National Bankshares, Inc. Reports First Quarter Earnings

BLACKSBURG, Va., April 18, 2019 -- National Bankshares, Inc. (NASDAQ: NKSH), parent company of The National Bank of Blacksburg, today announced its results of operations for the first quarter of 2019.  The Company reported net income of $4.44 million, or $0.65 per common share, for the quarter ended March 31, 2019. National Bankshares, Inc. ended the first quarter of 2019 with total assets of $1.26 billion.
 
First Quarter 2019 Highlights
  • Net income increased $1.15 million from $3.29 million for the quarter ended March 31, 2018 to $4.44 million for the quarter ended March 31, 2019.
  • Earnings per share increased $0.18 from $0.47 for the quarter ended March 31, 2018 to $0.65 for the quarter ended March 31, 2019.
  • Return on average assets increased to 1.34% for the quarter ended March 31, 2019, from 1.32% for the quarter ended March 31, 2018.
  • Return on average equity increased to 8.92% for the quarter ended March 31, 2019, from 8.85% for the quarter ended March 31, 2018.
  • Net loans increased $59.74 million or 9.17% from March 31, 2018 to $711.01 million as of March 31, 2019. 
  • The Company repurchased 452,400 common shares during the quarter for almost $18 million.
 
F. Brad Denardo, President and CEO, commented, “Our Company continued to perform well in the first quarter of 2019. By focusing on the fundamentals of quality customer service and sound lending, we were able to deliver another period of steady growth, increased profits and an improving return on our stockholders’ investment. We are thankful for the customers, communities and shareholders who continue to believe in our brand of independent community banking.”  
 
Non-GAAP Financial Measures
In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends and comparing financial results to other financial institutions.  The non-GAAP financial measures presented in this document include the efficiency ratio and certain financial measures presented on a fully taxable-equivalent (“FTE”) basis.  FTE basis is calculated using the federal statutory income tax rate of 21% for the periods after January 1, 2018 and 35% for the periods prior to January 1, 2018.  The Company believes certain non-GAAP financial measures enhance the understanding of its business and performance.  Non-GAAP financial measures are supplemental and not a substitute for, or more important than, financial measure prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions.
 
About National Bankshares
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 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,

2019

   

March 31,

2018

   

December 31,

2018

 

Assets

                       

Cash and due from banks

  $ 15,332     $ 10,598     $ 12,882  

Interest-bearing deposits

    53,381       76,571       43,491  

Securities available for sale, at fair value

    404,645       337,211       425,010  

Securities held to maturity

    ---       122,905       ---  

Restricted stock

    1,220       1,221       1,220  

Total securities

    405,865       461,337       426,230  

Mortgage loans held for sale

    602       ---       72  

Loans:

                       

Loans, net of unearned income and deferred fees and costs

    718,371       658,663       709,799  

Less: allowance for loan losses

    (7,360

)

    (7,391

)

    (7,390

)

Loans, net

    711,011       651,272       702,409  

Premises and equipment, net

    8,830       8,120       8,646  

Operating lease right of use asset

    2,190       ---       ---  

Accrued interest receivable

    5,401       5,360       5,160  

Other real estate owned, net

    2,025       2,741       2,052  

Intangible assets and goodwill

    5,848       5,886       5,848  

Bank-owned life insurance

    34,876       33,984       34,657  

Other assets

    12,642       14,659       14,585  

Total assets

  $ 1,258,003     $ 1,270,528     $ 1,256,032  
                         

Liabilities and Stockholders' Equity

                       

Noninterest-bearing deposits

  $ 199,449     $ 190,746     $ 195,441  

Interest-bearing demand deposits

    608,227       628,540       616,527  

Savings deposits

    142,675       142,019       138,175  

Time deposits

    109,854       111,635       101,799  

Total deposits

    1,060,205       1,072,940       1,051,942  

Accrued interest payable

    140       55       89  

Operating lease liability

    2,192       ---       ---  

Other liabilities

    14,238       11,996       13,763  

Total liabilities

    1,076,775       1,084,991       1,065,794  
                         

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 6,505,574 shares at March 31, 2019 and 6,957,974 shares at March 31, 2018 and December 31, 2018

    8,132       8,698       8,698  

Retained earnings

    180,637       189,189       193,625  

Accumulated other comprehensive loss, net

    (7,541

)

    (12,350

)

    (12,085

)

Total stockholders' equity

    181,228       185,537       190,238  

Total liabilities and stockholders' equity

  $ 1,258,003     $ 1,270,528     $ 1,256,032  

 

 

 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

 

 

   

Three Months Ended

 

($ in thousands, except for per share data)

 

March 31,

2019

   

March 31,

2018

 

Interest Income

               

Interest and fees on loans

  $ 8,269     $ 7,532  

Interest on interest-bearing deposits

    259       172  

Interest on securities - taxable

    1,683       1,608  

Interest on securities - nontaxable

    927       1,172  

Total interest income

    11,138       10,484  

Interest Expense

               

Interest on time deposits

    297       121  

Interest on other deposits

    1,496       960  

Total interest expense

    1,793       1,081  

Net interest income

    9,345       9,403  

Provision for (recovery of) loan losses

    200       (472

)

Net interest income after provision for loan losses

    9,145       9,875  

Noninterest Income

               

Service charges on deposit accounts

    590       670  

Other service charges and fees

    52       33  

Credit card fees

    309       344  

Trust income

    397       402  

Bank-owned life insurance

    219       228  

Other income

    910       346  

Realized securities gain, net

    12       ---  

Total noninterest income

    2,489       2,023  

Noninterest Expense

               

Salaries and employee benefits

    3,821       3,694  

Occupancy, furniture and fixtures

    465       472  

Data processing and ATM

    751       733  

FDIC assessment

    85       91  

Intangibles and goodwill amortization

    ---       12  

Net cost of other real estate owned

    25       85  

Franchise taxes

    314       331  

Write-down of insurance receivable

    ---       1,724  

Other operating expenses

    1,004       1,022  

Total noninterest expense

    6,465       8,164  

Income before income tax expense

    5,169       3,734  

Income tax expense

    726       438  

Net Income

  $ 4,443     $ 3,296  

Basic net income per share

  $ 0.65     $ 0.47  

Fully diluted net income per share

  $ 0.65     $ 0.47  

Weighted average number of common shares outstanding

               

Basic and diluted

    6,839,733       6,957,974  

Dividends declared per share

    ---       ---  

Dividend payout ratio

    ---       ---  

Book value per share

  $ 27.86     $ 26.67  

 

 

 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

   

Three Months Ended

 

($ in thousands)

 

March 31, 2019

   

March 31, 2018

 

Net income

  $ 4,443     $ 3,296  
                 

Other Comprehensive Income (Loss), Net of Tax

               

Unrealized holding gain (loss) on available for sale securities net of tax of $1,209 in 2019 and ($706) in 2018

    4,553       (2,655

)

Reclassification adjustment for gain included in net income, net of tax of ($3) for the period ended March 31, 2019

    (9

)

    ---  

Other comprehensive income (loss), net of tax

  $ 4,544     $ (2,655

)

Total Comprehensive Income

  $ 8,987     $ 641  

 

 

 

 

Key Ratios and Other Data

(Unaudited)

 

 

    Three Months Ended  
($ in thousands)   March 31, 2019     March 31, 2018  

Average Balances

               

Cash and due from banks

  $ 11,243     $ 11,246  

Interest-bearing deposits

    44,264       45,740  

Securities available for sale

    416,750       333,163  

Securities held to maturity

    ---       125,045  

Restricted stock

    1,220       1,201  

Mortgage loans held for sale

    153       233  

Gross Loans

    710,738       665,466  

Loans, net

    702,716       656,930  

Intangible assets

    5,848       5,893  

Total assets

    1,249,052       1,246,071  

Total deposits

    1,046,003       1,048,929  

Other borrowings

    ---       ---  

Stockholders' equity

    187,429       185,147  

Interest-earning assets

    1,177,911       1,177,009  

Interest-bearing liabilities

    854,614       868,118  
                 

Financial Ratios

               

Return on average assets (1)

    1.34 %     1.32 %

Return on average equity (1)

    8.92 %     8.85 %

Net interest margin

    3.34 %     3.38 %

Net interest income-fully taxable equivalent

  $ 9,712     $ 9,808  

Efficiency ratio (2)

    55.43 %     54.44 %

Average equity to average assets

    15.01 %     14.86 %
                 

Allowance for Loan Losses

               

Beginning balance

  $ 7,390     $ 7,925  

Provision for losses

    200       (472

)

Charge-offs

    (328

)

    (139

)

Recoveries

    98       77  

Ending balance

  $ 7,360     $ 7,391  

 

 

(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 recovery of loan losses and 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)

 

March 31, 2019

   

March 31, 2018

 

Nonperforming Assets

               

Nonaccrual loans

  $ 294     $ 6  

Nonaccrual restructured loans

    3,440       2,758  

Total nonperforming loans

    3,734       2,764  

Other real estate owned

  $ 2,025     $ 2,741  

Total nonperforming assets

  $ 5,759     $ 5,505  

Accruing restructured loans

    1,995       7,890  

Loans 90 days or more past due

  $ 55     $ 52  
                 

Asset Quality Ratios

               

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

    0.80 %     0.83 %

Allowance for loans losses to total loans

    1.02 %     1.12 %

Allowance for loan losses to nonperforming loans

    197.11 %     267.40 %

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

    0.01 %     0.01 %