0000796534 NATIONAL BANKSHARES INC false --12-31 Q1 2021 0 0 5,000,000 5,000,000 0 0 0 0 1.25 1.25 10,000,000 10,000,000 6,320,188 6,320,188 6,432,020 6,432,020 3,271 1,028 1 4 1,024 111,832 3,272 1.16 0 0 1 0 0 3 0 99.30 0 1,028 4 3,271 1 Net charge-offs are on an annualized basis. Excludes impaired, if any. Includes current and past due loans in nonaccrual status. Includes impaired loans in nonaccrual status. Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status. Only classes with past due or nonaccrual loans are shown. Includes current and past due loans in nonaccrual status. Includes impaired loans in nonaccrual status. Interest rate loan contracts at March 31, 2021 included a single loan. Only classes with impaired loans are shown. Discounts were weighted by the relative appraised value of the OREO properties. The ratio of the allowance for loan losses to the end of period loans, net of unearned income and deferred fees and costs at March 31, 2021 and December 31, 2020 include government-guaranteed SBA PPP loans, which do not require an allowance for loan losses. Excluding the PPP loans, the ratio would be 1.16% at both dates. Includes SBA PPP loans past due 30-89 days of $3 As of March 31, 2021 OREO was composed of a single property. Unobservable inputs were weighted by the relative fair value of the impaired loans. All contracts are valued using the same pull-through rate. The Company defines nonperforming loans as nonaccrual loans and restructured loans that are nonaccrual. Loans 90 days past due and still accruing and accruing restructured loans are excluded. Current reference prices were weighted by the relative amount of the loan. 1,028 4 3,271 119 00007965342021-01-012021-03-31 xbrli:shares 00007965342021-05-10 iso4217:USD 00007965342021-03-31 00007965342020-12-31 iso4217:USDxbrli:shares 00007965342020-01-012020-03-31 0000796534us-gaap:DepositAccountMember2021-01-012021-03-31 0000796534us-gaap:DepositAccountMember2020-01-012020-03-31 0000796534us-gaap:ProductAndServiceOtherMember2021-01-012021-03-31 0000796534us-gaap:ProductAndServiceOtherMember2020-01-012020-03-31 0000796534us-gaap:CreditAndDebitCardMember2021-01-012021-03-31 0000796534us-gaap:CreditAndDebitCardMember2020-01-012020-03-31 0000796534us-gaap:FiduciaryAndTrustMember2021-01-012021-03-31 0000796534us-gaap:FiduciaryAndTrustMember2020-01-012020-03-31 0000796534us-gaap:CommonStockMember2019-12-31 0000796534us-gaap:RetainedEarningsMember2019-12-31 0000796534us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-31 00007965342019-12-31 0000796534us-gaap:RetainedEarningsMember2020-01-012020-03-31 0000796534us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-31 0000796534us-gaap:CommonStockMember2020-03-31 0000796534us-gaap:RetainedEarningsMember2020-03-31 0000796534us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-31 00007965342020-03-31 0000796534us-gaap:CommonStockMember2020-12-31 0000796534us-gaap:RetainedEarningsMember2020-12-31 0000796534us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-31 0000796534us-gaap:RetainedEarningsMember2021-01-012021-03-31 0000796534us-gaap:CommonStockMember2021-01-012021-03-31 0000796534us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-31 0000796534us-gaap:CommonStockMember2021-03-31 0000796534us-gaap:RetainedEarningsMember2021-03-31 0000796534us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMember2021-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMember2020-12-31 0000796534nksh:CommercialNonRealEstateSegmentMember2021-03-31 0000796534nksh:CommercialNonRealEstateSegmentMember2020-12-31 0000796534nksh:PublicSectorAndIDAPortfolioSegmentMember2021-03-31 0000796534nksh:PublicSectorAndIDAPortfolioSegmentMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMember2020-12-31 0000796534us-gaap:UnallocatedFinancingReceivablesMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMember2021-01-012021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMember2021-01-012021-03-31 0000796534nksh:CommercialNonRealEstateSegmentMember2021-01-012021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMember2021-01-012021-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMember2021-01-012021-03-31 0000796534nksh:PublicSectorAndIDAPortfolioSegmentMember2021-01-012021-03-31 0000796534us-gaap:UnallocatedFinancingReceivablesMember2021-01-012021-03-31 0000796534us-gaap:UnallocatedFinancingReceivablesMember2021-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMember2019-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMember2019-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMember2019-12-31 0000796534nksh:CommercialNonRealEstateSegmentMember2019-12-31 0000796534nksh:PublicSectorAndIDAPortfolioSegmentMember2019-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMember2019-12-31 0000796534us-gaap:UnallocatedFinancingReceivablesMember2019-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMember2020-01-012020-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMember2020-01-012020-03-31 0000796534nksh:CommercialNonRealEstateSegmentMember2020-01-012020-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMember2020-01-012020-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMember2020-01-012020-03-31 0000796534nksh:PublicSectorAndIDAPortfolioSegmentMember2020-01-012020-03-31 0000796534us-gaap:UnallocatedFinancingReceivablesMember2020-01-012020-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMember2020-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMember2020-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMember2020-03-31 0000796534nksh:CommercialNonRealEstateSegmentMember2020-03-31 0000796534nksh:PublicSectorAndIDAPortfolioSegmentMember2020-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMember2020-03-31 0000796534us-gaap:UnallocatedFinancingReceivablesMember2020-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMember2020-01-012020-12-31 0000796534nksh:CommercialNonRealEstateSegmentMember2020-01-012020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMember2020-01-012020-12-31 00007965342020-01-012020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMember2020-01-012020-12-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMember2020-01-012020-12-31 0000796534nksh:PublicSectorAndIDAPortfolioSegmentMember2020-01-012020-12-31 0000796534us-gaap:UnallocatedFinancingReceivablesMember2020-01-012020-12-31 xbrli:pure 0000796534us-gaap:NonperformingFinancingReceivableMember2021-01-012021-03-31 0000796534us-gaap:NonperformingFinancingReceivableMember2020-01-012020-03-31 0000796534us-gaap:NonperformingFinancingReceivableMember2020-01-012020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMember2021-03-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMember2020-12-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMember2021-01-012021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMember2021-01-012021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMember2021-01-012021-03-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMember2021-01-012021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMember2021-01-012021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:EquityLinesMember2020-01-012020-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMember2020-01-012020-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMember2020-01-012020-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMember2020-01-012020-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMember2020-01-012020-03-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMember2020-01-012020-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMember2020-01-012020-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMember2020-01-012020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMember2020-01-012020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMember2020-01-012020-12-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMember2020-01-012020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMember2020-01-012020-12-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMembernksh:ConstructionOtherMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMembernksh:ConstructionOtherMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMembernksh:ConstructionOtherMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:EquityLinesMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:EquityLinesMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:EquityLinesMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:CreditCardReceivablesMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:CreditCardReceivablesMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:CreditCardReceivablesMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMembernksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMember2021-03-31 0000796534nksh:FinancingReceivables30To89DaysPastDueMember2021-03-31 0000796534us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2021-03-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMembernksh:FinancingReceivables30To89DaysPastDueMembernksh:SBACARESActPaycheckProtectionProgramMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMembernksh:FinancingReceivables30To89DaysPastDueMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMembernksh:FinancingReceivables30To89DaysPastDueMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMembernksh:FinancingReceivables30To89DaysPastDueMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMembernksh:FinancingReceivables30To89DaysPastDueMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMembernksh:FinancingReceivables30To89DaysPastDueMember2020-12-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:CreditCardReceivablesMembernksh:FinancingReceivables30To89DaysPastDueMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:CreditCardReceivablesMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:CreditCardReceivablesMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMembernksh:FinancingReceivables30To89DaysPastDueMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMembernksh:FinancingReceivables30To89DaysPastDueMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMemberus-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMember2020-12-31 0000796534nksh:FinancingReceivables30To89DaysPastDueMember2020-12-31 0000796534us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2020-12-31 utr:D 0000796534us-gaap:SpecialMentionMember2021-01-012021-03-31 0000796534nksh:ClassifiedExcludingImpairedMember2021-01-012021-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMembernksh:Construction14FamilyResidentialMemberus-gaap:PassMember2021-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMembernksh:ConstructionOtherMemberus-gaap:PassMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:EquityLinesMemberus-gaap:PassMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMemberus-gaap:PassMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMemberus-gaap:SpecialMentionMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMembernksh:ClassifiedExcludingImpairedMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndJuniorLiensMemberus-gaap:PassMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndJuniorLiensMemberus-gaap:SpecialMentionMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndJuniorLiensMembernksh:ClassifiedExcludingImpairedMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMemberus-gaap:PassMember2021-03-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMemberus-gaap:SpecialMentionMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:MultifamilyRealEstateMemberus-gaap:PassMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:MultifamilyRealEstateMemberus-gaap:SpecialMentionMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMemberus-gaap:PassMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMemberus-gaap:SpecialMentionMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMembernksh:ClassifiedExcludingImpairedMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMemberus-gaap:PassMember2021-03-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMemberus-gaap:SpecialMentionMember2021-03-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMemberus-gaap:PassMember2021-03-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMembernksh:ClassifiedExcludingImpairedMember2021-03-31 0000796534nksh:StatesPoliticalSubdivisionsMemberus-gaap:PassMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:CreditCardReceivablesMemberus-gaap:PassMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMemberus-gaap:PassMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMembernksh:ClassifiedExcludingImpairedMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMemberus-gaap:PassMember2021-03-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMembernksh:ClassifiedExcludingImpairedMember2021-03-31 0000796534us-gaap:PassMember2021-03-31 0000796534us-gaap:SpecialMentionMember2021-03-31 0000796534nksh:ClassifiedExcludingImpairedMember2021-03-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMembernksh:Construction14FamilyResidentialMemberus-gaap:PassMember2020-12-31 0000796534nksh:RealEstateConstructionPortfolioSegmentMembernksh:ConstructionOtherMemberus-gaap:PassMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:EquityLinesMemberus-gaap:PassMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMemberus-gaap:PassMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMemberus-gaap:SpecialMentionMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndFirstLiensMembernksh:ClassifiedExcludingImpairedMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndJuniorLiensMemberus-gaap:PassMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndJuniorLiensMemberus-gaap:SpecialMentionMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:ClosedEndJuniorLiensMembernksh:ClassifiedExcludingImpairedMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMemberus-gaap:PassMember2020-12-31 0000796534nksh:ConsumerRealEstatePortfolioSegmentMembernksh:InvestorOwnedResidentialRealEstateMembernksh:ClassifiedExcludingImpairedMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:MultifamilyRealEstateMemberus-gaap:PassMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:MultifamilyRealEstateMembernksh:ClassifiedExcludingImpairedMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMemberus-gaap:PassMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOwnerOccupiedMembernksh:ClassifiedExcludingImpairedMember2020-12-31 0000796534us-gaap:CommercialRealEstatePortfolioSegmentMembernksh:CommercialRealEstateOtherMemberus-gaap:PassMember2020-12-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMemberus-gaap:PassMember2020-12-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMemberus-gaap:SpecialMentionMember2020-12-31 0000796534nksh:CommercialNonRealEstateSegmentMembernksh:CommercialAndIndustrialMembernksh:ClassifiedExcludingImpairedMember2020-12-31 0000796534nksh:StatesPoliticalSubdivisionsMemberus-gaap:PassMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:CreditCardReceivablesMemberus-gaap:PassMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMemberus-gaap:PassMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMemberus-gaap:AutomobileLoanMembernksh:ClassifiedExcludingImpairedMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMemberus-gaap:PassMember2020-12-31 0000796534nksh:ConsumerNonRealEstatePortfolioSegmentMembernksh:OtherConsumerLoansMembernksh:ClassifiedExcludingImpairedMember2020-12-31 0000796534us-gaap:PassMember2020-12-31 0000796534us-gaap:SpecialMentionMember2020-12-31 0000796534nksh:ClassifiedExcludingImpairedMember2020-12-31 0000796534us-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-03-31 0000796534us-gaap:USStatesAndPoliticalSubdivisionsMember2021-03-31 0000796534us-gaap:MortgageBackedSecuritiesMember2021-03-31 0000796534us-gaap:CorporateDebtSecuritiesMember2021-03-31 0000796534us-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-31 0000796534us-gaap:USStatesAndPoliticalSubdivisionsMember2020-12-31 0000796534us-gaap:MortgageBackedSecuritiesMember2020-12-31 0000796534us-gaap:CorporateDebtSecuritiesMember2020-12-31 0000796534us-gaap:CommercialMortgageBackedSecuritiesMember2021-03-31 0000796534us-gaap:CommercialMortgageBackedSecuritiesMember2020-12-31 0000796534us-gaap:RestrictedStockMember2021-03-31 0000796534us-gaap:RestrictedStockMember2020-12-31 0000796534srt:FederalHomeLoanBankOfAtlantaMembernksh:NationalBankOfBlacksburgMember2021-03-31 0000796534us-gaap:PensionPlansDefinedBenefitMember2021-01-012021-03-31 0000796534us-gaap:PensionPlansDefinedBenefitMember2020-01-012020-03-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-03-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2021-03-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:MortgageBackedSecuritiesMember2021-03-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2021-03-31 0000796534us-gaap:FairValueInputsLevel2Member2021-03-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:USStatesAndPoliticalSubdivisionsMember2020-12-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:MortgageBackedSecuritiesMember2020-12-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2020-12-31 0000796534us-gaap:FairValueInputsLevel2Member2020-12-31 0000796534us-gaap:InterestRateContractMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2021-03-31 0000796534us-gaap:InterestRateContractMemberus-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-31 0000796534us-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-31 0000796534us-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-31 0000796534us-gaap:InterestRateContractMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-31 0000796534us-gaap:InterestRateContractMemberus-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-31 0000796534us-gaap:ForwardContractsMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-31 0000796534us-gaap:ForwardContractsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-31 0000796534us-gaap:InterestRateContractMembernksh:PullthroughRateMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534nksh:ForwardContractMembernksh:PullthroughRateMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534us-gaap:InterestRateContractMembernksh:CurrentReferencePriceMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534nksh:ForwardContractMembernksh:CurrentReferencePriceMembersrt:MinimumMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534nksh:ForwardContractMembernksh:CurrentReferencePriceMembersrt:MaximumMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534nksh:ForwardContractMembernksh:CurrentReferencePriceMembersrt:WeightedAverageMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534us-gaap:InterestRateContractMembernksh:PullthroughRateMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534nksh:ForwardContractMembernksh:PullthroughRateMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534us-gaap:InterestRateContractMembernksh:CurrentReferencePriceMembersrt:MinimumMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534us-gaap:InterestRateContractMembernksh:CurrentReferencePriceMembersrt:MaximumMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534nksh:ForwardContractMembernksh:CurrentReferencePriceMembersrt:MinimumMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534nksh:ForwardContractMembernksh:CurrentReferencePriceMembersrt:MaximumMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534nksh:LoansHeldForSaleMemberus-gaap:ChangeDuringPeriodFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2021-01-012021-03-31 0000796534nksh:LoansHeldForSaleMemberus-gaap:ChangeDuringPeriodFairValueDisclosureMemberus-gaap:FairValueMeasurementsNonrecurringMember2020-01-012020-12-31 0000796534us-gaap:FairValueInputsLevel3Member2021-03-31 0000796534us-gaap:FairValueInputsLevel3Member2020-12-31 0000796534us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534us-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534us-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534us-gaap:MeasurementInputCostToSellMemberus-gaap:MarketApproachValuationTechniqueMember2021-03-31 0000796534us-gaap:MeasurementInputCostToSellMembersrt:MaximumMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534us-gaap:MeasurementInputCostToSellMembersrt:WeightedAverageMemberus-gaap:MarketApproachValuationTechniqueMember2020-12-31 0000796534us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-03-31 0000796534us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-31 0000796534us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-31 0000796534us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-31 0000796534us-gaap:FairValueInputsLevel1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-31 0000796534us-gaap:FairValueInputsLevel2Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-31 0000796534us-gaap:FairValueInputsLevel3Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-31 0000796534us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-12-31 0000796534us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-12-31 0000796534us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-01-012020-03-31 0000796534us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-03-31 0000796534us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-03-31 0000796534us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-12-31 0000796534us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-31 0000796534us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-01-012021-03-31 0000796534us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-03-31 0000796534us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-03-31 0000796534nksh:InsuranceAndInvestmentMember2021-01-012021-03-31 0000796534nksh:InsuranceAndInvestmentMember2020-01-012020-03-31 0000796534us-gaap:OtherLiabilitiesMember2021-03-31 0000796534us-gaap:OtherLiabilitiesMember2020-12-31 utr:Y
 

 

Table of Contents

 


 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

 

Commission File Number 0-15204

NATIONAL BANKSHARES, INC.

(Exact name of registrant as specified in its charter)

 

Virginia

(State or other jurisdiction of incorporation or organization)

54-1375874

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

 

101 Hubbard Street

Blacksburg, Virginia 24062-9002

(Address of principal executive offices)

 

(540) 951-6300

(Registrant’s telephone number, including area code)

 

(Not applicable)

(Former name, former address and former fiscal year, if changed since last report)

 

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, par value $1.25 per share

NKSH

Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes   ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes   ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b–2 of the Exchange Act.

 

Large accelerated filer ☐       Accelerated filer ☐       Non-accelerated filer ☒       Smaller reporting company         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. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Outstanding shares of common stock at May 10 2021

6,205,358

 

 

 

 

 

NATIONAL BANKSHARES, INC.

Form 10-Q

Index

 

 

Page

Part I  Financial Information  
     

Item 1

Financial Statements

3

     
 

Consolidated Balance Sheets, March 31, 2021 (Unaudited) and December 31, 2020

3

     
 

Consolidated Statements of Income for the Three Months Ended March 31, 2021 and 2020 (Unaudited)

4 – 5

     
 

Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2021 and 2020 (Unaudited)

6

     
 

Consolidated Statements of Changes in Stockholders Equity for the Three Months Ended March 31, 2021 and 2020 (Unaudited)

7

 

 

 
 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (Unaudited)

8 – 9

 

 

 
 

Notes to Consolidated Financial Statements (Unaudited) 

10 – 33

     

Item 2

Managements Discussion and Analysis of Financial Condition and Results of Operations

34

     

Item 3

Quantitative and Qualitative Disclosures About Market Risk  

54

     

Item 4

Controls and Procedures

54

     

Part II  Other Information

 
     

Item 1

Legal Proceedings

55

     

Item 1A

Risk Factors

55

     

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds 

55

     

Item 3

Defaults Upon Senior Securities

55

 

 

 

Item 4

Mine Safety Disclosures

55

 

 

 

Item 5

Other Information

55

     

Item 6

Exhibits 

55

     

Signatures

57

     

Certifications

 

 

2

 


 

 
  Part I  
Item 1. Financial Statements Financial Information  
 

National Bankshares, Inc.

Consolidated Balance Sheets

 

 

  

(Unaudited)

     
  

March 31,

  

December 31,

 

(in thousands, except share and per share data)

 

2021

  

2020

 

Assets

        

Cash and due from banks

 $12,677  $13,147 

Interest-bearing deposits

  135,142   120,725 

Securities available for sale, at fair value

  571,359   546,742 

Restricted stock, at cost

  845   1,279 

Loans held for sale

  424   866 

Loans:

        

Loans, net of unearned income and deferred fees and costs

  779,360   768,799 

Less allowance for loan losses

  (8,536

)

  (8,481

)

Loans, net

  770,824   760,318 

Premises and equipment, net

  9,955   10,035 

Accrued interest receivable

  5,367   5,028 

Other real estate owned, net

  957   1,553 

Goodwill

  5,848   5,848 

Bank-owned life insurance

  36,650   36,444 

Other assets

  18,162   17,688 

Total assets

 $1,568,210  $1,519,673 
         

Liabilities and Stockholders' Equity

        

Noninterest-bearing demand deposits

 $319,126  $276,793 

Interest-bearing demand deposits

  766,582   763,293 

Savings deposits

  183,231   167,475 

Time deposits

  89,649   89,582 

Total deposits

  1,358,588   1,297,143 

Accrued interest payable

  49   56 

Other liabilities

  20,504   21,867 

Total liabilities

  1,379,141   1,319,066 

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. Authorized 10,000,000 shares; issued and outstanding 6,320,188 shares at March 31, 2021 and 6,432,020 shares at December 31, 2020

  7,900   8,040 

Retained earnings

  190,462   189,547 

Accumulated other comprehensive income (loss), net

  (9,293

)

  3,020 

Total stockholders' equity

  189,069   200,607 

Total liabilities and stockholders' equity

 $1,568,210  $1,519,673 

 

See accompanying notes to consolidated financial statements.

 

3

 


 

 

National Bankshares, Inc.

Consolidated Statements of Income

Three Months Ended March 31, 2021 and 2020

(Unaudited)

 

   

March 31,

   

March 31,

 

(in thousands, except share and per share data)

 

2021

   

2020

 

Interest Income

               

Interest and fees on loans

  $ 8,550     $ 8,466  

Interest on interest-bearing deposits

    28       217  

Interest on securities – taxable

    1,783       2,356  

Interest on securities – nontaxable

    521       349  

Total interest income

    10,882       11,388  
                 

Interest Expense

               

Interest on time deposits

    90       559  

Interest on other deposits

    765       1,237  

Total interest expense

    855       1,796  

Net interest income

    10,027       9,592  

Provision for loan losses

    50       479  

Net interest income after provision for loan losses

    9,977       9,113  
                 

Noninterest Income

               

Service charges on deposit accounts

    469       582  

Other service charges and fees

    41       39  

Credit and debit card fees

    434       306  

Trust income

    415       434  

BOLI income

    206       221  

Gain on sale of mortgage loans

    137       94  

Other income

    627       439  

Realized securities gain, net

    5       20  

Total noninterest income

    2,334       2,135  
                 

Noninterest Expense

               

Salaries and employee benefits

    3,906       3,873  

Occupancy, furniture and fixtures

    488       450  

Data processing and ATM

    778       791  

FDIC assessment

    83       -  

Net costs of other real estate owned

    37       22  

Franchise taxes

    335       343  

Other operating expenses

    909       988  

Total noninterest expense

    6,536       6,467  

Income before income taxes

    5,775       4,781  

Income tax expense

    1,009       802  

 (continued)

 

4

 


 

Net Income

  $ 4,766     $ 3,979  

Basic net income per common share

  $ 0.74     $ 0.61  

Fully diluted net income per common share

  $ 0.74     $ 0.61  

Weighted average number of common shares outstanding – basic and diluted

    6,407,685       6,489,574  

Dividends declared per common share

    -       -  

 

See accompanying notes to consolidated financial statements.

 

5

 


 

 

National Bankshares, Inc.

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended March 31, 2021 and 2020

(Unaudited)

 

  

March 31,

  

March 31,

 

(in thousands)

 

2021

  

2020

 

Net Income

 $4,766  $3,979 
         

Other Comprehensive Income (Loss), Net of Tax

        

Unrealized holding gain (loss) on available for sale securities net of tax of ($3,271) and $1,028 for the periods ended March 31, 2021 and 2020, respectively

  (12,309

)

  3,870 

Reclassification adjustment for gain included in net income, net of tax of ($1) for the period ended March 31, 2021 and ($4) for the period ended March 31, 2020

  (4

)

  (16

)

Other comprehensive income (loss), net of tax

  (12,313

)

  3,854 

Total Comprehensive Income (Loss)

 $(7,547

)

 $7,833 

 

See accompanying notes to consolidated financial statements.

 

6

 


 

 

National Bankshares, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

Three Months Ended March 31, 2021 and 2020

(Unaudited)

 

(in thousands, except share data)

 

Common

Stock

  

Retained

Earnings

  

Accumulated

Other

Comprehensive

Loss

  

Total

 

Balances at December 31, 2019

 $8,112  $184,120  $(8,506

)

 $183,726 

Net income

  -   3,979   -   3,979 

Other comprehensive income, net of tax of $1,024

  -   -   3,854   3,854 

Balances at March 31, 2020

 $8,112   188,099   (4,652

)

  191,559 
                 

Balances at December 31, 2020

 $8,040  $189,547  $3,020  $200,607 

Net income

  -   4,766   -   4,766 

Common stock repurchased, 111,832 shares

  (140

)

  (3,851

)

  -   (3,991

)

Other comprehensive loss, net of tax of ($3,272)

  -   -   (12,313

)

  (12,313

)

Balances at March 31, 2021

 $7,900  $190,462  $(9,293

)

 $189,069 

 

See accompanying notes to consolidated financial statements.

 

7

 


 

 

National Bankshares, Inc.

Consolidated Statements of Cash Flows

Three Months Ended March 31, 2021 and 2020

(Unaudited)

 

   

March 31,

   

March 31,

 

(in thousands)

 

2021

   

2020

 

Cash Flows from Operating Activities

               

Net income

  $ 4,766     $ 3,979  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Provision for loan losses

    50       479  

Depreciation of bank premises and equipment

    164       176  

Amortization of premiums and accretion of discounts, net

    416       193  

Gain on sales and calls of securities available for sale, net

    (5

)

    (20

)

Loss and write-down on other real estate owned, net

    26       4  

Increase in cash value of bank-owned life insurance

    (206

)

    (221

)

Origination of mortgage loans held for sale

    (6,266

)

    (6,428

)

Proceeds from sale of mortgage loans held for sale

    6,845       5,639  

Gain on sale of mortgage loans held for sale

    (137

)

    (94

)

Net change in:

               

Accrued interest receivable

    (339

)

    5  

Other assets

    1,340       625  

Accrued interest payable

    (7

)

    (7

)

Other liabilities

    106       883  

Net cash provided by operating activities

    6,753       5,213  
                 

Cash Flows from Investing Activities

               

Net change in interest-bearing deposits

    (14,417

)

    4,983  

Proceeds from calls, principal payments, sales and maturities of securities available for sale

    15,331       53,872  

Purchase of securities available for sale

    (55,944

)

    (52,923

)

Net change in restricted stock

    434       (59

)

Purchase of loan participations

    (951

)

    (18

)

Collection of loan participations

    93       87  

Loan originations and principal collections, net

    (9,761

)

    3,720  

Proceeds from sale of other real estate owned

    570       24  

Proceeds from disposal of repossessed assets

    -       27  

Recoveries on loans charged off

    52       73  

Proceeds from sale and purchases of premises and equipment, net

    (84

)

    (1,315

)

Net cash provided by (used in) investing activities

    (64,677

)

    8,471  

(continued)

 

8

 


 

Cash Flows from Financing Activities

        

Net change in time deposits

  67   (4,230

)

Net change in other deposits

  61,378   (7,340

)

Common stock repurchased

  (3,991

)

  - 

Net cash provided by (used in) financing activities

  57,454   (11,570

)

Net change in cash and due from banks

  (470

)

  2,114 

Cash and due from banks at beginning of period

  13,147   10,290 

Cash and due from banks at end of period

 $12,677  $12,404 
         

Supplemental Disclosures of Cash Flow Information

        

Interest paid on deposits

 $862  $1,803 

Income taxes paid

  -   - 
         

Supplemental Disclosure of Noncash Activities

        

Loans charged against the allowance for loan losses

 $47  $175 

Loans transferred to other real estate owned

  -   - 

Loans transferred to repossessed assets

  11   4 

Unrealized net gain (loss) on securities available for sale

  (15,585

)

  4,878 

Lease liabilities arising from obtaining right-of-use assets

  -   - 

 

See accompanying notes to consolidated financial statements.

 

9

 


 

National Bankshares, Inc.

Notes to Consolidated Financial Statements

March 31, 2021

(Unaudited)

 

$ in thousands, except per share data

 

 

Note 1: General

 

The consolidated financial statements of National Bankshares, Inc. (“NBI”) and its wholly-owned subsidiaries, The National Bank of Blacksburg (the “Bank” or “NBB”) and National Bankshares Financial Services, Inc. (“NBFS”) (collectively, the “Company”), conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and to general practices within the banking industry. The accompanying interim period consolidated financial statements are unaudited; however, in the opinion of management, all adjustments consisting of normal recurring adjustments, which are necessary for a fair presentation of the consolidated financial statements, have been included.  The results of operations for the three month period ended March 31, 2021 are not necessarily indicative of results of operations for the full year or any other interim period.  The interim period consolidated financial statements and financial information included in this Form 10-Q should be read in conjunction with the notes to consolidated financial statements included in the Company’s 2020 Form 10-K.  The Company posts all reports required to be filed under the Securities Exchange Act of 1934 on its web site at www.nationalbankshares.com.

 

Risks and Uncertainties

 

Over the past year, the COVID-19 pandemic and efforts to reduce its spread have caused significant disruptions in the U.S. economy and negatively impacted financial activity in the Company’s market. The Company’s business is dependent upon the willingness and ability of its employees and customers to conduct banking and other financial transactions. If the global response to contain COVID-19 escalates further or is unsuccessful, the Company could experience a material adverse effect on its business, financial condition, results of operations and cash flows. While it is not possible to know the full extent of the impact COVID-19 will have on the Company’s operations, the Company is disclosing potentially material items of which it is aware.

 

Financial position and results of operations

The pandemic led to declines in two key income categories during 2020: interest income and overdraft fee income. Interest income was impacted by modification requests and by a decreased interest rate environment. During the first quarter of 2021, the number of modification requests that reduce interest income vastly decreased, though loan refinance and securities call activity spurred by the low interest rates continue to impact interest income, with reinvestment opportunities at lower rates. The Company does not expect the Federal Reserve to increase rates in the near future. If the pandemic’s evolution brings new or worsened economic impacts, these income categories and others may be negatively affected.

 

Lending operations and accommodations to borrowers

Modifications to loans for borrowers affected by COVID-19 provided payment relief. Depending on the demonstrated need of the borrower, the Company provided payment extensions, periods of interest only payments to otherwise amortizing loans, and interest rate reductions. The Company is monitoring loans with payment extensions, with special attention to loans with payment extensions that exceed 90 days, as well as subsequent requests for modifications to determine whether changes in risk ratings, accrual status or designation as a troubled debt restructuring (“TDR”) is warranted. If eventual credit losses are identified on these or other loans, accrued interest and fee income would be reversed at the time the loss is identified. If the loans are fully or partially charged off, future requirements for the provision for loan losses will increase. At this time, the Company is unable to project the materiality of such an impact, but recognizes economic declines may affect its borrowers’ ability to repay in future periods. The Company is closely monitoring the crisis and expects to continue to work with customers when warranted in order to preserve income potential and customer base.

With the passage of the Paycheck Protection Program (“PPP”), administered by the Small Business Administration (“SBA”), the Company is actively participating in assisting its customers through the program. It is the Company’s understanding that loans funded through the PPP program are fully guaranteed by the U.S. government and that the majority of these loans will ultimately be forgiven by the SBA in accordance with the terms of the program. Should those circumstances change, the Company could be required to establish additional allowance for loan loss through provision for loan loss charged to earnings.

 

Credit

The Company is working with customers directly affected by COVID-19, providing short-term assistance in accordance with regulatory guidelines. As a result of the current economic environment caused by the COVID-19 pandemic, the Company is engaging in more frequent communication with borrowers to better understand their situation and the challenges faced, allowing it to respond proactively as needs and issues arise. Should economic conditions worsen, the Company could experience further increases in its required allowance for loan loss and record additional loan loss expense. It is possible that the Company’s asset quality measures could worsen at future measurement periods if effects of the COVID-19 pandemic are prolonged.

 

 


 

Asset valuation

Currently, the Company does not expect COVID-19 to affect its ability to account timely for the assets on its balance sheet; however if the impact of the pandemic worsens, valuation procedures in future periods could be negatively affected. While certain valuation assumptions and judgments will change to account for pandemic-related circumstances, such as widening credit spreads, the Company does not anticipate significant changes in methodology used to determine the fair value of assets measured in accordance with U.S. GAAP.

The Company tests goodwill for impairment annually, usually during the fourth quarter using September 30 information, unless facts and circumstances indicate the need for more frequent impairment testing. If the evolution of the pandemic or other adverse events cause a sustained decline in the Company’s stock price or the occurrence of what management deems to be a triggering event, under certain circumstances prescribed by U.S. GAAP, the Company will perform goodwill impairment testing as needed, which may be more frequently than annually. In the event that testing indicates that all or a portion of goodwill is impaired, a non-cash charge for the amount of such impairment would be recorded to earnings.

 

Capital and liquidity

While the Company believes that it has sufficient capital to withstand an extended economic recession brought about by COVID-19, its reported and regulatory capital ratios could be adversely impacted by further credit losses.

The Company maintains access to multiple sources of liquidity. Wholesale funding markets are currently available to the Company. If the uncertainty caused by the COVID-19 pandemic results in volatile or elevated funding costs for an extended period of time and if it becomes necessary for the Company to access wholesale funding, the Company’s net interest margin could be adversely affected. Deposits have increased since the beginning of the pandemic, however, if an extended recession causes large numbers of the Company’s deposit customers to withdraw their funds, the Company might become more reliant on volatile or more expensive sources of funding.

 

Accounting Standards Adopted as of January 1, 2021

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes.” The amendments are expected to reduce cost and complexity related to the accounting for income taxes by removing specific exceptions to general principles in Topic 740 (eliminating the need for an organization to analyze whether certain exceptions apply in a given period) and improving financial statement preparers’ application of certain income tax-related guidance. This ASU is part of the FASB’s simplification initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. ASU 2019-12 was effective for the Company on January 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force).” The ASU is based on a consensus of the Emerging Issues Task Force and is expected to increase comparability in accounting for these transactions. ASU 2016-01 made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Among other topics, the amendments clarify that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting. ASU 2020-01 was effective for the Company on January 1, 2021. The adoption of ASU 2020-01 did not have a material impact on the Company’s consolidated financial statements.

In October 2020, the FASB issued ASU 2020-08, “Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable fees and Other Costs.” This ASU clarifies that an entity should reevaluate whether a callable debt security is within the scope of ASC paragraph 310-20-35-33 for each reporting period. ASU 2020-08 was effective for the Company on January 1, 2021. The adoption of ASU 2020-08 did not have a material impact on the Company’s consolidated financial statements.

 

 


 

Recent Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this ASU, among other things, require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The FASB has issued multiple updates to ASU 2016-13 as codified in Topic 326, including ASU’s 2019-04, 2019-05, 2019-10, 2019-11, 2020-02, and 2020-03. These ASU’s have provided for various minor technical corrections and improvements to the codification as well as other transition matters. Smaller reporting companies who file with the U.S. Securities and Exchange Commission (“SEC”) and all other entities who do not file with the SEC are required to apply the guidance for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently assessing the impact that ASU 2016-13 will have on its consolidated financial statements. Management is working to ensure readiness and compliance with the standard and has implemented coding of the loan portfolio to enable appropriate segregation and data integrity, analyzed correlations for forecasting, determined methodologies, and selected a vendor to provide a platform.  Management has prepared multiple concurrent models using the Current Expected Credit Losses (“CECL”) methodology and will continue to refine assumptions that impact the calculation prior to the effective date.

Effective November 25, 2019, the SEC adopted Staff Accounting Bulletin (“SAB”) 119. SAB 119 updated portions of SEC interpretative guidance to align with FASB Accounting Standards Codification (“ASC 326”), “Financial Instruments – Credit Losses.” It covers topics including (1) measuring current expected credit losses; (2) development, governance, and documentation of a systematic methodology; (3) documenting the results of a systematic methodology; and (4) validating a systematic methodology.

In August 2018, the FASB issued ASU 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans.” These amendments modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. Certain disclosure requirements have been deleted while the following disclosure requirements have been added: the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed: The projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets and the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. The amendments are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company does not expect the adoption of ASU 2018-14 to have a material impact on its consolidated financial statements.

 

 

Note 2: Loan Portfolio

 

The loan portfolio, excluding loans held for sale, was comprised of the following.

 

  

March 31,

2021

  

December 31,

2020

 

Real estate construction

 $42,570  $42,266 

Consumer real estate

  186,906   181,782 

Commercial real estate

  392,461   393,115 

Commercial non-real estate

  87,258   78,771 

Public sector and IDA

  39,788   40,983 

Consumer non-real estate

  32,261   33,110 

Gross loans

  781,244   770,027 

Less unearned income and deferred fees and costs

  (1,884

)

  (1,228

)

Loans, net of unearned income and deferred fees and costs

 $779,360  $768,799 

 

 

Note 3: Allowance for Loan Losses, Nonperforming Assets and Impaired Loans

 

The allowance for loan losses methodology incorporates individual evaluation of impaired loans and collective evaluation of groups of non-impaired loans. The Company performs ongoing analysis of the loan portfolio to determine credit quality and to identify impaired loans. Credit quality is rated based on the loan’s payment history, the borrower’s current financial situation and value of the underlying collateral.

 

Impaired Loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts will not be collected when due according to the contractual terms of the loan agreement. Impaired loans are those loans that have been modified in a TDR and larger, usually non-homogeneous loans that are in nonaccrual or exhibit payment history or financial status that indicate that collection probably will not occur when due according to the loan’s terms. Generally, impaired loans are given risk ratings that indicate higher risk, such as “classified” or “special mention.” Impaired loans are individually evaluated to determine appropriate reserves and are measured at the lower of the invested amount or the fair value. Impaired loans that are not TDRs and for which fair value measurement indicates an impairment loss are designated nonaccrual. A TDR loan that maintains current status for at least six months may accrue interest. Please refer to the Company’s 2020 Form 10-K, Note 1: Summary of Significant Accounting Policies for additional information on evaluation of impaired loans and associated specific reserves, and policies regarding nonaccruals, past due status and charge-offs.

 

 


 

TDRs impact the estimation of the appropriate level of the allowance for loan losses. If the restructuring included forgiveness of a portion of principal or accrued interest, the charge-off is included in the historical charge-off rates applied to the collective evaluation methodology. Restructured loans are individually evaluated for impairment, and the amount of a restructured loan’s book value in excess of its fair value is accrued as a specific allocation in the allowance for loan losses. If a TDR loan payment exceeds 90 days past due, it is examined to determine whether the late payment indicates collateral dependency or cash flows below those that were used in the fair value measurement. TDRs, as well as all impaired loans, that are determined to be collateral dependent are charged down to fair value. Deficiencies indicated by impairment measurements for TDRs that are not collateral dependent may be accrued in the allowance for loan losses or charged off if deemed uncollectible.

 

Collectively Evaluated Loans

The Company evaluated characteristics in the loan portfolio and determined major segments and smaller classes within each segment. These characteristics include collateral type, repayment sources, and (if applicable) the borrower’s business model. The methodology for calculating reserves for collectively evaluated loans is applied at the class level.

 

Portfolio Segments and Classes

The segments and classes used in determining the allowance for loan losses are as follows.

Real Estate Construction

Construction, residential

Construction, other

 

Consumer Real Estate

Equity lines

Residential closed-end first liens

Residential closed-end junior liens

Investor-owned residential real estate

 

Commercial Real Estate

Multifamily real estate

Commercial real estate, owner-occupied

Commercial real estate, other

Commercial Non-Real Estate

Commercial and industrial

 

Public Sector and IDA

Public sector and IDA

 

Consumer Non-Real Estate

Credit cards

Automobile

Other consumer loans

 

Historical Loss Rates

The Company’s allowance methodology for collectively evaluated loans applies historical loss rates by class to current class balances as part of the process of determining required reserves. Class loss rates are calculated as the net charge-offs for the class as a percentage of average class balance. The Company averages loss rates for the most recent eight quarters to determine the historical loss rate for each class.

Two loss rates for each class are calculated: total net charge-offs for the class as a percentage of average class loan balance (“class loss rate”), and total net charge-offs for the class as a percentage of average classified loans in the class (“classified loss rate”). Classified loans are those with risk ratings of “substandard” or lower. Net charge-offs in both calculations include charge-offs and recoveries of classified and non-classified loans as well as those associated with impaired loans. Class historical loss rates are applied to non-classified loan balances at the reporting date, and classified historical loss rates are applied to classified balances at the reporting date.

 

Risk Factors

In addition to historical loss rates, risk factors pertinent to credit risk for each class are analyzed to estimate reserves for collectively evaluated loans. Factors include changes in national and local economic and business conditions, the nature and volume of classes within the portfolio, loan quality, loan officers’ experience, lending policies and the Company’s loan review system.

The analysis of certain factors results in standard allocations to all segments and classes. These factors include the risk from changes in lending policies, loan officers’ average years of experience, and economic factors including unemployment levels, bankruptcy rates, interest rate environment, and competition/legal/regulatory environments. Also applied to all segments and classes is an economic factor implemented to address COVID-19 uncertainty: national unemployment filings. Typically the Company applies to the allowance calculation economic data specific to its market area. However, since local data is not available timely and historical analysis determined that local unemployment filings were closely correlated to national unemployment filings, the Company elected to allocate based upon national unemployment filings.

 

13

 


 

Factors analyzed for each class, with resultant allocations based upon the level of risk assessed for each class, include the risk from changes in loan review, levels of past due loans, levels of nonaccrual loans, current class balance as a percentage of total loans, and the percentage of high risk loans within the class. High risk loans include junior liens, interest only and high loan to value loans. During the 4th quarter of 2020 the Company implemented a new factor to account for potential increased risk of loans that have received multiple modifications and were still in the modification period at the reporting date. Additionally, factors specific to each segment are analyzed and result in allocations to the segment. Factor allocations applied to each class are increased for loans rated special mention and increased to a greater extent for loans rated classified. Please refer to the Company’s 2020 Form 10-K, Note 1: Summary of Significant Accounting Policies for a discussion of risk factors pertinent to each class.

Real estate construction loans are subject to general risks from changing commercial building and housing market trends and economic conditions that may impact demand for completed properties and the costs of completion. These risks are measured by market-area unemployment rates, bankruptcy rates, building market trends, and interest rates.

The credit quality of consumer real estate is subject to risks associated with the borrower’s repayment ability and collateral value, measured generally by analyzing local unemployment and bankruptcy trends, local housing market trends, and interest rates.

The commercial real estate segment includes loans secured by multifamily residential real estate, commercial real estate occupied by the owner/borrower, and commercial real estate leased to non-owners. Loans in the commercial real estate segment are impacted by economic risks from changing commercial real estate markets, rental markets for multi-family housing and commercial buildings, business bankruptcy rates, local unemployment and interest rate trends that would impact the businesses housed by the commercial real estate.

Commercial non-real estate loans are secured by collateral other than real estate, or are unsecured. Credit risk for commercial non-real estate loans is subject to economic conditions, generally monitored by local business bankruptcy trends, and interest rates.

Public sector and Industrial Development Authority (“IDA”) loans are extended to municipalities and related entities. Credit risk is based upon the entity’s ability to repay and interest rate trends.

Consumer non-real estate includes credit cards, automobile and other consumer loans. Credit cards and certain other consumer loans are unsecured, while collateral is obtained for automobile loans and other consumer loans. Credit risk stems primarily from the borrower’s ability to repay, measured by average unemployment, average personal bankruptcy rates and interest rates.

 

A detailed analysis showing the allowance roll-forward by portfolio segment and related loan balance by segment follows.

 

  

Activity in the Allowance for Loan Losses for the Three Months Ended March 31, 2021

 
  

Real Estate Construction

  

Consumer Real Estate

  

Commercial Real Estate

  

Commercial Non-Real Estate

  

Public Sector and IDA

  

Consumer Non- Real Estate

  

Unallocated

  

Total

 

Balance, December 31, 2020

 $503  $2,165  $3,853  $670  $339  $555  $396  $8,481 

Charge-offs

  -   -   -   -   -   (47

)

  -   (47

)

Recoveries

  -   -   12   2   -   38   -   52 

Provision for (recovery of) loan losses

  8   201   (3

)

  (38

)

  (28

)

  (50

)

  (40

)

  50 

Balance, March 31, 2021

 $511  $2,366  $3,862  $634  $311  $496  $356  $8,536 

 

  

Activity in the Allowance for Loan Losses for the Three Months Ended March 31, 2020

 
  

Real Estate Construction

  

Consumer Real Estate

  

Commercial Real Estate

  

Commercial Non-Real Estate

  

Public Sector and IDA

  

Consumer Non- Real Estate

  

Unallocated

  

Total

 

Balance, December 31, 2019

 $400  $1,895  $2,559  $555  $478  $650  $326  $6,863 

Charge-offs

  -   (44

)

  -   (65

)

  -   (66

)

  -   (175

)

Recoveries

  -   -   12   1   -   60   -   73 

Provision for (recovery

of) loan losses

  (25

)

  219   29   230   33   (25

)

  18   479 

Balance, March 31, 2020

 $375  $2,070  $2,600  $721  $511  $619  $344  $7,240 

 

14

 


 

  

Activity in the Allowance for Loan Losses for the Year Ended December 31, 2020

 
  

Real Estate Construction

  

Consumer Real Estate

  

Commercial Real Estate

  

Commercial Non-Real Estate

  

Public Sector and IDA

  

Consumer Non- Real Estate

  

Unallocated

  

Total

 

Balance, December 31, 2019

 $400  $1,895  $2,559  $555  $478  $650  $326  $6,863 

Charge-offs

  -   (85

)

  (15

)

  (372

)

  -   (248

)

  -   (720

)

Recoveries

  -   18   145   9   -   175   -   347 

Provision for (recovery of) loan losses

  103   337   1,164   478   (139

)

  (22

)

  70   1,991 

Balance, December 31, 2020

 $503  $2,165  $3,853  $670  $339  $555  $396  $8,481 

 

  

Allowance for Loan Losses as of March 31, 2021

 
  

Real Estate Construction

  

Consumer Real Estate

  

Commercial Real Estate

  

Commercial Non-Real Estate

  

Public Sector and IDA

  

Consumer Non- Real Estate

  

Unallocated

  

Total

 

Individually evaluated for impairment

 $-  $2  $-  $16  $-  $-  $-  $18 

Collectively evaluated for impairment

  511   2,364   3,862   618   311   496   356   8,518 

Total

 $511  $2,366  $3,862  $634  $311  $496  $356  $8,536 

 

  

Allowance for Loan Losses as of December 31, 2020

 
  

Real Estate Construction

  

Consumer Real Estate

  

Commercial Real Estate

  

Commercial Non-Real Estate

  

Public Sector and IDA

  

Consumer Non- Real Estate

  

Unallocated

  

Total

 

Individually evaluated for impairment

 $-  $2  $-  $73  $-  $-  $-  $75 

Collectively evaluated for impairment

  503   2,163   3,853   597   339   555   396   8,406 

Total

 $503  $2,165  $3,853  $670  $339  $555  $396  $8,481 

 

  

Loans as of March 31, 2021

 
  

Real Estate Construction

  

Consumer Real Estate

  

Commercial Real Estate

  

Commercial Non-Real Estate

  

Public Sector and IDA

  

Consumer Non- Real Estate

  

Unallocated

  

Total

 

Individually evaluated for impairment

 $-  $193  $3,919  $826  $-  $1  $-  $4,939 

Collectively evaluated for impairment

  42,570   186,713   388,542   86,432   39,788   32,260   -   776,305 

Total

 $42,570  $186,906  $392,461  $87,258  $39,788  $32,261  $-  $781,244 

 

  

Loans as of December 31, 2020

 
  

Real Estate Construction

  

Consumer Real Estate

  

Commercial Real Estate

  

Commercial Non-Real Estate

  

Public Sector and IDA

  

Consumer Non- Real Estate

  

Unallocated

  

Total

 

Individually evaluated for impairment

 $-  $194  $3,856  $851  $-  $2  $-  $4,903 

Collectively evaluated for impairment

  42,266   181,588   389,259   77,920   40,983   33,108   -   765,124 

Total

 $42,266  $181,782  $393,115  $78,771  $40,983  $33,110  $-  $770,027 

 

 


 

A summary of ratios for the allowance for loan losses follows.

 

  

As of and for the

 
  

Three Months Ended

March 31,

  

Year Ended

December 31,

 
  

2021

  

2020

  

2020

 

Ratio of allowance for loan losses to the end of period loans, net of unearned income and deferred fees and costs(1)

  1.10

%

  0.99

%

  1.10

%

Ratio of net charge-offs to average loans, net of unearned income and deferred fees and costs(2)

  0.00

%

  0.06

%

  0.05

%

 

(1)

The ratio of the allowance for loan losses to the end of period loans, net of unearned income and deferred fees and costs at March 31, 2021 and December 31, 2020 include government-guaranteed SBA PPP loans, which do not require an allowance for loan losses. Excluding the PPP loans, the ratio would be 1.16% at both dates.

(2)

Net charge-offs are on an annualized basis.

 

A summary of nonperforming assets follows.

 

  

March 31,

  

December 31,

 
  

2021

  

2020

  

2020

 

Nonperforming assets:

            

Nonaccrual loans

 $784  $261  $846 

Restructured loans in nonaccrual

  2,907   3,191   2,839 

Total nonperforming loans

  3,691   3,452   3,685 

Other real estate owned, net

  957   1,584   1,553 

Total nonperforming assets

 $4,648  $5,036  $5,238 

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

  0.60

%

  0.69

%

  0.68

%

Ratio of allowance for loan losses to nonperforming loans(1)

  231.27

%

  209.73

%

  230.15

%

 

(1)

The Company defines nonperforming loans as nonaccrual loans and restructured loans that are nonaccrual. Loans 90 days past due and still accruing and accruing restructured loans are excluded.

 

A summary of loans past due 90 days or more and impaired loans follows.

 

  

March 31,

  

December 31,

 
  

2021

  

2020

  

2020

 

Loans past due 90 days or more and still accruing

 $12  $170  $17 

Ratio of loans past due 90 days or more and still accruing to loans, net of unearned income and deferred fees and costs

  0.00

%

  0.02

%

  0.00

%

Accruing restructured loans

 $1,378  $1,592  $1,410 

Impaired loans:

            

Impaired loans with no valuation allowance

 $4,564  $4,557  $3,858 

Impaired loans with a valuation allowance

  375   1,114   1,045 

Total impaired loans

 $4,939  $5,671  $4,903 

Valuation allowance

  (18

)

  (110

)

  (75

)

Impaired loans, net of allowance

 $4,921  $5,561  $4,828 

Average recorded investment in impaired loans(1)

 $4,956  $5,677  $5,093 

Interest income recognized on impaired loans, after designation as impaired

 $46  $26  $54 

Amount of income recognized on a cash basis

 $-  $-  $- 

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

 

 


 

Nonaccrual loan relationships that meet the Company’s balance threshold of $250 and all TDRs are designated as impaired. The Company also designates as impaired other loan relationships that meet the Company’s balance threshold of $250 and for which the Company does not expect to collect according to the note’s contractual terms. No interest income was recognized on nonaccrual loans for the three months ended March 31, 2021 or March 31, 2020 or for the year ended December 31, 2020.

 

A detailed analysis of investment in impaired loans and associated reserves, segregated by loan class follows.         

 

  

Impaired Loans as of March 31, 2021

 
  

Principal

Balance

  

Total

Recorded

Investment(1)

  

Recorded

Investment(1)for

Which There is No

Related Allowance

  

Recorded

Investment(1) for

Which There is a

Related Allowance

  

Related

Allowance

 

Consumer Real Estate(2)

                    

Investor-owned residential real estate

 $193  $193  $-  $193  $2 

Commercial Real Estate(2)

                    

Commercial real estate, owner-occupied

  3,846   3,265   3,265   -   - 

Commercial real estate, other

  654   654   654   -   - 

Commercial Non-Real Estate(2)

                    

Commercial and industrial

  826   826   644   182   16 

Consumer Non-Real Estate(2)

                    

Automobile

  1   1   1   -   - 

Total

 $5,520  $4,939  $4,564  $375  $18 

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

(2)

Only classes with impaired loans are shown.

 

  

Impaired Loans as of December 31, 2020

 
  

Principal

Balance

  

Total

Recorded

Investment(1)

  

Recorded

Investment(1) for

Which There is No

Related Allowance

  

Recorded

Investment(1) for

Which There is a

Related Allowance

  

Related

Allowance

 

Consumer Real Estate(2)

                    

Investor-owned residential real estate

 $194  $194  $-  $194  $2 

Commercial Real Estate(2)

                    

Commercial real estate, owner occupied

  3,752   3,202   3,202   -   - 

Commercial real estate, other

  654   654   654   -   - 

Commercial Non-Real Estate(2)

                    

Commercial and industrial

  851   851   -   851   73 

Consumer Non-Real Estate(2)

                    

Automobile

  2   2   2   -   - 

Total

 $5,453  $4,903  $3,858  $1,045  $75 

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

(2)

Only classes with impaired loans are shown.

 

 


 

The following tables show the average recorded investment and interest income recognized for impaired loans.

 

  

For the Three Months Ended

March 31, 2021

 
  

Average

Recorded

Investment(1)

  

Interest

Income

Recognized

 

Consumer Real Estate(2)

        

Investor-owned residential real estate

 $194  $3 

Commercial Real Estate(2)

        

Commercial real estate, owner occupied

  3,269   38 

Commercial real estate, other

  654   - 

Commercial Non-Real Estate(2)

        

Commercial and industrial

  838   5 

Consumer Non-Real Estate(2)

        

Automobile

  1   - 

Total

 $4,956  $46 

 

  

For the Three Months Ended

March 31, 2020

 
  

Average

Recorded

Investment(1)

  

Interest

Income

Recognized

 

Consumer Real Estate(2)

        

Equity lines

 $100  $2 

Residential closed-end first liens

  22   - 

Investor-owned residential real estate

  487   4 

Commercial Real Estate(2)

        

Commercial real estate, owner occupied

  3,309   6 

Commercial real estate, other

  838   8 

Commercial Non-Real Estate(2)

        

Commercial and industrial

  917   6 

Consumer Non-Real Estate(2)

        

Automobile

  4   - 

Total

 $5,677  $26 

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

(2)

Only classes with impaired loans are shown.

 

18

 


 

  

For the Year Ended

December 31, 2020

 
  

Average

Recorded

Investment(1)

  

Interest

Income

Recognized

 

Consumer Real Estate(2)

        

Investor-owned residential real estate

 $196  $13 

Commercial Real Estate(2)

        

Commercial real estate, owner occupied

  3,217   19 

Commercial real estate, other

  790   - 

Commercial Non-Real Estate(2)

        

Commercial and industrial

  887   22 

Consumer Non-Real Estate(2)

        

Automobile

  3   - 

Total

 $5,093  $54 

 

(1)

Recorded investment is net of charge-offs and interest paid while a loan is in nonaccrual status.

(2)

Only classes with impaired loans are shown.

 

The Company reviews nonaccrual loans on an individual loan basis to determine whether future payments are reasonably assured. To satisfy this criteria, the Company’s evaluation must determine that the underlying cause of the original delinquency or weakness that indicated nonaccrual status has been resolved, such as receipt of new guarantees, increased cash flows that cover the debt service or other resolution. Nonaccrual loans that demonstrate reasonable assurance of future payments and that have made at least six consecutive payments in accordance with repayment terms and timeframes may be returned to accrual status.

 

An analysis of past due and nonaccrual loans follows.

 

March 31, 2021

                
  

30 89 Days

Past Due and

Accruing

  

90 or More

Days Past Due

  

90 or More Days

Past Due and

Accruing

  

Nonaccruals(2)

 

Real Estate Construction(1)

                

Construction, other

 $16  $-  $-  $- 

Consumer Real Estate(1)

                

Equity lines

  29   -   -   - 

Residential closed-end first liens

  403   62   -   62 

Investor-owned residential real estate

  163   -   -   - 

Commercial Real Estate(1)

                

Commercial real estate, owner-occupied

  -   461   -   2,907 

Commercial real estate, other

  -   654   -   654 

Commercial Non-Real Estate(1)

                

Commercial and industrial(3)

  874   48   -   68 

Consumer Non-Real Estate(1)

                

Credit cards

  4   1   1   - 

Automobile

  97   -   -   - 

Other consumer loans

  218   11