National Bankshares Inc. Reports Operating Results (10-Q)
National Bankshares Inc. has a market cap of $188.9 million; its shares were traded at around $27.24 with a P/E ratio of 12.9 and P/S ratio of 3.2. The dividend yield of National Bankshares Inc. stocks is 3.1%. National Bankshares Inc. had an annual average earning growth of 7.4% over the past 10 years.NKSH is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:Securities declined by $10,327, or 3.47%, from $297,417 at December 31, 2009 to $287,090 at March 31, 2010. The decline is the result of securities maturing and being called close to the end of the quarter and funds from called and matured investments not yet being reinvested. Net loans and deposits were largely unchanged from year-end. Net loans at March 31, 2010 were $580,933, down $2,088, or 0.36%, from $583,021 at December 31, 2009. Deposits grew by $5,356, or 0.63%, from year-end s $852,112 to $857,468 at March 31, 2010. Total assets were $982,367 at December 31, 2009 and were $992,944 at March 31, 2010, an increase of $10,577, or 1.08%.
Total nonperforming loans at March 31, 2010, all of which were nonaccrual loans, were $7,743, or 1.75% of loans net of unearned income and deferred fees, plus other real estate owned. Nonperforming loans increased by $993, from $6,750 at December 31, 2009 to $7,743 at March 31, 2010. The ratio of nonperforming loans to net loans is at a level that is higher than the Company has experienced in the recent past. However the ratio remains manageable and below that of peers. Sufficient resources are dedicated to working out problem assets, and exposure to loss is somewhat mitigated because most of the problem loans are collateralized. In addition, the Company s conservative loan underwriting policies help to limit potential loss.
The $520 increase in loans past due 90 days or more from $1,697 at year-end to $2,217 at March 31, 2010, is somewhat predictive of a continuing trend of increasing nonperforming loans. This fact, taken together with the effects of the lingering recession in the Company s market area, leads management to expect some future additional asset quality deterioration before full economic recovery. It is not possible to predict the exact extent and duration of the recession.
Total interest income for the quarter ended March 31, 2010 was $12,240, down by $338, or 2.69%, from the $12,578 reported for the same period in 2009. Total interest income was down because of the decline in interest rates. Total interest expense was down by $1,433, or 32.48%, from $4,412 at March 31, 2009 to $2,979 at March 31, 2010. The decline in interest expense resulted from a migration of higher-priced, longer-term certificates of deposit into lower cost, shorter-term interest bearing deposits. In addition, certificates of deposit are renewing at lower interest rates. To summarize, the rates paid on the Company s deposit liabilities declined at a more rapid pace than the interest rates on its interest-earning assets.
Credit card fees for the first three months of 2010 were $666. This was an increase of $41, or 6.56%, when compared with the $625 total reported for the same period last year. The increase was due to a higher volume of merchant transaction fees and credit card fees.
Salary and benefits expense increased only $25, or 0.88%, from $2,831 for the three months ended March 31, 2009 to $2,856 for the three months ended March 31, 2010. The Company has made an effort to control salary costs.
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