National Bankshares(US:NKSH)2023-05-11 16:49Financial Performance - Net income for Q1 2023 was $4,531 thousand, a decrease of 7.2% from $4,886 thousand in Q1 2022[12]. - Net interest income for the three months ended March 31, 2023, was $10,946 thousand, an increase of 5.3% compared to $10,395 thousand for the same period in 2022[12]. - Total noninterest income decreased to $2,199 million in Q1 2023 from $2,291 million in Q1 2022, a decline of 4.0%[129]. - The adjusted return on average assets for Q1 2023 was 1.16%, compared to 1.11% in Q1 2022[160]. - The adjusted return on average equity for Q1 2023 was 15.25%, up from 10.21% in Q1 2022[160]. - The efficiency ratio for Q1 2023 was 54.99%, compared to 52.71% in Q1 2022, indicating a decrease in operational efficiency[157]. Asset and Deposit Changes - Total assets decreased to $1,654,277 thousand as of March 31, 2023, down from $1,677,551 thousand at December 31, 2022, representing a decline of approximately 1.4%[9]. - Total deposits decreased to $1,511,452 thousand as of March 31, 2023, down from $1,542,725 thousand at December 31, 2022, reflecting a decline of approximately 2.0%[9]. - Interest-bearing deposits fell by 77.84% to $19,715, while noninterest-bearing demand deposits decreased by 8.68% to $308,908[201]. - The company experienced increased competitive pressure on deposits, prompting a response with special CD offerings and improved rates[206]. Credit Losses and Loan Portfolio - The provision for credit losses was $2 thousand in Q1 2023, significantly lower than $134 thousand in Q1 2022, indicating improved credit quality[12]. - The allowance for credit losses on loans increased to $10,650 million as of March 31, 2023, up from $8,225 million at December 31, 2022, representing a rise of 29.5%[53]. - The total loan portfolio, net of unearned income and deferred fees and costs, was $856,965 million as of March 31, 2023, compared to $852,744 million at December 31, 2022, reflecting a slight increase of 0.26%[53]. - The ratio of allowance for credit losses to nonaccrual loans was 378.46% as of March 31, 2023, significantly higher than 272.12% at December 31, 2022[60]. - The total loans past due 90 days or more and still accruing was 0.00% as of March 31, 2023, unchanged from December 31, 2022[60]. Securities and Investments - The total fair value of securities available for sale decreased from $656,852 million on December 31, 2022, to $651,047 million on March 31, 2023[81]. - The unrealized holding gain on available-for-sale securities was $14,847 thousand as of March 31, 2023, compared to a loss of $42,818 thousand in the same period last year[22]. - The company realized net securities gains of $12 million during the first three months of 2023, from sales with an amortized cost basis of $17,987 million[90]. - The deferred tax asset for net unrealized losses on securities available for sale was $18,526 million as of March 31, 2023, down from $21,644 million as of December 31, 2022[82]. Noninterest Expenses - Noninterest expense increased to $7,664 thousand in Q1 2023, up 15.9% from $6,613 thousand in Q1 2022[12]. - Total noninterest expense increased by 15.89% to $7,664 million for the three months ended March 31, 2023, driven mainly by higher salaries and professional services expenses[196]. - Cybersecurity measures cost the company $63 million in Q1 2023, down from $94 million in Q1 2022[143]. Loan Quality and Risk Management - The Company is closely monitoring risks such as high inflation and U.S. monetary policy, which may impact customer demand for banking services and loan repayment capabilities[26]. - The Company categorizes loans by risk based on borrowers' ability to service their debt, including collateral and financial information[72]. - The total charge-offs for the three months ended March 31, 2023, are $92 million, with recoveries amounting to $173 million[61]. - The company has not identified any collateral-dependent loans as of March 31, 2023[71]. Dividends and Stockholder Equity - The company declared dividends of $1.00 per common share in Q1 2023, compared to no dividends declared in Q1 2022[12]. - The total stockholders' equity increased to $131,043 thousand as of March 31, 2023, up from $122,687 thousand at December 31, 2022, representing a growth of approximately 6.8%[9].