UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

Form 8-K

 

Current Report

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) July 18, 2019 (July 18, 2019)

 

National Bankshares, Inc.

(Exact name of Registrant as specified in its charter)

 

 

Virginia

0-15204

54-1375874

(State or other jurisdiction

of incorporation)

(Commission File No.)

(I.R.S. Employer Identification No.)

101 Hubbard Street

Blacksburg, VA 24060

(Address of principal executive offices)

 

(540) 951-6300

(Registrant’s telephone number, including area code)

 

(Former name or former address, if changed since last report) Not applicable

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

NKSH

NASDAQ

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

☐     Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

ITEM 2.02.

RESULTS OF OPERATIONS, FINANCIAL STATEMENTS AND EXHIBITS

 

On July 18, 2019, National Bankshares, Inc. issued a press release announcing and commenting on its financial results for the quarter ended June 30, 2019.  A copy of the press release is attached as Exhibit 99.1.


 

ITEM 9.01.

FINANCIAL STATEMENTS AND EXHIBITS

 

(d)

Exhibits

 

99.1     National Bankshares, Inc. Press Release, dated July 18, 2019.

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

NATIONAL BANKSHARES, INC.

 

Date: July 18, 2019

 

By:/s/ F. BRAD DENARDO

F. Brad Denardo

Chairman, President & CEO

 

 

 

Page 2 of 2 Pages

ex_150459.htm

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

CONTACTS: F. Brad Denardo, Chairman, President & CEO David K. Skeens, Treasurer & CFO
 

(540) 951-6213   bdenardo@nbbank.com

(540) 951-6347   dskeens@nbbank.com

               

 

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

 

BLACKSBURG, VA., July 18, 2019 -- National Bankshares, Inc. (NASDAQ: NKSH), parent company of The National Bank of Blacksburg, today announced its results of operations for the second quarter and first half of 2019. The Company reported net income of $8.44 million, or $1.26 per common share, for the six months ended June 30, 2019. National Bankshares, Inc. ended the first half of 2019 with total assets of $1.27 billion.

 

First Half 2019 Highlights

 

 

Net income increased $1.10 million from $7.34 million for the six months ended June 30, 2018 to $8.44 million for the six months ended June 30, 2019.

 

Earnings per share increased $0.21 from $1.05 for the six months ended June 30, 2018 to $1.26 for the six months ended June 30, 2019.

 

Return on average assets increased to 1.32% for the six months ended June 30, 2019, from 1.30% for the six months ended June 30, 2018.

 

Return on average equity increased to 8.97% for the six months ended June 30, 2019, from 8.81% for the six months ended June 30, 2018.

 

Net loans increased $38.97 million or 5.70% from June 30, 2018 to $722.26 million as of June 30, 2019.

 

F. Brad Denardo, Chairman, President and CEO, commented, “The first half of 2019 was another good period for Bankshares, with solid growth in earnings and loans. While our proven business model continues to deliver good results, we’re also committing time and resources to new initiatives as we adapt and grow in a changing marketplace. Our recent move to a newly-renovated branch location in downtown Abingdon, Virginia is just one example of this commitment to continually improve our organization for the benefit of our customers, communities and shareholders.”

 

Non-GAAP Financial Measures

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. The non-GAAP financial measures presented in this document include the efficiency ratio and certain financial measures presented on a fully taxable-equivalent (“FTE”) basis. FTE basis is calculated using the federal statutory income tax rate of 21% for the periods after January 1, 2018 and 35% for the periods prior to January 1, 2018. The Company believes certain non-GAAP financial measures enhance the understanding of its business and performance. 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.

 

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 25 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.

 

 

101 Hubbard Street / Blacksburg, Virginia 24060

P.O. Box 90002 / Blacksburg, Virginia 24062-9002

540 951-6300 / 800 552-4123

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. 

 

2

 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

 

($ in thousands, except for share and per share data)  

June 30,

2019

   

June 30,

2018

   

December 31,

2018

 

Assets

                       

Cash and due from banks

  $ 17,170     $ 12,530     $ 12,882  

Interest-bearing deposits

    60,038       29,981       43,491  

Securities available for sale, at fair value

    396,347       467,505       425,010  

Restricted stock

    1,220       1,221       1,220  

Total securities

    397,567       468,726       426,230  

Mortgage loans held for sale

    809       ---       72  

Loans:

                       

Loans, net of unearned income and deferred fees and costs

    729,559       690,863       709,799  

Less: allowance for loan losses

    (7,304

)

    (7,579

)

    (7,390

)

Loans, net

    722,255       683,284       702,409  

Premises and equipment, net

    9,012       8,757       8,646  

Operating lease right of use asset

    2,131       ---       ---  

Accrued interest receivable

    5,192       5,400       5,160  

Other real estate owned, net

    2,025       2,582       2,052  

Intangible assets and goodwill

    5,848       5,873       5,848  

Bank-owned life insurance

    35,108       34,212       34,657  

Other assets

    12,362       15,014       14,585  

Total assets

  $ 1,269,517     $ 1,267,477     $ 1,256,032  
                         

Liabilities and Stockholders' Equity

                       

Noninterest-bearing deposits

  $ 203,534     $ 195,949     $ 195,441  

Interest-bearing demand deposits

    608,506       625,447       616,527  

Savings deposits

    143,024       141,943       138,175  

Time deposits

    114,733       105,442       101,799  

Total deposits

    1,069,797       1,068,781       1,051,942  

Accrued interest payable

    145       51       89  

Operating lease liability

    2,135       ---       ---  

Other liabilities

    13,592       12,794       13,763  

Total liabilities

    1,085,669       1,081,626       1,065,794  
                         

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 6,505,574 shares at June 30, 2019 and 6,957,974 shares at June 30, 2018 and December 31, 2018

    8,132       8,698       8,698  

Retained earnings

    180,272       189,194       193,625  

Accumulated other comprehensive loss, net

    (4,556

)

    (12,041

)

    (12,085

)

Total stockholders' equity

    183,848       185,851       190,238  

Total liabilities and stockholders' equity

  $ 1,269,517     $ 1,267,477     $ 1,256,032  

 

3

 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited) 

 

    Three Months Ended     Six Months Ended  

($ in thousands, except for share and per share data)

 

June 30, 2019

   

June 30, 2018

   

June 30, 2019

   

June 30, 2018

 

Interest Income

                               

Interest and fees on loans

  $ 8,460     $ 7,622     $ 16,729     $ 15,154  

Interest on federal funds

    ---       ---       ---       ---  

Interest on interest-bearing deposits

    382       226       641       398  

Interest on securities - taxable

    1,603       1,746       3,286       3,354  

Interest on securities - nontaxable

    848       1,132       1,775       2,304  

Total interest income

    11,293       10,726       22,431       21,210  

Interest Expense

                               

Interest on time deposits

    419       116       716       237  

Interest on other deposits

    1,495       1,029       2,991       1,989  

Total interest expense

    1,914       1,145       3,707       2,226  

Net interest income

    9,379       9,581       18,724       18,984  

Provision for loan losses

    55       342       255       (130

)

Net interest income after provision for loan losses

    9,324       9,239       18,469       19,114  

Noninterest Income

                               

Service charges on deposit accounts

    607       694       1,197       1,364  

Other service charges and fees

    51       34       103       67  

Credit card fees

    356       365       665       709  

Trust income

    371       374       768       776  

Bank-owned life insurance

    232       228       451       456  

Other income

    231       173       1,141       519  

Realized securities gain, net

    8       ---       20       ---  

Total noninterest income

    1,856       1,868       4,345       3,891  

Noninterest Expense

                               

Salaries and employee benefits

    3,802       3,545       7,623       7,239  

Occupancy and furniture and fixtures

    477       491       942       963  

Data processing and ATM

    789       607       1,540       1,340  

FDIC assessment

    82       90       167       181  

Intangibles and goodwill amortization

    ---       12       ---       25  

Net cost of other real estate owned

    3       164       28       249  

Franchise taxes

    333       320       647       651  

Write-down of insurance receivable

    ---       287       ---       2,010  

Other operating expenses

    967       908       1,971       1,930  

Total noninterest expense

    6,453       6,424       12,918       14,588  

Income before income tax expense

    4,727       4,683       9,896       8,417  

Income tax expense

    733       642       1,459       1,080  

Net Income

  $ 3,994     $ 4,041     $ 8,437     $ 7,337  

Basic net income per share

  $ 0.61     $ 0.58     $ 1.26     $ 1.05  

Fully diluted net income per share

  $ 0.61     $ 0.58     $ 1.26     $ 1.05  

Weighted average number of common shares outstanding

                               

Basic

    6,505,574       6,957,974       6,669,853       6,957,974  

Diluted

    6,505,574       6,957,974       6,669,853       6,957,974  

Dividends declared per share

  $ 0.67     $ 0.58     $ 0.67     $ 0.58  

Dividend payout ratio

    ---       ---       51.67 %     55.01 %

Book value per share

  $ 28.26     $ 26.71     $ 28.26     $ 26.71  

 

4

 

 

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

 

   

Three Months Ended

 

($ in thousands)

 

June 30, 2019

   

June 30, 2018

 

Net income

  $ 3,994     $ 4,041  
                 

Other Comprehensive Income, Net of Tax

               

Unrealized holding gain (loss) on available for sale securities net of tax of $795 at June 30, 2019 and ($155) at June 30, 2018

    2,991       (582

)

Reclassification adjustment for gain included in net income, net of tax of ($2) for the period ended June 30, 2019

    (6

)

    ---  

Unrealized holding gain on securities transferred from held to maturity to available for sale, net of tax of $237 for the period ended June 30, 2018

    ---       891  

Other comprehensive income, net of tax

  $ 2,985     $ 309  

Total Comprehensive Income

  $ 6,979     $ 4,350  

 

 

   

Six Months Ended

 

($ in thousands)

 

June 30, 2019

   

June 30, 2018

 

Net income

  $ 8,437     $ 7,337  
                 

Other Comprehensive Income (Loss), Net of Tax

               

Unrealized holding gain (loss) on available for sale securities net of tax of $2,003 at June 30, 2019 and ($861) at June 30, 2018

    7,545       (3,237

)

Reclassification adjustment for gain included in net income, net of tax of ($4) for the period ended June 30, 2019

    (16

)

    ---  

Unrealized holding gain on securities transferred from held to maturity to available for sale, net of tax of $237 for the period ended June 30, 2018

    ---       891  

Other comprehensive income (loss), net of tax

  $ 7,529     $ (2,346

)

Total Comprehensive Income

  $ 15,966     $ 4,991  

 

5

 

 

Key Ratios and Other Data

(Unaudited)

 

    Three Months Ended     Six Months Ended  

($ in thousands)

 

June 30, 2019

   

June 30, 2018

   

June 30, 2019

   

June 30, 2018

 

Average Balances

                               

Cash and due from banks

  $ 11,266     $ 11,100     $ 11,254     $ 11,173  

Interest-bearing deposits

    63,456       50,182       53,904       47,973  

Securities available for sale

    398,602       367,332       407,626       350,342  

Securities held to maturity

    ---       97,399       ---       111,145  

Restricted stock

    1,220       1,221       1,220       1,211  

Mortgage loans held for sale

    453       221       304       227  

Gross Loans

    720,910       671,699       715,852       668,599  

Loans, net

    713,000       663,729       707,886       660,348  

Intangible assets

    5,848       5,880       5,848       5,887  

Total assets

    1,260,195       1,263,837       1,254,654       1,255,003  

Total deposits

    1,061,692       1,066,765       1,053,891       1,057,896  

Other borrowings

    ---       ---       ---       ---  

Stockholders' equity

    182,201       185,060       184,800       185,103  

Interest-earning assets

    1,183,638       1,196,542       1,180,872       1,186,829  

Interest-bearing liabilities

    861,350       874,682       858,001       871,418  
                                 

Financial Ratios

                               

Return on average assets

    1.27 %     1.34 %     1.32 %     1.30 %

Return on average equity

    8.79 %     9.13 %     8.97 %     8.81 %

Net interest margin

    3.30 %     3.35 %     3.32 %     3.36 %

Net interest income-fully taxable equivalent

  $ 9,725     $ 9,982     $ 19,438     $ 19,790  

Efficiency ratio

    55.72 %     51.79 %     55.57 %     53.11 %

Average equity to average assets

    14.46 %     14.64 %     14.73 %     14.75 %
                                 

Allowance for Loan Losses

                               

Beginning balance

  $ 7,360     $ 7,391     $ 7,390     $ 7,925  

Provision for losses

    55       342       255       (130

)

Charge-offs

    (180

)

    (201

)

    (508

)

    (340

)

Recoveries

    69       47       167       124  

Ending balance

  $ 7,304     $ 7,579     $ 7,304     $ 7,579  

 

 

(1)

Return on average assets and return on average equity are calculated by annualizing net income to date. For 2019, the annualization factor was not applied to the recovery. For 2018, the annualization factor was not applied to the recovery of loan losses and the insurance write-off.

 

 

(2)

Efficiency ratio is calculated as noninterest expense, less non-recurring items, divided by the sum of noninterest income and net interest income on a fully taxable equivalent basis.

 

6

 

 

Asset Quality Data

(Unaudited) 

 

($ in thousands)

 

June 30, 2019

   

June 30, 2018

 

Nonperforming Assets

               

Nonaccrual loans

  $ 856     $ ---  

Nonaccrual restructured loans

    3,406       2,687  

Total nonperforming loans

    4,262       2,687  

Other real estate owned

  $ 2,025     $ 2,582  

Total nonperforming assets

  $ 6,287     $ 5,269  

Accruing restructured loans

    1,954       8,337  

Loans 90 days or more past due

  $ 50     $ 61  
                 

Asset Quality Ratios

               

Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned

    0.86 %     0.76 %

Allowance for loans losses to total loans

    1.00 %     1.10 %

Allowance for loan losses to nonperforming loans

    171.37 %     282.06 %

Loans past due 90 days or more to loans net of unearned income and deferred fees

    0.01 %     0.01 %

 

 

7