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 (loss)		$	(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 (loss)		$	(819	)		$	9,066

Key Ratios and Other Data

 

($ 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		$	12,127			$	12,121			$	12,075			$	12,169
Interest-bearing deposits			79,875				88,152				89,492				99,352
Securities available for sale			212,668				202,783				201,863				189,004
Securities held to maturity			166,859				142,123				164,574				141,433
Mortgage loans held for sale			1,405				1,264				1,456				1,238
Gross loans			582,987				586,120				583,169				585,600
Loans, net			573,726				576,996				573,878				576,290
Intangible assets			8,991				10,073				9,125				10,209
Total assets			1,100,326				1,076,975				1,096,622				1,072,910
Total deposits			939,378				923,982				936,296				921,187
Other borrowings			---				---				---				---
Stockholders' equity			153,683				146,625				152,774				145,113
Interest-earning assets			1,042,217				1,015,458				1,038,122				1,011,703
Interest-bearing liabilities			796,194				782,875				795,760				781,840
Financial ratios
Return on average assets			1.62	%			1.62	%			1.59	%			1.64	%
Return on average equity			11.57	%			11.90	%			11.42	%			12.15	%
Net interest margin			4.25	%			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			13.97	%			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

($ 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	%