National Bankshares, Inc. Announces Earnings for 2016


BLACKSBURG, Va., Feb. 23, 2017 (GLOBE NEWSWIRE) -- National Bankshares, Inc. (NASDAQ:NKSH) today announced its results of operations for the three and twelve months ended December 31, 2016. The Company reported net income of $14.94 million for the twelve months ended December 31, 2016, a decrease from the $15.83 million earned in 2015. The 2016 return on average assets and return on average equity were 1.24% and 8.30%, respectively. Basic earnings per share in 2016 were $2.15. National Bankshares, Inc. ended 2016 with total assets of $1.23 billion.

“In 2016 we celebrated National Bank’s 125th year as a community bank, and we’re extremely thankful to the customers, shareholders, employees and directors, past and present, who have helped us reach this milestone,” said National Bankshares Chairman, President and CEO James G. Rakes. “The low interest rate environment in 2016 continued to reduce margins and earnings. Despite this challenge, we focused on what we can control. We steadily grew our loan and deposit base by seeking out quality credits and providing superior customer service, while investing in the people and technology that will best position us for future growth.”

“We were pleased to share a dividend of $1.16 per share with our stockholders in 2016, an increase over the $1.14 per share dividend awarded in 2015,” continued Rakes. “We feel very privileged to be a part of National Bank’s 125-year history, and we are dedicated to serving our customers, communities and shareholders for many years to come.”

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 26 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 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 share and per share data)December 31,
2016
December 31,
2015
Assets  
Cash and due from banks$13,974  $12,152 
Interest-bearing deposits 80,268   130,811 
Federal funds sold ---  --- 
Securities available for sale, at fair value 304,282   236,131 
Securities held to maturity 134,957   152,028 
Restricted stock 1,170   1,129 
Total securities 440,409   389,288 
Mortgage loans held for sale 478   634 
Loans:  
Loans, net of unearned income and deferred fees 647,752   619,008 
Less: allowance for loan losses (8,300) (8,297)
Loans, net 639,452   610,711 
Premises and equipment, net 8,853   9,020 
Accrued interest receivable 5,260   5,769 
Other real estate owned 3,156   4,165 
Intangible assets and goodwill 5,966   6,224 
Bank-owned life insurance 22,998   22,401 
Other assets 13,128   12,344 
Total assets$1,233,942  $1,203,519 
   
Liabilities and Stockholders' Equity  
Noninterest-bearing deposits$171,946  $166,453 
Interest-bearing demand deposits 605,226   569,787 
Savings deposits 96,829   90,236 
Time deposits 169,441   192,383 
Total deposits 1,043,442   1,018,859 
Other borrowed funds ---  --- 
Accrued interest payable 55   56 
Other liabilities 12,182   12,490 
Total liabilities 1,055,679   1,031,405 
   
Stockholders' Equity  
Preferred stock, no par value, 5,000,000 shares authorized; none issued and outstanding ---  --- 
Common stock of $1.25 par value. Authorized 10,000,000 shares; issued and outstanding, 6,957,974 shares at December 31, 2016 and December 31, 2015 8,698   8,698 
Retained earnings 178,224   171,353 
Accumulated other comprehensive loss, net (8,659) (7,937)
Total stockholders' equity 178,263   172,114 
Total liabilities and stockholders' equity$1,233,942  $1,203,519 


National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 
 Three Months EndingTwelve Months Ending
($ in thousands, except for share and per share data)December 31,
2016
December 31,
2015
December 31,
2016
December 31,
2015
Interest Income    
Interest and fees on loans$7,333 $7,560$29,365  $30,446 
Interest on federal funds --- --- ---  --- 
Interest on interest-bearing deposits 123  81 532   254 
Interest on securities - taxable 1,285  1,652 5,910   6,776 
Interest on securities - nontaxable 1,256  1,343 5,123   5,438 
Total interest income 9,997  10,636 40,930   42,914 
Interest Expense    
Interest on time deposits 223  290 988   1,233 
Interest on other deposits 793  746 3,178   2,950 
Interest on borrowed funds --- --- ---  --- 
Total interest expense 1,016  1,036 4,166   4,183 
Net interest income 8,981  9,600 36,764   38,731 
Provision for loan losses 502  1,275 1,650   2,009 
Net income after provision for loan losses 8,479  8,325 35,114  36,722 
Noninterest Income     
Service charges on deposit accounts 680  574 2,458   2,250 
Other service charges and fees 47  51 212   215 
Credit card fees 996  1,018 3,798   3,861 
Trust Income 339  327 1,346   1,229 
Bank-owned life insurance 150  152 597   603 
Other income 247  332 1,289   1,295 
Realized securities gain,  net 33  28 232   33 
Total noninterest income 2,492  2,482 9,932   9,486 
Noninterest Expense    
Salaries and employee benefits 3,078  3,089 12,792   12,522 
Occupancy and furniture and fixtures 461  436 1,849   1,743 
Data processing and ATM 556  427 2,186   1,657 
FDIC assessment 55  138 476   546 
Credit card processing 733  706 2,782   2,692 
Intangibles and goodwill amortization 39  192 257   999 
Net cost of other real estate owned 293  53 472   608 
Franchise taxes 322  329 1,296   1,288 
Other operating expenses 1,073  901 4,042   3,580 
Total noninterest expense 6,610  6,271 26,152   25,635 
Income before income tax expense 4,361  4,536 18,894   20,573 
Income tax expense 891  978 3,952   4,740 
Net Income $3,470 $3,558$14,942  $15,833 
Basic net income per share$0.50 $0.51$2.15  $2.28 
Fully diluted net income per share$0.50 $0.51$2.15  $2.28 
Weighted average number of common shares outstanding    
Basic 6,957,974  6,957,213 6,957,974   6,953,849 
Diluted 6,957,974  6,959,049 6,957,974   6,957,094 
Dividends declared per share$0.61 $0.61$1.16  $1.14 
Dividend payout ratio --- --- 54.02% 50.09%
Book value per share --- ---$25.62  $24.74 


National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
 
 Three Months Ended
($ in thousands)December 31,
2016
 December 31,
2015
Net income$3,470  $3,558 
Other Comprehensive Income (Loss), net of tax  
Unrealized holding loss on available for sale securities net of tax of ($2,845)in 2016 and ($237) in 2015 (5,285) (440)
Reclassification adjustment for gain included in net income, net of tax of ($12) in 2016 and ($10) in 2015 (21) (18)
Net pension gain (loss) arising during the period, net of tax of $132 in 2016 and ($597) in 2015 271   (1,108)
Less: amortization of prior service cost included in net periodic pension cost net of tax of ($38) in 2016 and ($38) in 2015 (72) (72)
Other comprehensive loss, net of tax of ($2,763) in 2016  and ($882) in 2015$(5,107)$(1,638)
Total Comprehensive Income (Loss)$(1,637)$1,920 


 Twelve Months Ended
($ in thousands)December 31,
2016
 December 31,
2015
Net Income$14,942  $15,833 
Other Comprehensive Income (Loss), Net of Tax  
Unrealized holding loss on available for sale securities net of tax of ($431) in 2016 and ($571) in 2015 (800) (1,064)
Reclassification adjustment for gain included in net income, net of tax of ($65) in 2016 and ($12) in 2015 (121) (21)
Net pension gain (loss) arising during the period net of tax of $132 in 2016 and ($597) in 2015 271   (1,108)
Less:  amortization of prior service cost included in net periodic pension  cost net of tax of ($38) in 2016 and ($38) in 2015 (72) (72)
Other comprehensive loss, net of tax of ($402) in 2016 and ($1,218) in 2015$(722)$(2,265)
Total Comprehensive Income $14,220  $13,568 


Key Ratios and Other Data
(Unaudited)
 
($ in thousands)Three Months EndedTwelve Months Ended
 December 31,December 31,December 31,December 31,
Average Balances 2016  2015  2016  2015 
Cash and due from banks$11,825  $12,166 $11,401  $11,672 
Interest-bearing deposits 90,581   111,162  102,819   96,677 
Securities available for sale, at fair value 287,754   223,245  278,731   222,937 
Securities held to maturity 136,372   152,977  141,023   155,747 
Restricted stock 1,170   1,129  1,161   1,121 
Mortgage loans held for sale 645   861  585   802 
Gross Loans 637,821   624,754  622,486   620,594 
Loans, net 628,702   615,801  613,366   611,554 
Intangible assets 5,989   6,319  6,068   6,707 
Total assets 1,215,267   1,172,071  1,206,745   1,155,594 
Total deposits 1,019,896   989,853  1,013,787   976,597 
Other borrowings ---  ---  ---  --- 
Stockholders' equity 182,598   174,258  180,047   171,732 
Interest-earning assets 1,153,744   1,116,759  1,145,329   1,099,517 
Interest-bearing liabilities 847,362   822,540  843,443   816,768 
     
Financial Ratios    
Return on average assets 1.14% 1.20% 1.24% 1.37%
Return on average equity 7.56% 8.10% 8.30% 9.22%
Net interest margin 3.39% 3.74% 3.51% 3.86%
Net interest income-fully taxable equivalent$9,818  $10,514 $40,201  $42,394 
Efficiency  ratio 53.70% 48.25% 52.17% 49.41%
Average equity to average assets 15.03% 14.87% 14.92% 14.86%
     
Allowance for Loan Losses    
Beginning balance$8,301  $8,117 $8,297  $8,263 
Provision for losses 502   1,275  1,650   2,009 
Charge-offs (539) (1,118) (1,806)  (2,120)
Recoveries 36   23  159   145 
Ending balance$8,300  $8,297 $8,300  $8,297 


Asset Quality Data
(Unaudited)
 
($ in thousands)December 31,
2016
December 31,
2015
Nonperforming Assets  
Nonaccrual loans$1,168  $2,043 
Nonaccrual restructured loans 4,687   4,639 
Total nonperforming loans 5,855   6,682 
Other real estate owned$3,156  $4,165 
Total nonperforming assets$9,011  $10,847 
Accruing restructured loans 3,769   8,814 
Loans 90 days or more past due$63  $156 
   
Asset Quality Ratios  
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned 1.38% 1.74%
Allowance for loans losses to total loans 1.28% 1.34%
Allowance for loan losses to nonperforming loans 141.76% 124.17%
Loans past due 90 days or more to loans net of unearned income and deferred fees 0.01% 0.03%

 


            

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