National Bankshares, Inc. Reports Higher First Half Earnings

Marketwired

BLACKSBURG, VA--(Marketwire -07/19/12)- Today, National Bankshares, Inc. (NKSH) announced net income of over $4.34 million for the quarter ended June 30, 2012. Net income was approaching $8.77 million through June 30, 2012, or nearly 6.42% above the total reported for the first half of 2011. Basic earnings per share were $1.26, which compares with $1.19 for the first six months last year. The return on average assets for the first half of 2012 was 1.64%, and it was 1.63% for the six months ended June 30, 2011. The return on average equity was 12.15% and 12.48% for the same two periods. At June 30, 2012, the Company had total assets of almost $1.09 billion, an increase of 5.16% over the end of the first half of 2011 and up slightly from total assets of $1.07 billion at year-end.

National Bankshares' Chairman, President & CEO James G. Rakes commented, "While we expect the second half of 2012 to remain challenging due to economic factors, low rates and regulatory headwinds, we are poised to expand our lending activity as local economic conditions improve. We are working to deliver the best services and products we can to our customers, manage expense growth prudently and focus on asset quality."

National Bankshares, Inc., headquartered in Blacksburg, Virginia, is the parent company of 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 offices 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 Sheet
(Unaudited)

($ in thousands, except for per June 30, June 30, December 31,
share data) 2012 2011 2011
------------ ------------ ------------
Assets
Cash and due from banks $ 13,140 $ 13,113 $ 11,897
Interest-bearing deposits 105,102 54,768 98,355
Federal funds sold --- --- ---
Securities available for sale 189,768 190,674 174,918
Securities held to maturity 146,451 136,399 143,995
------------ ------------ ------------
Total securities 336,219 327,073 318,913
------------ ------------ ------------
Mortgage loans held for sale 1,395 248 2,623
Loans:
Loans, net of unearned income
and deferred fees 586,223 593,572 588,470
Less: allowance for loan losses (8,168) (8,494) (8,068)
------------ ------------ ------------
Loans, net 578,055 585,078 580,402
------------ ------------ ------------
Bank premises and equipment, net 10,618 10,232 10,393
Accrued interest receivable 6,273 6,255 6,304
Other real estate owned 871 1,855 1,489
Intangible assets 9,918 11,001 10,460
Bank-owned life insurance 20,170 17,580 19,812
Other assets 6,507 7,654 6,454
------------ ------------ ------------
Total assets $ 1,088,268 $ 1,034,857 $ 1,067,102
============ ============ ============

Liabilities and Stockholders'
Equity
Noninterest-bearing deposits $ 146,899 $ 136,041 $ 142,163
Interest-bearing demand deposits 423,272 384,329 404,801
Savings deposits 65,398 59,909 61,298
Time deposits 299,869 311,908 311,071
------------ ------------ ------------
Total deposits 935,438 892,187 919,333
------------ ------------ ------------
Other borrowed funds --- --- ---
Accrued interest payable 173 237 206
Other liabilities 5,970 6,125 6,264
------------ ------------ ------------
Total liabilities 941,581 898,549 925,803
------------ ------------ ------------

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 6,939,974
shares at June 30, 2012,
6,937,974 at June 30, 2011 and
6,939,974 at December 31, 2011 8,675 8,672 8,675
Retained earnings 139,036 128,129 133,945
Accumulated other comprehensive
loss (1,024) (493) (1,321)
------------ ------------ ------------
Total stockholders' equity 146,687 136,308 141,299
------------ ------------ ------------
Total liabilities and
stockholders' equity $ 1,088,268 $ 1,034,857 $ 1,067,102
============ ============ ============



National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2012 2011 2012 2011
---------- ---------- ---------- ----------
($ in thousands, except for
per share data)
Interest Income
Interest and fees on loans $ 8,753 $ 9,107 $ 17,631 $ 18,202
Interest on federal funds --- --- --- ---
Interest on interest-bearing
deposits 56 35 127 67
Interest on securities -
taxable 1,782 1,713 3,371 3,375
Interest on securities -
nontaxable 1,591 1,620 3,167 3,296
---------- ---------- ---------- ----------
Total interest income 12,182 12,475 24,296 24,940
---------- ---------- ---------- ----------

Interest Expense
Interest on time deposits of
$100,000 or more 391 505 816 1,066
Interest on other deposits 1,627 1,841 3,319 3,659
Interest on borrowed funds --- --- --- ---
---------- ---------- ---------- ----------
Total interest expense 2,018 2,346 4,135 4,725
---------- ---------- ---------- ----------
Net interest income 10,164 10,129 20,161 20,215
Provision for loan losses 1,104 753 1,776 1,553
---------- ---------- ---------- ----------
Net interest income after
provision for loan
losses 9,060 9,376 18,385 18,662
---------- ---------- ---------- ----------

Noninterest Income
Service charges on deposit
accounts 651 648 1,282 1,260
Other service charges and
fees 41 59 90 117
Credit card fees 840 827 1,634 1,560
Trust income 440 307 766 553
Bank-owned life insurance 200 186 400 370
Other income 112 77 211 168
Realized securities gains
(losses), net (1) (14) 52 (4)
---------- ---------- ---------- ----------
Total noninterest income 2,283 2,090 4,435 4,024
---------- ---------- ---------- ----------

Noninterest Expense
Salaries and employee
benefits 2,954 2,823 5,910 5,727
Occupancy and furniture and
fixtures 397 435 794 858
Data processing and ATM 424 429 816 873
FDIC assessment 101 350 210 696
Credit card processing 638 646 1,210 1,232
Intangibles and goodwill
amortization 271 271 542 542
Net costs of other real
estate owned 103 95 151 229
Franchise taxes 226 215 388 457
Other operating expenses 617 761 1,421 1,495
---------- ---------- ---------- ----------
Total noninterest expense 5,731 6,025 11,442 12,109
---------- ---------- ---------- ----------
Income before income tax
expense 5,612 5,441 11,378 10,577
Income tax expense 1,272 1,225 2,609 2,337
---------- ---------- ---------- ----------
Net income $ 4,340 $ 4,216 $ 8,769 $ 8,240
========== ========== ========== ==========

Basic net income per share $ 0.63 $ 0.61 $ 1.26 $ 1.19
========== ========== ========== ==========
Fully diluted net income per
share $ 0.62 $ 0.61 $ 1.26 $ 1.19
========== ========== ========== ==========
Weighted average outstanding
number of common shares
Basic 6,939,974 6,936,501 6,939,974 6,935,148
========== ========== ========== ==========
Diluted 6,957,445 6,946,852 6,956,041 6,952,159
========== ========== ========== ==========
Dividends declared per share $ 0.53 $ 0.48 $ 0.53 $ 0.48
========== ========== ========== ==========
Dividend payout ratio --- --- 41.94 40.40
========== ========== ========== ==========
Book value per share $ 21.14 $ 19.65 $ 21.14 $ 19.65
========== ========== ========== ==========



National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)

Three Months Ended
June 30, June 30,
($ in thousands, except for per share data) 2012 2011
---------- ----------
Net Income $ 4,340 $ 4,216
========== ==========

Other Comprehensive Income, net of tax
Unrealized holding gains on available for sale
securities net of deferred taxes of $662 and $925 1,229 1,718
Reclassification adjustment, net of income taxes of $2
and $7 4 12
---------- ----------
Other comprehensive income, net of tax of $664 and
$932 $ 1,233 $ 1,730
---------- ----------
Total Comprehensive Income $ 5,573 $ 5,946
========== ==========



Six Months Ended
June 30, June 30,
($ in thousands, except for per share data) 2012 2011
---------- ----------
Net Income $ 8,769 $ 8,240
========== ==========

Other Comprehensive Income, net of tax
Unrealized holding gains on available for sale
securities net of deferred taxes of $173 and $1,153 322 2,141
Reclassification adjustment, net of income taxes of
$(13) and $4 (25) 7
---------- ----------
Other comprehensive income, net of tax of $160 and
$1,157 $ 297 $ 2,148
---------- ----------
Total Comprehensive Income $ 9,066 $ 10,388
========== ==========



Key Ratios and Other Data
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
Average Balances 2012 2011 2012 2011
------------ ------------ ------------ ------------
Cash and due from
banks $ 12,121 $ 12,290 $ 12,169 $ 11,857
Interest-bearing
deposits 88,152 59,465 99,352 56,792
Securities available
for sale 202,783 188,590 189,004 188,044
Securities held to
maturity 142,123 132,613 141,433 132,469
Mortgage loans held
for sale 1,264 512 1,238 603
Gross loans 586,120 588,145 585,600 586,801
Loans, net 576,996 578,824 576,290 577,723
Intangible assets 10,073 11,157 10,209 11,292
Total assets 1,076,975 1,027,361 1,072,910 1,022,196
Total deposits 923,982 885,295 921,187 881,319
Other borrowings --- --- --- ---
Stockholders' equity 146,625 135,159 145,113 133,182
Interest-earning
assets 1,015,458 967,328 1,011,703 963,343
Interest-bearing
liabilities 782,875 750,735 781,840 749,182

Financial ratios
Return on average
assets 1.62% 1.65% 1.64% 1.63%
Return on average
equity 11.90% 12.51% 12.15% 12.48%
Net interest margin 4.40% 4.59% 4.39% 4.64%
Net interest income
- fully taxable
equivalent $ 11,119 $ 11,080 $ 22,059 $ 22,146
Efficiency ratio 42.76% 45.70% 43.19% 46.27%
Average equity to
average assets 13.61% 13.16% 13.53% 13.03%

Allowance for loan
losses
Beginning balance $ 8,063 $ 8,245 $ 8,068 $ 6,926
Provision for losses 1,104 753 1,776 1,499
Charge-offs (1,033) (517) (1,733) (971)
Recoveries 34 13 57 99
------------ ------------ ------------ ------------
Ending balance $ 8,168 $ 8,494 $ 8,168 $ 7,553
============ ============ ============ ============



Asset Quality Data
(Unaudited)

June 30, June 30,
Nonperforming assets 2012 2011
---------- ----------
Nonaccrual loans $ 3,627 $ 1,819
Nonaccrual restructured loans 3,763 5,030
---------- ----------
Total nonperforming loans 7,390 6,849
Other real estate owned 871 1,855
---------- ----------
Total nonperforming assets $ 8,261 $ 8,704
========== ==========
Accruing restructured loans $ 2,035 $ 780
========== ==========
Loans 90 days or more past due $ 242 $ 572
========== ==========

Asset quality ratios
Nonperforming assets to loans net of unearned income
and deferred fees, plus other real estate owned 1.41% 1.46%
Allowance for loan losses to total loans 1.39% 1.43%
Allowance for loan losses to nonperforming loans 110.53% 124.02%
Loans past due 90 days or more to loans net of
unearned income and deferred fees 0.04% 0.10%

Contact:
CONTACTS:
JAMES G. RAKES
CHAIRMAN, PRESIDENT & CEO
(540) 951-6236
Email Contact
DAVID K. SKEENS
TREASURER & CFO
(540) 951-6347
Email Contact

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