SOURCE: National Bankshares, Inc.

National Bankshares, Inc.

July 28, 2016 16:30 ET

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

BLACKSBURG, VA--(Marketwired - Jul 28, 2016) -  National Bankshares, Inc. (NASDAQ: NKSH) today announced its results of operations for the second quarter and first half of 2016. The Company reported net income of $7.64 million for the six months ended June 30, 2016 compared to $8.08 million at June 30, 2015. Basic earnings per share were $1.10 at June 30, 2016 compared to $1.16 for the same period in 2015. For the first half of the year, the return on average assets was 1.28% and the return on average equity was 8.65% compared to 1.41% and 9.55%, respectively, for the first six months of 2015. At June 30, 2016, the Company had total assets of $1.21 billion which was an increase of 5.40% when compared to $1.15 billion at the end of June 2015.

Commenting on the Company's financial results, National Bankshares Chairman, President & CEO James G. Rakes said, "The low interest rate environment continues to put pressure on our margins and impact earnings. Increasing competition for loans, along with lower yields for certain investment portfolio assets, are also reflected in the past quarter's numbers. As National Bank commemorates its 125th anniversary, we are focused on positioning ourselves for future growth by improving our product offerings and exceeding our customers' expectations for personalized service."

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)   June 30, 2016     June 30, 2015     December 31, 2015  
Assets                        
Cash and due from banks   $ 14,320     $ 11,353     $ 12,152  
Interest-bearing deposits     75,892       83,818       130,811  
Federal funds sold     ---       ---       ---  
Securities available for sale, at fair value     303,242       218,524       236,131  
Securities held to maturity     138,424       155,704       152,028  
Restricted stock     1,170       1,129       1,129  
    Total securities     442,836       375,357       389,288  
Mortgage loans held for sale     663       853       634  
Loans:                        
  Loans, net of unearned income and deferred fees     630,916       626,941       619,008  
  Less: allowance for loan losses     (8,195 )     (8,131 )     (8,297 )
    Loans, net     622,721       618,810       610,711  
Premises and equipment, net     8,718       8,878       9,020  
Accrued interest receivable     5,259       5,857       5,769  
Other real estate owned     3,425       4,441       4,165  
Intangible assets and goodwill     6,046       6,685       6,224  
Bank-owned life insurance     22,699       22,097       22,401  
Other assets     7,720       10,122       8,564  
    Total assets   $ 1,210,299     $ 1,148,271     $ 1,199,739  
                         
Liabilities and Stockholders' Equity                        
Noninterest-bearing deposits   $ 171,350     $ 157,983     $ 166,453  
Interest-bearing demand deposits     575,364       526,749       569,787  
Savings deposits     95,484       86,354       90,236  
Time deposits     179,540       203,070       192,383  
    Total deposits     1,021,738       974,156       1,018,859  
Other borrowed funds     ---       ---       ---  
Accrued interest payable     56       61       56  
Other liabilities     8,577       6,484       8,710  
    Total liabilities     1,030,371       980,701       1,027,625  
                         
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 June 30, 2016 and December 31, 2015 and 6,954,474 shares at June 30, 2015.     8,697       8,693       8,697  
Retained earnings     175,170       167,764       171,353  
Accumulated other comprehensive loss, net     (3,939 )     (8,887 )     (7,936 )
    Total stockholders' equity     179,928       167,570       172,114  
    Total liabilities and stockholders' equity   $ 1,210,299     $ 1,148,271     $ 1,199,739  
                         
                         
                         
National Bankshares, Inc. and Subsidiaries  
Consolidated Statements of Income  
(Unaudited)  
   
 ($ in thousands, except   Three Months Ended   Six Months Ended  
 for share and per share data)   June 30, 2016   June 30, 2015   June 30, 2016     June 30, 2015  
Interest Income                            
Interest and fees on loans   $ 7,289   $ 7,600   $ 14,623     $ 15,210  
Interest on federal funds     ---     ---     ---       ---  
Interest on interest-bearing deposits     150     55     312       119  
Interest on securities - taxable     1,567     1,712     3,244       3,446  
Interest on securities - nontaxable     1,286     1,357     2,597       2,743  
  Total interest income     10,292     10,724     20,776       21,518  
Interest Expense                            
Interest on time deposits     253     315     527       642  
Interest on other deposits     810     736     1,604       1,496  
Interest on borrowed funds     ---     ---     ---       ---  
  Total interest expense     1,063     1,051     2,131       2,138  
  Net interest income     9,229     9,673     18,645       19,380  
Provision for loan losses     654     355     857       556  
  Net income after provision for loan losses     8,575     9,318     17,788       18,824  
Noninterest Income                            
Service charges on deposit accounts     569     570     1,129       1,105  
Other service charges and fees     46     48     118       119  
Credit card fees     969     976     1,839       1,871  
Trust Income     354     299     677       588  
Bank-owned life insurance     151     150     298       299  
Other income     455     419     800       733  
Realized securities gain, net     74     5     98       3  
  Total noninterest income     2,618     2,467     4,959       4,718  
Noninterest Expense                            
Salaries and employee benefits     2,907     3,232     6,475       6,283  
Occupancy and furniture and fixtures     448     420     925       869  
Data processing and ATM     595     408     1,006       843  
FDIC assessment     145     135     286       270  
Credit card processing     712     675     1,334       1,285  
Intangibles and goodwill amortization     68     269     178       538  
Net cost of other real estate owned     39     43     108       507  
Franchise taxes     322     322     653       630  
Other operating expenses     1,002     861     1,957       1,820  
  Total noninterest expense     6,238     6,365     12,922       13,045  
Income before income tax expense     4,955     5,420     9,825       10,497  
Income tax expense     1,090     1,310     2,181       2,421  
    Net Income   $ 3,865   $ 4,110   $ 7,644     $ 8,076  
Basic net income per share   $ 0.56   $ 0.59   $ 1.10     $ 1.16  
Fully diluted net income per share   $ 0.56   $ 0.59   $ 1.10     $ 1.16  
Weighted average number of common shares outstanding                            
  Basic     6,957,974     6,952,540     6,957,974       6,951,513  
  Diluted     6,957,974     6,956,039     6,957,974       6,955,093  
Dividends declared per share   $ 0.55   $ 0.53   $ 0.55     $ 0.53  
Dividend payout ratio     ---     ---     50.07 %     45.64 %
Book value per share   $ 25.86   $ 24.10   $ 25.86     $ 24.10  
                             
                             
                             
National Bankshares, Inc. and Subsidiaries  
Consolidated Statements of Comprehensive Income (Loss)  
(Unaudited)  
   
($ in thousands)   Three Months Ended  
    June 30, 2016     June 30, 2015  
Net income   $ 3,865     $ 4,110  
                 
Other Comprehensive Income (Loss), net of tax                
Unrealized holding gain (loss) on available for sale securities net of tax of $368 and ($3,048) for the periods ended June 30, 2016 and 2015, respectively     684       (5,665 )
Reclassification adjustment for gain included in net income, net of tax of ($16) and ($2) for the periods ended June 30, 2016 and 2015, respectively     (30 )     (3 )
Other comprehensive income (loss), net of tax of $352 and ($3,050) for the periods ended June 30, 2016 and 2015, respectively   $ 654     $ (5,668 )
Total Comprehensive Income (Loss)   $ 4,519     $ (1,558 )
                 
                 
    Six Months Ended  
($ in thousands)   June 30, 2016     June 30, 2015  
Net Income   $ 7,644     $ 8,076  
                 
Other Comprehensive Income (Loss), Net of Tax                
Unrealized holding gain (loss) on available for sale securities net of tax of $2,171 and ($1,728) for the periods ended June 30, 2016 and 2015, respectively     4,031       (3,213 )
Reclassification adjustment for gain included in net income, net of tax of ($18) and ($1) for the periods ended June 30, 2016 and 2015, respectively     (34 )     (2 )
Other comprehensive income (loss), net of tax of $2,153 and ($1,729) for the periods ended June 30, 2016 and 2015, respectively     3,997       (3,215 )
Total Comprehensive Income   $ 11,641     $ 4,861  
                 
                 
                 
Key Ratios and Other Data  
(Unaudited)  
   
($ in thousands)   Three Months Ended     Six Months Ended  
    June 30, 2016     June 30, 2015     June 30, 2016     June 30, 2015  
Average Balances                                
Cash and due from banks   $ 11,217     $ 11,537     $ 11,263     $ 11,451  
Interest-bearing deposits     118,395       86,617       122,122       95,314  
Securities available for sale     283,280       229,447       264,217       225,824  
Securities held to maturity     140,415       155,736       144,809       157,547  
Restricted stock     1,170       1,130       1,151       1,112  
Mortgage loans held for sale     601       893       514       678  
Gross Loans     610,657       624,598       610,818       614,922  
Loans, net     601,700       623,764       601,628       605,808  
Intangible assets     6,085       6,839       6,128       6,974  
Total assets     1,211,217       1,155,852       1,199,839       1,152,732  
Total deposits     1,022,306       976,427       1,012,721       975,118  
Other borrowings     ---       1       ---       ---  
Stockholders' equity     179,452       171,616       177,722       170,461  
Interest-earning assets     1,152,614       1,098,866       1,142,769       1,095,694  
Interest-bearing liabilities     851,522       817,674       845,232       819,481  
                                 
Financial Ratios                                
Return on average assets     1.28 %     1.43 %     1.28 %     1.41 %
Return on average equity     8.66 %     9.61 %     8.65 %     9.55 %
Net interest margin     3.52 %     3.87 %     3.59 %     3.90 %
Net interest income-fully taxable equivalent   $ 10,089     $ 10,599     $ 20,397     $ 21,207  
Efficiency ratio     49.09 %     48.71 %     50.96 %     50.32 %
Average equity to average assets     14.82 %     14.85 %     14.81 %     14.79 %
                                 
Allowance for Loan Losses                                
Beginning balance   $ 8,107     $ 8,257     $ 8,297     $ 8,263  
Provision for losses     654       355       857       556  
Charge-offs     (598 )     (516 )     (1,051 )     (776 )
Recoveries     32       35       92       88  
Ending balance   $ 8,195     $ 8,131     $ 8,195     $ 8,131  
                                 
                                 
                                 
Asset Quality Data  
(Unaudited)  
   
($ in thousands)   June 30, 2016     June 30, 2015  
Nonperforming Assets                
Nonaccrual loans   $ 1,751     $ 2,870  
Nonaccrual restructured loans     4,454       6,035  
Total nonperforming loans   $ 6,205     $ 8,905  
Other real estate owned   $ 3,425     $ 4,441  
Total nonperforming assets   $ 9,630     $ 13,346  
Accruing restructured loans   $ 4,729     $ 5,943  
Loans 90 days or more past due   $ 316     $ 80  
                 
Asset Quality Ratios                
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned     1.52 %     2.11 %
Allowance for loans losses to total loans     1.30 %     1.30 %
Allowance for loan losses to nonperforming loans     132.07 %     91.31 %
Loans past due 90 days or more to loans net of unearned income and deferred fees     0.05 %     0.01 %

Contact Information

  • CONTACTS:
    JAMES G. RAKES
    CHAIRMAN, PRESIDENT & CEO
    (540) 951-6236
    Email Contact

    DAVID K. SKEENS
    TREASURER & CFO
    (540) 951-6347
    Email Contact