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FOR IMMEDIATE RELEASE
CONTACTS James G. Rakes, Chairman, President & CEO (540) 951-6236
jrakes@nbbank.com
David K. Skeens, Treasurer (540) 951-6347
dskeens@nbbank.com
NATIONAL BANKSHARES, INC.’S FIRST QUARTER
EARNINGS UP BY MORE THAN 11% OVER LAST YEAR
BLACKSBURG, VA, APRIL 15, 2010: Today, National Bankshares, Inc. (NASDAQ Capital Market: NKSH) reported record net income of nearly $3.77 million for the quarter ended March 31, 2010. Net income is 11.28% above the nearly $3.39 million posted by the Company on March 31, 2009, which was itself a record total for the first quarter of the year. Basic net income per share for the first three months of 2010 was $0.54, up from $0.49 per share earned in the same period last year. Net loans were at $580.93 million on March 31, 2010, a 2.2% increase over net loans of $568.60 million at the end of the first quarter of 2009 and a slight decline from the $583.02 million reported at year-end. At March 31, 2010, National Bankshares, Inc. had total assets of $992.94 million, up from both the $982.37 million reported at December 31, 2009 and the $979.79 million in total assets at the end of the first quarter of 2009. At March 31, the Company reported a return on average assets of 1.57%, a return on average equity of 12.27% and a net interest margin of 4.57%.
The Company’s Chairman, President and CEO, James G. Rakes, said, “At our National Bank subsidiary during the first quarter of the year, the migration of longer-term, higher-cost time deposits into shorter-term deposits continued. We were able to take advantage of the resulting lower cost of funds in this interest rate environment to maximize the net interest margin. The result has been good earnings. As has been our longtime practice, we also carefully monitored controllable expenses during the quarter.” Mr. Rakes went on to say, “This level of earnings has allowed us to continue to prudently add to the allowance for loan losses to help us work through a period of higher nonperforming assets and loan charge-offs. Our trade area was not as seriously impacted as some other parts of the country during the early stages of the recession. But we anticipated that our customers would not be able to totally escape its effects, and we have been preparing for this time. The ratio of nonperforming assets to net loans, plus other real estate owned, grew to 1.77% at March 31, while the ratio of the allowance for loan losses to total loans was 1.21% at the end of the first quarter.”
National Bankshares, Inc. is a financial holding company with headquarters in Blacksburg, Virginia. It is the parent company of the National Bank of Blacksburg, which does business as National Bank from 25 offices throughout Southwest Virginia, and of National Bankshares Financial Services, Inc., an insurance and investments subsidiary in the same market. National Bankshares’ 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.
101 Hubbard Street / Blacksburg, Virginia 24060
P.O. Box 90002 / Blacksburg, Virginia 24062-9002
540 951-6300 / 800 552-4123
www.nationalbankshares.com
National Bankshares, Inc. and Subsidiaries
Consolidated Balance Sheet
($ in thousands) | (Unaudited) | (Audited) | ||||||||||
Assets | March 31, 2010 | March 31, 2009 | December 31, 2009 | |||||||||
Cash and due from banks | $ | 11,744 | $ | 13,603 | $ | 12,894 | ||||||
Interest-bearing deposits | 55,706 | 41,929 | 32,730 | |||||||||
Federal funds sold | --- | --- | --- | |||||||||
Securities available for sale | 161,543 | 166,007 | 168,041 | |||||||||
Securities held to maturity | 125,547 | 134,484 | 129,376 | |||||||||
Total securities | 287,090 | 300,491 | 297,417 | |||||||||
Mortgage loans held for sale | 1,358 | 998 | 126 | |||||||||
Loans: | ||||||||||||
Real estate construction loans | 47,245 | 58,645 | 45,625 | |||||||||
Real estate mortgage loans | 165,604 | 164,684 | 165,542 | |||||||||
Commercial and industrial loans | 284,242 | 249,925 | 283,998 | |||||||||
Consumer loans | 92,035 | 102,533 | 95,844 | |||||||||
Total loans | 589,126 | 575,787 | 591,009 | |||||||||
Less: unearned income and deferred fees | (1,052 | ) | (1,069 | ) | (1,062 | ) | ||||||
Loans, net of unearned income and deferred fees | 588,074 | 574,718 | 589,947 | |||||||||
Less: allowance for loan losses | (7,141 | ) | (6,118 | ) | (6,926 | ) | ||||||
Loans, net | 580,933 | 568,600 | 583,021 | |||||||||
Bank premises and equipment, net | 10,729 | 11,070 | 10,628 | |||||||||
Accrued interest receivable | 6,186 | 6,209 | 6,250 | |||||||||
Other real estate owned | 2,567 | 1,918 | 2,126 | |||||||||
Intangible assets | 12,355 | 13,441 | 12,626 | |||||||||
Other assets | 24,276 | 21,528 | 24,549 | |||||||||
Total assets | $ | 992,944 | $ | 979,787 | $ | 982,367 | ||||||
Liabilities and Stockholders' Equity | ||||||||||||
Noninterest-bearing deposits | $ | 116,153 | $ | 112,473 | $ | 122,549 | ||||||
Interest-bearing demand deposits | 325,214 | 285,218 | 310,629 | |||||||||
Savings deposits | 53,977 | 49,178 | 51,622 | |||||||||
Time deposits | 362,124 | 410,960 | 367,312 | |||||||||
Total deposits | 857,468 | 857,829 | 852,112 | |||||||||
Other borrowed funds | --- | 51 | --- | |||||||||
Accrued interest payable | 392 | 650 | 336 | |||||||||
Other liabilities | 8,580 | 7,701 | 7,843 | |||||||||
Total liabilities | 866,440 | 866,231 | 860,291 | |||||||||
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 6,933,474 shares at March 31, 2010, 6,929,474 shares at March 31, 2009 and 6,933,474 shares at December 31, 2009 | 8,667 | 8,662 | 8,667 | |||||||||
Retained earnings | 117,670 | 108,743 | 113,901 | |||||||||
Accumulated comprehensive income | 167 | (3,849 | ) | (492 | ) | |||||||
Total stockholders' equity | 126,504 | 113,556 | 122,076 | |||||||||
Total liabilities and stockholders' equity | $ | 992,944 | $ | 979,787 | $ | 982,367 |
National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended | ||||||||
March 31, 2010 | March 31, 2009 | |||||||
($ in thousands, except for per share data) | ||||||||
Interest Income | ||||||||
Interest and fees on loans | $ | 9,176 | $ | 9,462 | ||||
Interest on federal funds | --- | --- | ||||||
Interest on interest-bearing deposits | 19 | 24 | ||||||
Interest on securities - taxable | 1,443 | 1,561 | ||||||
Interest on securities - nontaxable | 1,602 | 1,531 | ||||||
Total interest income | 12,240 | 12,578 | ||||||
Interest Expense | ||||||||
Interest on time deposits of $100,000 or more | 946 | 1,491 | ||||||
Interest on other deposits | 2,033 | 2,920 | ||||||
Interest on borrowed funds | --- | 1 | ||||||
Total interest expense | 2,979 | 4,412 | ||||||
Net interest income | 9,261 | 8,166 | ||||||
Provision for loan losses | 647 | 370 | ||||||
Net interest income after provision for loan losses | 8,614 | 7,796 | ||||||
Noninterest Income | ||||||||
Service charges on deposit accounts | 714 | 804 | ||||||
Other service charges and fees | 47 | 73 | ||||||
Credit card fees | 666 | 625 | ||||||
Trust income | 269 | 276 | ||||||
BOLI income | 185 | 172 | ||||||
Other income | 104 | 77 | ||||||
Realized securities gains (losses), net | (14 | ) | 80 | |||||
Total noninterest income | 1,971 | 2,107 | ||||||
Noninterest Expense | ||||||||
Salaries and employee benefits | 2,856 | 2,831 | ||||||
Occupancy and furniture and fixtures | 491 | 469 | ||||||
Data processing and ATM | 357 | 322 | ||||||
FDIC assessment | 263 | 121 | ||||||
Credit card processing | 508 | 463 | ||||||
Intangibles and goodwill amortization | 271 | 278 | ||||||
Net costs of other real estate owned | 33 | 60 | ||||||
Franchise taxes | 239 | 227 | ||||||
Other operating expenses | 766 | 859 | ||||||
Total noninterest expense | 5,784 | 5,630 | ||||||
Income before income tax expense | 4,801 | 4,273 | ||||||
Income tax expense | 1,032 | 886 | ||||||
Net income | $ | 3,769 | $ | 3,387 | ||||
Basic net income per share | $ | 0.54 | $ | 0.49 | ||||
Fully diluted net income per share | $ | 0.54 | $ | 0.49 | ||||
Weighted average outstanding number of common shares | ||||||||
Basic | 6,933,474 | 6,929,474 | ||||||
Diluted | 6,952,812 | 6,934,846 | ||||||
Dividends declared per share | --- | --- | ||||||
Dividend payout ratio | --- | --- | ||||||
Book value per share | $ | 18.25 | $ | 16.39 |
Key Ratios and Other Data
(Unaudited)
($ in thousands) | Three Months Ending | |||||||
Average Balances | March 31, 2010 | March 31, 2009 | ||||||
Cash and due from banks | $ | 11,197 | $ | 11,811 | ||||
Interest-bearing deposits | 34,866 | 41,121 | ||||||
Securities available for sale | 163,438 | 160,767 | ||||||
Securities held to maturity | 125,448 | 125,712 | ||||||
Mortgage loans held for sale | 619 | 1,091 | ||||||
Gross loans | 589,379 | 574,246 | ||||||
Loans, net | 581,296 | 567,190 | ||||||
Intangible assets | 12,511 | 13,601 | ||||||
Total assets | 971,844 | 960,824 | ||||||
Total deposits | 838,697 | 839,828 | ||||||
Other borrowings | --- | 53 | ||||||
Stockholders' equity | 124,529 | 113,111 | ||||||
Interest-earning assets | 909,654 | 901,837 | ||||||
Interest-bearing liabilities | 723,107 | 730,963 | ||||||
Financial Ratios | ||||||||
Return on average assets | 1.57 | % | 1.43 | % | ||||
Return on average equity | 12.27 | % | 12.14 | % | ||||
Net interest margin | 4.57 | % | 4.08 | % | ||||
Net interest income - fully taxable equivalent | $ | 10,241 | $ | 9,077 | ||||
Efficiency ratio | 47.36 | % | 50.34 | % | ||||
Average equity to average assets | 12.81 | % | 11.77 | % | ||||
($ in thousands) | ||||||||
Allowance for Loan Losses | ||||||||
Beginning balance | $ | 6,926 | $ | 5,858 | ||||
Provision for losses | 647 | 370 | ||||||
Charge-offs | (455 | ) | (123 | ) | ||||
Recoveries | 23 | 13 | ||||||
Ending balance | $ | 7,141 | $ | 6,118 |
Asset Quality Data
(Unaudited)
($ in thousands) | ||||||||
Nonperforming assets | March 31, 2010 | March 31, 2009 | ||||||
Nonaccrual loans | $ | 7,743 | $ | 1,337 | ||||
Restructured loans | --- | --- | ||||||
Total nonperforming loans | 7,743 | 1,337 | ||||||
Other real estate owned | 2,567 | 1,918 | ||||||
Total nonperforming assets | $ | 10,310 | $ | 3,255 | ||||
Loans 90 days or more past due | $ | 2,217 | $ | 1,607 | ||||
Asset Quality Ratios | ||||||||
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned | 1.77 | % | 0.56 | % | ||||
Allowance for loan losses to total loans | 1.21 | % | 1.06 | % | ||||
Allowance for loan losses to nonperforming loans | 92.23 | % | 457.59 | % | ||||
Loans past due 90 days or more to loans net of unearned income and deferred fees | 0.38 | % | 0.28 | % |