National Bankshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

($ in thousands, except for share and per share data)

 

September 30,

2018

   

September 30,

2017

   

December 31,

2017

 

Assets

                       

Cash and due from banks

  $ 11,533     $ 12,066     $ 12,926  

Interest-bearing deposits

    28,328       58,260       51,233  

Securities available for sale, at fair value

    448,485       309,323       331,387  

Securities held to maturity

    ---       129,750       127,164  

Restricted stock

    2,708       1,200       1,200  

Total securities

    451,193       440,273       459,751  

Mortgage loans held for sale

    1,027       505       260  

Loans:

                       

Loans, net of unearned income and deferred fees and costs

    701,834       660,362       668,069  

Less: allowance for loan losses

    (7,713

)

    (8,473

)

    (7,925

)

Loans, net

    694,121       651,889       660,144  

Premises and equipment, net

    8,727       8,458       8,221  

Accrued interest receivable

    5,589       5,123       5,297  

Other real estate owned, net

    2,214       2,923       2,817  

Intangible assets and goodwill

    5,861       5,911       5,898  

Bank-owned life insurance

    34,434       33,520       33,756  

Other assets

    15,262       13,555       16,454  

Total assets

  $ 1,258,289     $ 1,232,483     $ 1,256,757  
                         

Liabilities and Stockholders' Equity

                       

Noninterest-bearing deposits

  $ 199,953     $ 184,483     $ 182,511  

Interest-bearing demand deposits

    584,305       588,447       622,189  

Savings deposits

    141,751       140,324       140,150  

Time deposits

    96,167       118,719       114,884  

Total deposits

    1,022,176       1,031,973       1,059,734  

Other borrowed funds

    35,000       ---       ---  

Accrued interest payable

    165       51       62  

Other liabilities

    12,791       12,798       12,065  

Total liabilities

    1,070,132       1,044,822       1,071,861  
                         

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 September 30, 2018, September 30, 2017 and December 31, 2017

    8,698       8,698       8,698  

Retained earnings

    193,445       185,331       185,893  

Accumulated other comprehensive loss, net

    (13,986

)

    (6,368

)

    (9,695

)

Total stockholders' equity

    188,157       187,661       184,896  

Total liabilities and stockholders' equity

  $ 1,258,289     $ 1,232,483     $ 1,256,757  

 


 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

   

Three Months Ended

   

Nine Months Ended

 

($ in thousands, except for share and per share data)

 

September 30,

2018

   

September 30,

2017

   

September 30,

2018

   

September 30,

2017

 

Interest Income

                               

Interest and fees on loans

  $ 8,005     $ 7,473     $ 23,159     $ 22,379  

Interest on federal funds

    ---       ---       ---       ---  

Interest on interest-bearing deposits

    111       224       509       603  

Interest on securities - taxable

    1,771       1,426       5,125       4,225  

Interest on securities - nontaxable

    1,058       1,178       3,362       3,627  

Total interest income

    10,945       10,301       32,155       30,834  

Interest Expense

                               

Interest on time deposits

    107       130       344       410  

Interest on other deposits

    1,034       891       3,023       2,687  

Interest on borrowed funds

    104       ---       104       ---  

Total interest expense

    1,245       1,021       3,471       3,097  

Net interest income

    9,700       9,280       28,684       27,737  

Provision for loan losses

    223       201       93       724  

Net interest income after provision for loan losses

    9,477       9,079       28,591       27,013  

Noninterest Income

                               

Service charges on deposit accounts

    673       710       2,037       2,067  

Other service charges and fees

    20       42       87       152  

Credit card fees

    362       315       1,071       854  

Trust income

    355       365       1,131       1,127  

Bank-owned life insurance

    222       233       678       522  

Other income

    282       215       801       735  

Realized securities gain, net

    ---       4       ---       8  

Total noninterest income

    1,914       1,884       5,805       5,465  

Noninterest Expense

                               

Salaries and employee benefits

    3,639       3,478       10,878       10,420  

Occupancy and furniture and fixtures

    433       459       1,396       1,366  

Data processing and ATM

    684       565       2,024       1,673  

FDIC assessment

    88       93       269       279  

Intangibles and goodwill amortization

    12       13       37       56  

Net cost of other real estate owned

    274       58       523       142  

Franchise taxes

    314       332       965       983  

Write-down of insurance receivable

    ---       ---       2,010       ---  

Other operating expenses

    1,019       1,033       2,949       3,369  

Total noninterest expense

    6,463       6,031       21,051       18,288  

Income before income tax expense

    4,928       4,932       13,345       14,190  

Income tax expense

    677       1,147       1,757       3,186  

Net Income

  $ 4,251     $ 3,785     $ 11,588     $ 11,004  

Basic net income per share

  $ 0.61     $ 0.54     $ 1.67     $ 1.58  

Fully diluted net income per share

  $ 0.61     $ 0.54     $ 1.67     $ 1.58  

Weighted average number of common shares outstanding

                               

Basic

    6,957,974       6,957,974       6,957,974       6,957,974  

Diluted

    6,957,974       6,957,974       6,957,974       6,957,974  

Dividends declared per share

    ---       ---     $ 0.58     $ 0.56  

Dividend payout ratio

    ---       ---       34.83 %     35.41 %

Book value per share

    ---       ---     $ 27.04     $ 26.97  

 


 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 

   

Three Months Ended

 

($ in thousands)

 

September 30, 2018

   

September 30, 2017

 

Net income

  $ 4,251     $ 3,785  
                 

Other Comprehensive Loss, net of tax

               

Unrealized holding loss on available for sale securities net of tax of ($517) in 2018 and ($219) in 2017

    (1,945

)

    (407

)

Reclassification adjustment for loss included in net income, net of tax of ($1) in 2017

    ---       (3

)

Other comprehensive loss, net of tax of ($517) in 2018 and ($220) in 2017

  $ (1,945

)

  $ (410

)

Total Comprehensive Income

  $ 2,306     $ 3,375  

 

 

 

   

Nine Months Ended

 

($ in thousands)

 

September 30, 2018

   

September 30, 2017

 

Net income

  $ 11,588     $ 11,004  
                 

Other Comprehensive Income (Loss), net of tax

               

Unrealized holding gain (loss) on available for sale securities net of tax of ($1,378) in 2018 and $1,235 in 2017

    (5,182

)

    2,294  

Reclassification adjustment for gain included in net income, net of tax of ($1) in 2017

    ---       (3

)

Unrealized holding gain on securities transferred from held to maturity to available for sale, net of tax of $237 for the period ended September 30, 2018

    891       ---  

Other comprehensive income (loss), net of tax of ($1,141) in 2018 and $1,234 in 2017

  $ (4,291

)

  $ 2,291  

Total Comprehensive Income

  $ 7,297     $ 13,295  

 


 

 

Key Ratios and Other Data

 

(Unaudited)

 

   

Three Months Ended

    Nine Months Ended  

($ in thousands)

 

September 30, 2018

   

September 30, 2017

   

September 30, 2018

   

September 30, 2017

 

Average Balances

                               

Cash and due from banks

  $ 11,026     $ 11,182     $ 11,123     $ 11,291  

Interest-bearing deposits

    22,432       69,994       39,366       76,661  

Securities available for sale

    459,745       308,725       387,210       306,145  

Securities held to maturity

    ---       130,140       73,690       132,349  

Restricted stock

    1,899       1,200       1,443       1,190  

Mortgage loans held for sale

    592       549       350       343  

Gross Loans

    694,606       651,577       677,363       651,566  

Loans, net

    686,366       642,521       669,116       642,547  

Intangible assets

    5,868       5,918       5,881       5,933  

Total assets

    1,254,055       1,243,789       1,254,684       1,233,997  

Total deposits

    1,037,798       1,036,317       1,051,123       1,037,947  

Other borrowings

    15,978       ---       5,385       ---  

Stockholders' equity

    187,996       185,967       186,078       183,549  

Interest-earning assets

    1,186,219       1,163,054       1,186,623       1,170,491  

Interest-bearing liabilities

    856,299       855,777       866,323       861,237  
                                 

Financial Ratios

                               

Return on average assets(1)

    1.34 %     1.22 %     1.28 %     1.19 %

Return on average equity(1)

    8.97 %     8.07 %     8.61 %     8.02 %

Net interest margin

    3.38 %     3.44 %     3.37 %     3.45 %

Net interest income-fully taxable equivalent

  $ 10,096     $ 10,082     $ 29,886     $ 30,204  

Efficiency ratio(2)

    53.81 %     53.19 %     53.35 %     53.97 %

Average equity to average assets

    14.99 %     15.06 %     14.83 %     14.87 %
                                 

Allowance for Loan Losses

                               

Beginning balance

  $ 7,579     $ 8,372     $ 7,925     $ 8,300  

Provision for losses

    223       201       93       724  

Charge-offs

    (147

)

    (137

)

    (487

)

    (689

)

Recoveries

    58       37       182       138  

Ending balance

  $ 7,713     $ 8,473     $ 7,713     $ 8,473  

 

 

 

(1)

Return on average assets and return on average equity are calculated by annualizing net income to date. For 2018, the annualization factor was not applied to the insurance write-off.

 

(2)

Efficiency ratio is calculated as noninterest expense, less non-recurring items, divided by the sum of noninterest income and net interest income on a fully taxable equivalent basis.

 


 

 

Asset Quality Data

(Unaudited)

 

($ in thousands)

 

September 30,

2018

   

September 30,

2017

 

Nonperforming Assets

               

Nonaccrual loans

  $ 220     $ 7  

Nonaccrual restructured loans

    2,856       3,149  

Total nonperforming loans

    3,076       3,156  

Other real estate owned

  $ 2,214     $ 2,923  

Total nonperforming assets

  $ 5,290     $ 6,079  

Accruing restructured loans

    7,843       4,815  

Loans 90 days or more past due

  $ 63     $ 250  
                 

Asset Quality Ratios

               

Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned

    0.75 %     0.92 %

Allowance for loans losses to total loans

    1.10 %     1.28 %

Allowance for loan losses to nonperforming loans

    250.75 %     268.47 %

Loans past due 90 days or more to loans net of unearned income and deferred fees

    0.01 %     0.04 %