BLACKSBURG, VA., April 24, 2025 -- National Bankshares, Inc. (“the Company”) (Nasdaq: NKSH), parent company of The National Bank of Blacksburg (“the Bank”) and National Bankshares Financial Services, Inc., today announced its results of operations for the first quarter of 2025. The Company reported net income of $3.24 million or $0.51 per diluted common share for the three months ended March 31, 2025. This compares with net income of $2.17 million or $0.37 per diluted common share for the three months ended March 31, 2024. National Bankshares, Inc. ended March 31, 2025 with total assets of $1.84 billion.
CEO F. Brad Denardo commented, "During the first quarter, National Bankshares continued to build a brighter future for our customers, communities, and shareholders. We are excited to have recently opened our Roanoke, Virginia, branch office, and we are motivated to serve our new neighbors and grow our presence in the Roanoke Valley. We are also working tirelessly towards launching our core systems upgrade in the second quarter, which promises better efficiency, streamlined processes, and an enhanced customer experience. Our commitment to shareholder value remains steadfast, and we are confident that our proven business model and strategically sound growth plan will continue to deliver results."
Comparability
The Company acquired Frontier Community Bank ("FCB") on June 1, 2024. In accordance with generally accepted accounting principles, periods prior to June 1, 2024 have not been restated and do not include assets acquired, liabilities assumed or results of operations related to FCB prior to acquisition. On the date of merger, the transaction increased the Company's stockholders' equity by $14.3 million and added loans of $118.7 million, goodwill of $4.9 million, core deposit intangibles of $2.1 million, and customer deposits of $129.7 million. More information about assets acquired and liabilities assumed is provided in the Company's 2024 Form 10-K.
Highlights
Branch Opening
The Company opened its new branch location in Roanoke, Virginia. The branch team will build on the customer relationships developed through the Roanoke loan production office and is eager to welcome the broader Roanoke Valley to The National Bank.
Net Interest Income
The net interest margin improved when the first quarter of 2025 is compared with the fourth quarter of 2024, due to lower deposit costs. When the three months ended March 31, 2025 is compared with the three months ended March 31, 2024, the net interest margin improved on higher asset yields and lower deposit costs.
Noninterest Income
Noninterest income increased when the first quarter of 2025 is compared with the fourth quarter of 2024 due to higher volume in credit and debit card transactions and receipt of an annual distribution of partnership income included in other income. When compared with the first quarter of 2024, the same drivers increased noninterest income for the three months ended March 31, 2025, along with the FCB acquisition and positive trends in Trust income.
Noninterest Expense
Noninterest expense increased slightly when the first quarter of 2025 is compared with the fourth quarter of 2024. Noninterest expense in 2025 includes conversion expenses associated with the upcoming system upgrade that will provide greater efficiency and improved product offerings. When compared with the first quarter of 2024, the FCB acquisition was the primary driver of the increase in noninterest expense.
Securities
The Company reduced its securities holdings by investing proceeds from matured securities in interest-bearing deposits. Fluctuation in the the value of the Company's securities portfolio are primarily due to market interest rate expectations. As of March 31, 2025, the Company has the ability to hold securities until recovery of the unrealized loss, which may be at maturity. Analysis as of March 31, 2025 did not indicate credit risk concerns with any of the Company’s securities.
Deposits
The Company’s depositors within its market areas are diverse and include individuals, businesses and municipalities. The Company does not have any brokered deposits. Depositors are insured up to the FDIC maximum of $250 thousand. Municipal deposits, which account for approximately 24% of the Company’s deposits, have additional security from bonds pledged as collateral, in accordance with state regulation. Of the Company’s non-municipal deposits, approximately 22.6% are uninsured.
Liquidity
The Company’s liquidity position remains solid. The Company maintains borrowing lines with the Federal Home Loan Bank of Atlanta (“FHLB”) and the Federal Reserve that provide substantial borrowing capacity. Combined with a low loan-to-deposit ratio, positive results of the latest liquidity stress testing and success of deposit marketing, the Company believes it is well positioned to meet foreseeable liquidity demands.
Loans and Credit Quality
Loans increased from December 31, 2024, primarily driven by growth in commercial real estate loans. The Company is positioned to continue to make every loan that meets its underwriting standards. Loan metrics continue to reflect low credit risk, with low charge-off and past due levels. The Company recorded a higher provision for the first quarter of 2025 when compared with the first and last quarters of 2024, reflecting loan growth and some softening in economic indicators.
Stockholders’ Equity
Stockholders’ equity as of March 31, 2025 increased when compared with the last quarter of 2024 due to net income and improvement in unrealized losses on available for sale securities, which are reflected, net of tax, in accumulated other comprehensive loss. Accumulated other comprehensive loss is excluded from the Bank’s regulatory capital and does not affect regulatory capital ratios. The Bank is considered well capitalized, with capital ratios substantially higher than minimum regulatory requirements, and meets all requirements for borrowing from the FHLB.
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 28 full-service offices, primarily in southwestern, western and central Virginia, and one loan production office in Charlottesville, 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
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, achievements, or trends will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the following: the businesses of the Company and Frontier Community Bank (“FCB”) may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; the expected growth opportunities or cost savings from the merger with FCB may not be fully realized or may take longer to realize than expected; deposit attrition, operating costs, customer losses and business disruption prior to and following the merger with FCB, including adverse effects on relationships with employees and customers, may be greater than expected; the regulatory and shareholder approvals required for the merger with FCB may not be obtained; the level of inflation; interest rates; national and local economic conditions; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation, and the impact of any policies or programs implemented pursuant to financial reform legislation; unanticipated increases in the level of unemployment in the Company’s market; the quality or composition of the loan and/or investment portfolios; the sufficiency of the Company’s allowance for credit losses; demand for loan products; deposit flows, including impact on liquidity; competition; demand for financial services in the Company’s market; the real estate market conditions in the Company’s market; laws, regulations and policies impacting financial institutions; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer behavior; technological risks and developments, and cyber-threats, attacks or events; the Company’s technology initiatives; geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts; the occurrence of significant natural disasters, including severe weather conditions, floods, and other catastrophic events; the Company's ability to identify, attract, and retain experienced management, relationship managers, and support personnel, particularly in a competitive labor environment; performance by the Company’s counterparties or vendors; applicable accounting principles, policies and guidelines; the impact of public health events, including the adverse impact on our business and operations and on our customers; and other factors described from time to time in the Company’s reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.