BLACKSBURG, VA., October 24, 2024 -- National Bankshares, Inc. (“the Company”) (Nasdaq: NKSH), parent company of The National Bank of Blacksburg (“the Bank”) and National Bankshares Financial Services, Inc., today announced its results of operations through the third quarter of 2024. The Company reported net income of $4.54 million or $0.75 per basic common share for the nine months ended September 30, 2024. This compares with net income of $11.51 million or $1.95 per basic common share for the nine months ended September 30, 2023. For the three month period ended September 30, 2024, the Company reported net income of $2.68 million or $0.42 per basic common share. This compares with net income for the three month period ended September 30, 2023 of $3.07 million or $0.52 per basic common share. National Bankshares, Inc. ended September 30, 2024 with total assets of $1.79 billion.
President and CEO F. Brad Denardo commented, "Year-to-date earnings remain burdened by high interest expense, but we were pleased with the positive income statement trends in the third quarter. While 2024 has presented a difficult earnings environment, it has also been a building year for National Bankshares. Our acquisition of three branch offices in new markets, along with the upcoming opening of a newly constructed office in Roanoke, demonstrate our commitment to growth and to increasing long-term shareholder value."
Highlights
Merger: Income Statement Impacts
During the nine months ended September 30, 2024, the Company recorded merger-related expense of $2.89 million. Upon acquisition of the Frontier Community Bank (“FCB”) loans, the Company recorded a provision for credit loss of $1.29 million.
Merger: Balance Sheet Impacts
Consideration for the acquisition of FCB totaled $16.35 million, including $14.30 million in shares of the Company’s common stock and $2.05 million in cash for shareholder elections, fractional shares and to settle outstanding options.
The transaction was accounted for under the acquisition method of accounting, with acquired assets and liabilities recorded at fair value. Key items are presented in the following table as of the merger date:
| |
|
|
|
|
($ in thousands, except per share data)
|
June 1, 2024
|
|
|
Assets acquired at fair value
|
|
|
|
|
Cash and due from banks, interest-bearing deposits, and federal funds sold
|
$
|
8,934
|
|
|
Securities available for sale
|
|
9,320
|
|
|
Loans
|
|
118,743
|
|
|
Goodwill (provisional)
|
|
4,874
|
|
|
Core deposit intangible
|
|
2,100
|
|
|
Bank-owned life insurance
|
|
2,666
|
|
|
Liabilities acquired at fair value
|
|
|
|
|
Noninterest-bearing deposits
|
$
|
17,303
|
|
|
Interest-bearing demand deposits
|
|
40,367
|
|
|
Savings deposits
|
|
5,613
|
|
|
Time deposits
|
|
66,434
|
|
|
Total deposits
|
$
|
129,717
|
|
|
Borrowings
|
|
5,230
|
|
|
Stockholders' Equity
|
|
|
|
|
464,855 shares of common stock issued, $1.25 par value, and additional paid in capital
|
$
|
14,299
|
|
Within a short period following the merger, the Company sold FCB’s securities and repaid its borrowings.
Net Interest Income
The net interest margin improved when the third quarter of 2024 is compared with the second quarter of 2024, with increases in loan yields that outpaced increases in deposit costs. The impact of the FCB acquisition benefited the full third quarter, while impacting only one month of the second quarter. Many of the Company’s loans are adjustable with repricing dates in the future. If rates remain at the current level or do not decrease substantially, repricing will continue to contribute to improved interest income.
The cost of deposits increased when compared with the second quarter due to the acquisition and continued competitive pressure. The Federal Reserve's rate cut in September immediately decreased interest expense for adjustable-rate deposits. The Company continuously monitors its deposit base and funding costs.
Noninterest Income
When the nine months ended September 30, 2024 are compared with the same period of 2023, service charges on deposits increased due to an updated fee schedule and the FCB acquisition. Trust income increased due to expansion in assets under management. Noninterest income for 2023 reflects payout of a BOLI policy, gain on the sale of an investment in VISA Class B shares, and loss on the sale of securities.
Noninterest income for the third quarter of 2024 increased slightly when compared with the second quarter of 2024, due to the FCB acquisition and positive trends in Trust income.
Noninterest Expense
Noninterest expense for the nine months ended September 30, 2024 increased when compared with the same period of 2023, due to the FCB acquisition and a contract termination expense. During 2023, the Company reported expenses, included in professional services, associated with a proxy contest.
When the third quarter of 2024 is compared with the second quarter of 2024, noninterest expense decreased. The majority of merger-related expenses were recorded during the second quarter. Other categories increased due to the FCB acquisition and marketing expenses to promote the acquired branches and the soon to open Roanoke branch.
Securities
Market interest rate expectations at September 30, 2024 improved the fair value of securities when compared with June 30, 2024 and September 30, 2023, reflecting the Federal Reserve's interest rate cut in September 2024. The Company’s Asset Liability Management Committee closely monitors interest rate risk on all of the Company’s financial assets and liabilities. As of September 30, 2024, the Company has the ability to hold securities until maturity. Analysis as of September 30, 2024 did not indicate credit risk concerns with any of the Company’s securities.
Deposits
The Company’s depositors within its market areas are diverse and include individuals, businesses and municipalities. The Company does not have any brokered deposits. Depositors are insured up to the FDIC maximum of $250 thousand. Municipal deposits, which account for approximately 22% of the Company’s deposits, have additional security from bonds pledged as collateral, in accordance with state regulation. Of the Company’s non-municipal deposits, approximately 22% are uninsured.
Liquidity
The Company’s liquidity position remains solid. The Company maintains borrowing lines with the Federal Home Loan Bank of Atlanta (“FHLB”) and the Federal Reserve that provide substantial borrowing capacity. During 2023, the Company accessed short-term borrowings with the FHLB and Federal Reserve to reinforce liquidity. The advances were fully repaid due to the success of the Company’s deposit strategy. Combined with a low loan-to-deposit ratio, positive results of the latest liquidity stress testing and success of deposit marketing, the Company believes it is well positioned to meet foreseeable liquidity demands.
Loans
Loans increased from June 30, 2024, driven by growth in consumer real estate and commercial real estate loans. The Company is positioned to continue to make every loan that meets its underwriting standards.
Credit Quality
Loan metrics continue to reflect low credit risk, with low charge-off and past due levels.
Stockholders’ Equity
Stockholders’ equity as of September 30, 2024 increased when compared with 2023 primarily due to the acquisition and improvement in the unrealized loss on securities, which is reflected in the accumulated other comprehensive loss in stockholders' equity. Accumulated other comprehensive loss is excluded from the Bank’s regulatory capital and does not affect regulatory capital ratios. The Bank is considered well capitalized, with capital ratios substantially higher than minimum regulatory requirements, and meets all requirements for borrowing from the FHLB.
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 27 full-service offices, primarily in southwest and central Virginia, and two loan production offices in Roanoke and Charlottesville, 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.”
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, achievements, or trends will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the following: the businesses of the Company and Frontier Community Bank (“FCB”) may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; the expected growth opportunities or cost savings from the merger with FCB may not be fully realized or may take longer to realize than expected; deposit attrition, operating costs, customer losses and business disruption prior to and following the merger with FCB, including adverse effects on relationships with employees and customers, may be greater than expected; the regulatory and shareholder approvals required for the merger with FCB may not be obtained; the level of inflation; interest rates; national and local economic conditions; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation, and the impact of any policies or programs implemented pursuant to financial reform legislation; unanticipated increases in the level of unemployment in the Company’s market; the quality or composition of the loan and/or investment portfolios; the sufficiency of the Company’s allowance for credit losses; demand for loan products; deposit flows, including impact on liquidity; competition; demand for financial services in the Company’s market; the real estate market conditions in the Company’s market; laws, regulations and policies impacting financial institutions; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer behavior; technological risks and developments, and cyber-threats, attacks or events; the Company’s technology initiatives; geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts; the occurrence of significant natural disasters, including severe weather conditions, floods, and other catastrophic events; the Company's ability to identify, attract, and retain experienced management, relationship managers, and support personnel, particularly in a competitive labor environment; performance by the Company’s counterparties or vendors; applicable accounting principles, policies and guidelines; the impact of public health events, including the adverse impact on our business and operations and on our customers; and other factors described from time to time in the Company’s reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
National Bankshares, Inc.
Consolidated Balance Sheets
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except share and per share data)
|
|
September 30, 2024
|
|
|
June 30, 2024
|
|
|
September 30, 2023
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
15,990
|
|
|
$
|
14,908
|
|
|
$
|
13,089
|
|
|
Interest-bearing deposits
|
|
|
33,707
|
|
|
|
80,477
|
|
|
|
40,353
|
|
|
Federal funds sold
|
|
|
73
|
|
|
|
3,499
|
|
|
|
-
|
|
|
Securities available for sale, at fair value
|
|
|
622,271
|
|
|
|
605,196
|
|
|
|
591,552
|
|
|
Restricted stock, at cost
|
|
|
1,849
|
|
|
|
1,752
|
|
|
|
1,264
|
|
|
Mortgage loans held for sale
|
|
|
457
|
|
|
|
125
|
|
|
|
82
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
Real estate construction loans
|
|
|
71,920
|
|
|
|
81,355
|
|
|
|
64,181
|
|
|
Consumer real estate loans
|
|
|
306,012
|
|
|
|
299,310
|
|
|
|
226,671
|
|
|
Commercial real estate loans
|
|
|
473,018
|
|
|
|
454,978
|
|
|
|
424,765
|
|
|
Commercial non real estate loans
|
|
|
52,699
|
|
|
|
52,297
|
|
|
|
42,940
|
|
|
Public sector and IDA loans
|
|
|
58,109
|
|
|
|
59,043
|
|
|
|
51,591
|
|
|
Consumer non real estate loans
|
|
|
40,483
|
|
|
|
42,915
|
|
|
|
39,269
|
|
|
Total loans
|
|
|
1,002,241
|
|
|
|
989,898
|
|
|
|
849,417
|
|
|
Less: unearned income and deferred fees and costs
|
|
|
(582
|
)
|
|
|
(531
|
)
|
|
|
(442
|
)
|
|
Loans, net of unearned income and deferred fees and costs
|
|
|
1,001,659
|
|
|
|
989,367
|
|
|
|
848,975
|
|
|
Less: allowance for credit losses
|
|
|
(10,328
|
)
|
|
|
(10,502
|
)
|
|
|
(10,181
|
)
|
|
Loans, net
|
|
|
991,331
|
|
|
|
978,865
|
|
|
|
838,794
|
|
|
Premises and equipment, net
|
|
|
16,165
|
|
|
|
15,468
|
|
|
|
11,091
|
|
|
Accrued interest receivable
|
|
|
6,648
|
|
|
|
6,615
|
|
|
|
6,180
|
|
|
Other real estate owned, net
|
|
|
-
|
|
|
|
-
|
|
|
|
662
|
|
|
Goodwill
|
|
|
10,718
|
|
|
|
10,732
|
|
|
|
5,848
|
|
|
Core deposit intangible, net
|
|
|
1,963
|
|
|
|
2,065
|
|
|
|
-
|
|
|
Bank-owned life insurance
|
|
|
47,071
|
|
|
|
46,775
|
|
|
|
43,327
|
|
|
Other assets
|
|
|
36,790
|
|
|
|
42,738
|
|
|
|
39,660
|
|
|
Total assets
|
|
$
|
1,785,033
|
|
|
$
|
1,809,215
|
|
|
$
|
1,591,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand deposits
|
|
$
|
296,469
|
|
|
$
|
296,242
|
|
|
$
|
303,166
|
|
|
Interest-bearing demand deposits
|
|
|
819,947
|
|
|
|
867,899
|
|
|
|
789,148
|
|
|
Savings deposits
|
|
|
176,460
|
|
|
|
176,852
|
|
|
|
184,801
|
|
|
Time deposits
|
|
|
310,077
|
|
|
|
304,059
|
|
|
|
187,885
|
|
|
Total deposits
|
|
|
1,602,953
|
|
|
|
1,645,052
|
|
|
|
1,465,000
|
|
|
Accrued interest payable
|
|
|
2,074
|
|
|
|
2,525
|
|
|
|
551
|
|
|
Other liabilities
|
|
|
12,224
|
|
|
|
12,675
|
|
|
|
10,238
|
|
|
Total liabilities
|
|
|
1,617,251
|
|
|
|
1,660,252
|
|
|
|
1,475,789
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, no par value, 5,000,000 shares authorized; none issued and outstanding
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Common stock of $1.25 par value and additional paid in capital. Authorized 10,000,000 shares; issued and outstanding 6,360,973 (including 4,379 unvested) shares at September 30, 2024, 6,361,433 (including 4,839 unvested) shares at June 30, 2024, and 5,891,739 (including 2,052 unvested) shares at September 30, 2023
|
|
|
21,796
|
|
|
|
21,768
|
|
|
|
7,383
|
|
|
Retained earnings
|
|
|
198,225
|
|
|
|
195,549
|
|
|
|
198,394
|
|
|
Accumulated other comprehensive loss, net
|
|
|
(52,239
|
)
|
|
|
(68,354
|
)
|
|
|
(89,664
|
)
|
|
Total stockholders' equity
|
|
|
167,782
|
|
|
|
148,963
|
|
|
|
116,113
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,785,033
|
|
|
$
|
1,809,215
|
|
|
$
|
1,591,902
|
|
National Bankshares, Inc.
Consolidated Statements of Income
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
(in thousands, except share and per share data)
|
|
September 30, 2024
|
|
|
June 30, 2024
|
|
|
September 30, 2023
|
|
|
Interest Income
|
|
|
|
|
|
|
|
|
|
|
Interest and fees on loans
|
|
$
|
13,164
|
|
|
$
|
11,301
|
|
|
$
|
9,816
|
|
|
Interest on federal funds sold
|
|
|
12
|
|
|
|
11
|
|
|
|
–
|
|
|
Interest on interest-bearing deposits
|
|
|
954
|
|
|
|
1,229
|
|
|
|
439
|
|
|
Interest on securities – taxable
|
|
|
4,203
|
|
|
|
4,239
|
|
|
|
4,084
|
|
|
Interest on securities – nontaxable
|
|
|
333
|
|
|
|
338
|
|
|
|
340
|
|
|
Total interest income
|
|
|
18,666
|
|
|
|
17,118
|
|
|
|
14,679
|
|
|
Interest Expense
|
|
|
|
|
|
|
|
|
|
|
Interest on time deposits
|
|
|
3,509
|
|
|
|
2,930
|
|
|
|
1,452
|
|
|
Interest on other deposits
|
|
|
5,709
|
|
|
|
5,486
|
|
|
|
4,584
|
|
|
Interest on borrowings
|
|
|
–
|
|
|
|
2
|
|
|
|
3
|
|
|
Total interest expense
|
|
|
9,218
|
|
|
|
8,418
|
|
|
|
6,039
|
|
|
Net interest income
|
|
|
9,448
|
|
|
|
8,700
|
|
|
|
8,640
|
|
|
(Recovery of) Provision for credit losses
|
|
|
(5
|
)
|
|
|
1,302
|
|
|
|
(371
|
)
|
|
Net interest income after (recovery of) provision for credit losses
|
|
|
9,453
|
|
|
|
7,398
|
|
|
|
9,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
753
|
|
|
|
722
|
|
|
|
642
|
|
|
Other service charges and fees
|
|
|
82
|
|
|
|
48
|
|
|
|
151
|
|
|
Credit and debit card fees, net
|
|
|
344
|
|
|
|
423
|
|
|
|
395
|
|
|
Trust income
|
|
|
580
|
|
|
|
513
|
|
|
|
505
|
|
|
BOLI income
|
|
|
295
|
|
|
|
269
|
|
|
|
253
|
|
|
Gain on sale of mortgage loans
|
|
|
50
|
|
|
|
58
|
|
|
|
22
|
|
|
Other income
|
|
|
168
|
|
|
|
213
|
|
|
|
147
|
|
|
Total noninterest income
|
|
|
2,272
|
|
|
|
2,246
|
|
|
|
2,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
4,953
|
|
|
|
4,687
|
|
|
|
4,462
|
|
|
Occupancy, furniture and fixtures
|
|
|
641
|
|
|
|
561
|
|
|
|
547
|
|
|
Data processing and ATM
|
|
|
1,054
|
|
|
|
886
|
|
|
|
978
|
|
|
FDIC assessment
|
|
|
211
|
|
|
|
192
|
|
|
|
190
|
|
|
Intangible asset amortization
|
|
|
102
|
|
|
|
35
|
|
|
|
–
|
|
|
Net costs of other real estate owned
|
|
|
–
|
|
|
|
–
|
|
|
|
14
|
|
|
Franchise taxes
|
|
|
373
|
|
|
|
358
|
|
|
|
339
|
|
|
Professional services
|
|
|
254
|
|
|
|
272
|
|
|
|
251
|
|
|
Merger-related expenses
|
|
|
150
|
|
|
|
2,257
|
|
|
|
–
|
|
|
Contract termination
|
|
|
–
|
|
|
|
173
|
|
|
|
–
|
|
|
Other operating expenses
|
|
|
761
|
|
|
|
706
|
|
|
|
654
|
|
|
Total noninterest expense
|
|
|
8,499
|
|
|
|
10,127
|
|
|
|
7,435
|
|
|
Income (Loss) before income tax expense (benefit)
|
|
|
3,226
|
|
|
|
(483
|
)
|
|
|
3,691
|
|
|
Income tax expense (benefit)
|
|
|
550
|
|
|
|
(177
|
)
|
|
|
617
|
|
|
Net Income (Loss)
|
|
$
|
2,676
|
|
|
$
|
(306
|
)
|
|
$
|
3,074
|
|
|
Basic net income (loss) per common share
|
|
$
|
0.42
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.52
|
|
|
Fully diluted net income (loss) per common share
|
|
$
|
0.42
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.52
|
|
|
Weighted average number of common shares outstanding, basic
|
|
|
6,356,594
|
|
|
|
6,028,220
|
|
|
|
5,889,687
|
|
|
Weighted average number of common shares outstanding, fully diluted
|
|
|
6,358,352
|
|
|
|
6,028,220
|
|
|
|
5,889,939
|
|
|
Dividends declared per common share
|
|
$
|
—
|
|
|
$
|
0.73
|
|
|
$
|
—
|
|
|
Book value per common share
|
|
$
|
26.38
|
|
|
$
|
23.42
|
|
|
$
|
19.71
|
|
National Bankshares, Inc.
Consolidated Statements of Income
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
(in thousands, except share and per share data)
|
|
2024
|
|
|
2023
|
|
|
Interest Income
|
|
|
|
|
|
|
|
Interest and fees on loans
|
|
$
|
34,742
|
|
|
$
|
28,793
|
|
|
Interest on federal funds sold
|
|
|
23
|
|
|
|
-
|
|
|
Interest on interest-bearing deposits
|
|
|
3,312
|
|
|
|
1,207
|
|
|
Interest on securities – taxable
|
|
|
12,718
|
|
|
|
12,268
|
|
|
Interest on securities – nontaxable
|
|
|
1,010
|
|
|
|
1,052
|
|
|
Total interest income
|
|
|
51,805
|
|
|
|
43,320
|
|
|
Interest Expense
|
|
|
|
|
|
|
|
Interest on time deposits
|
|
|
8,991
|
|
|
|
2,865
|
|
|
Interest on other deposits
|
|
|
16,419
|
|
|
|
11,352
|
|
|
Interest on borrowings
|
|
|
2
|
|
|
|
300
|
|
|
Total interest expense
|
|
|
25,412
|
|
|
|
14,517
|
|
|
Net interest income
|
|
|
26,393
|
|
|
|
28,803
|
|
|
Provision for (recovery of) credit losses
|
|
|
1,287
|
|
|
|
(368
|
)
|
|
Net interest income after provision for (recovery of) credit losses
|
|
|
25,106
|
|
|
|
29,171
|
|
|
|
|
|
|
|
|
|
|
Noninterest Income
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
2,150
|
|
|
|
1,871
|
|
|
Other service charges and fees
|
|
|
176
|
|
|
|
253
|
|
|
Credit and debit card fees, net
|
|
|
1,141
|
|
|
|
1,276
|
|
|
Trust income
|
|
|
1,596
|
|
|
|
1,431
|
|
|
BOLI income
|
|
|
822
|
|
|
|
1,771
|
|
|
Gain on sale of investment
|
|
|
-
|
|
|
|
2,971
|
|
|
Gain on sale of mortgage loans
|
|
|
132
|
|
|
|
93
|
|
|
Other income
|
|
|
700
|
|
|
|
771
|
|
|
Realized securities loss, net
|
|
|
-
|
|
|
|
(3,332
|
)
|
|
Total noninterest income
|
|
|
6,717
|
|
|
|
7,105
|
|
|
|
|
|
|
|
|
|
|
Noninterest Expense
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
14,106
|
|
|
|
13,361
|
|
|
Occupancy, furniture and fixtures
|
|
|
1,741
|
|
|
|
1,500
|
|
|
Data processing and ATM
|
|
|
2,807
|
|
|
|
2,730
|
|
|
FDIC assessment
|
|
|
590
|
|
|
|
561
|
|
|
Intangible asset amortization
|
|
|
137
|
|
|
|
-
|
|
|
Net costs of other real estate owned
|
|
|
-
|
|
|
|
29
|
|
|
Franchise taxes
|
|
|
1,081
|
|
|
|
1,072
|
|
|
Professional services
|
|
|
766
|
|
|
|
1,555
|
|
|
Merger-related expenses
|
|
|
2,891
|
|
|
|
-
|
|
|
Contract termination
|
|
|
173
|
|
|
|
-
|
|
|
Other operating expenses
|
|
|
2,096
|
|
|
|
1,857
|
|
|
Total noninterest expense
|
|
|
26,388
|
|
|
|
22,665
|
|
|
Income before income taxes
|
|
|
5,435
|
|
|
|
13,611
|
|
|
Income tax expense
|
|
|
891
|
|
|
|
2,105
|
|
|
Net Income
|
|
$
|
4,544
|
|
|
$
|
11,506
|
|
|
Basic net income per common share
|
|
$
|
0.75
|
|
|
$
|
1.95
|
|
|
Fully diluted net income per common share
|
|
$
|
0.75
|
|
|
$
|
1.95
|
|
|
Weighted average number of common shares outstanding, basic
|
|
|
6,092,468
|
|
|
|
5,889,687
|
|
|
Weighted average number of common shares outstanding, fully diluted
|
|
|
6,094,442
|
|
|
|
5,889,778
|
|
|
Dividends declared per common share
|
|
$
|
0.73
|
|
|
$
|
1.73
|
|
National Bankshares, Inc.
Net Interest Margin
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2024
|
|
|
|
Three Months Ended June 30, 2024
|
|
|
|
|
Average
Balance
|
|
|
Interest
|
|
|
Average
Yield/Rate
|
|
|
|
Average
Balance
|
|
|
Interest
|
|
|
Average
Yield/Rate
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1)(2)(3)
|
|
$
|
994,744
|
|
|
$
|
13,285
|
|
|
|
5.31
|
%
|
|
|
$
|
904,317
|
|
|
$
|
11,423
|
|
|
|
5.08
|
%
|
|
Taxable securities (4)(5)
|
|
|
625,908
|
|
|
|
4,203
|
|
|
|
2.67
|
%
|
|
|
|
629,871
|
|
|
|
4,239
|
|
|
|
2.71
|
%
|
|
Nontaxable securities (1)(4)
|
|
|
63,197
|
|
|
|
453
|
|
|
|
2.85
|
%
|
|
|
|
63,819
|
|
|
|
459
|
|
|
|
2.89
|
%
|
|
Federal funds sold
|
|
|
918
|
|
|
|
12
|
|
|
|
5.20
|
%
|
|
|
|
891
|
|
|
|
11
|
|
|
|
4.97
|
%
|
|
Interest-bearing deposits
|
|
|
69,264
|
|
|
|
954
|
|
|
|
5.48
|
%
|
|
|
|
90,047
|
|
|
|
1,229
|
|
|
|
5.49
|
%
|
|
Total interest-earning assets
|
|
$
|
1,754,031
|
|
|
$
|
18,907
|
|
|
|
4.29
|
%
|
|
|
$
|
1,688,945
|
|
|
$
|
17,361
|
|
|
|
4.13
|
%
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand deposits
|
|
$
|
852,126
|
|
|
$
|
5,488
|
|
|
|
2.56
|
%
|
|
|
$
|
842,809
|
|
|
$
|
5,270
|
|
|
|
2.51
|
%
|
|
Savings deposits
|
|
|
176,354
|
|
|
|
221
|
|
|
|
0.50
|
%
|
|
|
|
174,699
|
|
|
|
216
|
|
|
|
0.50
|
%
|
|
Time deposits
|
|
|
308,247
|
|
|
|
3,509
|
|
|
|
4.53
|
%
|
|
|
|
261,584
|
|
|
|
2,930
|
|
|
|
4.51
|
%
|
|
Borrowings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
230
|
|
|
|
2
|
|
|
|
3.50
|
%
|
|
Total interest-bearing liabilities
|
|
$
|
1,336,727
|
|
|
$
|
9,218
|
|
|
|
2.74
|
%
|
|
|
$
|
1,279,322
|
|
|
$
|
8,418
|
|
|
|
2.65
|
%
|
|
Net interest income and interest rate spread
|
|
|
|
|
$
|
9,689
|
|
|
|
1.55
|
%
|
|
|
|
|
|
$
|
8,943
|
|
|
|
1.48
|
%
|
|
Net interest margin
|
|
|
|
|
|
|
|
|
2.20
|
%
|
|
|
|
|
|
|
|
|
|
2.13
|
%
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2023
|
|
|
|
|
Average
Balance
|
|
|
Interest
|
|
|
Average
Yield/Rate
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
Loans (1)(2)(3)
|
|
$
|
843,546
|
|
|
$
|
9,924
|
|
|
|
4.67
|
%
|
|
Taxable securities (4)(5)
|
|
|
640,578
|
|
|
|
4,084
|
|
|
|
2.53
|
%
|
|
Nontaxable securities (1)(4)
|
|
|
64,415
|
|
|
|
461
|
|
|
|
2.84
|
%
|
|
Interest-bearing deposits
|
|
|
32,503
|
|
|
|
439
|
|
|
|
5.36
|
%
|
|
Total interest-earning assets
|
|
$
|
1,581,042
|
|
|
$
|
14,908
|
|
|
|
3.74
|
%
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand deposits
|
|
$
|
799,772
|
|
|
$
|
4,358
|
|
|
|
2.16
|
%
|
|
Savings deposits
|
|
|
192,702
|
|
|
|
226
|
|
|
|
0.47
|
%
|
|
Time deposits
|
|
|
163,476
|
|
|
|
1,452
|
|
|
|
3.52
|
%
|
|
Borrowings
|
|
|
207
|
|
|
|
3
|
|
|
|
5.75
|
%
|
|
Total interest-bearing liabilities
|
|
$
|
1,156,157
|
|
|
$
|
6,039
|
|
|
|
2.07
|
%
|
|
Net interest income and interest rate spread
|
|
|
|
|
$
|
8,869
|
|
|
|
1.67
|
%
|
|
Net interest margin
|
|
|
|
|
|
|
|
|
2.23
|
%
|
(1)
Interest on nontaxable loans and securities is computed on a fully taxable equivalent basis using a federal income tax rate of 21%. See “Reconciliation of Non-GAAP Financial Measures” at the end of this release.
(2)
Interest income includes loan fees of $44, $55 and $56 for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
(3)
Includes loans held for sale and nonaccrual loans.
(4)
Daily averages are shown at amortized cost.
(5)
Includes restricted stock.
National Bankshares, Inc.
Net Interest Margin
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2024
|
|
|
|
2023
|
|
|
|
|
Average
Balance
|
|
|
Interest
|
|
|
Average
Yield/Rate
|
|
|
|
Average
Balance
|
|
|
Interest
|
|
|
Average
Yield/Rate
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (1)(2)(3)
|
|
$
|
919,369
|
|
|
$
|
35,108
|
|
|
|
5.10
|
%
|
|
|
$
|
850,543
|
|
|
$
|
29,068
|
|
|
|
4.57
|
%
|
|
Taxable securities (4)(5)
|
|
|
629,748
|
|
|
|
12,718
|
|
|
|
2.70
|
%
|
|
|
|
657,575
|
|
|
|
12,268
|
|
|
|
2.49
|
%
|
|
Nontaxable securities (4)
|
|
|
63,730
|
|
|
|
1,373
|
|
|
|
2.88
|
%
|
|
|
|
65,649
|
|
|
|
1,425
|
|
|
|
2.90
|
%
|
|
Federal funds sold
|
|
|
702
|
|
|
|
23
|
|
|
|
4.38
|
%
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
Interest-bearing deposits
|
|
|
80,637
|
|
|
|
3,312
|
|
|
|
5.49
|
%
|
|
|
|
31,435
|
|
|
|
1,207
|
|
|
|
5.13
|
%
|
|
Total interest-earning assets
|
|
$
|
1,694,186
|
|
|
$
|
52,534
|
|
|
|
4.14
|
%
|
|
|
$
|
1,605,202
|
|
|
$
|
43,968
|
|
|
|
3.66
|
%
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand deposits
|
|
$
|
839,211
|
|
|
$
|
15,747
|
|
|
|
2.51
|
%
|
|
|
$
|
834,575
|
|
|
$
|
10,846
|
|
|
|
1.74
|
%
|
|
Savings deposits
|
|
|
175,670
|
|
|
|
672
|
|
|
|
0.51
|
%
|
|
|
|
200,170
|
|
|
|
506
|
|
|
|
0.34
|
%
|
|
Time deposits
|
|
|
268,313
|
|
|
|
8,991
|
|
|
|
4.48
|
%
|
|
|
|
131,398
|
|
|
|
2,865
|
|
|
|
2.92
|
%
|
|
Borrowings
|
|
|
76
|
|
|
|
2
|
|
|
|
3.52
|
%
|
|
|
|
8,287
|
|
|
|
300
|
|
|
|
4.84
|
%
|
|
Total interest-bearing liabilities
|
|
$
|
1,283,270
|
|
|
$
|
25,412
|
|
|
|
2.65
|
%
|
|
|
$
|
1,174,430
|
|
|
$
|
14,517
|
|
|
|
1.65
|
%
|
|
Net interest income and interest rate spread
|
|
|
|
|
$
|
27,122
|
|
|
|
1.49
|
%
|
|
|
|
|
|
$
|
29,451
|
|
|
|
2.01
|
%
|
|
Net interest margin
|
|
|
|
|
|
|
|
|
2.14
|
%
|
|
|
|
|
|
|
|
|
|
2.45
|
%
|
(1)
Interest on nontaxable loans and securities is computed on a fully taxable equivalent basis using a federal income tax rate of 21%. See “Reconciliation of Non-GAAP Financial Measures” at the end of this release.
(2)
Interest income includes loan fees of $147 and $162 for the nine months ended September 30, 2024 and September 30, 2023, respectively.
(3)
Includes loans held for sale and nonaccrual loans.
(4)
Daily averages are shown at amortized cost.
(5)
Includes restricted stock.
National Bankshares, Inc.
Key Ratios and Other Data
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Three Months Ended
|
|
|
|
|
September 30, 2024
|
|
|
June 30, 2024
|
|
|
September 30, 2023
|
|
|
Average Balances
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
13,443
|
|
|
$
|
12,644
|
|
|
$
|
11,929
|
|
|
Interest-bearing deposits
|
|
|
69,264
|
|
|
|
90,047
|
|
|
|
32,503
|
|
|
Securities available for sale, at fair value
|
|
|
611,615
|
|
|
|
602,646
|
|
|
|
609,404
|
|
|
Mortgage loans held for sale
|
|
|
419
|
|
|
|
453
|
|
|
|
88
|
|
|
Loans, gross
|
|
|
994,876
|
|
|
|
904,399
|
|
|
|
843,892
|
|
|
Loans, net of unearned income and deferred fees and costs
|
|
|
994,325
|
|
|
|
903,864
|
|
|
|
843,458
|
|
|
Loans, net of allowance for credit losses
|
|
|
983,862
|
|
|
|
894,351
|
|
|
|
832,861
|
|
|
Intangible assets
|
|
|
12,755
|
|
|
|
8,149
|
|
|
|
5,848
|
|
|
Total assets
|
|
$
|
1,804,348
|
|
|
$
|
1,714,639
|
|
|
$
|
1,591,801
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand deposits
|
|
$
|
296,549
|
|
|
$
|
284,038
|
|
|
$
|
298,431
|
|
|
Interest-bearing and savings deposits
|
|
|
1,028,480
|
|
|
|
1,017,508
|
|
|
|
992,474
|
|
|
Time deposits
|
|
|
308,247
|
|
|
|
261,584
|
|
|
|
163,476
|
|
|
Total deposits
|
|
|
1,633,276
|
|
|
|
1,563,130
|
|
|
|
1,454,381
|
|
|
Total shareholders' equity
|
|
$
|
156,111
|
|
|
$
|
137,873
|
|
|
$
|
126,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Ratios
|
|
|
|
|
|
|
|
|
|
|
Return on average assets(1)
|
|
|
0.61
|
%
|
|
|
0.46
|
%
|
|
|
0.71
|
%
|
|
Return on average equity(1)
|
|
|
7.09
|
%
|
|
|
5.69
|
%
|
|
|
8.89
|
%
|
|
Efficiency ratio(2)
|
|
|
69.80
|
%
|
|
|
68.79
|
%
|
|
|
67.96
|
%
|
|
Average equity to average assets
|
|
|
8.65
|
%
|
|
|
8.04
|
%
|
|
|
7.95
|
%
|
|
Tangible common equity to tangible assets(3)
|
|
|
8.75
|
%
|
|
|
7.58
|
%
|
|
|
6.95
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Credit Losses
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
10,502
|
|
|
$
|
9,055
|
|
|
$
|
10,626
|
|
|
Provision for (recovery of) credit losses
|
|
|
5
|
|
|
|
12
|
|
|
|
(401
|
)
|
|
Acquisition-related provision
|
|
|
–
|
|
|
|
1,290
|
|
|
|
–
|
|
|
Acquisition-related increase for purchased credit deteriorated loans
|
|
|
–
|
|
|
|
175
|
|
|
|
–
|
|
|
Charge-offs
|
|
|
(234
|
)
|
|
|
(68
|
)
|
|
|
(72
|
)
|
|
Recoveries
|
|
|
55
|
|
|
|
38
|
|
|
|
28
|
|
|
Ending Balance
|
|
$
|
10,328
|
|
|
$
|
10,502
|
|
|
$
|
10,181
|
|
(1)
The return on average assets and return on average equity are calculated by annualizing net income and dividing by average period-to-date assets or equity, respectively. Any significant nonrecurring items within net income are not annualized. See “Reconciliation of Non-GAAP Financial Measures” at the end of this release.
(2)
The efficiency ratio is calculated as noninterest expense divided by the sum of noninterest income, less non-recurring items, and net interest income on a fully taxable equivalent basis. See “Reconciliation of Non-GAAP Financial Measures” at the end of this release.
(3)
Tangible common equity and tangible assets exclude goodwill and intangible assets of $12,681 as of September 30, 2024 and $12,797 as of June 30, 2024 and $5,848 as of September 30, 2023. See “Reconciliation of Non-GAAP Financial Measures” at the end of this release.
National Bankshares, Inc.
Key Ratios and Other Data
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
As of and for the Nine Months Ended
|
|
|
|
|
September 30, 2024
|
|
|
September 30, 2023
|
|
|
Average Balances
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
12,647
|
|
|
$
|
11,829
|
|
|
Interest-bearing deposits
|
|
|
80,637
|
|
|
|
31,435
|
|
|
Securities available for sale, at fair value
|
|
|
609,499
|
|
|
|
627,908
|
|
|
Mortgage loans held for sale
|
|
|
342
|
|
|
|
161
|
|
|
Loans, gross
|
|
|
919,563
|
|
|
|
850,814
|
|
|
Loans, net of unearned income and deferred fees and costs
|
|
|
919,027
|
|
|
|
850,382
|
|
|
Loans, net of allowance for credit loss
|
|
|
909,345
|
|
|
|
839,764
|
|
|
Intangible assets
|
|
|
8,931
|
|
|
|
5,848
|
|
|
Total assets
|
|
$
|
1,726,898
|
|
|
$
|
1,614,757
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand deposits
|
|
$
|
286,643
|
|
|
$
|
302,568
|
|
|
Interest-bearing and savings deposits
|
|
|
1,014,881
|
|
|
|
1,034,745
|
|
|
Time deposits
|
|
|
268,313
|
|
|
|
131,398
|
|
|
Total deposits
|
|
|
1,569,837
|
|
|
|
1,468,711
|
|
|
Total shareholders' equity
|
|
|
143,444
|
|
|
|
126,792
|
|
|
|
|
|
|
|
|
|
|
Financial Ratios
|
|
|
|
|
|
|
|
Return on average assets(1)
|
|
|
0.42
|
%
|
|
|
0.94
|
%
|
|
Return on average equity(1)
|
|
|
5.05
|
%
|
|
|
11.97
|
%
|
|
Efficiency ratio(2)
|
|
|
68.93
|
%
|
|
|
60.98
|
%
|
|
Average equity to average assets
|
|
|
8.31
|
%
|
|
|
7.85
|
%
|
|
Tangible common equity to tangible assets(3)
|
|
|
8.75
|
%
|
|
|
6.95
|
%
|
|
|
|
|
|
|
|
|
|
Allowance for Loan Credit Losses
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
9,094
|
|
|
$
|
8,225
|
|
|
Provision for (recovery of) credit losses
|
|
|
22
|
|
|
|
(389
|
)
|
|
Acquisition-related provision
|
|
|
1,290
|
|
|
|
–
|
|
|
Acquisition-related increase for purchased credit deteriorated loans
|
|
|
175
|
|
|
|
–
|
|
|
Charge-offs
|
|
|
(411
|
)
|
|
|
(232
|
)
|
|
Recoveries
|
|
|
158
|
|
|
|
235
|
|
|
Adoption of ASU 2016-13
|
|
|
–
|
|
|
|
2,342
|
|
|
Ending Balance
|
|
$
|
10,328
|
|
|
$
|
10,181
|
|
(1)
The return on average assets and return on average equity are calculated by annualizing net income and dividing by average period-to-date assets or equity, respectively. Any significant nonrecurring items within net income are not annualized. See “Reconciliation of Non-GAAP Financial Measures” at the end of this release.
(2)
The efficiency ratio is calculated as noninterest expense divided by the sum of noninterest income, less non-recurring items, and net interest income on a fully taxable equivalent basis. See “Reconciliation of Non-GAAP Financial Measures” at the end of this release.
(3)
Tangible common equity and tangible assets exclude goodwill and intangible assets of $12,681 as of September 30, 2024 and $5,848 as of September 30, 2023. See “Reconciliation of Non-GAAP Financial Measures” at the end of this release.
National Bankshares, Inc.
Asset Quality Data
(Unaudited)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2024
|
|
|
June 30, 2024
|
|
|
September 30, 2023
|
|
|
Nonperforming Assets
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans
|
|
$
|
2,283
|
|
|
$
|
2,507
|
|
|
$
|
2,981
|
|
|
Other real estate owned, net
|
|
|
–
|
|
|
|
–
|
|
|
|
662
|
|
|
Total nonperforming assets
|
|
$
|
2,283
|
|
|
$
|
2,507
|
|
|
$
|
3,643
|
|
|
Loans past due 90 days or more, and still accruing
|
|
$
|
71
|
|
|
$
|
234
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Ratios
|
|
|
|
|
|
|
|
|
|
|
Ratio of nonperforming assets to loans(1) plus other real estate owned
|
|
|
0.23
|
%
|
|
|
0.25
|
%
|
|
|
0.43
|
%
|
|
Allowance for credit losses on loans to total loans(1)
|
|
|
1.03
|
%
|
|
|
1.06
|
%
|
|
|
1.20
|
%
|
|
Ratio of ACLL to nonperforming loans
|
|
|
452.39
|
%
|
|
|
418.91
|
%
|
|
|
341.53
|
%
|
|
Loans past due 90 days or more to loans (1)
|
|
|
0.01
|
%
|
|
|
0.02
|
%
|
|
|
0.00
|
%
|
(1)
Loans are net of unearned income and deferred fees and costs
National Bankshares, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
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. 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.
The non-GAAP financial measures presented in this document include fully taxable equivalent (“FTE”) interest income used in the net interest margin, the efficiency ratio, and the ratio of tangible common equity to tangible assets. For periods that are shorter than twelve months, the Company annualizes net income for the return on average assets and return on average equity. In order to prevent distortion, the Company does not annualize significant non-recurring income and expense items.
The following tables present calculations underlying non-GAAP financial measures. All dollars are in thousands.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Net Interest Margin, FTE
|
|
September 30, 2024
|
|
|
June 30, 2024
|
|
|
September 30, 2023
|
|
|
Interest income (GAAP)
|
|
$
|
18,666
|
|
|
$
|
17,118
|
|
|
$
|
14,679
|
|
|
Add: FTE adjustment
|
|
|
241
|
|
|
|
243
|
|
|
|
229
|
|
|
Interest income, FTE (non-GAAP)
|
|
|
18,907
|
|
|
|
17,361
|
|
|
|
14,908
|
|
|
Interest expense (GAAP)
|
|
|
9,218
|
|
|
|
8,418
|
|
|
|
6,039
|
|
|
Net interest income, FTE (non-GAAP)
|
|
$
|
9,689
|
|
|
$
|
8,943
|
|
|
$
|
8,869
|
|
|
Average balance of interest-earning assets
|
|
$
|
1,754,031
|
|
|
$
|
1,688,945
|
|
|
$
|
1,581,042
|
|
|
Net interest margin
|
|
|
2.20
|
%
|
|
|
2.13
|
%
|
|
|
2.23
|
%
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Efficiency Ratio
|
|
September 30, 2024
|
|
|
June 30, 2024
|
|
|
September 30, 2023
|
|
|
Noninterest expense (GAAP)
|
|
$
|
8,499
|
|
|
$
|
10,127
|
|
|
$
|
7,435
|
|
|
Less: merger-related expense
|
|
|
(150
|
)
|
|
|
(2,257
|
)
|
|
|
–
|
|
|
Less: contract termination expense (1)
|
|
|
–
|
|
|
|
(173
|
)
|
|
|
–
|
|
|
Less: proxy-related expense (2)
|
|
|
–
|
|
|
|
–
|
|
|
|
(2
|
)
|
|
Adjusted noninterest expense (non-GAAP)
|
|
$
|
8,349
|
|
|
$
|
7,697
|
|
|
$
|
7,433
|
|
|
Noninterest income (GAAP)
|
|
$
|
2,272
|
|
|
$
|
2,246
|
|
|
$
|
2,115
|
|
|
Net interest income, FTE (non-GAAP)
|
|
|
9,689
|
|
|
|
8,943
|
|
|
|
8,869
|
|
|
Total income for efficiency ratio (non-GAAP)
|
|
$
|
11,961
|
|
|
$
|
11,189
|
|
|
$
|
10,984
|
|
|
Efficiency ratio
|
|
|
69.80
|
%
|
|
|
68.79
|
%
|
|
|
67.67
|
%
|
(1)
Contract termination expense was recorded to reflect the Company’s notification to a vendor that it intends to end its relationship in 2025.
(2)
Included in professional services in the Consolidated Statements of Income.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Annualized Net Income for Ratio Calculation
|
|
September 30, 2024
|
|
|
June 30, 2024
|
|
|
September 30, 2023
|
|
|
Net income (loss) per GAAP
|
|
$
|
2,676
|
|
|
$
|
(306
|
)
|
|
$
|
3,074
|
|
|
Less: items not annualized:
|
|
|
|
|
|
|
|
|
|
|
Proxy-related expense for the period ended September 30, 2023
|
|
|
–
|
|
|
|
–
|
|
|
|
2
|
|
|
ACL provision (recovery), net of tax of $271 and ($84) for the periods ended June 30, 2024 and September 30, 2023, respectively. (1)
|
|
|
–
|
|
|
|
1,019
|
|
|
|
(317
|
)
|
|
Merger-related expense, net of tax of $6 and $411 for the periods ended September 30, 2024 and June 30, 2024, respectively
|
|
|
144
|
|
|
|
1,846
|
|
|
|
–
|
|
|
Contract termination expense, net of tax of $36 for the period ended June 30, 2024(2)
|
|
|
–
|
|
|
|
137
|
|
|
|
–
|
|
|
Total non-annualized items
|
|
|
144
|
|
|
|
3,002
|
|
|
|
(315
|
)
|
|
Adjusted net income
|
|
|
2,820
|
|
|
|
2,696
|
|
|
|
2,759
|
|
|
Adjusted net income, annualized
|
|
$
|
11,219
|
|
|
$
|
10,843
|
|
|
$
|
10,946
|
|
|
Add: total non-annualized items
|
|
|
(144
|
)
|
|
|
(3,002
|
)
|
|
|
315
|
|
|
Annualized net income for ratio calculation (non-GAAP)
|
|
$
|
11,075
|
|
|
$
|
7,841
|
|
|
$
|
11,261
|
|
|
Return on average assets (GAAP)
|
|
|
0.59
|
%
|
|
|
(0.07
|
)%
|
|
|
0.77
|
%
|
|
Adjusted return on average assets (non-GAAP)
|
|
|
0.61
|
%
|
|
|
0.46
|
%
|
|
|
0.71
|
%
|
|
Return on average equity (GAAP)
|
|
|
6.82
|
%
|
|
|
(0.89
|
)%
|
|
|
9.63
|
%
|
|
Adjusted return on average equity (non-GAAP)
|
|
|
7.09
|
%
|
|
|
5.69
|
%
|
|
|
8.89
|
%
|
(1)
In June 2024, the Company recorded a provision expense upon acquisition of FCB of $1,290 gross, and $1,019 net of tax. During 2023, the Company recorded a recovery. The Company avoids annualizing significant recoveries unless information as of the reporting date, in this case September 30, 2023, provides a strong likelihood of additional significant recovery during the remainder of the year.
(2)
Contract termination expense reflects the Company’s notification to a vendor that it intends to end its relationship in 2025.
| |
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
Net Interest Margin, FTE
|
|
2024
|
|
|
2023
|
|
|
Interest income (GAAP)
|
|
$
|
51,805
|
|
|
$
|
43,320
|
|
|
Add: FTE adjustment
|
|
|
729
|
|
|
|
648
|
|
|
Interest income, FTE (non-GAAP)
|
|
|
52,534
|
|
|
|
43,968
|
|
|
Interest expense (GAAP)
|
|
|
25,412
|
|
|
|
14,517
|
|
|
Net interest income, FTE (non-GAAP)
|
|
$
|
27,122
|
|
|
$
|
29,451
|
|
|
Average balance of interest-earning assets
|
|
$
|
1,694,186
|
|
|
$
|
1,605,202
|
|
|
Net interest margin
|
|
|
2.14
|
%
|
|
|
2.45
|
%
|
| |
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
Efficiency Ratio
|
|
2024
|
|
|
2023
|
|
|
Noninterest expense (GAAP)
|
|
$
|
26,388
|
|
|
$
|
22,665
|
|
|
Less: merger-related expense
|
|
|
(2,891
|
)
|
|
|
–
|
|
|
Less: contract termination expense (1)
|
|
|
(173
|
)
|
|
|
–
|
|
|
Less: proxy-related expense (2)
|
|
|
–
|
|
|
|
(786
|
)
|
|
Adjusted noninterest expense (non-GAAP)
|
|
$
|
23,324
|
|
|
$
|
21,879
|
|
|
Noninterest income (GAAP)
|
|
$
|
6,717
|
|
|
$
|
7,105
|
|
|
Less: realized securities loss, net
|
|
|
–
|
|
|
|
3,332
|
|
|
Less: gain on sale of investment (3)
|
|
|
–
|
|
|
|
(2,971
|
)
|
|
Less: gain on BOLI settlement
|
|
|
–
|
|
|
|
(1,037
|
)
|
|
Adjusted noninterest income (non-GAAP)
|
|
|
6,717
|
|
|
|
6,429
|
|
|
Net interest income, FTE (non-GAAP)
|
|
|
27,122
|
|
|
|
29,451
|
|
|
Total income for efficiency ratio (non-GAAP)
|
|
$
|
33,839
|
|
|
$
|
35,880
|
|
|
Efficiency ratio
|
|
|
68.93
|
%
|
|
|
60.98
|
%
|
(1)
Contract termination expense was recorded to reflect the Company’s notification to a vendor that it intends to end its relationship in 2025.
(2)
Included in professional services in the Consolidated Statements of Income.
(3)
Sale of VISA Class B shares.
| |
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
Annualized Net Income for Ratio Calculation
|
|
2024
|
|
|
2023
|
|
|
Net income per GAAP
|
|
$
|
4,544
|
|
|
$
|
11,506
|
|
|
Less: items not annualized:
|
|
|
|
|
|
|
|
Partnership income net of tax of ($35) and ($44) for the periods ended September 30, 2024 and 2023, respectively
|
|
|
(134
|
)
|
|
|
(164
|
)
|
|
Realized securities gain, net of tax of $700 for the period ended September 30, 2023
|
|
|
–
|
|
|
|
2,632
|
|
|
Proxy-related expense, net of tax of $165 for the period ended September 30, 2023 (1)
|
|
|
–
|
|
|
|
621
|
|
|
Gain on sale of investment, net of tax of ($624) for the period ended September 30, 2023 (2)
|
|
|
–
|
|
|
|
(2,347
|
)
|
|
Gain on BOLI settlement
|
|
|
–
|
|
|
|
(1,037
|
)
|
|
ACL provision (recovery), net of tax of $271 and ($82) for the periods ended September 30, 2024 and 2023, respectively (3)
|
|
|
1,019
|
|
|
|
(307
|
)
|
|
Merger-related expense, net of tax of $417 for the period ended September 30, 2024
|
|
|
2,474
|
|
|
|
–
|
|
|
Contract termination expense, net of tax of $36 for the period ended September 30, 2024 (4)
|
|
|
137
|
|
|
|
–
|
|
|
Total non-annualized items
|
|
|
3,496
|
|
|
|
(602
|
)
|
|
Adjusted net income
|
|
$
|
8,040
|
|
|
$
|
10,904
|
|
|
Adjusted net income, annualized
|
|
$
|
10,740
|
|
|
$
|
14,579
|
|
|
Add: total non-annualized items
|
|
|
(3,496
|
)
|
|
|
602
|
|
|
Annualized net income for ratio calculation (non-GAAP)
|
|
$
|
7,244
|
|
|
$
|
15,181
|
|
|
Return on average assets (GAAP)
|
|
|
0.35
|
%
|
|
|
0.95
|
%
|
|
Adjusted return on average assets (non-GAAP)
|
|
|
0.42
|
%
|
|
|
0.94
|
%
|
|
Return on average equity (GAAP)
|
|
|
4.23
|
%
|
|
|
12.13
|
%
|
|
Adjusted return on average equity (non-GAAP)
|
|
|
5.05
|
%
|
|
|
11.97
|
%
|
(1)
Included in professional services in the Consolidated Statements of Income.
(2)
Sale of VISA Class B shares.
(3)
In June 2024, the Company recorded a provision expense upon acquisition of FCB of $1,290 gross, and $1,019 net of tax. During 2023, the Company recorded a recovery. The Company avoids annualizing significant recoveries unless information as of the reporting date, in this case September 30, 2023, provides a strong likelihood of additional significant recovery during the remainder of the year.
(4)
Contract termination expense was recorded to reflect the Company’s notification to a vendor that it intends to end its relationship in 2025.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
September 30, 2024
|
|
|
June 30, 2024
|
|
|
September 30, 2023
|
|
|
Tangible Assets
|
|
|
|
|
|
|
|
|
|
|
Total assets (GAAP)
|
|
$
|
1,785,033
|
|
|
$
|
1,809,215
|
|
|
$
|
1,591,902
|
|
|
Less: goodwill and intangible asses
|
|
|
(12,681
|
)
|
|
|
(12,797
|
)
|
|
|
(5,848
|
)
|
|
Tangible assets (non-GAAP)
|
|
$
|
1,772,352
|
|
|
$
|
1,796,418
|
|
|
$
|
1,586,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Common Equity
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity (GAAP)
|
|
$
|
167,782
|
|
|
$
|
148,963
|
|
|
$
|
116,113
|
|
|
Less: goodwill and intangible assets
|
|
|
(12,681
|
)
|
|
|
(12,797
|
)
|
|
|
(5,848
|
)
|
|
Tangible common equity (non-GAAP)
|
|
$
|
155,101
|
|
|
$
|
136,166
|
|
|
$
|
110,265
|
|