National Bankshares Reports 48.9% Increase in Net Income for Q1 2025

National Bankshares, Inc. (NBI) reported a net income of $3.236 million for the first quarter of 2025, reflecting a 48.9% increase from $2.174 million in the same period of 2024. This growth was driven by a rise in net interest income, which increased to $10.256 million from $8.245 million year-over-year. The company’s total interest income rose to $18.203 million, up from $16.021 million, while total interest expense increased slightly to $7.947 million from $7.776 million. The net interest margin improved to 2.41% compared to 2.08% in the prior year, indicating enhanced profitability from interest-earning assets.

In terms of balance sheet performance, total assets grew to $1.836 billion as of March 31, 2025, up from $1.812 billion at the end of 2024. Total loans increased to $992.774 million, a rise from $977.688 million, with notable growth in commercial real estate loans, which rose to $497.072 million from $478.078 million. However, real estate construction loans saw a decline, dropping to $42.942 million from $50.798 million. The company’s total deposits also increased to $1.658 billion, up from $1.645 billion, with noninterest-bearing demand deposits rising to $301.149 million.

Strategically, NBI completed the acquisition of Frontier Community Bank (FCB) on June 1, 2024, which expanded its operations into new markets, including Waynesboro, Staunton, and Lynchburg, Virginia. This acquisition added significant assets and liabilities to NBI's balance sheet, including $118.743 million in loans and $129.717 million in deposits. The integration of FCB is expected to enhance NBI's growth potential and operational efficiency.

Operationally, the company reported an increase in noninterest income, which rose to $2.555 million from $2.199 million, driven by higher service charges on deposit accounts and increased trust income. The number of loans modified for borrowers experiencing financial difficulty remained low, with no significant defaults reported. The allowance for credit losses (ACLL) increased to $10.490 million, or 1.05% of loans, reflecting a cautious approach amid economic uncertainties.

Looking ahead, NBI's management expressed optimism about continued growth, supported by a favorable interest rate environment and the successful integration of FCB. However, they remain vigilant regarding potential risks, including inflation and changing market conditions that could impact loan demand and credit quality. The company is well-capitalized, with a common equity tier I capital ratio of 15.62%, indicating a strong financial position to support future growth initiatives.