National Bankshares, Inc. (NBI) reported a net income of $7.6 million for the fiscal year ending December 31, 2024, a decrease of 51.4% compared to $15.7 million in 2023. This decline was attributed to net interest margin compression, merger-related expenses from the acquisition of Frontier Community Bank (FCB), and a contract termination expense. The company's net interest income after provision for credit losses was $35.2 million, down from $38.5 million in the previous year. The net interest margin also decreased to 2.19% from 2.38%, reflecting the impact of rising interest rates and competitive pressures on deposit pricing.
The acquisition of FCB on June 1, 2024, was a significant strategic development for NBI, expanding its footprint and enhancing its growth potential. The acquisition added approximately $118.7 million in loans and $129.7 million in deposits to NBI's balance sheet. However, it also incurred one-time expenses of $2.9 million and a provision for credit loss of $1.3 million associated with the merger. As of December 31, 2024, total assets increased to $1.81 billion, up 9.4% from $1.66 billion in 2023, primarily due to the FCB acquisition.
Operationally, NBI's total loans increased by 15.4% to $977.7 million, driven by the addition of FCB's loan portfolio. Customer deposits also rose by 9.4% to $1.64 billion, with a notable increase in time deposits, which grew by 40.0% to $312.6 million. The bank's employee headcount stood at 242 full-time equivalent employees as of December 31, 2024, reflecting the integration of FCB's workforce. The company continues to focus on prudent lending practices, with 84.6% of its loans secured by real estate.
Looking ahead, NBI anticipates ongoing challenges related to the interest rate environment and competitive pressures in the banking sector. The company remains committed to maintaining its capital ratios, which exceed regulatory requirements, and is positioned to continue making loans that meet its underwriting standards. Management expressed confidence in the bank's ability to navigate these challenges while leveraging the benefits of the recent acquisition to enhance its market presence and operational efficiency.
About NATIONAL BANKSHARES INC
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