BLACKSBURG, VA., October 21, 2021 -- National Bankshares, Inc. (NASDAQ: NKSH), parent company of The National Bank of Blacksburg, today announced its results of operations for the third quarter and nine months ended September 30, 2021. The Company reported net income of $15.13 million, or $2.42 per common share, for the nine months ended September 30, 2021. This compares to net income of $11.13 million, or $1.71 per common share, for the nine months ended September 30, 2020. National Bankshares, Inc. ended the nine months ended September 30, 2021 with total assets of $1.64 billion.
"We are pleased to report that your Company delivered solid results again for the period ended September 30, 2021,” said F. Brad Denardo, President and Chief Executive Officer of National Bankshares. “Net income was up significantly over the same period last year, with the low cost to fund deposits and a partial reversal of loan loss reserves greatly improving our net interest income. Good loan growth and increased fee income for the period were also very encouraging, as we continue to meet the financial service needs of our customers and communities while enhancing profitability. As always, our success would not be possible without your investment in National Bankshares, and we thank you for your continued support.”
Highlights for the Nine Months Ended September 30, 2021
Paycheck Protection Program Loans
- We participated in the SBA’s Paycheck Protection Program (“PPP”) which began in April 2020. The Company assisted local businesses through the PPP by providing 1,259 loans totaling $83.02 million. Gross PPP loans totaling $12.80 million remain on the balance sheet.
- For the nine months ended September 30, 2021, contractual interest earned on PPP loans totaled $253 thousand, while net fees recognized totaled $1.78 million. For the nine months ended September 30, 2020, contractual interest earned on PPP loans totaled $263 thousand and net fees recognized totaled $509 thousand.
Income Statement
- Net income of $15.13 million for the nine months ended September 30, 2021 benefitted from the reversal of a portion of previous loan loss provisions. For the nine months ended September 30, 2021, the Company recovered $338 thousand, compared with a provision expense of $1.99 million for the nine months ended September 30, 2020.
- The return on average assets and the return on average equity for the nine months ended September 30, 2021 were 1.25% and 10.36% respectively, improved from 1.07% and 7.61% respectively, for the nine months ended September 30, 2020.
- The cost of interest-bearing liabilities decreased from 0.69% for the nine months ended September 30, 2020 to 0.30% for the nine months ended September 30, 2021, the result of reductions in deposit offering rates.
- The Company experienced high levels of calls on securities and loan refinance activity that resulted in a decrease in the yield on earning assets(1) to 3.03% for the nine months ended September 30, 2021, from 3.47% for the nine months ended September 30, 2020.
- Our net interest margin(1) for the nine months ended September 30, 2021 was 2.81%, down from 2.98% for the nine months ended September 30, 2020.
- Fees and interest income from PPP loans helped increase our net interest margin. For the nine months ended September 30, 2021, PPP loans increased average loans by $32.29 million and added $2.03 million in interest and fee income. For the nine months ended September 30, 2020, PPP loans increased average loans by $32.56 million and added $772 thousand in interest and fee income. If PPP loans are excluded, the net interest margin would have been 2.64% for the nine months ended September 30, 2021 and 2.91% for the nine months ended September 30, 2020.
- Total noninterest income for the nine months ended September 30, 2021 was up $461 thousand, or 7.94%, when compared to the nine months ended September 30, 2020. Higher noninterest income was driven by increased credit and debit card fees and receipt of a one-time bonus from a partnership investment.
- Noninterest expense was up $686 thousand, or 3.68%, when the nine months ended September 30, 2021 is compared with the nine months ended September 30, 2020.
Balance Sheet
- Total assets increased by $208.53 million, or 14.53%, from $1.44 billion at September 30, 2020 to $1.64 billion at September 30, 2021.
- Total deposits increased by $219.15 million, or 18.06%, to $1.43 billion, in part due to government stimulus funds received by depositors, especially municipal accounts.
- Gross loans outstanding were $798.61 million at September 30, 2021, a decrease of $4.19 million from September 30, 2020. PPP loans decreased $45.23 million from September 30, 2020 to September 30, 2021, while non-PPP loans grew $41.04 million.
- Total stockholders’ equity at September 30, 2021 was $190.85 million. The Company’s capital position provides a source of great strength and continues to significantly exceed all regulatory capital guidelines.
Other Notable Information
- The Company repurchased 73,100 shares in the 3rd quarter of 2021. Shares repurchased during the nine months ended September 30, 2021 total 247,662.
- Nonperforming loans as a percentage of total loans were 0.39% at September 30, 2021, down from 0.45% at September 30, 2020.
- The efficiency ratio(1) was 51.54% for the nine months ended September 30, 2021, an improvement over 54.58% for the nine months ended September 30, 2020.
- The allowance for loan losses to total loans was 0.97% at September 30, 2021.
- The Company’s net charge offs for the nine months ended September 30, 2021 were $445 thousand, compared with net charge offs of $420 thousand for the nine months ended September 30, 2020.
- The book value per common share as of September 30, 2021 was $31.30, compared with $31.16 as of September 30, 2020.
(1)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 the net interest margin, which is presented on a fully taxable-equivalent (“FTE”) basis. Efficiency ratio is calculated as noninterest expense, less non-recurring items, divided by the sum of noninterest income and net interest income on an FTE basis. FTE basis is calculated using the federal statutory income tax rate of 21%. 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 including a full version of this release with data tables 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.