National Bankshares, Inc. Reports Second Quarter and First Half 2020 Earnings

BLACKSBURG, VA., July 16, 2020 -- National Bankshares, Inc. (NASDAQ: NKSH), parent company of The National Bank of Blacksburg, today announced its results of operations for the second quarter and first half of 2020.  The Company reported net income of $6.96 million, or $1.07 per common share, for the six months ended June 30, 2020. For the six months ended June 30, 2019, the Company reported net income of $8.44 million or $1.27 per common share.  National Bankshares, Inc. ended the first half of 2020 with total assets of $1.43 billion. Additionally, the Company declared a semi-annual dividend to common shareholders of sixty-seven cents ($0.67) per common share during the second quarter of 2020.
Chairman, President, and CEO F. Brad Denardo commented, “National Bankshares and our subsidiaries have been working throughout the COVID-19 pandemic to meet the everyday banking needs as well as the emergency relief needs of our customers and communities. The situation is ongoing and the economic outlook remains uncertain, and we see this reflected in the second quarter numbers. Nonetheless, we remain committed to serving our customers through these difficult times, and are thankful for the continuing support of our customers, our communities, and our shareholders.”
First Half Highlights

In Light of the Pandemic
  • In order to protect our employees and customers during the COVID-19 Pandemic, we closed our branch offices on March 20th and they have remained closed. We continue to serve customers through other channels or in person when requested. We plan to reopen those offices sometime in third quarter.
  • In order to aid our many business customers in their time of financial hardship, we have modified or deferred payments on 297 loans totaling $119.70 million.
  • Through July 6, 2020, National Bank has originated 806 Paycheck Protection Program loans totaling $58.1 million. We will continue to accept applications until August 8, 2020.
Income Statement
  • Our current net income includes a loan loss provision of $1.83 million, an increase of $1.58 million over the provision for the first half of 2019. The additional provision was taken in order to recognize the potential effect of the slowdown in business activity.
  • Despite the significant increase in the loan loss provision, the return on average assets was still a positive 1.03% for the first six months of 2020.
  • The net interest margin decreased to 3.05% for the six months ended June 30, 2020 from 3.32% for the six months ended June 30, 2019.
  • The Company has worked to contain expenses such that total noninterest expense for the six months ended June 30, 2020 is $0.374 million less than for the same period ending June 30, 2019.
Balance Sheet
  • Total assets have increased from June 30, 2019 by $164 million to $1.43 billion at June 30, 2020.
  • Total deposits have increased from June 30, 2019 by $149.8 million to $1.22 billion at June 30, 2020.
  • With total stockholders equity of $195.8 million, the Company’s capital position provides a source of strength and continues to significantly exceed all regulatory capital guidelines.
 Other Notables
  • No shares of the Company’s common stock were repurchased this quarter.
  • Nonperforming loans as a percentage of total loans decreased to 0.48% at June 30, 2020, a 17.1% decrease from June 30, 2019.
  • The efficiency ratio decreased to 54.5% for the six months ended June 30, 2020, down from 55.6% for the six months ended June 2019.
  • The allowance for loan losses to total loans increased to 1.05%, compared with 1.00% at June 30, 2019. Excluding the Paycheck Protection Program loans, that ratio increases to 1.13% at June 30, 2020.
  • Book value per common share at June 30, 2020 increased to $30.17 from $28.26 at June 30, 2019.
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%.  Further, the Company elects not to annualize net securities gains and losses in 2020 and 2019 or the insurance recovery received in 2019 in calculating the return on average equity and return on average assets. 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 measures 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
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.