deposits of $100 or more			145		230		298			498
Interest on other deposits			1,150		1,318		2,312			2,729
Interest on borrowed funds			---		---		---			---
	Total interest expense		1,295		1,548		2,610			3,227
	Net interest income		9,759		10,014		19,597			19,872
Provision for loan losses			701		355		804			1,026
	Net income after provision for loan losses		9,058		9,659		18,793			18,846
Noninterest Income
Service charges on deposit accounts			607		625		1,199			1,213
Other service charges and fees			38		42		103			102
Credit card fees			961		853		1,758			1,593
Trust Income			332		311		625			600
Bank-owned life insurance			177		176		352			364
Other income			229		223		506			504
Realized securities gains, net			---		9		1			18
	Total noninterest income		2,344		2,239		4,544			4,394
Noninterest Expense
Salaries and employee benefits			3,007		2,992		6,006			5,932
Occupancy and furniture and fixtures			417		404		857			836
Data processing and ATM			394		418		757			811
FDIC assessment			117		136		264			272
Credit card processing			665		646		1,214			1,198
Intangibles and goodwill amortization			269		269		538			540
Net cost of other real estate owned			84		65		161			140
Franchise taxes			287		265		566			523
Other operating expenses			820		942		1,879			1,849
	Total noninterest expense		6,060		6,137		12,242			12,101
Income before income tax expense			5,342		5,761		11,095			11,139
Income tax expense			1,233		1,326		2,582			2,488
	Net income	$	4,109	$	4,435	$	8,513		$	8,651
Basic net income per share		$	0.59	$	0.64	$	1.23		$	1.25
Fully diluted net income per share		$	0.59	$	0.64	$	1.22		$	1.24
Weighted average number of common shares outstanding
	Basic		6,947,974		6,947,974		6,947,974			6,947,974
	Diluted		6,960,683		6,968,348		6,962,274			6,968,711
Dividends declared per share		$	0.55	$	0.54	$	0.55		$	0.54
Dividends payout ratio			---		---		44.89	%		43.37	%
Book value per share			22.57	$	20.95		22.57		$	20.95

National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

	Three Months Ended
($ in thousands)	June 30, 2014		June 30, 2013
Net income	$	4,109	$	4,435

Other Comprehensive Income, net of tax
Unrealized holding gains (losses) on available for sale securities net of deferred tax of $1,664 in 2014 and ($4,577) in 2013		3,091		(8,500	)
Reclassification adjustment, net of income tax (benefit) of $0 in 2014 and $(3) in 2013		---		(6	)
Other comprehensive income (loss), net of tax of $1,664 in 2014 and ($4,580) in 2013	$	3,091	$	(8,506	)
Total Comprehensive Income (Loss)	$	7,200	$	(4,071	)

	Six Months Ended
($ in thousands)	June 30, 2014		June 30, 2013
Net income	$	8,513	$	8,651

Other Comprehensive Income, net of tax
Unrealized holding gains (losses) on available for sale securities net of deferred tax of $3,345 in 2014 and ($5,094) in 2013		6,212		(9,458	)
Reclassification adjustment, net of income tax (benefit)of $0 in 2014 and ($6) in 2013		---		(12	)
Other comprehensive income (loss), net of tax of 3,345 in 2013 and ($5,100) in 2013	$	6,212	$	(9,470	)
Total Comprehensive Income (Loss)	$	14,725	$	(819	)

Key Ratios and Other Data
(Unaudited)

($ in thousands)	Three Months Ended						Six Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Average Balances
Cash and due from banks	$	11,636		$	12,126		$	11,786		$	12,076
Interest-bearing deposits		102,409			80,447			102,698			90,099
Securities available for sale		193,854			209,367			189,196			198,436
Securities held to maturity		164,476			166,859			163,643			164,574
Restricted stock		1,089			1,414			1,237			1,541
Mortgage loans held for sale		256			1,405			319			1,456
Gross Loans		592,073			582,988			592,205			583,161
Loans, net		583,054			573,727			583,121			573,877
Intangible assets		7,915			8,991			8,050			9,125
Total assets		1,116,461			1,100,325			1,112,664			1,096,620
Total deposits		954,592			939,379			954,163			936,297
Other borrowings		1			---			---			---
Stockholders' equity		156,045			153,684			152,975			152,775
Interest-earning assets		1,067,136			1,040,900			1,064,732			1,036,833
Interest-bearing liabilities		811,711			796,195			812,197			795,760

Financial ratios
Return on average assets		1.48	%		1.62	%		1.54	%		1.59	%
Return on average equity		10.56	%		11.58	%		11.22	%		11.42	%
Net interest margin		4.02	%		4.25	%		4.07	%		4.26	%
Net interest income-fully taxable equivalent	$	10,699		$	11,022		$	21,498		$	21,901
Efficiency ratio		46.46	%		46.28	%		47.01	%		46.02	%
Average equity to average assets		13.98	%		13.97	%		13.75	%		13.93	%

Allowance for loan losses
Beginning balance	$	8,297		$	8,291		$	8,227		$	8,349
Provision for losses		701			355			804			1,026
Charge-offs		(1,053	)		(730	)		(1,244	)		(1,484	)
Recoveries		26			36			184			61
Ending balance	$	7,971		$	7,952		$	7,971		$	7,952

Asset Quality Data
(Unaudited)

($ in thousands)
Nonperforming assets	June 30, 2014			June 30, 2013
Nonaccrual loans	$	2,335		$	10,428
Nonaccrual restructured loans		2,674			1,522
Total nonperforming loans		5,009			11,950
Other real estate owned		5,293			969
Total nonperforming assets	$	10,302		$	12,919
Accruing restructured loans		6,240			6,234
Loans 90 days or more past due	$	266		$	125

Asset quality ratios
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned		1.72	%		2.19	%
Allowance for loans losses to total loans		1.34	%		1.35	%
Allowance for loan losses to nonperforming loans		159.13	%		66.54	%
Loans past due 90 days or more to loans net of unearned income and deferred fees		0.04	%		0.02	%

CONTACTS: James G. Rakes Chairman, President & CEO (540) 951-6236 Email Contact David K. Skeens Treasurer & CFO (540) 951-6347 Email Contact

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