National Bankshares, Inc. Reports Second Quarter and First

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News Desk 2018

Jul 18, 2013 at 4:45 PM

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

BLACKSBURG, VA--(Marketwired - Jul 18, 2013) - Today, National Bankshares, Inc. ( NASDAQ : NKSH ) announced net income of over $4.43 million for the quarter ended June 30, 2013 which is 2.19% above the total reported for the quarter ended June 30, 2012. Basic earnings per share were $0.64 which compares to $0.63 for second quarter of 2012. The return on average assets for the second quarter of 2013 was 1.63% compared to 1.62% in 2012. The return on average equity was 11.71% and 11.90% for the same two periods.

For the first six months, net income was above $8.65 million. The Company had total assets exceeding $1.09 billion at June 30, 2013.

National Bankshares' Chairman, President & CEO James G. Rakes commented, "Our focus remains on investing in our businesses to grow our bank, creating sustainable stockholder value, and controlling discretionary expenses while maintaining a strong balance sheet. We were pleased to provide stockholders an increase over last June of our semi-annual dividend. We continue to upgrade our capabilities in order to deliver the best services and products possible to our customers and community."

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 per share data)				June 30, 2013			June 30, 2012			December 31, 2012
Assets
Cash and due from banks				$	13,474		$	13,140		$	14,783
Interest-bearing deposits					63,731			105,102			96,597
Securities available for sale					207,362			189,768			191,504
Securities held to maturity					166,915			146,451			160,539
		Total securities			374,277			336,219			352,043
Mortgage loans held for sale					1,950			1,395			2,796
Loans:
	Loans, net of unearned income and deferred fees				588,061			586,223			592,162
	Less: allowance for loan losses				(7,952	)		(8,168	)		(8,349	)
		Loans, net			580,109			578,055			583,813
Bank premises and equipment, net					10,222			10,618			10,401
Accrued interest receivable					6,291			6,273			6,247
Other real estate owned					969			871			1,435
Intangible assets					8,837			9,918			9,377
Bank-owned life insurance					20,858			20,170			20,523
Other assets					10,368			6,507			6,346
		Total assets		$	1,091,086		$	1,088,268		$	1,104,361

Liabilities and Stockholders' Equity
Noninterest-bearing deposits				$	144,164		$	146,899		$	144,252
Interest-bearing demand deposits					461,662			423,272			455,713
Savings deposits					73,095			65,398			69,063
Time deposits					259,600			299,869			277,738
		Total deposits			938,521			935,438			946,766
Accrued interest payable					126			173			139
Other liabilities					6,901			5,970			7,347
		Total liabilities			945,548			941,581			954,252

Stockholders' Equity
Preferred stock of no par value.
Authorized 5,000,000 shares; none issued and outstanding					---			---			---
Common stock of $1.25 par value. Authorized 10,000,000 shares; issued and outstanding 6,947,974 shares at June 30, 2013, 6,939,974 at June 30, 2012 and 6,947,974 at December 31, 2012					8,685			8,675			8,685
Retained earnings					149,061			139,036			144,162
Accumulated other comprehensive loss, net					(12,208	)		(1,024	)		(2,738	)
		Total stockholders' equity			145,538			146,687			150,109
			Total liabilities and stockholders' equity	$	1,091,086		$	1,088,268		$	1,104,361

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

		Three Months Ended						Six Months Ended
		June 30, 2013			June 30, 2012			June 30, 2013		June 30, 2012
($ in thousands, except for per share data)
Interest Income
Interest and fees on loans		$	8,192		$	8,753		$	16,511	$	17,631
Interest on federal funds			---			---			---		---
Interest on interest-bearing deposits			58			56			116		127
Interest on securities - taxable			1,725			1,782			3,264		3,371
Interest on securities - nontaxable			1,618			1,591			3,266		3,167
	Total interest income		11,593			12,182			23,157		24,296

Interest Expense
Interest on time deposits of $100,000 or more			230			391			498		816
Interest on other deposits			1,318			1,627			2,729		3,319
Interest on borrowed funds			---			---			---		---
	Total interest expense		1,548			2,018			3,227		4,135
	Net interest income		10,045			10,164			19,930		20,161
Provision for loan losses			355			1,104			1,026		1,776
	Net interest income after provision for loan losses		9,690			9,060			18,904		18,385

Noninterest Income
Service charges on deposit accounts			625			651			1,213		1,282
Other service charges and fees			42			41			102		90
Credit card fees			853			840			1,593		1,634
Trust income			311			440			600		766
Bank-owned life insurance			176			200			364		400
Other income			190			112			340		211
Realized securities gains (losses), net			(11	)		(1	)		84		52
	Total noninterest income		2,186			2,283			4,296		4,435

Noninterest Expense
Salaries and employee benefits			2,992			2,954			5,932		5,910
Occupancy and furniture and fixtures			404			397			836		794
Data processing and ATM			418			424			811		816
FDIC assessment			136			101			272		210
Credit card processing			646			638			1,198		1,210
Intangibles and goodwill amortization			269			271			540		542
Net costs of other real estate owned			65			103			140		151
Franchise taxes			265			226			523		388
Other operating expenses			920			617			1,809		1,421
	Total noninterest expense		6,115			5,731			12,061		11,442
Income before income tax expense			5,761			5,612			11,139		11,378
Income tax expense			1,326			1,272			2,488		2,609
	Net income	$	4,435		$	4,340		$	8,651	$	8,769

Basic net income per share		$	0.64		$	0.63		$	1.25	$	1.26
Fully diluted net income per share		$	0.64		$	0.62		$	1.24	$	1.26
Weighted average outstanding number of common shares
	Basic		6,947,974			6,939,974			6,947,974		6,939,974
	Diluted		6,968,348			6,957,445			6,968,711		6,956,041
Dividends declared per share		$	0.54		$	0.53		$	0.54	$	0.53
Dividend payout ratio			---			---			43.37		41.94
Book value per share		$	20.95		$	21.14		$	20.95	$	21.14

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

	Three Months Ended
($ in thousands, except for per share data)	June 30, 2013			June 30, 2012
Net Income	$	4,435		$	4,340

Other Comprehensive Income, net of tax
Unrealized holding gains (losses) on available for sale securities net of deferred taxes of ($4,135) and $662	$	(7,680	)	$	1,229
Reclassification adjustment, net of income taxes of ($4) and $2		(7	)		4
Other comprehensive income (loss), net of tax of ($4,139) and $664	$	(7,687	)	$	1,233
Total Comprehensive Income	$	(3,252	)	$	5,573


	Six Months Ended
($ in thousands, except for per share data)	June 30, 2013			June 30, 2012
Net Income	$	8,651		$	8,769

Other Comprehensive Income, net of tax
Unrealized holding gains (losses) on available for sale securities net of deferred taxes of ($5,070) and $173	$	(9,415	)	$	322
Reclassification adjustment, net of income taxes of $(30) and ($13)		(55	)		(25	)
Other comprehensive income (loss), net of tax of ($5,100) and $160	$	(9,470	)	$	297
Total Comprehensive Income	$	(819	)	$	9,066

Key Ratios and Other Data
(Unaudited)

($ in thousands)	Three Months Ended						Six Months Ended
Average Balances	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Cash and due from banks	$	12,023		$	12,121		$	12,075		$	12,169
Interest-bearing deposits		99,216			88,152			89,492			99,352
Securities available for sale		190,938			202,783			201,863			189,004
Securities held to maturity		162,264			142,123			164,574			141,433
Mortgage loans held for sale		1,507			1,264			1,456			1,238
Gross loans		583,337			586,120			583,169			585,600
Loans, net		574,030			576,996			573,878			576,290
Intangible assets		9,262			10,073			9,125			10,209
Total assets		1,092,880			1,076,975			1,096,622			1,072,910
Total deposits		933,185			923,982			936,296			921,187
Other borrowings		---			---			---			---
Stockholders' equity		151,852			146,625			152,774			145,113
Interest-earning assets		1,035,659			1,015,458			1,038,122			1,011,703
Interest-bearing liabilities		795,321			782,875			795,760			781,840

Financial ratios
Return on average assets		1.63	%		1.62	%		1.59	%		1.64	%
Return on average equity		11.71	%		11.90	%		11.42	%		12.15	%
Net interest margin		4.28	%		4.40	%		4.27	%		4.39	%
Net interest income - fully taxable equivalent	$	11,053		$	11,119		$	21,959		$	22,059
Efficiency ratio		46.19	%		42.76	%		45.94	%		43.19	%
Average equity to average assets		13.89	%		13.61	%		13.93	%		13.53	%

Allowance for loan losses
Beginning balance	$	8,291		$	8,063		$	8,349		$	8,068
Provision for losses		355			1,104			1,026			1,776
Charge-offs		(730	)		(1,028	)		(1,484	)		(1,728	)
Recoveries		36			29			61			52
Ending balance	$	7,952		$	8,168		$	7,952		$	8,168

Asset Quality Data
(Unaudited)

($ in thousands)
Nonperforming assets	June 30, 2013			June 30, 2012
Nonaccrual loans	$	10,428		$	3,627
Nonaccrual restructured loans		1,522			3,763
Total nonperforming loans		11,950			7,390
Other real estate owned		969			871
Total nonperforming assets	$	12,919		$	8,261
Accruing restructured loans	$	6,234		$	2,035
Loans 90 days or more past due	$	125		$	242

Asset quality ratios
Nonperforming assets to loans net of unearned income and deferred fees,plus other real estate owned		2.19	%		1.41	%
Allowance for loan losses to total loans		1.35	%		1.39	%
Allowance for loan losses to nonperforming loans		66.54	%		110.53	%
Loans past due 90 days or more to loans net of unearned income and deferred fees		0.02	%		0.04	%

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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