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National Bankshares, Inc. Reports First Quarter Earnings

BLACKSBURG, Va., April 27, 2017 (GLOBE NEWSWIRE) -- National Bankshares, Inc. (NASDAQ:NKSH) today announced its results of operations for the first quarter of 2017. The Company reported net income of $3.65 million for the quarter ended March 31, 2017 compared to $3.78 million at March 31, 2016. Basic earnings per share were $0.52 for the three months ended March 31, 2017 compared to $0.54 for the same period in 2016. For the first quarter, the return on average assets was 1.21% and the return on average equity was 8.20% compared to 1.28% and 8.64%, respectively, for the first quarter of 2016. At March 31, 2017, the Company had total assets of $1.24 billion, an increase of 2.60% when compared to $1.21 billion at the end of the first quarter of 2016.

“The first quarter of 2017 saw improvements in several key areas, despite the low interest rate environment that continues to pressure earnings,” said National Bankshares Chairman, President & CEO James G. Rakes. “While net income was down compared to the same period in 2016, we were pleased to see steady growth in net loans, improved asset quality, and increased noninterest income. Moving forward in 2017 we remain focused on providing the highest level of personalized financial service for our customers while we pursue opportunities to grow the bank and increase profitability.”

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)March 31, 2017March 31, 2016December 31, 2016
Assets
Cash and due from banks$13,654 $9,913 $13,974
Interest-bearing deposits 85,552 129,363 80,268
Federal funds sold --- --- ---
Securities available for sale, at fair value 304,376 270,094 304,282
Securities held to maturity 133,596 144,664 134,957
Restricted stock 1,200 1,170 1,170
Total securities 439,172 415,928 440,409
Mortgage loans held for sale 608 63 478
Loans:
Loans, net of unearned income and deferred fees 652,313 607,643 647,752
Less: allowance for loan losses (8,261) (8,107) (8,300)
Loans, net 644,052 599,536 639,452
Premises and equipment, net 8,675 8,841 8,853
Accrued interest receivable 5,267 5,587 5,260
Other real estate owned 2,952 3,612 3,156
Intangible assets and goodwill 5,936 6,114 5,966
Bank-owned life insurance 23,141 22,548 22,998
Other assets 14,117 10,146 13,128
Total assets$1,243,126 $1,211,651 $1,233,942
Liabilities and Stockholders' Equity
Noninterest-bearing deposits$182,750 $170,206 $171,946
Interest-bearing demand deposits 601,421 570,065 605,226
Savings deposits 99,193 92,944 96,829
Time deposits 163,116 185,296 169,441
Total deposits 1,046,480 1,018,511 1,043,442
Other borrowed funds --- --- ---
Accrued interest payable 45 62 55
Other liabilities 13,614 13,841 12,182
Total liabilities 1,060,139 1,032,414 1,055,679
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 March 31, 2107, December 31, 2016 and March 31, 2016. 8,698 8,698 8,698
Retained earnings 181,873 175,132 178,224
Accumulated other comprehensive loss, net (7,584) (4,593) (8,659)
Total stockholders' equity 182,987 179,237 178,263
Total liabilities and stockholders' equity$1,243,126 $1,211,651 $1,233,942


National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ending
($ in thousands, except for share and per share data)March 31, 2017 March 31, 2016
Interest Income
Interest and fees on loans$7,453 $7,334
Interest on federal funds --- ---
Interest on interest-bearing deposits 148 162
Interest on securities - taxable 1,402 1,677
Interest on securities - nontaxable 1,235 1,311
Total interest income 10,238 10,484
Interest Expense
Interest on time deposits 202 274
Interest on other deposits 826 794
Interest on borrowed funds --- ---
Total interest expense 1,028 1,068
Net interest income 9,210 9,416
Provision for loan losses 59 203
Net income after provision for loan losses 9,151 9,213
Noninterest Income
Service charges on deposit accounts 665 560
Other service charges and fees 69 72
Credit card fees 898 870
Trust Income 401 323
Bank-owned life insurance 143 147
Other income 328 345
Realized securities gain, net --- 24
Total noninterest income 2,504 2,341
Noninterest Expense
Salaries and employee benefits 3,543 3,568
Occupancy and furniture and fixtures 438 477
Data processing and ATM 565 411
FDIC assessment 95 141
Credit card processing 655 622
Intangibles and goodwill amortization 31 110
Net cost of other real estate owned 29 69
Franchise taxes 322 331
Other operating expenses 1,259 955
Total noninterest expense 6,937 6,684
Income before income tax expense 4,718 4,870
Income tax expense 1,069 1,091
Net Income $3,649 $3,779
Basic net income per share$0.52 $0.54
Fully diluted net income per share$0.52 $0.54
Weighted average number of common shares outstanding
Basic 6,957,974 6,957,974
Diluted 6,957,974 6,957,974
Dividends declared per share --- ---
Dividend payout ratio --- ---
Book value per share$26.30 $25.76


National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended
($ in thousands)March 31, 2017 March 31, 2016
Net Income$3,649 $3,779
Other Comprehensive Income, Net of Tax
Unrealized holding gain on available for sale securities net of tax of $580 and $1,802 for the periods ended March 31, 2017 and 2016, respectively 1,075 3,348
Reclassification adjustment for gain included in net income, net of tax of ($2) for the period ended March 31, 2016 --- (4)
Other comprehensive income, net of tax of $580 and $1,800 for the periods ended March 31, 2017 and 2016, respectively$1,075 $3,344
Total Comprehensive Income $4,724 $7,123


Key Ratios and Other Data
(Unaudited)
Three Months Ended
$ in thousandsMarch 31, 2017 March 31, 2016
Average Balances
Cash and due from banks$11,111 $11,309
Interest-bearing deposits 72,322 125,849
Securities available for sale 304,605 245,153
Securities held to maturity 134,477 149,202
Restricted stock 1,172 1,133
Mortgage loans held for sale 214 427
Gross Loans 650,464 610,979
Loans, net 641,406 601,557
Intangible assets 5,951 6,170
Total assets 1,224,870 1,188,462
Total deposits 1,032,012 1,003,136
Other borrowings --- ---
Stockholders' equity 180,512 175,991
Interest-earning assets 1,167,053 1,132,925
Interest-bearing liabilities 860,928 838,943
Financial Ratios
Return on average assets 1.21% 1.28%
Return on average equity 8.20% 8.64%
Net interest margin 3.49% 3.66%
Net interest income-fully taxable equivalent$10,048 $10,307
Efficiency ratio 55.27% 52.85%
Average equity to average assets 14.74% 14.81%
Allowance for Loan Losses
Beginning balance$8,300 $8,297
Provision for losses 59 203
Charge-offs (143) (453)
Recoveries 45 60
Ending balance$8,261 $8,107


Asset Quality Data
(Unaudited)
$ in thousandsMarch 31, 2017 March 31, 2016
Nonperforming Assets
Nonaccrual loans$1,040 $1,901
Nonaccrual restructured loans 4,640 4,504
Total nonperforming loans 5,680 6,405
Other real estate owned$2,952 $3,612
Total nonperforming assets$8,632 $10,017
Accruing restructured loans 3,747 7,724
Loans 90 days or more past due$63 $328
Asset Quality Ratios
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned 1.32% 1.64%
Allowance for loans losses to total loans 1.27% 1.33%
Allowance for loan losses to nonperforming loans 145.44% 126.57%
Loans past due 90 days or more to loans net of unearned income and deferred fees 0.01% 0.05%


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.