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) April 21, 2022
NATIONAL BANKSHARES, INC.
(Exact name of Registrant as specified in its charter)
| Virginia | 0-15204 | 54-1375874 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) |
101 Hubbard Street
Blacksburg , VA 24060
(Address of principal executive offices)
(540) 951-6300
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report) Not applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | NKSH | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| ITEM 2.02. | RESULTS OF OPERATIONS, FINANCIAL STATEMENTS AND EXHIBITS |
|---|
On April 21, 2022, National Bankshares, Inc. issued a press release announcing and commenting on its financial results for the quarter ended March 31, 2022. 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 April 21, 2022. |
| --- | --- |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| --- | --- |
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: April 21, 2022
| By: | /s/ F. BRAD DENARDO |
|---|---|
| F. Brad Denardo<br><br> <br>Chairman, President & CEO |
Page 2 of 2 Pages
ex_360959.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 First Quarter Earnings
BLACKSBURG, VA., April 21, 2022 -- National Bankshares, Inc. **** (NASDAQ: NKSH), parent company of The National Bank of Blacksburg, today announced its results of operations for the first quarter of 2022. The Company reported net income of $4.89 million, or $0.81 per common share, for the quarter ended March 31, 2022. This compares to net income of $4.77 million, or $0.74 per common share, for the quarter ended March 31, 2021. National Bankshares, Inc. ended the first quarter of 2022 with total assets of $1.72 billion.
President and Chief Executive Officer F. Brad Denardo commented, “In the face of an uncertain economy, we are pleased to report a steady performance for the first quarter of 2022. Solid loan growth and improved efficiency were encouraging highlights in a period marked by significant fiscal pressures. I am proud of our community banking team, who continue to deliver results by putting our customers and communities first. We are very thankful for the support of our shareholders, whose continued investment helps make it all possible.”
Highlights for the Quarter Ended March 31, 2022
Income Statement
| - | The return on average assets for the three months ended March 31, 2022 was 1.11%, compared with 1.19% for the three months ended March 31, 2021. |
|---|---|
| - | The return on average equity for the three months ended March 31, 2022 was 10.26%, up from 9.30% for the three months ended March 31, 2021. |
| --- | --- |
| - | The cost of interest-bearing liabilities was 0.23% for the three months ended March 31, 2022, improved from 0.34% for the three months ended March 31, 2021. |
| --- | --- |
| - | The yield on earning assets^(1)^ decreased to 2.82% for the three months ended March 31, 2022, from 3.13% for the three months ended March 31, 2021. |
| --- | --- |
| - | Our net interest margin^(1)^ for the three months ended March 31, 2022 was 2.66%, down from 2.89% for the three months ended March 31, 2021. |
| --- | --- |
Balance Sheet
| - | Total assets increased from March 31, 2021 by $153.29 million, or 9.78%, to $1.72 billion at March 31, 2022. |
|---|---|
| - | Total deposits increased from March 31, 2021 by $185.17 million, or 13.63%, to $1.54 billion at March 31, 2022. |
| --- | --- |
| - | Gross loans outstanding were $819.77 million at March 31, 2022, an increase of $38.53 million from March 31, 2021. |
| --- | --- |
| - | Total stockholders’ equity at March 31, 2022 was $161.29 million, a decrease from $189.07 million at March 31, 2021. Accumulated other comprehensive loss, a component of total stockholders’ equity, decreased due to unrealized losses in the securities portfolio. |
| --- | --- |
Other Notable Information
| - | The Company repurchased 41,185 shares in the 1^st^ quarter of 2022. We expect to continue to repurchase shares throughout 2022. |
|---|---|
| - | Nonperforming loans as a percentage of total loans were 0.35% at March 31, 2022, down from 0.47% at March 31, 2021. |
| --- | --- |
101 Hubbard Street / Blacksburg, Virginia 24060
P.O. Box 90002 / Blacksburg, Virginia 24062-9002
540 951-6300 / 800 552-4123
www.nationalbankshares.com
| - | The efficiency ratio^(1)^ was 52.71% for the quarter ended March 31, 2022, an improvement from the 53.87% reported for the quarter ended March 31, 2021. |
|---|---|
| - | The allowance for loan losses to total loans was 0.95% at March 31, 2022, down from 1.10% at March 31, 2021, a reflection of our continuing good credit quality. |
| --- | --- |
| - | Net charge offs for the three months ended March 31, 2022 were $20 thousand, compared with a net recovery of $5 thousand for the quarter ended March 31, 2021. |
| --- | --- |
| - | The book value per common share as of March 31, 2022 was $26.78, down from $29.98 as of March 31, 2021. |
| --- | --- |
^(1)^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 the net interest margin, which is presented on a fully taxable-equivalent (“FTE”) basis. Efficiency ratio is calculated as noninterest expense, less non-recurring items, divided by the sum of noninterest income and net interest income on an 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 measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions.
About National Bankshares
National Bankshares, Inc., headquartered in Blacksburg, Virginia, is the parent company of The National Bank of Blacksburg, which does business as National Bank, and of National Bankshares Financial Services, Inc. National Bank is a community bank operating from 24 full-service offices and one loan production office throughout Southwest Virginia. National Bankshares Financial Services, Inc. is an investment and insurance subsidiary in the same trade area. The Company’s stock is traded on the NASDAQ Capital Market under the symbol “NKSH.” Additional information is available at www.nationalbankshares.com.
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.
Consolidated Balance Sheets
(Unaudited)
| ( in thousands, except for share and per share data) | March 31,<br><br> <br>2021 | December 31,<br><br> <br>2021 | ||||||
|---|---|---|---|---|---|---|---|---|
| Assets | **** | **** | **** | **** | **** | **** | **** | **** |
| Cash and due from banks | 12,247 | $ | 12,677 | $ | 8,768 | |||
| Interest-bearing deposits | 108,028 | 135,142 | 130,021 | |||||
| Securities available for sale, at fair value | 699,354 | 571,359 | 686,080 | |||||
| Restricted stock | 941 | 845 | 845 | |||||
| Total securities | 700,295 | 572,204 | 686,925 | |||||
| Mortgage loans held for sale | - | 424 | 615 | |||||
| Loans: | ||||||||
| Loans, net of unearned income and deferred fees and costs | 819,328 | 779,360 | 803,248 | |||||
| Less allowance for loan losses | (7,788 | ) | (8,536 | ) | (7,674 | ) | ||
| Loans, net | 811,540 | 770,824 | 795,574 | |||||
| Premises and equipment, net | 9,764 | 9,955 | 9,722 | |||||
| Accrued interest receivable | 5,433 | 5,367 | 5,104 | |||||
| Other real estate owned, net | 957 | 957 | 957 | |||||
| Intangible assets and goodwill | 5,848 | 5,848 | 5,848 | |||||
| Bank-owned life insurance | 42,592 | 36,650 | 42,354 | |||||
| Other assets | 24,800 | 18,162 | 16,287 | |||||
| Total assets | 1,721,504 | $ | 1,568,210 | $ | 1,702,175 | |||
| Liabilities and Stockholders' Equity | **** | **** | **** | **** | **** | **** | **** | **** |
| Noninterest-bearing deposits | 338,031 | $ | 319,126 | $ | 317,430 | |||
| Interest-bearing demand deposits | 908,790 | 766,582 | 890,124 | |||||
| Savings deposits | 220,083 | 183,231 | 208,065 | |||||
| Time deposits | 76,849 | 89,649 | 78,968 | |||||
| Total deposits | 1,543,753 | 1,358,588 | 1,494,587 | |||||
| Accrued interest payable | 51 | 49 | 48 | |||||
| Other liabilities | 16,411 | 20,504 | 15,789 | |||||
| Total liabilities | 1,560,215 | 1,379,141 | 1,510,424 | |||||
| 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 6,022,752 shares at March 31, 2022 and 6,063,937 December 31, 2021 and 6,320,188 shares at March 31, 2021 | 7,528 | 7,900 | 7,580 | |||||
| Retained earnings | 191,645 | 190,462 | 188,229 | |||||
| Accumulated other comprehensive loss, net | (37,884 | ) | (9,293 | ) | (4,058 | ) | ||
| Total stockholders' equity | 161,289 | 189,069 | 191,751 | |||||
| Total liabilities and stockholders' equity | 1,721,504 | $ | 1,568,210 | $ | 1,702,175 |
All values are in US Dollars.
3
National Bankshares, Inc.
Consolidated Statements of Income
(Unaudited)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| ($ in thousands, except for share and per share data) | 2022 | 2021 | ||
| Interest Income | **** | **** | **** | **** |
| Interest and fees on loans | $ | 8,100 | $ | 8,550 |
| Interest on interest-bearing deposits | **** | 49 | 28 | |
| Interest on securities - taxable | **** | 2,473 | 1,783 | |
| Interest on securities - nontaxable | **** | 428 | 521 | |
| Total interest income | **** | 11,050 | 10,882 | |
| Interest Expense | **** | **** | **** | **** |
| Interest on time deposits | **** | 37 | 90 | |
| Interest on other deposits | **** | 618 | 765 | |
| Total interest expense | **** | 655 | 855 | |
| Net interest income | **** | 10,395 | 10,027 | |
| Provision for loan losses | **** | 134 | 50 | |
| Net interest income after provision for loan losses | **** | 10,261 | 9,977 | |
| Noninterest Income | **** | **** | **** | **** |
| Service charges on deposit accounts | **** | 562 | 469 | |
| Other service charges and fees | **** | 55 | 41 | |
| Credit card fees | **** | 440 | 434 | |
| Trust income | **** | 443 | 415 | |
| Bank-owned life insurance | **** | 238 | 206 | |
| Other income | **** | 553 | 764 | |
| Realized securities gain, net | **** | - | 5 | |
| Total noninterest income | **** | 2,291 | 2,334 | |
| Noninterest Expense | **** | **** | **** | **** |
| Salaries and employee benefits | **** | 3,978 | 3,906 | |
| Occupancy, furniture and fixtures | **** | 492 | 488 | |
| Data processing and ATM | **** | 787 | 778 | |
| FDIC assessment | **** | 111 | 83 | |
| Net cost of other real estate owned | **** | 10 | 37 | |
| Franchise taxes | **** | 362 | 335 | |
| Other operating expenses | **** | 873 | 909 | |
| Total noninterest expense | **** | 6,613 | 6,536 | |
| Income before income tax expense | **** | 5,939 | 5,775 | |
| Income tax expense | **** | 1,053 | 1,009 | |
| Net Income | $ | 4,886 | $ | 4,766 |
| Basic and fully diluted net income per share | $ | 0.81 | $ | 0.74 |
| Weighted average number of common shares outstanding | ||||
| Basic and diluted | **** | 6,047,230 | 6,407,685 | |
| Dividends declared per share | **** | --- | --- | |
| Dividend payout ratio | **** | --- | --- | |
| Book value per share | $ | 26.78 | $ | 29.98 |
4
National Bankshares, Inc.
Consolidated Statements of Comprehensive Loss
(Unaudited)
| ( in thousands) | 2021 | ||||
| Net income | 4,886 | $ | 4,766 | ||
| Other Comprehensive Loss, Net of Tax | **** | **** | **** | **** | **** |
| Unrealized holding loss on available for sale securities net of tax of (8,992) in 2022 and (3,271) in 2021 | (33,826 | ) | (12,309 | ) | |
| Reclassification adjustment for gain included in net income, net of tax of (1) in 2021 | - | (4 | ) | ||
| Other comprehensive loss, net of tax | (33,826 | ) | $ | (12,313 | ) |
| Total Comprehensive Loss | (28,940 | ) | $ | (7,547 | ) |
All values are in US Dollars.
5
National Bankshares, Inc.
Key Ratios and Other Data
(Unaudited)
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| ($ in thousands) | 2022 | 2021 | ||||
| Average Balances | **** | **** | **** | **** | **** | **** |
| Cash and due from banks | $ | 11,693 | $ | 11,665 | ||
| Interest-bearing deposits | **** | 114,254 | 119,311 | |||
| Securities available for sale | **** | 696,540 | 558,181 | |||
| Restricted stock | **** | 856 | 1,230 | |||
| Mortgage loans held for sale | **** | 216 | 854 | |||
| Loans, gross | **** | 803,943 | 770,733 | |||
| Loans, net | **** | 795,817 | 760,823 | |||
| Intangible assets | **** | 5,848 | 5,848 | |||
| Total assets | **** | 1,702,492 | 1,530,908 | |||
| Total deposits | **** | 1,501,910 | 1,315,029 | |||
| Stockholders' equity | **** | 184,536 | 195,595 | |||
| Interest-earning assets | **** | 1,622,179 | 1,439,854 | |||
| Interest-bearing liabilities | **** | 1,177,738 | 1,025,226 | |||
| Financial Ratios | **** | **** | **** | **** | **** | **** |
| Return on average assets ^(1)^ | **** | 1.11 | % | 1.19 | % | |
| Return on average equity ^(1)^ | **** | 10.26 | % | 9.30 | % | |
| Net interest margin^(2)^ | **** | 2.66 | % | 2.89 | % | |
| Net interest income-fully taxable equivalent^(2)^ | $ | 10,622 | $ | 10,272 | ||
| Efficiency ratio ^(3)^ | **** | 52.71 | % | 53.87 | % | |
| Average equity to average assets | **** | 10.84 | % | 12.78 | % | |
| Allowance for Loan Losses | **** | **** | **** | **** | **** | **** |
| Beginning balance | $ | 7,674 | $ | 8,481 | ||
| Provision for losses | **** | 134 | 50 | |||
| Charge-offs | **** | (60 | ) | (47 | ) | |
| Recoveries | **** | 40 | 52 | |||
| Ending balance | $ | 7,788 | $ | 8,536 | ||
| (1) | The return on average assets and return on average equity are calculated by annualizing net income and dividing by average year-to-date assets or equity, respectively. When net income includes certain nonrecurring items, the items are removed from net income prior to annualization. Adjusted net income is annualized and the nonrecurring items are added back to annualized net income. | |||||
| --- | --- | |||||
| (2) | The net interest margin is calculated by dividing annualized taxable equivalent net interest income by total average earning assets. Because a portion of interest income earned by the Company is nontaxable, the tax equivalent net interest income is considered in the calculation of this ratio. Tax equivalent net interest income is calculated by adding the tax benefit realized from interest income that is nontaxable to total interest income then subtracting total interest expense. The tax rate utilized in calculating the tax benefit is 21%. | |||||
| --- | --- | |||||
| (3) | The efficiency ratio is calculated as noninterest expense 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.
Asset Quality Data
(Unaudited)
| ($ in thousands) | March 31, 2022 | March 31, 2021 | ||||
|---|---|---|---|---|---|---|
| Nonperforming Assets | **** | **** | **** | **** | **** | **** |
| Nonaccrual loans | $ | 29 | $ | 784 | ||
| Nonaccrual restructured loans | **** | 2,833 | 2,907 | |||
| Total nonperforming loans | **** | 2,862 | 3,691 | |||
| Other real estate owned | $ | 957 | $ | 957 | ||
| Total nonperforming assets | $ | 3,819 | $ | 4,648 | ||
| Accruing restructured loans | **** | 3,001 | 1,378 | |||
| Accruing loans 90 days or more past due | $ | 381 | $ | 12 | ||
| Asset Quality Ratios | **** | **** | **** | **** | **** | **** |
| Nonperforming assets to loans^(1)^ plus other real estate owned | **** | 0.47 | % | 0.60 | % | |
| Allowance for loans losses to total loans^(1)^ | **** | 0.95 | % | 1.10 | % | |
| Allowance for loan losses to nonperforming loans | **** | 272.12 | % | 231.27 | % | |
| Loans past due 90 days or more to loans^(1)^ | **** | 0.05 | % | 0.00 | % | |
| (1) | Loans are net of unearned income and deferred fees and costs | |||||
| --- | --- |
7