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%


CONTACTS: JAMES G. RAKES, CHAIRMAN, PRESIDENT & CEO (540) 951-6236 jrakes@nbbank.com DAVID K. SKEENS, TREASURER & CFO (540) 951-6347 dskeens@nbbank.com

Source:National Bankshares, Inc.