National Bankshares Inc.
01/23/2025 | Press release | Distributed by Public on 01/23/2025 15:30
National Bankshares, Inc. Reports Results for the Fourth Quarter and Twelve Months Ended December 31, 2024 (Form 8-K)
National Bankshares, Inc. Reports Results for the Fourth Quarter and Twelve Months Ended December 31, 2024
BLACKSBURG, VA., January 23, 2025 -- National Bankshares, Inc. ("the Company") (Nasdaq: NKSH), parent company of The National Bank of Blacksburg ("the Bank") and National Bankshares Financial Services, Inc., today announced its results of operations for the year and quarter ended December 31, 2024. The Company reported net income of $7.62 million or $1.24 per basic and diluted common share for the twelve months ended December 31, 2024. For the three month period ended December 31, 2024, the Company reported net income of $3.08 million or $0.48 per basic and diluted common share. National Bankshares, Inc. ended December 31, 2024 with total assets of $1.81 billion.
CEO F. Brad Denardo commented, "National Bankshares is uniquely positioned to provide our customers, communities, and shareholders with exceptional service and value today and well into the future. Over the past year we have expanded our reach, acquiring and building branches in neighboring markets with good growth potential, while maintaining a strong community banking ethos. In 2024 we also embarked on an enterprise system upgrade that will deliver a powerful and improved customer experience while increasing back-end efficiency. We have recruited talented new bankers, who along with our cadre of experienced professionals, possess the tools and know-how to propel our brand into a promising future. National Bankshares is committed to banking that is both personal and profitable, and we look forward to making good on that promise in 2025 and beyond."
Highlights
Merger:
The Company successfully completed the acquisition of Frontier Community Bank ("FCB") on June 1, 2024. The transaction was accounted for under the acquisition method of accounting, with acquired assets and liabilities recorded at fair value. Upon acquisition, the Company recorded assets, including goodwill, of $153.39 million, deposits of $129.72 million, equity of $16.35 million, and a provision for credit loss of $1.29 million. Merger-related expense of $2.92 million was recorded for the year ended December 31, 2024.
Net Interest Income
The net interest margin for the year ended December 31, 2024 was lower than for the year ended December 31, 2023, due to higher deposit costs that outpaced improvements in asset yields. However, the net interest margin improved when the fourth quarter of 2024 is compared with the third quarter of 2024, due to the Federal Reserve's 100 basis point decrease during the last four months of 2024 that immediately reduced the cost of the Company's adjustable-rate deposits and allowed lower repricing on maturing time deposits. The Company continuously monitors its deposit base and funding costs.
101 Hubbard Street / Blacksburg, Virginia 24060
P.O. Box 90002 / Blacksburg, Virginia 24062-9002
540 951-6300 / 800 552-4123
www.nationalbankshares.com
Noninterest Income
When the year ended December 31, 2024 is compared with the year ended December 31, 2023, service charges on deposits increased due to an updated fee schedule and the FCB acquisition, trust income increased due to expansion in assets under management and credit and debit card fees, net, decreased due to higher processing costs. Noninterest income for 2023 reflects nonrecurring items including settlement of a BOLI policy, gain on the sale of an investment in VISA Class B shares, a gain on contract contingency, and loss on the sale of securities.
Noninterest income for the fourth quarter of 2024 decreased slightly when compared with the third quarter of 2024, due to a nonrecurring fee recorded during the third quarter.
Noninterest Expense
Noninterest expense increased when the year ended December 31, 2024 is compared with the year ended December 31, 2023, due to the FCB acquisition and a contract termination expense. During 2023 the Company reported expenses associated with a proxy contest, included in professional services.
When the fourth quarter of 2024 is compared with the third quarter of 2024, noninterest expense increased slightly, primarily due to normal fluctuation in salaries and employee benefits and data processing and ATM expense.
Securities
During 2024, the Company reduced its securities holdings by investing proceeds from matured securities in interest-bearing deposits. FCB's securities were sold upon acquisition. Fluctuation in the the value of the Company's securities portfolio are primarily due to market interest rate expectations. The Company's Asset Liability Management Committee closely monitors interest rate risk on all of the Company's financial assets and liabilities. As of December 31, 2024, the Company has the ability to hold securities until maturity. Analysis as of December 31, 2024 did not indicate credit risk concerns with any of the Company's securities.
Deposits
The Company's depositors within its market areas are diverse and include individuals, businesses and municipalities. The Company does not have any brokered deposits. Depositors are insured up to the FDIC maximum of $250 thousand. Municipal deposits, which account for approximately 23.6% of the Company's deposits, have additional security from bonds pledged as collateral, in accordance with state regulation. Of the Company's non-municipal deposits, approximately 22.4% are uninsured.
Liquidity
The Company's liquidity position remains solid. The Company maintains borrowing lines with the Federal Home Loan Bank of Atlanta ("FHLB") and the Federal Reserve that provide substantial borrowing capacity. During 2023, the Company accessed short-term borrowings with the FHLB and Federal Reserve to reinforce liquidity. The advances were fully repaid due to the success of the Company's deposit strategy. Combined with a low loan-to-deposit ratio, positive results of the latest liquidity stress testing and success of deposit marketing, the Company believes it is well positioned to meet foreseeable liquidity demands.
Loans and Credit Quality
Loans as of December 31, 2024 decreased when compared with the level at September 30, 2024, driven by payoffs of real estate construction loans. The Company is positioned to continue to make every loan that meets its underwriting standards. Loan metrics continue to reflect low credit risk, with low charge-off and past due levels.
Stockholders' Equity
Stockholders' equity as of December 31, 2024 increased when compared with December 31, 2023 primarily due to the acquisition of FCB. During 2024, the Company paid regular dividends of $1.51 per common share and did not repurchase stock. The Bank is considered well capitalized, with capital ratios substantially higher than minimum regulatory requirements, and meets all requirements for borrowing from the FHLB.
2
About National Bankshares
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 27 full-service offices, primarily in southwest and central Virginia, and two loan production offices in Roanoke and Charlottesville, 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."
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by use of words such as "may," "will," "anticipates," "believes," "expects," "plans," "estimates," "potential," "continue," "should," and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company's market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, achievements, or trends will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the following: the businesses of the Company and Frontier Community Bank ("FCB") may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; the expected growth opportunities or cost savings from the merger with FCB may not be fully realized or may take longer to realize than expected; deposit attrition, operating costs, customer losses and business disruption prior to and following the merger with FCB, including adverse effects on relationships with employees and customers, may be greater than expected; the regulatory and shareholder approvals required for the merger with FCB may not be obtained; the level of inflation; interest rates; national and local economic conditions; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation, and the impact of any policies or programs implemented pursuant to financial reform legislation; unanticipated increases in the level of unemployment in the Company's market; the quality or composition of the loan and/or investment portfolios; the sufficiency of the Company's allowance for credit losses; demand for loan products; deposit flows, including impact on liquidity; competition; demand for financial services in the Company's market; the real estate market conditions in the Company's market; laws, regulations and policies impacting financial institutions; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer behavior; technological risks and developments, and cyber-threats, attacks or events; the Company's technology initiatives; geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts; the occurrence of significant natural disasters, including severe weather conditions, floods, and other catastrophic events; the Company's ability to identify, attract, and retain experienced management, relationship managers, and support personnel, particularly in a competitive labor environment; performance by the Company's counterparties or vendors; applicable accounting principles, policies and guidelines; the impact of public health events, including the adverse impact on our business and operations and on our customers; and other factors described from time to time in the Company's reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
3
National Bankshares, Inc.
Consolidated Balance Sheets
(Unaudited)
|
(in thousands, except share and per share data) |
December 31, 2024 |
September 30, 2024 |
December 31, 2023 |
|||
|
Assets |
||||||
|
Cash and due from banks |
$ |
13,564 |
$ |
15,990 |
$ |
12,967 |
|
Interest-bearing deposits |
94,254 |
33,707 |
73,636 |
|||
|
Federal funds sold |
299 |
73 |
- |
|||
|
Securities available for sale, at fair value |
601,898 |
622,271 |
618,601 |
|||
|
Restricted stock, at cost |
1,848 |
1,849 |
1,264 |
|||
|
Mortgage loans held for sale |
619 |
457 |
406 |
|||
|
Loans: |
||||||
|
Real estate construction loans |
50,798 |
71,920 |
55,379 |
|||
|
Consumer real estate loans |
307,855 |
306,012 |
241,564 |
|||
|
Commercial real estate loans |
478,078 |
473,018 |
419,130 |
|||
|
Commercial non real estate loans |
51,844 |
52,699 |
41,555 |
|||
|
Public sector and IDA loans |
57,171 |
58,109 |
60,551 |
|||
|
Consumer non real estate loans |
42,867 |
40,483 |
38,996 |
|||
|
Total loans |
988,613 |
1,002,241 |
857,175 |
|||
|
Less: unearned income and deferred fees and costs |
(663 |
) |
(582 |
) |
(529 |
) |
|
Loans, net of unearned income and deferred fees and costs |
987,950 |
1,001,659 |
856,646 |
|||
|
Less: allowance for credit losses |
(10,262 |
) |
(10,328 |
) |
(9,094 |
) |
|
Loans, net |
977,688 |
991,331 |
847,552 |
|||
|
Premises and equipment, net |
16,878 |
16,165 |
11,109 |
|||
|
Accrued interest receivable |
6,469 |
6,648 |
6,313 |
|||
|
Goodwill |
10,718 |
10,718 |
5,848 |
|||
|
Core deposit intangible, net |
1,863 |
1,963 |
- |
|||
|
Bank-owned life insurance |
47,369 |
47,071 |
43,583 |
|||
|
Other assets |
38,169 |
36,790 |
34,091 |
|||
|
Total assets |
$ |
1,811,636 |
$ |
1,785,033 |
$ |
1,655,370 |
|
Liabilities and Stockholders' Equity |
||||||
|
Noninterest-bearing demand deposits |
$ |
290,088 |
$ |
296,469 |
$ |
281,215 |
|
Interest-bearing demand deposits |
864,753 |
819,947 |
821,661 |
|||
|
Savings deposits |
177,297 |
176,460 |
177,856 |
|||
|
Time deposits |
312,614 |
310,077 |
223,240 |
|||
|
Total deposits |
1,644,752 |
1,602,953 |
1,503,972 |
|||
|
Accrued interest payable |
1,462 |
2,074 |
1,416 |
|||
|
Other liabilities |
9,013 |
12,224 |
9,460 |
|||
|
Total liabilities |
1,655,227 |
1,617,251 |
1,514,848 |
|||
|
Commitments and contingencies |
||||||
|
Stockholders' Equity |
||||||
|
Preferred stock, no par value, 5,000,000 shares authorized; none issued and outstanding |
$ |
- |
$ |
- |
$ |
- |
|
Common stock of $1.25 par value and additional paid in capital. Authorized 10,000,000 shares; issued and outstanding 6,363,371 (including 4,961 unvested) shares at December 31, 2024, 6,360,973 (including 4,379 unvested) shares at September 30, 2024, and 5,893,782 (including 4,095 unvested) shares at December 31, 2023 |
21,831 |
21,796 |
7,404 |
|||
|
Retained earnings |
196,343 |
198,225 |
197,984 |
|||
|
Accumulated other comprehensive loss, net |
(61,765 |
) |
(52,239 |
) |
(64,866 |
) |
|
Total stockholders' equity |
156,409 |
167,782 |
140,522 |
|||
|
Total liabilities and stockholders' equity |
$ |
1,811,636 |
$ |
1,785,033 |
$ |
1,655,370 |
4
National Bankshares, Inc.
Consolidated Statements of Income
(Unaudited)
|
Three Months Ended |
||||||
|
(in thousands, except share and per share data) |
December 31, 2024 |
September 30, 2024 |
December 31, 2023 |
|||
|
Interest Income |
||||||
|
Interest and fees on loans |
$ |
13,142 |
$ |
13,164 |
$ |
10,131 |
|
Interest on federal funds sold |
3 |
12 |
- |
|||
|
Interest on interest-bearing deposits |
758 |
954 |
775 |
|||
|
Interest on securities - taxable |
4,079 |
4,203 |
4,268 |
|||
|
Interest on securities - nontaxable |
335 |
333 |
339 |
|||
|
Total interest income |
18,317 |
18,666 |
15,513 |
|||
|
Interest Expense |
||||||
|
Interest on time deposits |
3,390 |
3,509 |
2,124 |
|||
|
Interest on other deposits |
4,923 |
5,709 |
4,909 |
|||
|
Total interest expense |
8,313 |
9,218 |
7,033 |
|||
|
Net interest income |
10,004 |
9,448 |
8,480 |
|||
|
Recovery of credit losses |
(60 |
) |
(5 |
) |
(893 |
) |
|
Net interest income after recovery of credit losses |
10,064 |
9,453 |
9,373 |
|||
|
Noninterest Income |
||||||
|
Service charges on deposit accounts |
748 |
753 |
647 |
|||
|
Other service charges and fees |
53 |
82 |
44 |
|||
|
Credit and debit card fees, net |
307 |
344 |
402 |
|||
|
Trust income |
581 |
580 |
470 |
|||
|
BOLI income |
298 |
295 |
255 |
|||
|
Gain on sale of mortgage loans |
36 |
50 |
14 |
|||
|
Other income |
220 |
168 |
422 |
|||
|
Total noninterest income |
2,243 |
2,272 |
2,254 |
|||
|
Noninterest Expense |
||||||
|
Salaries and employee benefits |
5,108 |
4,953 |
3,957 |
|||
|
Occupancy, furniture and fixtures |
598 |
641 |
505 |
|||
|
Data processing and ATM |
1,116 |
1,054 |
819 |
|||
|
FDIC assessment |
222 |
211 |
188 |
|||
|
Intangible asset amortization |
100 |
102 |
- |
|||
|
Net costs of other real estate owned |
- |
- |
2 |
|||
|
Franchise taxes |
373 |
373 |
350 |
|||
|
Professional services |
285 |
254 |
184 |
|||
|
Merger-related expenses |
25 |
150 |
- |
|||
|
Other operating expenses |
793 |
761 |
558 |
|||
|
Total noninterest expense |
8,620 |
8,499 |
6,563 |
|||
|
Income before income tax expense |
3,687 |
3,226 |
5,064 |
|||
|
Income tax expense |
608 |
550 |
879 |
|||
|
Net Income |
$ |
3,079 |
$ |
2,676 |
$ |
4,185 |
|
Basic net income per common share |
$ |
0.48 |
$ |
0.42 |
$ |
0.71 |
|
Fully diluted net income per common share |
$ |
0.48 |
$ |
0.42 |
$ |
0.71 |
|
Weighted average number of common shares outstanding, basic |
6,356,949 |
6,356,594 |
5,889,687 |
|||
|
Weighted average number of common shares outstanding, fully diluted |
6,359,506 |
6,358,352 |
5,890,471 |
|||
|
Dividends declared per common share |
$ |
0.78 |
$ |
- |
$ |
0.78 |
|
Book value per common share |
$ |
24.58 |
$ |
26.38 |
$ |
23.86 |
5
National Bankshares, Inc.
Consolidated Statements of Income
(Unaudited)
|
Year Ended December 31, |
||||
|
(in thousands, except share and per share data) |
2024 |
2023 |
||
|
Interest Income |
||||
|
Interest and fees on loans |
$ |
47,884 |
$ |
38,924 |
|
Interest on federal funds sold |
26 |
- |
||
|
Interest on interest-bearing deposits |
4,070 |
1,982 |
||
|
Interest on securities - taxable |
16,797 |
16,536 |
||
|
Interest on securities - nontaxable |
1,345 |
1,391 |
||
|
Total interest income |
70,122 |
58,833 |
||
|
Interest Expense |
||||
|
Interest on time deposits |
12,381 |
4,989 |
||
|
Interest on other deposits |
21,342 |
16,261 |
||
|
Interest on borrowings |
2 |
300 |
||
|
Total interest expense |
33,725 |
21,550 |
||
|
Net interest income |
36,397 |
37,283 |
||
|
Provision for (recovery of) credit losses |
1,227 |
(1,261 |
) |
|
|
Net interest income after provision for (recovery of) credit losses |
35,170 |
38,544 |
||
|
Noninterest Income |
||||
|
Service charges on deposit accounts |
2,898 |
2,518 |
||
|
Other service charges and fees |
229 |
297 |
||
|
Credit and debit card fees, net |
1,448 |
1,678 |
||
|
Trust income |
2,177 |
1,901 |
||
|
BOLI income |
1,120 |
2,026 |
||
|
Gain on sale of investment |
- |
2,971 |
||
|
Gain on sale of mortgage loans |
168 |
107 |
||
|
Other income |
920 |
1,193 |
||
|
Realized securities loss, net |
- |
(3,332 |
) |
|
|
Total noninterest income |
8,960 |
9,359 |
||
|
Noninterest Expense |
||||
|
Salaries and employee benefits |
19,214 |
17,318 |
||
|
Occupancy, furniture and fixtures |
2,339 |
2,005 |
||
|
Data processing and ATM |
3,923 |
3,549 |
||
|
FDIC assessment |
812 |
749 |
||
|
Intangible asset amortization |
237 |
- |
||
|
Net costs of other real estate owned |
- |
31 |
||
|
Franchise taxes |
1,454 |
1,422 |
||
|
Professional services |
1,051 |
1,739 |
||
|
Merger-related expenses |
2,916 |
- |
||
|
Contract termination |
173 |
- |
||
|
Other operating expenses |
2,889 |
2,415 |
||
|
Total noninterest expense |
35,008 |
29,228 |
||
|
Income before income tax expense |
9,122 |
18,675 |
||
|
Income tax expense |
1,499 |
2,984 |
||
|
Net Income |
$ |
7,623 |
$ |
15,691 |
|
Basic net income per common share |
$ |
1.24 |
$ |
2.66 |
|
Fully diluted net income per common share |
$ |
1.24 |
$ |
2.66 |
|
Weighted average number of common shares outstanding, basic |
6,161,428 |
5,889,687 |
||
|
Weighted average number of common shares outstanding, fully diluted |
6,163,610 |
5,889,953 |
||
|
Dividends declared per common share |
$ |
1.51 |
$ |
2.51 |
6
National Bankshares, Inc.
Net Interest Margin
(Unaudited)
|
Three Months Ended December 31, 2024 |
Three Months Ended September 30, 2024 |
|||||||||||
|
(in thousands) |
Average |
Interest |
Average |
Average |
Interest |
Average |
||||||
|
Interest-earning assets: |
||||||||||||
|
Loans (1)(2)(3) |
$ |
995,259 |
$ |
13,261 |
5.30 |
% |
$ |
994,744 |
$ |
13,285 |
5.31 |
% |
|
Taxable securities (4)(5) |
621,424 |
4,079 |
2.61 |
% |
625,908 |
4,203 |
2.67 |
% |
||||
|
Nontaxable securities (1)(4) |
63,079 |
455 |
2.87 |
% |
63,197 |
453 |
2.85 |
% |
||||
|
Federal funds sold |
294 |
3 |
4.06 |
% |
918 |
12 |
5.20 |
% |
||||
|
Interest-bearing deposits |
63,028 |
758 |
4.78 |
% |
69,264 |
954 |
5.48 |
% |
||||
|
Total interest-earning assets |
$ |
1,743,084 |
$ |
18,556 |
4.24 |
% |
$ |
1,754,031 |
$ |
18,907 |
4.29 |
% |
|
Interest-bearing liabilities: |
||||||||||||
|
Interest-bearing demand deposits |
$ |
836,486 |
$ |
4,698 |
2.23 |
% |
$ |
852,126 |
$ |
5,488 |
2.56 |
% |
|
Savings deposits |
177,040 |
225 |
0.51 |
% |
176,354 |
221 |
0.50 |
% |
||||
|
Time deposits |
308,979 |
3,390 |
4.36 |
% |
308,247 |
3,509 |
4.53 |
% |
||||
|
Total interest-bearing liabilities |
$ |
1,322,505 |
$ |
8,313 |
2.50 |
% |
$ |
1,336,727 |
$ |
9,218 |
2.74 |
% |
|
Net interest income and interest rate spread |
$ |
10,243 |
1.74 |
% |
$ |
9,689 |
1.55 |
% |
||||
|
Net interest margin |
2.34 |
% |
2.20 |
% |
|
Three Months Ended December 31, 2023 |
||||||
|
(in thousands) |
Average |
Interest |
Average |
|||
|
Interest-earning assets: |
||||||
|
Loans (1)(2)(3) |
$ |
853,233 |
$ |
10,252 |
4.77 |
% |
|
Taxable securities (4)(5) |
637,349 |
4,268 |
2.66 |
% |
||
|
Nontaxable securities (1)(4) |
64,297 |
461 |
2.84 |
% |
||
|
Interest-bearing deposits |
56,132 |
775 |
5.48 |
% |
||
|
Total interest-earning assets |
$ |
1,611,011 |
$ |
15,756 |
3.88 |
% |
|
Interest-bearing liabilities: |
||||||
|
Interest-bearing demand deposits |
$ |
801,000 |
$ |
4,669 |
2.31 |
% |
|
Savings deposits |
182,006 |
240 |
0.52 |
% |
||
|
Time deposits |
206,770 |
2,124 |
4.08 |
% |
||
|
Total interest-bearing liabilities |
$ |
1,189,776 |
$ |
7,033 |
2.35 |
% |
|
Net interest income and interest rate spread |
$ |
8,723 |
1.53 |
% |
||
|
Net interest margin |
2.15 |
% |
(1)
Interest on nontaxable loans and securities is computed on a fully taxable equivalent basis using a federal income tax rate of 21%. See "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
(2)
Interest income includes loan fees of $53, $44 and $52 for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023, respectively.
(3)
Includes loans held for sale and nonaccrual loans.
(4)
Daily averages are shown at amortized cost.
(5)
Includes restricted stock.
7
National Bankshares, Inc.
Net Interest Margin
(Unaudited)
|
Year Ended December 31, |
||||||||||||
|
2024 |
2023 |
|||||||||||
|
Average |
Interest |
Average |
Average |
Interest |
Average |
|||||||
|
Interest-earning assets: |
||||||||||||
|
Loans (1)(2)(3) |
$ |
938,446 |
$ |
48,369 |
5.15 |
% |
$ |
851,221 |
$ |
39,320 |
4.62 |
% |
|
Taxable securities (4)(5) |
627,656 |
16,797 |
2.68 |
% |
652,477 |
16,536 |
2.53 |
% |
||||
|
Nontaxable securities (1)(4) |
63,566 |
1,828 |
2.88 |
% |
65,309 |
1,885 |
2.89 |
% |
||||
|
Federal funds sold |
600 |
26 |
4.33 |
% |
- |
- |
- |
|||||
|
Interest-bearing deposits |
76,211 |
4,070 |
5.34 |
% |
37,660 |
1,982 |
5.26 |
% |
||||
|
Total interest-earning assets |
$ |
1,706,479 |
$ |
71,090 |
4.17 |
% |
$ |
1,606,667 |
$ |
59,723 |
3.72 |
% |
|
Interest-bearing liabilities: |
||||||||||||
|
Interest-bearing demand deposits |
$ |
838,526 |
$ |
20,445 |
2.44 |
% |
$ |
826,112 |
$ |
15,515 |
1.88 |
% |
|
Savings deposits |
176,014 |
897 |
0.51 |
% |
195,592 |
746 |
0.38 |
% |
||||
|
Time deposits |
278,535 |
12,381 |
4.45 |
% |
150,395 |
4,989 |
3.32 |
% |
||||
|
Borrowings |
57 |
2 |
3.51 |
% |
6,198 |
300 |
4.84 |
% |
||||
|
Total interest-bearing liabilities |
$ |
1,293,132 |
$ |
33,725 |
2.61 |
% |
$ |
1,178,297 |
$ |
21,550 |
1.83 |
% |
|
Net interest income and interest |
$ |
37,365 |
1.56 |
% |
$ |
38,173 |
1.89 |
% |
||||
|
Net interest margin |
2.19 |
% |
2.38 |
% |
(1)
Interest on nontaxable loans and securities is computed on a fully taxable equivalent basis using a federal income tax rate of 21%. See "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
(2)
Interest income includes loan fees of $200 and $214 for the twelve months ended December 31, 2024 and December 31, 2023, respectively.
(3)
Includes loans held for sale and nonaccrual loans.
(4)
Daily averages are shown at amortized cost.
(5)
Includes restricted stock.
8
National Bankshares, Inc.
Key Ratios and Other Data
(Unaudited)
|
As of and for the Three Months Ended |
||||||
|
(in thousands) |
December 31, 2024 |
September 30, 2024 |
December 31, 2023 |
|||
|
Average Balances |
||||||
|
Cash and due from banks |
$ |
13,937 |
$ |
13,443 |
$ |
12,718 |
|
Interest-bearing deposits |
63,028 |
69,264 |
56,132 |
|||
|
Securities available for sale, at fair value |
612,680 |
611,615 |
593,500 |
|||
|
Mortgage loans held for sale |
197 |
419 |
57 |
|||
|
Loans, gross |
995,669 |
994,876 |
853,683 |
|||
|
Loans, net of unearned income and deferred fees and costs |
995,062 |
994,325 |
853,176 |
|||
|
Loans, net of allowance for credit losses |
984,725 |
983,862 |
843,040 |
|||
|
Intangible assets |
12,643 |
12,755 |
5,848 |
|||
|
Total assets |
$ |
1,796,684 |
$ |
1,804,348 |
$ |
1,611,174 |
|
Noninterest-bearing demand deposits |
$ |
300,148 |
$ |
296,549 |
$ |
291,378 |
|
Interest-bearing and savings deposits |
1,013,526 |
1,028,480 |
983,006 |
|||
|
Time deposits |
308,979 |
308,247 |
206,770 |
|||
|
Total deposits |
1,622,653 |
1,633,276 |
1,481,154 |
|||
|
Total shareholders' equity |
$ |
159,476 |
$ |
156,111 |
$ |
118,257 |
|
Financial Ratios |
||||||
|
Return on average assets(1) |
0.68 |
% |
0.61 |
% |
0.87 |
% |
|
Return on average equity(1) |
7.63 |
% |
7.09 |
% |
11.81 |
% |
|
Efficiency ratio(2) |
68.84 |
% |
69.80 |
% |
61.08 |
% |
|
Average equity to average assets |
8.88 |
% |
8.65 |
% |
7.34 |
% |
|
Tangible common equity to tangible assets(3) |
7.99 |
% |
8.75 |
% |
8.16 |
% |
|
Allowance for Loan Credit Losses |
||||||
|
Beginning balance |
$ |
10,328 |
$ |
10,502 |
$ |
10,181 |
|
Provision for (recovery of) credit losses |
(70 |
) |
5 |
(889 |
) |
|
|
Charge-offs |
(108 |
) |
(234 |
) |
(246 |
) |
|
Recoveries |
112 |
55 |
48 |
|||
|
Ending Balance |
$ |
10,262 |
$ |
10,328 |
$ |
9,094 |
(1)
The return on average assets and return on average equity are calculated by annualizing net income and dividing by average period-to-date assets or equity, respectively. Any significant nonrecurring items within net income are not annualized. See "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
(2)
The efficiency ratio is calculated as noninterest expense divided by the sum of noninterest income and net interest income on a fully taxable equivalent basis. Noninterest income and noninterest expense are adjusted for any non-recurring items. See "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
(3)
Tangible common equity and tangible assets exclude goodwill and intangible assets of $12,581 as of December 31, 2024 and $12,681 as of September 30, 2024 and $5,848 as of December 31, 2023. See "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
9
National Bankshares, Inc.
Key Ratios and Other Data
(Unaudited)
|
As of and for the Twelve Months Ended |
||||
|
(in thousands) |
December 31, 2024 |
December 31, 2023 |
||
|
Average Balances |
||||
|
Cash and due from banks |
$ |
12,971 |
$ |
12,053 |
|
Interest-bearing deposits |
76,211 |
37,660 |
||
|
Securities available for sale, at fair value |
610,298 |
619,236 |
||
|
Mortgage loans held for sale |
306 |
135 |
||
|
Loans, gross |
938,694 |
851,537 |
||
|
Loans, net of unearned income and deferred fees and costs |
938,140 |
851,086 |
||
|
Loans, net of allowance for credit losses |
928,293 |
840,590 |
||
|
Intangible assets |
9,864 |
5,848 |
||
|
Total assets |
$ |
1,744,440 |
$ |
1,613,854 |
|
Noninterest-bearing demand deposits |
$ |
290,038 |
$ |
299,748 |
|
Interest-bearing and savings deposits |
1,014,540 |
1,021,704 |
||
|
Time deposits |
278,535 |
150,395 |
||
|
Total deposits |
1,583,113 |
1,471,847 |
||
|
Total shareholders' equity |
147,474 |
124,641 |
||
|
Financial Ratios |
||||
|
Return on average assets |
0.44 |
% |
0.97 |
% |
|
Return on average equity |
5.17 |
% |
12.59 |
% |
|
Efficiency ratio(1) |
68.90 |
% |
61.01 |
% |
|
Average equity to average assets |
8.45 |
% |
7.72 |
% |
|
Tangible common equity to tangible assets(2) |
7.99 |
% |
8.16 |
% |
|
Allowance for Loan Credit Losses |
||||
|
Beginning balance |
$ |
9,094 |
$ |
8,225 |
|
Recovery of credit losses |
(48 |
) |
(1,278 |
) |
|
Acquisition-related provision |
1,290 |
- |
||
|
Acquisition-related increase for purchased credit deteriorated loans |
175 |
- |
||
|
Charge-offs |
(519 |
) |
(478 |
) |
|
Recoveries |
270 |
283 |
||
|
Adoption of ASU 2016-13 |
- |
2,342 |
||
|
Ending Balance |
$ |
10,262 |
$ |
9,094 |
(1)
The efficiency ratio is calculated as noninterest expense divided by the sum of noninterest income and net interest income on a fully taxable equivalent basis. Noninterest income and noninterest expense are adjusted for any non-recurring items. See "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
(2)
Tangible common equity and tangible assets exclude goodwill and intangible assets of $12,581 as of December 31, 2024 and $5,848 as of December 31, 2023. See "Reconciliation of Non-GAAP Financial Measures" at the end of this release.
10
National Bankshares, Inc.
Asset Quality Data
(Unaudited)
|
(in thousands) |
December 31, 2024 |
September 30, 2024 |
December 31, 2023 |
|||
|
Nonperforming Assets |
||||||
|
Nonaccrual loans |
$ |
2,222 |
$ |
2,283 |
$ |
2,629 |
|
Total nonperforming assets |
$ |
2,222 |
$ |
2,283 |
$ |
2,629 |
|
Loans past due 90 days or more, and still accruing |
$ |
548 |
$ |
71 |
$ |
188 |
|
Asset Quality Ratios |
||||||
|
Ratio of nonperforming assets to loans(1) plus other real estate owned |
0.22 |
% |
0.23 |
% |
0.31 |
% |
|
Allowance for credit losses on loans to total loans(1) |
1.04 |
% |
1.03 |
% |
1.06 |
% |
|
Ratio of ACLL to nonperforming loans |
461.84 |
% |
452.39 |
% |
345.91 |
% |
|
Loans past due 90 days or more to loans (1) |
0.06 |
% |
0.01 |
% |
0.02 |
% |
(1)
Loans are net of unearned income and deferred fees and costs
11
National Bankshares, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and comparing financial results to other financial institutions. Non-GAAP financial measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions.
The non-GAAP financial measures presented in this document include fully taxable equivalent ("FTE") interest income used in the net interest margin, the efficiency ratio, and the ratio of tangible common equity to tangible assets. For periods that are shorter than twelve months, the Company annualizes net income for the return on average assets and return on average equity. In order to prevent distortion, the Company does not annualize significant non-recurring income and expense items.
The following tables present calculations underlying non-GAAP financial measures. All dollars are in thousands.
|
(in thousands) |
Three Months Ended |
|||||
|
Net Interest Margin, FTE |
December 31, 2024 |
September 30, 2024 |
December 31, 2023 |
|||
|
Interest income (GAAP) |
$ |
18,317 |
$ |
18,666 |
$ |
15,513 |
|
Add: FTE adjustment |
239 |
241 |
243 |
|||
|
Interest income, FTE (non-GAAP) |
18,556 |
18,907 |
15,756 |
|||
|
Interest expense (GAAP) |
8,313 |
9,218 |
7,033 |
|||
|
Net interest income, FTE (non-GAAP) |
$ |
10,243 |
$ |
9,689 |
$ |
8,723 |
|
Average balance of interest-earning assets |
$ |
1,743,084 |
$ |
1,754,031 |
$ |
1,611,011 |
|
Net interest margin |
2.34 |
% |
2.20 |
% |
2.15 |
% |
|
(in thousands) |
Three Months Ended |
|||||
|
Efficiency Ratio |
December 31, 2024 |
September 30, 2024 |
December 31, 2023 |
|||
|
Noninterest expense (GAAP) |
$ |
8,620 |
$ |
8,499 |
$ |
6,563 |
|
Less: merger-related expense |
(25 |
) |
(150 |
) |
- |
|
|
Adjusted noninterest expense (non-GAAP) |
$ |
8,595 |
$ |
8,349 |
$ |
6,563 |
|
Noninterest income (GAAP) |
$ |
2,243 |
$ |
2,272 |
$ |
2,254 |
|
Less: gain on sale of investment (1) |
- |
- |
(232 |
) |
||
|
Adjusted noninterest income (non-GAAP) |
$ |
2,243 |
$ |
2,272 |
$ |
2,022 |
|
Net interest income, FTE (non-GAAP) |
10,243 |
9,689 |
8,723 |
|||
|
Total income for efficiency ratio (non-GAAP) |
$ |
12,486 |
$ |
11,961 |
$ |
10,745 |
|
Efficiency ratio |
68.84 |
% |
69.80 |
% |
61.08 |
% |
(1)
Contract contingency payment associated with the 2022 sale of a private equity investment.
12
|
(in thousands) |
Three Months Ended |
|||||
|
Annualized Net Income for Ratio Calculation |
December 31, 2024 |
September 30, 2024 |
December 31, 2023 |
|||
|
Net income per GAAP |
$ |
3,079 |
$ |
2,676 |
$ |
4,185 |
|
Less: items not annualized: |
||||||
|
Gain on sale of investment(1), net of tax of ($49) for the period ended December 31, 2023 |
- |
- |
(183 |
) |
||
|
ACL recovery(2), net of tax of ($13) and ($188) for the periods ended December 31, 2024 and December 31, 2023, respectively |
(47 |
) |
- |
(705 |
) |
|
|
Merger-related expense, net of tax of $5 and $6 for the periods ended December 31, 2024 and September 30, 2024, respectively |
20 |
144 |
- |
|||
|
Total non-annualized items |
(27 |
) |
144 |
(888 |
) |
|
|
Adjusted net income |
3,052 |
2,820 |
3,297 |
|||
|
Adjusted net income, annualized |
$ |
12,142 |
$ |
11,219 |
$ |
13,080 |
|
Add: total non-annualized items |
27 |
(144 |
) |
888 |
||
|
Annualized net income for ratio calculation (non-GAAP) |
$ |
12,169 |
$ |
11,075 |
$ |
13,968 |
|
Return on average assets (GAAP) |
0.68 |
% |
0.59 |
% |
1.03 |
% |
|
Adjusted return on average assets (non-GAAP) |
0.68 |
% |
0.61 |
% |
0.87 |
% |
|
Return on average equity (GAAP) |
7.68 |
% |
6.82 |
% |
14.04 |
% |
|
Adjusted return on average equity (non-GAAP) |
7.63 |
% |
7.09 |
% |
11.81 |
% |
(1)
Contract contingency payment associated with the 2022 sale of a private equity investment.
(2)
The Company avoids annualizing significant recoveries unless information as of the reporting date provides a strong likelihood of additional significant recovery during the remainder of the year.
|
Year Ended December 31, |
||||
|
Net Interest Margin, FTE |
2024 |
2023 |
||
|
Interest income (GAAP) |
$ |
70,122 |
$ |
58,833 |
|
Add: FTE adjustment |
968 |
890 |
||
|
Interest income, FTE (non-GAAP) |
71,090 |
59,723 |
||
|
Interest expense (GAAP) |
33,725 |
21,550 |
||
|
Net interest income, FTE (non-GAAP) |
$ |
37,365 |
$ |
38,173 |
|
Average balance of interest-earning assets |
$ |
1,706,479 |
$ |
1,606,667 |
|
Net interest margin |
2.19 |
% |
2.38 |
% |
|
Year Ended December 31, |
||||
|
Efficiency Ratio |
2024 |
2023 |
||
|
Noninterest expense (GAAP) |
$ |
35,008 |
$ |
29,228 |
|
Less: merger-related expense |
(2,916 |
) |
- |
|
|
Less: contract termination expense (1) |
(173 |
) |
- |
|
|
Less: proxy-related expense (2) |
- |
(786 |
) |
|
|
Adjusted noninterest expense (non-GAAP) |
$ |
31,919 |
$ |
28,442 |
|
Noninterest income (GAAP) |
$ |
8,960 |
$ |
9,359 |
|
Less: realized securities loss, net |
- |
3,332 |
||
|
Less: gain on sale of investment (3) |
- |
(232 |
) |
|
|
Less: gain on sale of investment (4) |
- |
(2,971 |
) |
|
|
Less: gain on BOLI settlement |
- |
(1,044 |
) |
|
|
Adjusted noninterest income (non-GAAP) |
8,960 |
8,444 |
||
|
Net interest income, FTE (non-GAAP) |
37,365 |
38,173 |
||
|
Total income for efficiency ratio (non-GAAP) |
$ |
46,325 |
$ |
46,617 |
|
Efficiency ratio |
68.90 |
% |
61.01 |
% |
(1)
Recorded to reflect the Company's notification to a vendor that it intends to end its relationship in 2025.
(2)
Included in professional services in the Consolidated Statements of Income.
(3)
Contract contingency payment associated with the 2022 sale of a private equity investment.
(4)
Sale of VISA Class B shares.
13
|
As of |
||||||
|
(in thousands) |
December 31, 2024 |
September 30, 2024 |
December 31, 2023 |
|||
|
Tangible Assets |
||||||
|
Total assets (GAAP) |
$ |
1,811,636 |
$ |
1,785,033 |
$ |
1,655,370 |
|
Less: goodwill and intangible asses |
(12,581 |
) |
(12,681 |
) |
(5,848 |
) |
|
Tangible assets (non-GAAP) |
$ |
1,799,055 |
$ |
1,772,352 |
$ |
1,649,522 |
|
Tangible Common Equity |
||||||
|
Total stockholders' equity (GAAP) |
$ |
156,409 |
$ |
167,782 |
$ |
140,522 |
|
Less: goodwill and intangible assets |
(12,581 |
) |
(12,681 |
) |
(5,848 |
) |
|
Tangible common equity (non-GAAP) |
$ |
143,828 |
$ |
155,101 |
$ |
134,674 |
14