National Bankshares(NKSH) - 2025 Q1 - Quarterly Report

Financial Performance - Net income for the three months ended March 31, 2025, was $3,236 thousand, a 48.9% increase compared to $2,174 thousand for the same period in 2024[12] - Basic net income per common share increased to $0.51 for the three months ended March 31, 2025, compared to $0.37 for the same period in 2024, representing a growth of 37.8%[12] - Total comprehensive income for the three months ended March 31, 2025, was $10,826 thousand, compared to a loss of $1,164 thousand in the same period of 2024[14] - Total interest income for Q1 2025 was $18,203,000, a 13.6% increase from $16,021,000 in Q1 2024[12] - Noninterest income for the first quarter of 2025 was $2,555 thousand, an increase of 16.2% from $2,199 thousand in the same quarter of 2024[12] - Total noninterest expense increased to $8,633 thousand for the first quarter of 2025, up from $7,762 thousand in the same quarter of 2024, a rise of 11.2%[12] Asset and Loan Growth - Total assets increased to $1,835,717 thousand as of March 31, 2025, up from $1,811,636 thousand at December 31, 2024, representing a growth of 1.3%[10] - Total loans increased to $1,003,905 thousand as of March 31, 2025, compared to $988,613 thousand at December 31, 2024, marking a growth of 1.5%[10] - The total loans, net of deferred fees and costs, as of March 31, 2025, were $992,774,000, up from $977,688,000 at the end of 2024, reflecting a growth of 1.1%[36] - The loan portfolio composition as of March 31, 2025, included $497,072,000 in commercial real estate loans, an increase from $478,078,000 at the end of 2024, showing a growth of 4.0%[36] - Residential closed-end first liens increased to $175,178 million as of March 31, 2025, from $171,382 million on December 31, 2024, marking a growth of about 2.3%[40] - The total amount of commercial real estate loans was $198,762 million as of March 31, 2025, compared to $193,795 million on December 31, 2024, showing an increase of about 2.5%[40] Credit Losses and Allowances - The allowance for credit losses was $10,490 thousand as of March 31, 2025, compared to $10,262 thousand at December 31, 2024, reflecting a slight increase of 2.2%[10] - The provision for credit losses for the three months ended March 31, 2025, was $277 million, compared to a recovery of $15 million for the same period in 2024[42] - The total Allowance for Credit Losses on Loans (ACLL) was $10.49 billion, an increase from $10.26 billion on December 31, 2024[42] - The balance of individually evaluated loans as of March 31, 2025, was $76 million, while collectively evaluated loans totaled $10.41 billion[44] - The company reported charge-offs of $112 million for the three months ended March 31, 2025, compared to $109 million for the same period in 2024[42] Securities and Investments - The total securities available for sale had an amortized cost of $665.244 million and a fair value of $596.253 million as of March 31, 2025, reflecting unrealized losses of $69.020 million[58] - The company reported unrealized holding gains on securities available for sale of $9,607,000 in Q1 2025, compared to losses of $4,225,000 in Q1 2024[21] - The fair value of U.S. government agencies and corporations securities was $306,927 million as of March 31, 2025, down from $311,124 million at December 31, 2024[73] - The company had 545 securities with a fair value of $571,226 million in an unrealized loss position, attributed to noncredit-related factors such as interest rate changes[64] - The company did not record any impairment on FHLB stock as of March 31, 2025, indicating stable investment conditions[66] Acquisitions and Strategic Moves - The acquisition of Frontier Community Bank was completed on June 1, 2024, with a total purchase price consideration of $16,349,000, which included $2,050,000 in cash and stock consideration valued at $14,299,000[31] - The identifiable assets acquired from Frontier Community Bank totaled $148,513,000, while the identifiable liabilities assumed were $137,038,000, resulting in a fair value of net assets acquired of $11,475,000[34] - The company issued 464,855 shares of common stock valued at $30.76 per share as part of the acquisition of Frontier Community Bank, reflecting a strategic move to enhance its market presence[38] Risk Management and Economic Factors - The company is closely monitoring risks related to high inflation and U.S. monetary policy, which may impact customer demand for banking services and loan repayment capabilities[27] - The company does not expect the adoption of recent accounting standards (ASU 2023-09 and ASU 2024-03) to have a material impact on its consolidated financial statements[28][30] Other Financial Metrics - Cash flows from operating activities provided $2,566,000 in Q1 2025, down from $3,840,000 in Q1 2024, reflecting a decrease of 33.2%[20] - The company reported a net change in cash and cash equivalents of $14,418,000 for Q1 2025, compared to $34,580,000 in Q1 2024, indicating a decrease of 58.3%[20] - The lease liability as of March 31, 2025, was $1,422, down from $1,523 as of December 31, 2024, indicating a decrease of 6.6%[99] - The weighted average discount rate for leases was 3.89% as of March 31, 2025, slightly up from 3.87% at the end of 2024[99] - The company recognized an amortization expense of $97,000 for intangible assets in Q1 2025[12]