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National Bankshares, Inc. Reports First Quarter Earnings

BLACKSBURG, Va., April 27, 2017 (GLOBE NEWSWIRE) -- National Bankshares, Inc. (NASDAQ:NKSH) today announced its results of operations for the first quarter of 2017. The Company reported net income of $3.65 million for the quarter ended March 31, 2017 compared to $3.78 million at March 31, 2016. Basic earnings per share were $0.52 for the three months ended March 31, 2017 compared to $0.54 for the same period in 2016. For the first quarter, the return on average assets was 1.21% and the return on average equity was 8.20% compared to 1.28% and 8.64%, respectively, for the first quarter of 2016. At March 31, 2017, the Company had total assets of $1.24 billion, an increase of 2.60% when compared to $1.21 billion at the end of the first quarter of 2016.

“The first quarter of 2017 saw improvements in several key areas, despite the low interest rate environment that continues to pressure earnings,” said National Bankshares Chairman, President & CEO James G. Rakes. “While net income was down compared to the same period in 2016, we were pleased to see steady growth in net loans, improved asset quality, and increased noninterest income. Moving forward in 2017 we remain focused on providing the highest level of personalized financial service for our customers while we pursue opportunities to grow the bank and increase profitability.”

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 26 full service offices and one loan production office throughout Southwest Virginia. National Bankshares Financial Services, Inc. is an investment and insurance subsidiary 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) March 31, 2017 March 31, 2016 December 31, 2016
Assets      
Cash and due from banks $13,654   $9,913   $13,974  
Interest-bearing deposits   85,552     129,363     80,268  
Federal funds sold   ---     ---     ---  
Securities available for sale, at fair value   304,376     270,094     304,282  
Securities held to maturity   133,596     144,664     134,957  
Restricted stock   1,200     1,170     1,170  
Total securities   439,172     415,928     440,409  
Mortgage loans held for sale   608     63     478  
Loans:      
Loans, net of unearned income and deferred fees   652,313     607,643     647,752  
Less: allowance for loan losses   (8,261 )   (8,107 )   (8,300 )
Loans, net   644,052     599,536     639,452  
Premises and equipment, net   8,675     8,841     8,853  
Accrued interest receivable   5,267     5,587     5,260  
Other real estate owned   2,952     3,612     3,156  
Intangible assets and goodwill   5,936     6,114     5,966  
Bank-owned life insurance   23,141     22,548     22,998  
Other assets   14,117     10,146     13,128  
Total assets $1,243,126   $1,211,651   $1,233,942  
       
Liabilities and Stockholders' Equity      
Noninterest-bearing deposits $182,750   $170,206   $171,946  
Interest-bearing demand deposits   601,421     570,065     605,226  
Savings deposits   99,193     92,944     96,829  
Time deposits   163,116     185,296     169,441  
Total deposits   1,046,480     1,018,511     1,043,442  
Other borrowed funds   ---     ---     ---  
Accrued interest payable   45     62     55  
Other liabilities   13,614     13,841     12,182  
Total liabilities   1,060,139     1,032,414     1,055,679  
       
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, 6,957,974 shares at March 31, 2107, December 31, 2016 and March 31, 2016.   8,698     8,698     8,698  
Retained earnings   181,873     175,132     178,224  
Accumulated other comprehensive loss, net   (7,584 )   (4,593 )   (8,659 )
Total stockholders' equity   182,987     179,237     178,263  
Total liabilities and stockholders' equity $1,243,126   $1,211,651   $1,233,942  


National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
   
  Three Months Ending
($ in thousands, except for share and per share data) March 31, 2017     March 31, 2016
Interest Income    
Interest and fees on loans $7,453 $7,334
Interest on federal funds   ---     ---
Interest on interest-bearing deposits   148     162
Interest on securities - taxable   1,402     1,677
Interest on securities - nontaxable   1,235     1,311
Total interest income   10,238     10,484
Interest Expense    
Interest on time deposits   202     274
Interest on other deposits   826     794
Interest on borrowed funds   ---     ---
Total interest expense   1,028     1,068
Net interest income   9,210     9,416
Provision for loan losses   59     203
Net income after provision for loan losses   9,151     9,213
Noninterest Income    
Service charges on deposit accounts   665     560
Other service charges and fees   69     72
Credit card fees   898     870
Trust Income   401     323
Bank-owned life insurance   143     147
Other income   328     345
Realized securities gain,  net   ---     24
Total noninterest income   2,504     2,341
Noninterest Expense    
Salaries and employee benefits   3,543     3,568
Occupancy and furniture and fixtures   438     477
Data processing and ATM   565     411
FDIC assessment   95     141
Credit card processing   655     622
Intangibles and goodwill amortization   31     110
Net cost of other real estate owned   29     69
Franchise taxes   322     331
Other operating expenses   1,259     955
Total noninterest expense   6,937     6,684
Income before income tax expense   4,718     4,870
Income tax expense   1,069     1,091
Net Income $3,649 $3,779
Basic net income per share $0.52 $0.54
Fully diluted net income per share $0.52 $0.54
Weighted average number of common shares outstanding    
Basic   6,957,974     6,957,974
Diluted   6,957,974     6,957,974
Dividends declared per share   ---     ---
Dividend payout ratio   ---     ---
Book value per share $26.30 $25.76


National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
   
  Three Months Ended
($ in thousands) March 31, 2017   March 31, 2016  
Net Income $3,649 $3,779  
     
Other Comprehensive Income, Net of Tax    
Unrealized holding gain on available for sale securities net of tax of $580 and $1,802 for the periods ended March 31, 2017 and 2016, respectively   1,075   3,348  
Reclassification adjustment for gain included in net income, net of tax of  ($2) for the period ended March 31, 2016   ---   (4 )
Other comprehensive income, net of tax of $580 and $1,800 for the periods ended March 31, 2017 and 2016, respectively $1,075 $3,344  
Total Comprehensive Income $4,724 $7,123  


Key Ratios and Other Data
(Unaudited)
   
  Three Months Ended
$ in thousands March 31, 2017   March 31, 2016  
Average Balances    
Cash and due from banks $11,111   $11,309  
Interest-bearing deposits   72,322     125,849  
Securities available for sale   304,605     245,153  
Securities held to maturity   134,477     149,202  
Restricted stock   1,172     1,133  
Mortgage loans held for sale   214     427  
Gross Loans   650,464     610,979  
Loans, net   641,406     601,557  
Intangible assets   5,951     6,170  
Total assets   1,224,870     1,188,462  
Total deposits   1,032,012     1,003,136  
Other borrowings   ---     ---  
Stockholders' equity   180,512     175,991  
Interest-earning assets   1,167,053     1,132,925  
Interest-bearing liabilities   860,928     838,943  
     
Financial Ratios    
Return on average assets   1.21%     1.28%  
Return on average equity   8.20%     8.64%  
Net interest margin   3.49%     3.66%  
Net interest income-fully taxable equivalent $10,048   $10,307  
Efficiency  ratio   55.27%     52.85%  
Average equity to average assets   14.74%     14.81%  
     
Allowance for Loan Losses    
Beginning balance $8,300   $8,297  
Provision for losses   59     203  
Charge-offs   (143 )   (453 )
Recoveries   45     60  
Ending balance $8,261   $8,107  


Asset Quality Data
(Unaudited)
     
$ in thousands March 31, 2017   March 31, 2016  
Nonperforming Assets    
Nonaccrual loans $1,040   $1,901  
Nonaccrual restructured loans   4,640     4,504  
Total nonperforming loans   5,680     6,405  
Other real estate owned $2,952   $3,612  
Total nonperforming assets $8,632   $10,017  
Accruing restructured loans   3,747     7,724  
Loans 90 days or more past due $63   $328  
     
Asset Quality Ratios    
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned   1.32%     1.64%  
Allowance for loans losses to total loans   1.27%     1.33%  
Allowance for loan losses to nonperforming loans   145.44%     126.57%  
Loans past due 90 days or more to loans net of  unearned income and deferred fees   0.01%     0.05%  

/EIN News/ --  

CONTACTS:   
                    JAMES G. RAKES, CHAIRMAN, PRESIDENT & CEO 
                    (540) 951-6236   jrakes@nbbank.com
                    DAVID K. SKEENS, TREASURER & CFO
                    (540) 951-6347   dskeens@nbbank.com

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