National Bankshares(NKSH) - 2025 Q1 - Quarterly Results

Financial Performance - National Bankshares, Inc. reported a net income of $3.24 million or $0.51 per diluted common share for Q1 2025, compared to $2.17 million or $0.37 per diluted common share in Q1 2024, representing a 49.3% increase in net income year-over-year [2]. - Net income for the three months ended March 31, 2025, was $3,236,000, up from $3,079,000 in the previous quarter, representing a 5.1% increase [22]. - Basic net income per common share increased to $0.51 for the three months ended March 31, 2025, up from $0.48 in the previous quarter [22]. - Adjusted net income for the three months ended March 31, 2025, was $3,075 thousand, compared to $3,052 thousand in the previous quarter [1]. Asset and Deposit Growth - Total assets as of March 31, 2025, were $1.84 billion, reflecting the company's growth and stability [2]. - Total assets increased to $1,835,717,000 as of March 31, 2025, compared to $1,811,636,000 at December 31, 2024, reflecting a growth of 1.4% [20]. - Total assets increased to $1,819,747 thousand as of March 31, 2025, compared to $1,796,684 thousand as of December 31, 2024, reflecting a growth of 1.9% [1]. - Total deposits rose to $1,657,760,000 as of March 31, 2025, compared to $1,644,752,000 at December 31, 2024, marking a 0.7% increase [20]. - Total deposits rose to $1,647,550 thousand as of March 31, 2025, from $1,622,653 thousand as of December 31, 2024, marking a 1.5% increase [1]. Loan Performance - Loans increased from December 31, 2024, mainly due to growth in commercial real estate loans, with low credit risk metrics reflected in charge-off and past due levels [13]. - Total loans reached $1,003,905,000 as of March 31, 2025, an increase of 1.3% from $988,613,000 at December 31, 2024 [20]. - The allowance for credit losses was $10,490,000 as of March 31, 2025, slightly higher than $10,262,000 at December 31, 2024 [20]. - Allowance for credit losses on loans to total loans remained stable at 1.05% as of March 31, 2025, consistent with the previous quarter [1]. - Nonperforming loans to total loans ratio was 0.22% as of March 31, 2025, unchanged from the previous quarter [1]. Income and Expense Analysis - Net interest income after provision for credit losses was $9,980,000 for the three months ended March 31, 2025, compared to $10,064,000 in the previous quarter [22]. - Noninterest income increased in Q1 2025 compared to Q4 2024, driven by higher credit and debit card transaction volumes and contributions from the FCB acquisition [7]. - Noninterest income totaled $2,555,000 for the three months ended March 31, 2025, compared to $2,243,000 in the previous quarter, reflecting a 13.9% increase [22]. - Noninterest expense rose slightly in Q1 2025 compared to Q4 2024, primarily due to conversion expenses related to an upcoming system upgrade and costs associated with the FCB acquisition [9]. - Total noninterest expense was $8,633,000 for the three months ended March 31, 2025, compared to $8,620,000 in the previous quarter, indicating a marginal increase [22]. Capital and Liquidity Position - Stockholders' equity increased as of March 31, 2025, due to net income and improvements in unrealized losses on available-for-sale securities, indicating a strong capital position [14]. - The company maintains a solid liquidity position with substantial borrowing capacity from the Federal Home Loan Bank and the Federal Reserve, ensuring it can meet foreseeable liquidity demands [12]. - Approximately 24% of the company's deposits are municipal deposits, which have additional security from bonds pledged as collateral, enhancing the safety of these deposits [11]. Operational Efficiency - The net interest margin improved in Q1 2025 compared to Q4 2024 due to lower deposit costs and higher asset yields, indicating better profitability from interest-earning assets [6]. - The net interest margin improved to 2.41% for the three months ended March 31, 2025, compared to 2.34% in the previous quarter [23]. - The efficiency ratio (non-GAAP) improved to 65.81% for the three months ended March 31, 2025, down from 68.84% in the previous quarter [1]. - The company is undergoing a system upgrade aimed at enhancing efficiency and product offerings, which is reflected in the conversion expenses reported [1].