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

BLACKSBURG, Va., July 27, 2017 (GLOBE NEWSWIRE) -- National Bankshares, Inc. (NASDAQ:NKSH) today announced its results of operations for the second quarter and first half of 2017. The Company reported net income of $7.22 million for the six months ended June 30, 2017 compared to $7.64 million at June 30, 2016. Basic earnings per share were $1.04 at June 30, 2017 compared to $1.10 for the same period in 2016. For the first half of the year, the return on average assets was 1.18% and the return on average equity was 7.98% compared to 1.28% and 8.65%, respectively, for the first six months of 2016. At June 30, 2017, the Company had total assets of close to $1.26 billion which was an increase of 3.73% when compared to $1.21 billion at the end of June 2016.

“I’m pleased to report that the second quarter of 2017 was another solid period for our Company,” said National Bankshares Chairman, President & CEO James G. Rakes. “The broader financial environment, governed by low interest rates, continues to pressure our earnings. However, by focusing on things within our control – by making quality loans, providing superior customer service, and investing in bank infrastructure and personnel – we remain a profitable bank holding company that our customers, shareholders and communities can rely on.”

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)June 30, 2017June 30, 2016December 31, 2016
Assets
Cash and due from banks$12,936 $14,320 $13,974
Interest-bearing deposits 89,096 75,892 80,268
Federal funds sold --- --- ---
Securities available for sale, at fair value 308,435 303,242 304,282
Securities held to maturity 130,712 138,424 134,957
Restricted stock 1,200 1,170 1,170
Total securities 440,347 442,836 440,409
Mortgage loans held for sale 491 663 478
Loans:
Loans, net of unearned income and deferred fees 654,734 630,916 647,752
Less: allowance for loan losses (8,372) (8,195) (8,300)
Loans, net 646,362 622,721 639,452
Premises and equipment, net 8,557 8,718 8,853
Accrued interest receivable 5,139 5,259 5,260
Other real estate owned 3,008 3,425 3,156
Intangible assets and goodwill 5,923 6,046 5,966
Bank-owned life insurance 33,287 22,699 22,998
Other assets 14,208 11,500 13,128
Total assets$1,259,354 $1,214,079 $1,233,942
Liabilities and Stockholders' Equity
Noninterest-bearing deposits$181,868 $171,350 $171,946
Interest-bearing demand deposits 618,223 574,507 604,093
Savings deposits 140,325 136,051 136,789
Time deposits 121,941 139,830 130,614
Total deposits 1,062,357 1,021,738 1,043,442
Other borrowed funds --- --- ---
Accrued interest payable 43 56 55
Other liabilities 12,668 12,357 12,182
Total liabilities 1,075,068 1,034,151 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 June 30, 2017, December 31, 2016 and June 30, 2016. 8,698 8,698 8,698
Retained earnings 181,546 175,169 178,224
Accumulated other comprehensive loss, net (5,958) (3,939) (8,659)
Total stockholders' equity 184,286 179,928 178,263
Total liabilities and stockholders' equity$1,259,354 $1,214,079 $1,233,942


National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months EndedSix Months Ended
($ in thousands, except for share and per share data)June 30, 2017June 30, 2016June 30, 2017June 30, 2016
Interest Income
Interest and fees on loans$7,453 $7,289$14,906 $14,623
Interest on federal funds --- --- --- ---
Interest on interest-bearing deposits 231 150 379 312
Interest on securities - taxable 1,397 1,567 2,799 3,244
Interest on securities - nontaxable 1,214 1,286 2,449 2,597
Total interest income 10,295 10,292 20,533 20,776
Interest Expense
Interest on time deposits 135 181 280 375
Interest on other deposits 913 882 1,796 1,756
Interest on borrowed funds --- --- --- ---
Total interest expense 1,048 1,063 2,076 2,131
Net interest income 9,247 9,229 18,457 18,645
Provision for loan losses 464 654 523 857
Net income after provision for loan losses 8,783 8,575 17,934 17,788
Noninterest Income
Service charges on deposit accounts 692 569 1,357 1,129
Other service charges and fees 41 46 110 118
Credit card fees 1,019 969 1,917 1,839
Trust Income 361 354 762 677
Bank-owned life insurance 146 151 289 298
Other income 192 455 520 800
Realized securities gain, net 4 74 4 98
Total noninterest income 2,455 2,618 4,959 4,959
Noninterest Expense
Salaries and employee benefits 3,438 2,907 6,981 6,475
Occupancy and furniture and fixtures 469 448 907 925
Data processing and ATM 541 595 1,106 1,006
FDIC assessment 91 145 186 286
Credit card processing 725 712 1,380 1,334
Intangibles and goodwill amortization 12 68 43 178
Net cost of other real estate owned 55 39 84 108
Franchise taxes 329 322 651 653
Other operating expenses 1,038 1,002 2,297 1,957
Total noninterest expense 6,698 6,238 13,635 12,922
Income before income tax expense 4,540 4,955 9,258 9,825
Income tax expense 970 1,090 2,039 2,181
Net Income $3,570 $3,865$7,219 $7,644
Basic net income per share$0.51 $0.56$1.04 $1.10
Fully diluted net income per share$0.51 $0.56$1.04 $1.10
Weighted average number of common shares outstanding
Basic 6,957,974 6,957,974 6,957,974 6,957,974
Diluted 6,957,974 6,957,974 6,957,974 6,957,974
Dividends declared per share$0.56 $0.55$0.56 $0.55
Dividend payout ratio --- --- 53.98% 50.07%
Book value per share $26.49 $25.86


National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended
($ in thousands) June 30, 2017 June 30, 2016
Net income $3,570 $3,865
Other Comprehensive Income, net of tax
Unrealized holding gain on available for sale securities net of tax of $874 in 2017 and $368 in 2016 1,626 684
Reclassification adjustment for gain included in net income, net of tax of ($16) in 2016 --- (30)
Other comprehensive income, net of tax of $874 in 2017 and $352 in 2016 $1,626 $654
Total Comprehensive Income $5,196 $4,519
Six Months Ended
($ in thousands) June 30, 2017 June 30, 2016
Net Income $7,219 $7,644
Other Comprehensive Income, Net of Tax
Unrealized holding gain on available for sale securities net of tax of $1,454 in 2017 and $2,170 in 2016 2,701 4,032
Reclassification adjustment for gain included in net income, net of tax of ($18) in 2016 --- (34)
Other comprehensive income, net of tax of $1,454 in 2017 and $2,152 in 2016 $2,701 $3,998
Total Comprehensive Income $9,920 $11,642


Key Ratios and Other Data
(Unaudited)
Three Months EndedSix Months Ended
($ in thousands)June 30, 2017June 30, 2016June 30, 2017June 30, 2016
Average Balances
Cash and due from banks$11,579 $11,217 $11,346 $11,263
Interest-bearing deposits 87,694 118,395 80,050 122,122
Securities available for sale 305,058 283,280 304,833 264,217
Securities held to maturity 132,477 140,415 133,472 144,809
Restricted stock 1,200 1,170 1,186 1,151
Mortgage loans held for sale 262 601 238 514
Gross Loans 652,644 610,657 651,560 610,818
Loans, net 643,702 601,700 642,561 601,628
Intangible assets 5,931 6,085 5,940 6,128
Total assets 1,242,223 1,211,217 1,233,594 1,199,839
Total deposits 1,045,464 1,022,306 1,038,775 1,012,721
Other borrowings --- --- --- ---
Stockholders' equity 184,108 179,452 182,319 177,722
Interest-earning assets 1,181,413 1,152,614 1,174,273 1,142,769
Interest-bearing liabilities 867,065 851,522 864,013 845,232
Financial Ratios
Return on average assets 1.15% 1.28% 1.18% 1.28%
Return on average equity 7.78% 8.66% 7.98% 8.65%
Net interest margin 3.42% 3.52% 3.46% 3.59%
Net interest income-fully taxable equivalent$10,074 $10,089 $20,122 $20,397
Efficiency ratio 53.46% 49.09% 54.36% 50.96%
Average equity to average assets 14.82% 14.82% 14.78% 14.81%
Allowance for Loan Losses
Beginning balance$8,261 $8,107 $8,300 $8,297
Provision for losses 464 654 523 857
Charge-offs (409) (598) (552) (1,051)
Recoveries 56 32 101 92
Ending balance$8,372 $8,195 $8,372 $8,195


Asset Quality Data
(Unaudited)
($ in thousands)June 30, 2017June 30, 2016
Nonperforming Assets
Nonaccrual loans$9 $1,751
Nonaccrual restructured loans 3,188 4,454
Total nonperforming loans 3,197 6,205
Other real estate owned$3,008 $3,425
Total nonperforming assets$6,205 $9,630
Accruing restructured loans 3,711 4,729
Loans 90 days or more past due$259 $316
Asset Quality Ratios
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned 0.94% 1.52%
Allowance for loans losses to total loans 1.28% 1.30%
Allowance for loan losses to nonperforming loans 261.87% 132.07%
Loans past due 90 days or more to loans net of unearned income and deferred fees 0.04% 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.