Exhibit 99.1
2013
Third Quarter
Report
Message to Our Stockholders:
As we enter the final quarter of 2013, I am pleased to report the earnings for National Bankshares, Inc. forthe third quarter. Even though we faced a challenging operating environment complicated by further regulatory requirements, we reported net income of approximately $4.52 million for the three months ended September 30, 2013, an increase of $224 thousand, or 5.22%, compared to the $4.29 million reported for the same period in 2012. For the nine months ended September 30, 2013, your Company had net income of almost $13.17 million, up $106 thousand, or 0.81%, above the total reported for the first nine months of2012. At September 30, 2013, the Company had total assets of $1.08 billion.
Basic earnings per share were $1.90 which compares with $1.88 reported for the nine months ended September 30, 2012. Basic earnings per share for the third quarter of 2013 were $0.65 which compares with$0.62 for the third quarter last year. The return on average assets for the nine months ended September30, 2013 was 1.61% compared to 1.62% in 2012. Thereturn on average equity was 11.70% and 12.14% for the same two periods.
By the end of the third quarter of 2013, we also initiated a number of technology and process improvements that we believe are providing an even better customer experience. These upgrades include our new mobile banking application and a new debit card and ATM data system to better serve our customers. We will continue to refine and efficiently manage our operations to bring the best community banking services and products to our customers and value to our stockholders.
On behalf of the directors, officers and employees, thank you for your support.
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| James G. Rakes Chairman, President and Chief Executive Officer |
National Bankshares
101 Hubbard Street / P.O. Box 90002
Blacksburg, Virginia 24062-9002
National Bankshares, Inc.
Board of Directors
Lawrence J. Ball President Moog Components Group
John E. DooleyChief Executive Officer Virginia Tech Foundation, Inc.
Charles E. Green, III Financial Planner AXA Advisors, LLC
Jack M. Lewis President New River CommunityCollege
Mary G. Miller President Interactive Design & Development, Inc. | William A. Peery President Cargo Oil Co., Inc.
James G. Rakes Chairman, President and CEO, National Bankshares, Inc.; Chairman, President and CEO, National Bank; Chairman, President and CEO, National Bankshares Financial Services, Inc.
Glenn P. Reynolds President Reynolds Architects Incorporated
James M. Shuler Vice Chairman of the Board Virginia House ofDelegates, Retired |
Mission Statement
National Bankshares, Inc. strives to be an exceptional community bank holding company dedicated to providing shareholder value by offering financial services to customers through subsidiary financial institutions and affiliated companies in an efficient, friendly, personalized and cost-effective manner. We recognize that to do this, our financial institutions must retain the ability to make decisions locally and must actively participate in the communities they serve. We are committed to offering competitive and fair employment opportunities and to maintaining the highest standards in all aspects of our business.
National Bankshares, Inc. and Subsidiaries | |||||
Consolidated Balance Sheets | |||||
(Unaudited) |
($ In thousands, except share data) | September 30, 2013 | September 30, 2012 | ||||||
Assets | ||||||||
Cash and due from banks | $ | 13,806 | $ | 12,445 | ||||
Interest-bearing deposits | 62,776 | 67,394 | ||||||
Securities available for sale, at fair value | 193,639 | 198,079 | ||||||
Securities held to maturity (fair value 160,676 in 2013 and $172,163 in 2012) | 164,752 | 161,728 | ||||||
Mortgage loans held for sale | 617 | 3,015 | ||||||
Loans: | ||||||||
Loans, net of unearned income and deferred fees | 590,664 | 591,461 | ||||||
Less allowance for loan losses | (8,090 | ) | (8,254 | ) | ||||
Loans, net | 582,574 | 583,207 | ||||||
Bank premises and equipment, net | 10,025 | 10,491 | ||||||
Accrued interest receivable | 6,044 | 6,291 | ||||||
Other real estate owned, net | 973 | 1,894 | ||||||
Intangible assets | 8,568 | 9,648 | ||||||
Bank-owned life insurance | 21,020 | 20,346 | ||||||
Other assets | 12,609 | 6,434 | ||||||
Total assets | $ | 1,077,403 | $ | 1,080,972 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Noninterest-bearing demand deposits | $ | 147,928 | $ | 147,346 | ||||
Interest-bearing demand deposits | 453,044 | 418,482 | ||||||
Savings deposits | 73,952 | 66,576 | ||||||
Time deposits | 248,574 | 291,979 | ||||||
Total deposits | 923,498 | 924,383 | ||||||
Other borrowed funds | --- | --- | ||||||
Accrued interest payable | 97 | 178 | ||||||
Other liabilities | 7,514 | 6,013 | ||||||
Total liabilities | 931,109 | 930,574 | ||||||
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 6,947,974 shares in 2013 and 6,943,974 shares in 2012 | 8,685 | 8,680 | ||||||
Retained earnings | 153,578 | 143,383 | ||||||
Accumulated other comprehensive loss, net | (15,969 | ) | (1,665 | ) | ||||
Total stockholders’ equity | 146,294 | 150,398 | ||||||
Total liabilities and stockholders’ equity | $ | 1,077,403 | $ | 1,080,972 | ||||
This financial information is a high level review and discussion of recent performance and activities. For a full discussion, investors should refer to the 10/17/13 Earnings Press Release and our SEC Filings found atwww.sec.gov and on the company’s web site atwww.nationalbankshares.com.
National Bankshares, Inc. and Subsidiaries | |||||||
Consolidated Statements of Income | |||||||
(Unaudited) | |||||||
($ In thousands, except per share data) | September 30, 2013 | September 30, 2012 | ||||||
Interest Income | ||||||||
Interest and fees on loans | $ | 24,707 | $ | 26,554 | ||||
Interest on interest-bearing deposits | 161 | 187 | ||||||
Interest on securities – taxable | 5,007 | 4,991 | ||||||
Interest on securities – nontaxable | 4,847 | 4,801 | ||||||
Total interest income | 34,722 | 36,533 | ||||||
Interest Expense | ||||||||
Interest on time deposits of $100 or more | 694 | 1,171 | ||||||
Interest on other deposits | 3,921 | 4,900 | ||||||
Interest on other borrowed funds | --- | --- | ||||||
Total interest expense | 4,615 | 6,071 | ||||||
Net interest income | 30,107 | 30,462 | ||||||
Provision for loan losses | 1,329 | 2,554 | ||||||
Net interest income after provision for loan losses | 28,778 | 27,908 | ||||||
Noninterest Income | ||||||||
Service charges on deposit accounts | 1,922 | 1,956 | ||||||
Other service charges and fees | 139 | 130 | ||||||
Credit card fees | 2,427 | 2,441 | ||||||
Trust income | 867 | 1,037 | ||||||
Bank-owned life insurance | 546 | 605 | ||||||
Other income | 502 | 341 | ||||||
Realized securities gains, net | 2 | 33 | ||||||
Total noninterest income | 6,405 | 6,543 | ||||||
Noninterest Expense | ||||||||
Salaries and employee benefits | 8,963 | 9,014 | ||||||
Occupancy and furniture and fixtures | 1,230 | 1,181 | ||||||
Data processing and ATM | 1,288 | 1,206 | ||||||
FDIC assessment | 408 | 343 | ||||||
Credit card processing | 1,854 | 1,817 | ||||||
Intangibles and goodwill amortization | 809 | 812 | ||||||
Net costs of other real estate owned | 192 | 209 | ||||||
Franchise taxes | 803 | 646 | ||||||
Other operating expense | 2,637 | 2,302 | ||||||
Total noninterest expense | 18,184 | 17,530 | ||||||
Income before income tax expense | 16,999 | 16,921 | ||||||
Income tax expense | 3,831 | 3,859 | ||||||
Net income | $ | 13,168 | $ | 13,062 | ||||
Basic net income per share | $ | 1.90 | $ | 1.88 | ||||