BLACKSBURG, Va., July 27, 2017 (GLOBE NEWSWIRE) -- National Bankshares, Inc. (NASDAQ:NKSH) today announced its results of operations for the second quarter and first half of 2017. The Company reported net income of $7.22 million for the six months ended June 30, 2017 compared to $7.64 million at June 30, 2016. Basic earnings per share were $1.04 at June 30, 2017 compared to $1.10 for the same period in 2016. For the first half of the year, the return on average assets was 1.18% and the return on average equity was 7.98% compared to 1.28% and 8.65%, respectively, for the first six months of 2016. At June 30, 2017, the Company had total assets of close to $1.26 billion which was an increase of 3.73% when compared to $1.21 billion at the end of June 2016.

"I'm pleased to report that the second quarter of 2017 was another solid period for our Company," said National Bankshares Chairman, President & CEO James G. Rakes. "The broader financial environment, governed by low interest rates, continues to pressure our earnings. However, by focusing on things within our control - by making quality loans, providing superior customer service, and investing in bank infrastructure and personnel - we remain a profitable bank holding company that our customers, shareholders and communities can rely on."

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 26 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.
 
National Bankshares, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
 
($ in thousands, except for share and per share data) June 30, 2017 June 30, 2016 December 31, 2016
Assets      
Cash and due from banks $ 12,936   $14,320   $13,974  
Interest-bearing deposits   89,096     75,892     80,268  
Federal funds sold   ---     ---     ---  
Securities available for sale, at fair value   308,435     303,242     304,282  
Securities held to maturity   130,712     138,424     134,957  
Restricted stock   1,200     1,170     1,170  
Total securities   440,347     442,836     440,409  
Mortgage loans held for sale   491     663     478  
Loans:      
Loans, net of unearned income and deferred fees   654,734     630,916     647,752  
Less: allowance for loan losses   (8,372 )     (8,195)     (8,300)  
Loans, net   646,362     622,721     639,452  
Premises and equipment, net   8,557     8,718     8,853  
Accrued interest receivable   5,139     5,259     5,260  
Other real estate owned   3,008     3,425     3,156  
Intangible assets and goodwill   5,923     6,046     5,966  
Bank-owned life insurance   33,287     22,699     22,998  
Other assets   14,208     11,500     13,128  
Total assets $ 1,259,354   $1,214,079   $1,233,942  
       
Liabilities and Stockholders' Equity      
Noninterest-bearing deposits $ 181,868   $171,350   $171,946  
Interest-bearing demand deposits   618,223     574,507     604,093  
Savings deposits   140,325     136,051     136,789  
Time deposits   121,941     139,830     130,614  
Total deposits   1,062,357     1,021,738     1,043,442  
Other borrowed funds   ---     ---     ---  
Accrued interest payable   43     56     55  
Other liabilities   12,668     12,357     12,182  
Total liabilities   1,075,068     1,034,151     1,055,679  
       
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, 6,957,974 shares at June 30, 2017, December 31, 2016 and June 30, 2016.   8,698     8,698     8,698  
Retained earnings   181,546     175,169     178,224  
Accumulated other comprehensive loss, net   (5,958 )     (3,939)     (8,659)  
Total stockholders' equity   184,286     179,928     178,263  
Total liabilities and stockholders' equity $ 1,259,354   $1,214,079   $1,233,942  
                   

National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 
  Three Months Ended Six Months Ended
($ in thousands, except for share and per share data) June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Interest Income        
Interest and fees on loans $ 7,453 $7,289 $ 14,906   $14,623  
Interest on federal funds   ---   ---   ---     ---  
Interest on interest-bearing deposits   231   150   379     312  
Interest on securities - taxable   1,397   1,567   2,799     3,244  
Interest on securities - nontaxable   1,214   1,286   2,449     2,597  
Total interest income   10,295   10,292   20,533     20,776  
Interest Expense        
Interest on time deposits   135   181   280     375  
Interest on other deposits   913   882   1,796     1,756  
Interest on borrowed funds   ---   ---   ---     ---  
Total interest expense   1,048   1,063   2,076     2,131  
Net interest income   9,247   9,229   18,457     18,645  
Provision for loan losses   464   654   523     857  
Net income after provision for loan losses   8,783   8,575   17,934     17,788  
Noninterest Income        
Service charges on deposit accounts   692   569   1,357     1,129  
Other service charges and fees   41   46   110     118  
Credit card fees   1,019   969   1,917     1,839  
Trust Income   361   354   762     677  
Bank-owned life insurance   146   151   289     298  
Other income   192   455   520     800  
Realized securities gain,  net   4   74   4     98  
Total noninterest income   2,455   2,618   4,959     4,959  
Noninterest Expense        
Salaries and employee benefits   3,438   2,907   6,981     6,475  
Occupancy and furniture and fixtures   469   448   907     925  
Data processing and ATM   541   595   1,106     1,006  
FDIC assessment   91   145   186     286  
Credit card processing   725   712   1,380     1,334  
Intangibles and goodwill amortization   12   68   43     178  
Net cost of other real estate owned   55   39   84     108  
Franchise taxes   329   322   651     653  
Other operating expenses   1,038   1,002   2,297     1,957  
Total noninterest expense   6,698   6,238   13,635     12,922  
Income before income tax expense   4,540   4,955   9,258     9,825  
Income tax expense   970   1,090   2,039     2,181  
Net Income $ 3,570 $3,865 $ 7,219   $7,644  
Basic net income per share $ 0.51 $0.56 $ 1.04   $1.10  
Fully diluted net income per share $ 0.51 $0.56 $ 1.04   $1.10  
Weighted average number of common shares outstanding        
Basic   6,957,974   6,957,974   6,957,974     6,957,974  
Diluted   6,957,974   6,957,974   6,957,974     6,957,974  
Dividends declared per share $ 0.56 $0.55 $ 0.56   $0.55  
Dividend payout ratio   ---   ---   53.98 %     50.07%  
Book value per share     $ 26.49   $25.86  
                 

National Bankshares, Inc. and Subsidiaries  
Consolidated Statements of Comprehensive Income  
(Unaudited)  
   
      Three Months Ended  
($ in thousands)     June 30, 2017       June 30, 2016  
Net income     $ 3,570     $3,865  
                   
Other Comprehensive Income, net of tax                  
Unrealized holding gain on available for sale securities net of tax of $874 in 2017 and $368 in 2016       1,626       684  
 Reclassification adjustment for gain included in net income, net of tax of ($16) in 2016        ---       (30)  
Other comprehensive income, net of tax of $874 in 2017  and $352 in 2016     $ 1,626     $654  
Total Comprehensive Income     $ 5,196     $4,519  
                   
         
      Six Months Ended  
($ in thousands)     June 30, 2017       June 30, 2016  
Net Income     $ 7,219       $7,644  
                   
Other Comprehensive Income, Net of Tax                  
Unrealized holding gain on available for sale securities net of tax of $1,454 in 2017 and $2,170 in 2016       2,701       4,032  
Reclassification adjustment for gain included in net income, net of tax of ($18) in 2016       ---       (34)  
Other comprehensive income, net of tax of $1,454 in 2017 and $2,152 in 2016     $ 2,701     $3,998  
Total Comprehensive Income     $ 9,920     $11,642  
               

Key Ratios and Other Data
(Unaudited)
 
  Three Months Ended Six Months Ended
($ in thousands) June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
Average Balances        
Cash and due from banks $ 11,579   $11,217   $ 11,346   $11,263  
Interest-bearing deposits   87,694     118,395     80,050     122,122  
Securities available for sale   305,058     283,280     304,833     264,217  
Securities held to maturity   132,477     140,415     133,472     144,809  
Restricted stock   1,200     1,170     1,186     1,151  
Mortgage loans held for sale   262     601     238     514  
Gross Loans   652,644     610,657     651,560     610,818  
Loans, net   643,702     601,700     642,561     601,628  
Intangible assets   5,931     6,085     5,940     6,128  
Total assets   1,242,223     1,211,217     1,233,594     1,199,839  
Total deposits   1,045,464     1,022,306     1,038,775     1,012,721  
Other borrowings   ---     ---     ---     ---  
Stockholders' equity   184,108     179,452     182,319     177,722  
Interest-earning assets   1,181,413     1,152,614     1,174,273     1,142,769  
Interest-bearing liabilities   867,065     851,522     864,013     845,232  
         
Financial Ratios        
Return on average assets   1.15 %     1.28%     1.18 %     1.28%  
Return on average equity   7.78 %     8.66%     7.98 %     8.65%  
Net interest margin   3.42 %     3.52%     3.46 %     3.59%  
Net interest income-fully taxable equivalent $ 10,074   $10,089   $ 20,122   $20,397  
Efficiency  ratio   53.46 %     49.09%     54.36 %     50.96%  
Average equity to average assets   14.82 %     14.82%     14.78 %     14.81%  
         
Allowance for Loan Losses        
Beginning balance $ 8,261   $8,107   $ 8,300   $8,297  
Provision for losses   464     654     523     857  
Charge-offs   (409 )     (598)     (552 )     (1,051)  
Recoveries   56     32     101     92  
Ending balance $ 8,372   $8,195   $ 8,372   $8,195  
                         

Asset Quality Data
(Unaudited)
 
($ in thousands) June 30, 2017 June 30, 2016
Nonperforming Assets    
Nonaccrual loans $ 9   $1,751  
Nonaccrual restructured loans   3,188     4,454  
Total nonperforming loans   3,197     6,205  
Other real estate owned $ 3,008   $3,425  
Total nonperforming assets $ 6,205   $9,630  
Accruing restructured loans   3,711     4,729  
Loans 90 days or more past due $ 259   $316  
     
Asset Quality Ratios    
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned   0.94 %     1.52%  
Allowance for loans losses to total loans   1.28 %     1.30%  
Allowance for loan losses to nonperforming loans   261.87 %     132.07%  
Loans past due 90 days or more to loans net of unearned income and deferred fees   0.04 %     0.05%  

 
CONTACTS:   JAMES G. RAKES, CHAIRMAN, PRESIDENT & CEO (540) 951-6236   jrakes@nbbank.comDAVID K. SKEENS, TREASURER & CFO(540) 951-6347   dskeens@nbbank.com

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