Exhibit 99.1
Message to Our Stockholders:
We are pleased to provide you with our 1st Quarter report for 2014.
National Bankshares, Inc. posted net income of $4.40 million, or basic net income per share of $0.63. The return on average assets for the first quarter was 1.61% and the return on average equity was 11.92% compared to 1.56% and 11.26%, respectively, for the first quarter of 2013. At March 31, 2014, the Company had total assets of $1.12 billion, an increase of 2.24% when compared to the end of the first quarter of 2013.
Total loans at quarter-end of $589.95 million were an increase of 2.45% from the total of $575.87 million at the end of March last year. We anticipate improving, though slow, economic activity in our market area, and we hope to build upon the momentum in our loan growth.
We recently concluded our Annual Meeting of Stockholders where we were able to report our strong earnings for 2013. During my remarks, I discussed the various challenges from having to keep so many “balls in the air” when it comes to delivering the very best in products and services while consistently putting into place and monitoring the appropriate regulatory compliance and technology securitymeasures. Additionally, we not only face competition from traditional banks but, each year, we deal with many new non-banking competitors such as Paypal and Bitcoin. Rest assured that our focus of providing a variety of financial products and delivery options with a personalized level of service is a proven success which we are committed to enhancing for our customers every day.
At the Annual Meeting, I announced that the National Bank Board of Directors had appointed Brad Denardo as the Bank’s President and CEO. Brad has played an important part in the Bank’s success for over 30 years, and I am confident that his banking experience, expertise and commitment along with his knowledge of our communities will ensure future success.
On behalf of your Company’s Board of Directors and our employees, we thank you, our stockholders, for your continued support and investment.
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| James G. Rakes Chairman, President and Chief Executive Officer |
National Bankshares, Inc.
Board of Directors
Lawrence J. Ball President Moog Components Group | William A. Peery President Cargo Oil Co., Inc. |
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John E. Dooley ChiefExecutive Officer VirginiaTech Foundation, Inc. Charles E. Green, III Financial Planner AXA Advisors, LLC Jack M. Lewis President New River Community College Mary G. Miller President Interactive Design & Development, Inc. | James G. Rakes Chairman, President and CEO, National Bankshares, Inc.; Executive Chairman, 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 of Delegates, 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) | | March 31, 2014 | | | March 31, 2013 | |
Assets | | | | | | | | |
Cash and due from banks | | $ | 14,723 | | | $ | 10,674 | |
Interest-bearing deposits | | | 108,841 | | | | 107,176 | |
Securities available for sale, at fair value | | | 190,401 | | | | 190,215 | |
Securities held to maturity (fair value $165,105 in 2014 and$174,218 in 2013) | | | 165,398 | | | | 166,947 | |
Restricted stock | | | 1,089 | | | | 1,414 | |
Mortgage loans held for sale | | | --- | | | | 313 | |
Loans: | | | | | | | | |
Loans, net of unearned income and deferred fees | | | 589,048 | | | | 574,958 | |
Less allowance for loan losses | | | (8,297 | ) | | | (8,291 | ) |
Loans, net | | | 580,751 | | | | 566,667 | |
Bank premises and equipment, net | | | 9,428 | | | | 10,237 | |
Accrued interest receivable | | | 5,893 | | | | 5,878 | |
Other real estate owned, net | | | 4,901 | | | | 1,094 | |
Intangible assets | | | 8,029 | | | | 9,106 | |
Bank-owned life insurance | | | 21,335 | | | | 20,690 | |
Other assets | | | 12,321 | | | | 8,092 | |
Total assets | | $ | 1,123,110 | | | $ | 1,098,503 | |
| | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | |
Noninterest-bearing demand deposits | | $ | 145,963 | | | $ | 144,815 | |
Interest-bearing demand deposits | | | 503,596 | | | | 449,992 | |
Savings deposits | | | 77,467 | | | | 72,420 | |
Time deposits | | | 237,060 | | | | 269,892 | |
| Total deposits | | | 964,086 | | | | 937,119 | |
Other borrowed funds | | | --- | | | | --- | |
Accrued interest payable | | | 78 | | | | 146 | |
Other liabilities | | | 5,529 | | | | 7,878 | |
Total liabilities | | | 969,693 | | | | 945,143 | |
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 2014 and 2013 | | | 8,685 | | | | 8,685 | |
Retained earnings | | | 158,575 | | | | 148,378 | |
Accumulated other comprehensive loss, net | | | (13,843 | ) | | | (3,703 | ) |
| Total stockholders’ equity | | | 153,417 | | | | 153,360 | |
| Total liabilities and stockholders’ equity | | $ | 1,123,110 | | | $ | 1,098,503 | |
This financial information is a high level review and discussion of recent performance and activities. For a full discussion, investors should refer to the 04/24/2014 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) | | March 31, 2014 | | | March 31, 2013 | |
Interest Income | | | | | | | | |
Interest and fees on loans | | $ | 7,935 | | | $ | 8,319 | |
Interest on interest-bearing deposits | | | 65 | | | | 58 | |
Interest on securities – taxable | | | 1,653 | | | | 1,512 | |
Interest on securities – nontaxable | | | 1,500 | | | | 1,648 | |
Total interest income | | | 11,153 | | | | 11,537 | |
| | | | | | | | | |
Interest Expense | | | | | | | | |
Interest on time deposits of $100 or more | | | 153 | | | | 268 | |
Interest on other deposits | | | 1,162 | | | | 1,411 | |
Interest on other borrowed funds | | | --- | | | | --- | |
Total interest expense | | | 1,315 | | | | 1,679 | |
Net interest income | | | 9,838 | | | | 9,858 | |
Provision for loan losses | | | 103 | | | | 671 | |
Net interest income after provision for loan losses | | | 9,735 | | | | 9,187 | |
| | | | | | | | | |
Noninterest Income | | | | | | | | |
Service charges on deposit accounts | | | 592 | | | | 588 | |
| Other service charges and fees | | | 65 | | | | 60 | |
Credit card fees | | | 797 | | | | 740 | |
Trust income | | | 293 | | | | 289 | |
Bank-owned life insurance | | | 175 | | | | 188 | |
Other income | | | 277 | | | | 281 | |
| Realized securities gains, net | | | 1 | | | | 9 | |
Total noninterest income | | | 2,200 | | | | 2,155 | |
| | | | | | | | | |
Noninterest Expense | | | | | | | | |
Salaries and employee benefits | | | 2,999 | | | | 2,940 | |
Occupancy and furniture and fixtures | | | 440 | | | | 432 | |
Data processing and ATM | | | 363 | | | | 393 | |
FDIC assessment | | | 147 | | | | 136 | |
Credit card processing | | | 549 | | | | 552 | |
Intangibles and goodwill amortization | | | 269 | | | | 271 | |
Net costs of other real estate owned | | | 77 | | | | 75 | |
Franchise taxes | | | 279 | | | | 258 | |
Other operating expense | | | 1,059 | | | | 907 | |
Total noninterest expense | | | 6,182 | | | | 5,964 | |
Income before income tax expense | | | 5,753 | | | | 5,378 | |
Income tax expense | | | 1,349 | | | | 1,162 | |
Net income | | $ | 4,404 | | | $ | 4,216 | |
Basic net income per share | | $ | 0.63 | | | $ | 0.61 | |
