8-K
NATIONAL BANKSHARES INC (NKSH)
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) January 30, 2020 (January 30, 2020)
National Bankshares, Inc.
(Exact name of Registrant as specified in its charter)
| Virginia | 0-15204 | 54-1375874 |
|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (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 or Rule 12b-2 of the Securities Exchange Act of 1934
| ☐ | 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 ANDEXHIBITS |
|---|
On January 30, 2020, National Bankshares, Inc. issued a press release announcing and commenting on its financial results for the year and quarter ended December 31, 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 January 30, 2020. |
| --- | --- |
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: January 30, 2020
| By: /s/ F. BRAD DENARDO |
|---|
| F. Brad Denardo<br><br> <br>Chairman, President & CEO |
Page 2 of 2 Pages
ex_170815.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 2019 Earnings
BLACKSBURG, Va., January 30, 2020 – National Bankshares, Inc. (the “Company”) **** (NASDAQ: NKSH), parent company of The National Bank of Blacksburg, today announced its results of operations for the quarter and year ended December 31, 2019. The Company reported net income of $17.47 million, or $2.65 per common share, for the year ended December 31, 2019. The Company also reported net income of $4.78 million, or $0.74 per common share, for the quarter ended December 31, 2019. National Bankshares, Inc. ended 2019 with total assets of $1.32 billion.
2019 Financial Highlights
| ● | Net Income increased $1.32 million from $16.15 million for the year ended December 31, 2018 to $17.47 million for the year ended December 31, 2019. This includes $566,000 (pre-tax) in realized gains from a partial restructure of the securities portfolio. |
|---|---|
| ● | Earnings per share increased $0.33 from $2.32 for the year ended December 31, 2018 to $2.65 for the year ended December 31, 2019. |
| --- | --- |
| ● | Return on average assets increased to 1.39% for the year ended December 31, 2019, from 1.29% for the year ended December 31, 2018. |
| --- | --- |
| ● | Return on average equity increased to 9.87% for the year ended December 31, 2019, from 8.65% for the year ended December 31, 2018. |
| --- | --- |
| ● | Net loans increased $24.18 million or 3.44% from December 31, 2018 to $726.59 million as of December 31, 2019. |
| --- | --- |
“In 2019 our Company achieved steady growth in net income, net loans, and total assets, and we were happy to share that success through increased dividends for our stockholders,” said National Bankshares Chairman, President and CEO F. Brad Denardo. “We believe that the more our industry changes, the more the fundamentals stay the same and that safety, strength, and service still matter in an ever-changing financial services marketplace. As we celebrate another successful year, we would like to thank the customers, communities, and shareholders who trust and support National Bankshares, Inc.”
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%. 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 measure 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 located 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) | |||||
|---|---|---|---|---|---|
| 2018 | |||||
| Assets | **** | **** | **** | **** | **** |
| Cash and due from banks | 10,290 | $ | 12,882 | ||
| Interest-bearing deposits | 76,881 | 43,491 | |||
| Securities available for sale, at fair value | 435,263 | 425,010 | |||
| Restricted stock | 1,220 | 1,220 | |||
| Total securities | 436,483 | 426,230 | |||
| Mortgage loans held for sale | 905 | 72 | |||
| Loans: | |||||
| Loans, net of unearned income and deferred fees and costs | 733,451 | 709,799 | |||
| Less: allowance for loan losses | (6,863 | ) | (7,390 | ) | |
| Loans, net | 726,588 | 702,409 | |||
| Premises and equipment, net | 8,919 | 8,646 | |||
| Operating lease right of use asset | 2,277 | --- | |||
| Accrued interest receivable | 4,285 | 5,160 | |||
| Other real estate owned, net | 1,612 | 2,052 | |||
| Intangible assets and goodwill | 5,848 | 5,848 | |||
| Bank-owned life insurance | 35,567 | 34,657 | |||
| Other assets | 12,182 | 14,585 | |||
| Total assets | 1,321,837 | $ | 1,256,032 | ||
| Liabilities and Stockholders' Equity | **** | **** | **** | **** | **** |
| Noninterest-bearing deposits | 201,866 | $ | 195,441 | ||
| Interest-bearing demand deposits | 643,482 | 616,527 | |||
| Savings deposits | 146,377 | 138,175 | |||
| Time deposits | 128,028 | 101,799 | |||
| Total deposits | 1,119,753 | 1,051,942 | |||
| Accrued interest payable | 144 | 89 | |||
| Operating lease liability | 2,286 | --- | |||
| Other liabilities | 15,928 | 13,763 | |||
| Total liabilities | 1,138,111 | 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 6,489,574 shares at December 31, 2019 and 6,957,974 shares at December 31, 2018 | 8,112 | 8,698 | |||
| Retained earnings | 184,120 | 193,625 | |||
| Accumulated other comprehensive loss, net | (8,506 | ) | (12,085 | ) | |
| Total stockholders' equity | 183,726 | 190,238 | |||
| Total liabilities and stockholders' equity | 1,321,837 | $ | 1,256,032 |
All values are in US Dollars.
3
National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
| Three Months Ended<br><br> <br>December 31, | Twelve Months Ended<br><br> <br>December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except for share and per share data) | 2019 | 2018 | 2019 | 2018 | ||||||
| Interest Income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest and fees on loans | $ | 8,592 | $ | 8,174 | $ | 33,869 | $ | 31,333 | ||
| Interest on interest-bearing deposits | **** | 475 | 163 | **** | 1,523 | 672 | ||||
| Interest on securities - taxable | **** | 1,874 | 1,731 | **** | 6,725 | 6,856 | ||||
| Interest on securities - nontaxable | **** | 487 | 1,001 | **** | 3,030 | 4,363 | ||||
| Total interest income | **** | 11,428 | 11,069 | **** | 45,147 | 43,224 | ||||
| Interest Expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Interest on time deposits | **** | 566 | 182 | **** | 1,805 | 526 | ||||
| Interest on other deposits | **** | 1,242 | 1,334 | **** | 5,575 | 4,357 | ||||
| Interest on borrowed funds | **** | --- | 60 | **** | --- | 164 | ||||
| Total interest expense | **** | 1,808 | 1,576 | **** | 7,380 | 5,047 | ||||
| Net interest income | **** | 9,620 | 9,493 | **** | 37,767 | 38,177 | ||||
| Recovery of (provision for) loan losses | **** | 224 | 174 | **** | (126 | ) | 81 | |||
| Net interest income after provision for loan losses | **** | 9,844 | 9,667 | **** | 37,641 | 38,258 | ||||
| Noninterest Income | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Service charges on deposit accounts | **** | 613 | 641 | **** | 2,453 | 2,678 | ||||
| Other service charges and fees | **** | 49 | 45 | **** | 198 | 132 | ||||
| Credit card fees | **** | 383 | 360 | **** | 1,398 | 1,431 | ||||
| Trust income | **** | 414 | 434 | **** | 1,622 | 1,565 | ||||
| Bank-owned life insurance | **** | 229 | 223 | **** | 910 | 901 | ||||
| Other income | **** | 275 | 204 | **** | 1,643 | 1,005 | ||||
| Realized securities gain, net | **** | 384 | 17 | **** | 566 | 17 | ||||
| Total noninterest income | **** | 2,347 | 1,924 | **** | 8,790 | 7,729 | ||||
| Noninterest Expense | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Salaries and employee benefits | **** | 3,852 | 3,628 | **** | 15,298 | 14,506 | ||||
| Occupancy and furniture and fixtures | **** | 456 | 449 | **** | 1,866 | 1,845 | ||||
| Data processing and ATM | **** | 808 | 760 | **** | 3,171 | 2,784 | ||||
| FDIC assessment | **** | --- | 90 | **** | 167 | 359 | ||||
| Intangibles and goodwill amortization | **** | --- | 13 | **** | --- | 50 | ||||
| Net cost of other real estate owned | **** | 2 | 30 | **** | 47 | 553 | ||||
| Franchise taxes | **** | 343 | 313 | **** | 1,333 | 1,278 | ||||
| Write-down of insurance receivable | **** | --- | --- | **** | --- | 2,010 | ||||
| Other operating expenses | **** | 989 | 942 | **** | 3,872 | 3,891 | ||||
| Total noninterest expense | **** | 6,450 | 6,225 | **** | 25,754 | 27,276 | ||||
| Income before income tax expense | **** | 5,741 | 5,366 | **** | 20,677 | 18,711 | ||||
| Income tax expense | **** | 964 | 803 | **** | 3,211 | 2,560 | ||||
| Net Income | $ | 4,777 | $ | 4,563 | $ | 17,466 | $ | 16,151 | ||
| Basic net income per share | $ | 0.74 | $ | 0.66 | $ | 2.65 | $ | 2.32 | ||
| Fully diluted net income per share | $ | 0.74 | $ | 0.66 | $ | 2.65 | $ | 2.32 | ||
| Weighted average number of common shares outstanding | ||||||||||
| Basic | **** | 6,489,574 | 6,957,974 | **** | 6,580,659 | 6,957,974 | ||||
| Diluted | **** | 6,489,574 | 6,957,974 | **** | 6,580,659 | 6,957,974 | ||||
| Dividends declared per share | $ | 0.72 | $ | 0.63 | $ | 1.39 | $ | 1.21 | ||
| Dividend payout ratio | **** | --- | --- | **** | 51.71 | % | 52.13 | % | ||
| Book value per share | **** | --- | --- | $ | 28.31 | $ | 27.34 |
4
National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
| ( in thousands) | 2018 | ||||
| Net income | 4,777 | $ | 4,563 | ||
| Other Comprehensive Loss, Net of Tax | **** | **** | **** | **** | **** |
| Unrealized holding gain (loss) on available for sale securities net of tax of (663) in 2019 and 783 in 2018 | (2,494 | ) | 2,936 | ||
| Reclassification adjustment for gain included in net income, net of tax of (81) in 2019 and (4) in 2018 | (303 | ) | (13 | ) | |
| Net pension loss arising during the period, net of tax of (394) in 2019 and (249) in 2018 | (1,482 | ) | (936 | ) | |
| Less amortization of prior service cost included in net periodic pension cost, net of tax of (23) in 2019 and (24) in 2018 | (87 | ) | (86 | ) | |
| Other comprehensive loss, net of tax | (4,366 | ) | $ | 1,901 | |
| Total Comprehensive Income | 411 | $ | 6,464 |
All values are in US Dollars.
| ( in thousands) | 2018 | ||||
| Net income | 17,466 | $ | 16,151 | ||
| Other Comprehensive Income (Loss), Net of Tax | **** | **** | **** | **** | **** |
| Unrealized holding gain (loss) on available for sale securities net of tax of 1,486 in 2019 and (595) in 2018 | 5,595 | (2,246 | ) | ||
| Reclassification adjustment for gain included in net income, net of tax of (119) in 2019 and (4) in 2018 | (447 | ) | (13 | ) | |
| Transfer from held to maturity to available sale securities, net of tax of 237 in 2018 | --- | 891 | |||
| Net pension loss arising during the period, net of tax of (394) in 2019 and (249) in 2018 | (1,482 | ) | (936 | ) | |
| Less amortization of prior service cost included in net periodic pension cost, net of tax of (23) in 2019 and (24) in 2018 | (87 | ) | (86 | ) | |
| Other comprehensive income (loss), net of tax | 3,579 | $ | (2,390 | ) | |
| Total Comprehensive Income | 21,045 | $ | 13,761 |
All values are in US Dollars.
5
National Bankshares, Inc. and Subsidiaries
Key Ratios and Other Data
(Unaudited)
| Three Months Ended<br><br> <br>December 31, | Twelve Months Ended<br><br> <br>December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ( $ in thousands ) | 2019 | 2018 | 2019 | 2018 | ||||||||
| Average Balances | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Cash and due from banks | $ | 12,142 | $ | 11,826 | $ | 11,563 | $ | 11,301 | ||||
| Interest-bearing deposits | **** | 114,048 | 28,243 | **** | 74,527 | 36,562 | ||||||
| Securities available for sale | **** | 378,157 | 434,670 | **** | 393,136 | 399,173 | ||||||
| Securities held to maturity | **** | --- | --- | **** | --- | 55,116 | ||||||
| Restricted stock | **** | 1,220 | 1,754 | **** | 1,220 | 1,521 | ||||||
| Mortgage loans held for sale | **** | 1,411 | 207 | **** | 737 | 314 | ||||||
| Gross Loans | **** | 725,848 | 703,345 | **** | 719,729 | 683,913 | ||||||
| Loans, net | **** | 718,037 | 695,029 | **** | 711,851 | 675,647 | ||||||
| Intangible assets | **** | 5,848 | 5,855 | **** | 5,848 | 5,874 | ||||||
| Total assets | **** | 1,296,594 | 1,243,414 | **** | 1,255,935 | 1,251,843 | ||||||
| Total deposits | **** | 1,091,846 | 1,029,996 | **** | 1,062,683 | 1,045,798 | ||||||
| Other borrowings | **** | --- | 12,554 | **** | --- | 7,192 | ||||||
| Stockholders' equity | **** | 187,689 | 188,297 | **** | 176,906 | 186,637 | ||||||
| Interest-earning assets | **** | 1,217,232 | 1,177,992 | **** | 1,188,366 | 1,184,448 | ||||||
| Interest-bearing liabilities | **** | 883,240 | 843,419 | **** | 861,713 | 860,550 | ||||||
| Financial Ratios | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Return on average assets | **** | 1.46 | % | 1.46 | % | **** | 1.39 | % | 1.29 | % | ||
| Return on average equity | **** | 10.10 | % | 9.61 | % | **** | 9.87 | % | 8.65 | % | ||
| Net interest margin | **** | 3.22 | % | 3.33 | % | **** | 3.29 | % | 3.36 | % | ||
| Net interest income-fully taxable equivalent | $ | 9,868 | $ | 9,878 | $ | 39,056 | $ | 39,764 | ||||
| Efficiency ratio^(1^^)^ | **** | 52.80 | % | 52.75 | % | **** | 54.44 | % | 53.20 | % | ||
| Average equity to average assets | **** | 14.48 | % | 15.14 | % | **** | 14.09 | % | 14.91 | % | ||
| Allowance for Loan Losses | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** | **** |
| Beginning balance | $ | 7,262 | $ | 7,713 | $ | 7,390 | $ | 7,925 | ||||
| Provision for (recovery of) losses | **** | (224 | ) | (174 | ) | **** | 126 | (81 | ) | |||
| Charge-offs | **** | (224 | ) | (202 | ) | **** | (920 | ) | (689 | ) | ||
| Recoveries | **** | 49 | 53 | **** | 267 | 235 | ||||||
| Ending balance | $ | 6,863 | $ | 7,390 | $ | 6,863 | $ | 7,390 |
^(1)^ Efficiency ratio is calculated as noninterest expense, less non-recurring items, divided by the sum of noninterest income, less non-recurring items, and net interest income on a fully taxable equivalent basis.
6
National Bankshares, Inc. and Subsidiaries
Asset Quality Data
(Unaudited)
| ( $ in thousands ) | December 31, | |||||
|---|---|---|---|---|---|---|
| 2019 | 2018 | |||||
| Nonperforming Assets | **** | **** | **** | **** | **** | **** |
| Nonaccrual loans | $ | 164 | $ | 311 | ||
| Nonaccrual restructured loans | **** | 3,211 | 3,109 | |||
| Total nonperforming loans | **** | 3,375 | 3,420 | |||
| Other real estate owned | $ | 1,612 | $ | 2,052 | ||
| Total nonperforming assets | $ | 4,987 | $ | 5,472 | ||
| Accruing restructured loans | **** | 1,729 | 2,552 | |||
| Loans 90 days or more past due | $ | 231 | $ | 35 | ||
| Asset Quality Ratios | **** | **** | **** | **** | **** | **** |
| Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned | **** | 0.68 | % | 0.77 | % | |
| Allowance for loans losses to total loans | **** | 0.94 | % | 1.04 | % | |
| Allowance for loan losses to nonperforming loans | **** | 203.35 | % | 216.08 | % | |
| Loans past due 90 days or more to loans net of unearned income and deferred fees | **** | 0.03 | % | 0.00 | % |
7