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

Marketwired

BLACKSBURG, VA--(Marketwired - Jul 18, 2013) - Today, National Bankshares, Inc. (NASDAQ: NKSH) announced net income of over $4.43 million for the quarter ended June 30, 2013 which is 2.19% above the total reported for the quarter ended June 30, 2012. Basic earnings per share were $0.64 which compares to $0.63 for second quarter of 2012. The return on average assets for the second quarter of 2013 was 1.63% compared to 1.62% in 2012. The return on average equity was 11.71% and 11.90% for the same two periods.

For the first six months, net income was above $8.65 million. The Company had total assets exceeding $1.09 billion at June 30, 2013.

National Bankshares' Chairman, President & CEO James G. Rakes commented, "Our focus remains on investing in our businesses to grow our bank, creating sustainable stockholder value, and controlling discretionary expenses while maintaining a strong balance sheet. We were pleased to provide stockholders an increase over last June of our semi-annual dividend. We continue to upgrade our capabilities in order to deliver the best services and products possible to our customers and community."

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 offices throughout Southwest Virginia. National Bankshares Financial Services, Inc. is an investment and insurance subsidiary operating 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 per share data)   June 30,
2013
    June 30,
2012
    December 31,
2012
 
Assets                        
Cash and due from banks   $ 13,474     $ 13,140     $ 14,783  
Interest-bearing deposits     63,731       105,102       96,597  
Securities available for sale     207,362       189,768       191,504  
Securities held to maturity     166,915       146,451       160,539  
    Total securities     374,277       336,219       352,043  
Mortgage loans held for sale     1,950       1,395       2,796  
Loans:                        
  Loans, net of unearned income and deferred fees     588,061       586,223       592,162  
  Less: allowance for loan losses     (7,952 )     (8,168 )     (8,349 )
    Loans, net     580,109       578,055       583,813  
Bank premises and equipment, net     10,222       10,618       10,401  
Accrued interest receivable     6,291       6,273       6,247  
Other real estate owned     969       871       1,435  
Intangible assets     8,837       9,918       9,377  
Bank-owned life insurance     20,858       20,170       20,523  
Other assets     10,368       6,507       6,346  
    Total assets   $ 1,091,086     $ 1,088,268     $ 1,104,361  
                         
Liabilities and Stockholders' Equity                        
Noninterest-bearing deposits   $ 144,164     $ 146,899     $ 144,252  
Interest-bearing demand deposits     461,662       423,272       455,713  
Savings deposits     73,095       65,398       69,063  
Time deposits     259,600       299,869       277,738  
    Total deposits     938,521       935,438       946,766  
Accrued interest payable     126       173       139  
Other liabilities     6,901       5,970       7,347  
    Total liabilities     945,548       941,581       954,252  
                         
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 6,947,974 shares at June 30, 2013, 6,939,974 at June 30, 2012 and 6,947,974 at December 31, 2012     8,685       8,675       8,685  
Retained earnings     149,061       139,036       144,162  
Accumulated other comprehensive loss, net     (12,208 )     (1,024 )     (2,738 )
    Total stockholders' equity     145,538       146,687       150,109  
      Total liabilities and stockholders' equity   $ 1,091,086     $ 1,088,268     $ 1,104,361  
                         
                         
                         
National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 
    Three Months Ended     Six Months Ended
    June 30, 2013     June 30, 2012     June 30, 2013   June 30, 2012
($ in thousands, except for per share data)                            
Interest Income                            
Interest and fees on loans   $ 8,192     $ 8,753     $ 16,511   $ 17,631
Interest on federal funds     ---       ---       ---     ---
Interest on interest-bearing deposits     58       56       116     127
Interest on securities - taxable     1,725       1,782       3,264     3,371
Interest on securities - nontaxable     1,618       1,591       3,266     3,167
    Total interest income     11,593       12,182       23,157     24,296
                             
Interest Expense                            
Interest on time deposits of $100,000 or more     230       391       498     816
Interest on other deposits     1,318       1,627       2,729     3,319
Interest on borrowed funds     ---       ---       ---     ---
    Total interest expense     1,548       2,018       3,227     4,135
    Net interest income     10,045       10,164       19,930     20,161
Provision for loan losses     355       1,104       1,026     1,776
    Net interest income after provision for loan losses     9,690       9,060       18,904     18,385
                             
Noninterest Income                            
Service charges on deposit accounts     625       651       1,213     1,282
Other service charges and fees     42       41       102     90
Credit card fees     853       840       1,593     1,634
Trust income     311       440       600     766
Bank-owned life insurance     176       200       364     400
Other income     190       112       340     211
Realized securities gains (losses), net     (11 )     (1 )     84     52
    Total noninterest income     2,186       2,283       4,296     4,435
                             
Noninterest Expense                            
Salaries and employee benefits     2,992       2,954       5,932     5,910
Occupancy and furniture and fixtures     404       397       836     794
Data processing and ATM     418       424       811     816
FDIC assessment     136       101       272     210
Credit card processing     646       638       1,198     1,210
Intangibles and goodwill amortization     269       271       540     542
Net costs of other real estate owned     65       103       140     151
Franchise taxes     265       226       523     388
Other operating expenses     920       617       1,809     1,421
    Total noninterest expense     6,115       5,731       12,061     11,442
Income before income tax expense     5,761       5,612       11,139     11,378
Income tax expense     1,326       1,272       2,488     2,609
    Net income   $ 4,435     $ 4,340     $ 8,651   $ 8,769
                             
Basic net income per share   $ 0.64     $ 0.63     $ 1.25   $ 1.26
Fully diluted net income per share   $ 0.64     $ 0.62     $ 1.24   $ 1.26
Weighted average outstanding number of common shares                            
    Basic     6,947,974       6,939,974       6,947,974     6,939,974
    Diluted     6,968,348       6,957,445       6,968,711     6,956,041
Dividends declared per share   $ 0.54     $ 0.53     $ 0.54   $ 0.53
Dividend payout ratio     ---       ---       43.37     41.94
Book value per share   $ 20.95     $ 21.14     $ 20.95   $ 21.14
                             
                             
                             
National Bankshares, Inc. and Subsidiaries  
Consolidated Statements of Comprehensive Income  
(Unaudited)  
   
    Three Months Ended  
($ in thousands, except for per share data)   June 30, 2013     June 30, 2012  
Net Income   $ 4,435     $ 4,340  
                 
Other Comprehensive Income, net of tax                
Unrealized holding gains (losses) on available for sale securities net of deferred taxes of ($4,135) and $662   $ (7,680 )   $ 1,229  
Reclassification adjustment, net of income taxes of ($4) and $2     (7 )     4  
Other comprehensive income (loss), net of tax of ($4,139) and $664   $ (7,687 )   $ 1,233  
Total Comprehensive Income   $ (3,252 )   $ 5,573  
                 
             
    Six Months Ended  
($ in thousands, except for per share data)   June 30, 2013     June 30, 2012  
Net Income   $ 8,651     $ 8,769  
                 
Other Comprehensive Income, net of tax                
Unrealized holding gains (losses) on available for sale securities net of deferred taxes of ($5,070) and $173   $ (9,415 )   $ 322  
Reclassification adjustment, net of income taxes of $(30) and ($13)     (55 )     (25 )
Other comprehensive income (loss), net of tax of ($5,100) and $160   $ (9,470 )   $ 297  
Total Comprehensive Income   $ (819 )   $ 9,066  
                 
                 
                 
Key Ratios and Other Data  
(Unaudited)  
   
($ in thousands)   Three Months Ended     Six Months Ended  
Average Balances   June 30, 2013     June 30, 2012     June 30, 2013     June 30, 2012  
Cash and due from banks   $ 12,023     $ 12,121     $ 12,075     $ 12,169  
Interest-bearing deposits     99,216       88,152       89,492       99,352  
Securities available for sale     190,938       202,783       201,863       189,004  
Securities held to maturity     162,264       142,123       164,574       141,433  
Mortgage loans held for sale     1,507       1,264       1,456       1,238  
Gross loans     583,337       586,120       583,169       585,600  
Loans, net     574,030       576,996       573,878       576,290  
Intangible assets     9,262       10,073       9,125       10,209  
Total assets     1,092,880       1,076,975       1,096,622       1,072,910  
Total deposits     933,185       923,982       936,296       921,187  
Other borrowings     ---       ---       ---       ---  
Stockholders' equity     151,852       146,625       152,774       145,113  
Interest-earning assets     1,035,659       1,015,458       1,038,122       1,011,703  
Interest-bearing liabilities     795,321       782,875       795,760       781,840  
                                 
Financial ratios                                
Return on average assets     1.63 %     1.62 %     1.59 %     1.64 %
Return on average equity     11.71 %     11.90 %     11.42 %     12.15 %
Net interest margin     4.28 %     4.40 %     4.27 %     4.39 %
Net interest income - fully taxable equivalent   $ 11,053     $ 11,119     $ 21,959     $ 22,059  
Efficiency ratio     46.19 %     42.76 %     45.94 %     43.19 %
Average equity to average assets     13.89 %     13.61 %     13.93 %     13.53 %
                                 
Allowance for loan losses                                
Beginning balance   $ 8,291     $ 8,063     $ 8,349     $ 8,068  
Provision for losses     355       1,104       1,026       1,776  
Charge-offs     (730 )     (1,028 )     (1,484 )     (1,728 )
Recoveries     36       29       61       52  
Ending balance   $ 7,952     $ 8,168     $ 7,952     $ 8,168  
                                 
                                 
                                 
Asset Quality Data  
(Unaudited)  
   
($ in thousands)            
Nonperforming assets   June 30, 2013     June 30, 2012  
Nonaccrual loans   $ 10,428     $ 3,627  
Nonaccrual restructured loans     1,522       3,763  
Total nonperforming loans     11,950       7,390  
Other real estate owned     969       871  
Total nonperforming assets   $ 12,919     $ 8,261  
Accruing restructured loans   $ 6,234     $ 2,035  
Loans 90 days or more past due   $ 125     $ 242  
                 
Asset quality ratios                
Nonperforming assets to loans net of unearned income and deferred fees,plus other real estate owned     2.19 %     1.41 %
Allowance for loan losses to total loans     1.35 %     1.39 %
Allowance for loan losses to nonperforming loans     66.54 %     110.53 %
Loans past due 90 days or more to loans net of unearned income and deferred fees     0.02 %     0.04 %
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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