# NATIONAL BANKSHARES INC (NKSH) Informational only - not investment advice. CIK: 0000796534 SIC: 6021 National Commercial Banks SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Depository Institutions](/major-group/60/) > [SIC 6021 National Commercial Banks](/industry/6021/) Latest 10-K filed: 2026-03-27 SEC page: https://www.sec.gov/edgar/browse/?CIK=796534 Filing source: https://www.sec.gov/Archives/edgar/data/796534/000119312526128311/nksh-20251231.htm ## At a glance FY2025 · period end 2025-12-31 · filed 2026-03-27 · accession 0001193125-26-128311 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000796534.json | Metric | Value | FY | Provenance | | --- | ---: | ---: | --- | | Revenue | 75,313,000 USD | 2025 | verified | | Net income | 15,826,000 USD | 2025 | verified | | Assets | 1,824,506,000 USD | 2025 | verified | | Free cash flow | 15,152,000 USD | 2025 | computed | | Net margin | 21.01% | 2025 | computed | | Revenue YoY | +7.54% | 2025 | computed | | ROE | 8.56% | 2025 | computed | Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity. No market price, no rating, no forecast on this site. Not investment advice. ### Peer percentile fingerprint | Ratio | NKSH | Peer median | Percentile | N | | --- | ---: | ---: | ---: | ---: | | Net margin | 21.0% | 22.9% | 33 | 76 | | Revenue growth | 7.5% | 5.2% | 68 | 76 | | FCF margin | 20.1% | 22.0% | 38 | 65 | | ROE | 8.6% | 9.9% | 31 | 76 | | ROA | 0.9% | 1.1% | 24 | 76 | | Liabilities / equity | 8.87 | 8.12 | 61 | 76 | Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 6021 National Commercial Banks, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking. ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 75313000 | USD | 2025 | 2026-03-27 | | Net income | 15826000 | USD | 2025 | 2026-03-27 | | Assets | 1824506000 | USD | 2025 | 2026-03-27 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000796534.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2008 | 2009 | 2010 | 2011 | 2012 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | | | | | | 40,930,000 | 41,260,000 | 43,224,000 | 45,147,000 | 44,008,000 | 44,987,000 | 50,109,000 | 58,833,000 | 70,035,000 | 75,313,000 | | Net income | | | | | | | 14,942,000 | 14,092,000 | 16,151,000 | 17,466,000 | 16,077,000 | 20,382,000 | 25,932,000 | 15,691,000 | 7,623,000 | 15,826,000 | | Diluted EPS | | | | | | 2.28 | 2.15 | 2.03 | 2.32 | 2.65 | 2.48 | | 4.33 | 2.66 | 1.24 | 2.49 | | Operating cash flow | | | | | | | 17,533,000 | 10,993,000 | 19,796,000 | 18,832,000 | 13,793,000 | 22,882,000 | 29,500,000 | 15,523,000 | 9,438,000 | 17,890,000 | | Capital expenditures | | | | | | | | | | | | | | 1,492,000 | 3,256,000 | 2,738,000 | | Dividends paid | | | | | | | 8,071,000 | 8,141,000 | 8,419,000 | 9,032,000 | 9,000,000 | 8,806,000 | 8,950,000 | 14,784,000 | 9,264,000 | 9,611,000 | | Assets | | | | | | | 1,233,942,000 | 1,256,757,000 | 1,256,032,000 | 1,321,837,000 | 1,519,673,000 | 1,702,175,000 | 1,677,551,000 | 1,655,370,000 | 1,811,635,000 | 1,824,506,000 | | Liabilities | | | | | | | 1,055,679,000 | 1,071,861,000 | 1,065,794,000 | 1,138,111,000 | 1,319,066,000 | 1,510,424,000 | 1,554,864,000 | 1,514,848,000 | 1,655,227,000 | 1,639,598,000 | | Stockholders' equity | | | | | | | 178,263,000 | 184,896,000 | 190,238,000 | 183,726,000 | 200,607,000 | 191,751,000 | 122,687,000 | 140,522,000 | 156,409,000 | 184,908,000 | | Cash and cash equivalents | 16,316,000 | 12,894,000 | 9,858,000 | 11,897,000 | 14,783,000 | | | | | | | | | 86,603,000 | 108,117,000 | 59,250,000 | | Free cash flow | | | | | | | | | | | | | | 14,031,000 | 6,182,000 | 15,152,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2008 | 2009 | 2010 | 2011 | 2012 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | | | | | | | 36.51% | 34.15% | 37.37% | 38.69% | 36.53% | 45.31% | 51.75% | 26.67% | 10.88% | 21.01% | | Return on equity | | | | | | | 8.38% | 7.62% | 8.49% | 9.51% | 8.01% | 10.63% | 21.14% | 11.17% | 4.87% | 8.56% | | Return on assets | | | | | | | 1.21% | 1.12% | 1.29% | 1.32% | 1.06% | 1.20% | 1.55% | 0.95% | 0.42% | 0.87% | | Liabilities / equity | | | | | | | 5.92 | 5.80 | 5.60 | 6.19 | 6.58 | 7.88 | 12.67 | 10.78 | 10.58 | 8.87 | ## As-reported value updates No tracked differences above grepcent's stated thresholds and capped precision rule were found between the earliest XBRL-filed value and the value currently on file for the standardized annual metrics grepcent tracks. ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-08-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000796534.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2021-Q2 | 2021-06-30 | | | 0.74 | reported discrete quarter | | 2021-Q3 | 2021-09-30 | | | 0.94 | reported discrete quarter | | 2023-Q2 | 2023-06-30 | | | 0.66 | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 14,679,000 | 3,074,000 | 0.52 | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 15,513,000 | 4,185,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 16,021,000 | 2,174,000 | 0.37 | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 17,117,000 | -306,000 | -0.05 | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 18,666,000 | 2,676,000 | 0.42 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 18,317,000 | 3,079,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 18,203,000 | 3,236,000 | 0.51 | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 18,537,000 | 2,289,000 | 0.36 | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 19,010,000 | 4,420,000 | 0.69 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 19,569,000 | 5,881,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 18,941,000 | 4,981,000 | 0.78 | reported discrete quarter | | 2026-Q2 | 2026-06-30 | 19,454,000 | 5,029,000 | 0.79 | reported discrete quarter | ## Filed narrative (10-K & 10-Q) ## Business Verbatim Item 1 Business section from NKSH's latest 10-K: [/company/NKSH/business/](/company/NKSH/business/). ## Risk Factors Verbatim Item 1A Risk Factors from NKSH's latest 10-K: [/company/NKSH/risk-factors/](/company/NKSH/risk-factors/). ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/796534/000119312526346967/nksh-20260630.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high Filing date: 2026-08-12 Report date: 2026-06-30 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations $ in thousands, except per share data The purpose of this discussion and analysis is to provide information about the financial condition and results of operations of the Company. Please refer to the financial statements and other information included in this report as well as the Company’s 2025 Form 10-K for an understanding of the following discussion and analysis. References in the following discussion and analysis to “we” or “us” refer to the Company unless the context indicates that the reference is to the Bank. Cautionary Statement Regarding Forward-Looking Statements We make forward-looking statements in this Form 10-Q that are subject to significant risks and uncertainties. These forward-looking statements include statements regarding our profitability, liquidity, allowance for credit losses, interest rate sensitivity, market risk, growth strategy, and financial and other goals, and are based upon management’s views and assumptions as of the date of this report. The words “believes,” “expects,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward-looking statements. These forward-looking statements are based upon or are affected by factors that could cause our actual results to differ materially from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, effects of or changes in: • inflation and changes in interest rates that may reduce our margins or reduce the fair value of financial instruments, • the ability to maintain adequate liquidity by retaining deposit customers and secondary funding sources, especially if the Company’s or banking industry’s reputation becomes damaged, • the adequacy of the level of the Company’s allowance for credit losses, the amount of credit loss provisions required in future periods, and the failure of assumptions underlying the allowance for credit losses, • general and local economic conditions, • monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury, the Office of the Comptroller of the Currency (“OCC”), the Federal Reserve, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation (“FDIC”), and the impact of any policies or programs implemented pursuant to financial reform legislation, • unanticipated increases in the level of unemployment in the Company’s market, • the quality or composition of the loan and/or investment portfolios, • our ability to maintain existing deposit relationships or attract new deposit relationships, • changes in consumer spending, borrowing and savings habits, • increased competition with other financial institutions and fintech companies, • demand for financial services in the Company’s market, • the real estate market in the Company’s market, • laws, regulations and policies impacting financial institutions, • technological risks and developments, and cyber-threats, attacks or events, • the Company’s technology initiatives, • geopolitical conditions, including trade restrictions and tariffs, acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to trade restrictions and tariffs, acts or threats of terrorism and/or military conflicts, • the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues, and other catastrophic events, • the Company's ability to identify, attract, and retain experienced management, relationship managers, and support personnel, particularly in a competitive labor environment, • performance by the Company’s counterparties or vendors, • applicable accounting principles, policies and guidelines, and • risks associated with mergers, acquisitions, and other expansion activities. These risks and uncertainties should be considered in evaluating the forward-looking statements contained in this report. We caution readers not to place undue reliance on those statements, which speak only as of the date of this report. This discussion and analysis should be read in conjunction with the description of our “Risk Factors” in Item 1A of the Company's 2025 Form 10-K. 30 Table of Contents Overview NBI is a financial holding company that was organized in 1986 under the laws of Virginia and is registered under the Bank Holding Company Act of 1956. NBI common stock is listed on the Nasdaq Capital Market and is traded under the symbol “NKSH.” NBI has two wholly-owned subsidiaries; the National Bank of Blacksburg ("NBB") and National Bankshares Financial Services, Inc. ("NBFS"). NBB is a community bank and does business as National Bank from 28 office locations and one loan production office. NBB is the source of nearly all of the Company’s revenue. NBFS does business as National Bankshares Investment Services and National Bankshares Insurance Services. Critical Accounting Policies The Company’s consolidated financial statements are prepared in accordance with GAAP. The financial information contained within our statements is, to a significant extent, based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value obtained when earning income, recognizing expense, recovering an asset or relieving a liability. Although the economics of the Company’s transactions may not change, the timing of events that would impact the transactions could change. Critical accounting policies are most important to the portrayal of the Company’s financial condition or results of operations and require management’s most difficult, subjective, and complex judgments about matters that are inherently uncertain. If conditions occur that differ from our assumptions, depending upon the severity of such differences, the Company’s financial condition or results of operations may be materially impacted. The Company designates as critical those policies governing the ACLL and the Pension Plan. The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them as needed. ACLL The ACLL represents the Company's best estimate of current expected credit losses on loans over the expected life as of the measurement date. The estimation utilizes internal and peer historical credit loss experience, current conditions and reasonable and supportable forecasts. The results are also dependent upon management's selection of methodologies, loan credit risk ratings, and determination of the impact of internal and external variables. The Company employs a cash flow ("CF") model whereby each loan’s cash flows are projected according to contractual terms and modified by prepayment rates and loss rates. Prepayment rates are sourced from the Company’s historical experience. Loss rates are calculated using the probability of default ("PD") and loss given default ("LGD") sourced from internal and peer historical experience, and adjusted for a forecast variable. The modified cash flows are then discounted at the loan's contractual interest rate. Application of historical prepayment rates lowers the ACL and may not be representative of realized prepayment rates. Historical loss experience and the impact of the forecast variable may not be representative of realized loss experience. Key to loss rate application is the Company's risk grading system, which is governed by a robust policy. Loss rates are calculated and applied by risk grade. Management relies upon risk grades to identify loans with risk characteristics that are different from other loans within a segment. Loans graded special mention or classified and that exceed a value threshold are individually evaluated. If management determines that a borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. Specific reserves for other individually evaluated loans are estimated using a CF approach. Cash flows are determined by analyzing the borrower's ability to repay and economic conditions affecting the borrower's industry, discounted at loss rates appropriate to the risk grade. The ultimate recoverability of the loan may be higher or lower than the specific reserve. The Company adjusts collectively-evaluated CF model results for qualitative risk factors that are not inherent in historical losses, but are relevant in assessing expected credit losses within the loan portfolio. Risks considered include the impact of changes in (i) economic conditions, (ii) the nature and volume of the loan portfolio, (iii) the existence, growth and effect of any concentrations in credit, (iv) lending policies and procedures, including underwriting standards and practices, (v) the quality of the credit review function, (vi) the experience, ability and depth of lending management and staff, (vii) the volume and severity of past due loans, (viii) the value of underlying collateral for collateral-dependent loans, and (ix) other factors such as the regulatory, legal and competitive environments. Because of low loss rate history, statistical correlation between losses and qualitative risk factors is not possible and adjustments are based upon management judgment. Management assesses each factor and determines the adjustment to the ACLL based upon a documented and consistently applied methodology. Management's assessment may be higher or lower than actual impact. The estimation of the ACLL involves analysis of internal and external variables, methodologies, assumptions and management’s judgment and experience. These judgments are inherently subjective and actual losses could be greater or less than the estimate. Future estimates of the ACLL could increase or decrease based on changes in the financial condition of individual borrowers, concentrations of various types of loans, economic conditions or the markets in which collateral may be sold. The estimate of the ACLL determines the amount of provision expense and directly affects our financial results. Pension Plan Pension obligations are determined through actuarial calculations based upon significant assumptions, including the IRS mortality table, an effective interest rate of 5.35% for 2026 and 5.32% for 2025, a discount rate of 5.25% for 2026 and 5.50% for 2025, anticipated 31 Table of Contents rate of compensation increases of 4% for both 2026 and 2025, and an expected long-term rate of return of 7.50% for 2026 and 2025. Actual outcomes could vary from the assumptions and result in underaccrual or overaccrual of pension obligations. For information on the Company's critical accounting policies, please refer to the Company’s 2025 Form 10-K, Note 1: Summary of Significant Accounting Policies. Performance Summary The Company’s results of operations and financial position are heavily influenced by the interest rate environment. The Federal Reserve's interest rate cuts between September 2024 and September of 2025 eased deposit pricing pressure but remain at a level that allows adjustable rate loans to reprice higher than their previous rates. Also influential to the Company's results are a gain on the sale of an equity investment offset by a loss on the sale of securities in 2026, and a core system conversion completed during the second quarter of 2025, with core system conversion expense presented on the Consolidated Statements of Income. Expanded discussion of significant items for 2026 and 2025 is provided in subsequent sections. The following tab [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A (excerpt) Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/796534/000119312526128311/nksh-20251231.htm Complete FY 2025 MD&A: /company/NKSH/mda/fy2025/ Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Filing date: 2026-03-27 Report date: 2025-12-31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations $ in thousands, except per share data. The purpose of this discussion and analysis is to provide information about the results of operations, financial condition, liquidity and capital resources of the Company. The discussion should be read in conjunction with the material presented in Item 8, “Financial Statements and Supplementary Data,” of this Form 10-K. Subsequent events have been considered through the date of this Form 10-K. Cautionary Statement Regarding Forward-Looking Statements We make forward-looking statements in this Form 10-K that are subject to significant risks and uncertainties. These forward-looking statements include statements regarding our profitability, liquidity, allowance for credit losses, interest rate sensitivity, market risk, growth strategy, and financial and other goals, and are based upon our management’s views and assumptions as of the date of this report. The words “believes,” “expects,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends,” or other similar words or terms are intended to identify forward-looking statements. These forward-looking statements are based upon or are affected by factors that could cause our actual results to differ materially from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, effects of or changes in: • inflation and changes in interest rates that may reduce our margins or reduce the fair value of financial instruments, • the ability to maintain adequate liquidity by retaining deposit customers and secondary funding sources, especially if the Company’s or banking industry’s reputation becomes damaged, • the adequacy of the level of the Company’s allowance for credit losses, the amount of credit loss provisions required in future periods, and the failure of assumptions underlying the allowance for credit losses, • general and local economic conditions, • monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury, the OCC, the Federal Reserve, the CFPB and the FDIC, and the impact of any policies or programs implemented pursuant to financial reform legislation, • unanticipated increases in the level of unemployment in the Company’s market, • the quality or composition of the loan and/or investment portfolios, • our ability to maintain existing deposit relationships or attract new deposit relationships, • changes in consumer spending, borrowing and savings habits, • increased competition with other financial institutions and fintech companies, • demand for financial services in the Company’s market, • the real estate market in the Company’s market, • laws, regulations and policies impacting financial institutions, • technological risks and developments, and cyber-threats, attacks or events, • the Company’s technology initiatives, • geopolitical conditions, including trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to trade restrictions and tariffs, and acts or threats of terrorism and/or military conflicts, • the occurrence of significant natural disasters, including severe weather conditions, floods, health related issues, and other catastrophic events, • the Company's ability to identify, attract, and retain experienced management, relationship managers, and support personnel, particularly in a competitive labor environment, • performance by the Company’s counterparties or vendors, • applicable accounting principles, policies and guidelines, and • risks associated with mergers, acquisitions, and other expansion activities. These risks and uncertainties should be considered in evaluating the forward-looking statements contained in this report. We caution readers not to place undue reliance on those statements, which speak only as of the date of this report. This discussion and analysis should be read in conjunction with the description of our “Risk Factors” in Item 1A. of this Form 10-K. 21 Table of Contents Critical Accounting Policies The Company’s consolidated financial statements are prepared in accordance with GAAP. The financial information contained within our statements is, to a significant extent, based on measures of the financial effects of transactions and events that have already occurred. A variety of factors could affect the ultimate value obtained when earning income, recognizing expense, recovering an asset or relieving a liability. Although the economics of the Company’s transactions may not change, the timing of events that would impact the transactions could change. Critical accounting policies are most important to the portrayal of the Company’s financial condition or results of operations and require management’s most difficult, subjective, and complex judgments about matters that are inherently uncertain. If conditions occur that differ from our assumptions, depending upon the severity of such differences, the Company’s financial condition or results of operations may be materially impacted. The Company designates as critical those policies governing the ACLL and the pension plan. The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them as needed. ACLL The ACLL represents the Company's best estimate of current expected credit losses on loans over the expected life as of the measurement date. The estimation utilizes internal and peer historical credit loss experience, current conditions and reasonable and supportable forecasts. The results are also dependent upon management's selection of methodologies, loan credit risk ratings, and determination of the impact of internal and external variables. The Company employs a discounted cash flow ("DCF") model whereby cash flows are projected according to each loan's contractual terms and modified by internal historical prepayment rates. Cash flows are then discounted at the loan's effective interest rate, modified by loss rates determined using the probability of default ("PD") and loss given default ("LGD") sourced from internal and peer historical experience, and a forecast variable. Application of historical prepayment rates to project cash flows lowers the ACLL. Historical prepayment rates may not be representative of realized prepayment rates. Similarly, historical loss experience modified by the forecast variable may not be representative of realized loss experience. Key to loss rate application is the Company's risk grading system, which is governed by a robust policy. Loss rates are calculated and applied by risk grade. Management relies upon risk grades to identify loans with risk characteristics that are different from other loans within a segment. Loans graded special mention or classified and that exceed a value threshold are individually evaluated. If management determines that a borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. Specific reserves for other individually evaluated loans are estimated using a DCF approach. Cash flows are determined by analyzing the borrower's ability to repay and economic conditions affecting the borrower's industry, discounted at loss rates appropriate to the risk grade. The ultimate recoverability of the loan may be higher or lower than the specific reserve. The Company adjusts collectively-evaluated DCF model results for qualitative risk factors that are not inherent in historical losses, but are relevant in assessing expected credit losses within the loan portfolio. Risks considered include the impact of changes in (i) economic conditions, (ii) the nature and volume of the loan portfolio, (iii) the existence, growth and effect of any concentrations in credit, (iv) lending policies and procedures, including underwriting standards and practices, (v) the quality of the credit review function, (vi) the experience, ability and depth of lending management and staff, (vii) the volume and severity of past due loans, (viii) the value of underlying collateral for collateral-dependent loans, and (ix) other factors such as the regulatory, legal and competitive environments. Because of low loss rate history, statistical correlation between losses and qualitative risk factors is not possible and adjustments are based upon management judgment. Management assesses each factor and determines the adjustment to the ACLL based upon a documented and consistently applied methodology. Management's assessment my be higher or lower than actual impact. The estimation of the ACLL involves analysis of internal and external variables, methodologies, assumptions and management’s judgment and experience. These judgments are inherently subjective and actual losses could be greater or less than the estimate. Future estimates of the ACLL could increase or decrease based on changes in the financial condition of individual borrowers, concentrations of various types of loans, economic conditions or the markets in which collateral may be sold. The estimate of the ACLL determines the amount of provision expense and directly affects our financial results. Please refer to Note 1 and Note 5 of Notes to Consolidated Financial Statements for additional information. Pension Plan Pension obligations are determined through actuarial calculations based upon significant assumptions, including the IRS mortality table, an effective interest rate of 5.32% for December 31, 2025 and 5.24% for December 31, 2024, a discount rate of 5.50% for December 31, 2025 and 4.75% for December 31, 2024, anticipated rate of compensation increases of 4% for both reporting dates, and an expected long-term rate of return of 7.50% for both reporting dates. Actual outcomes could vary from the assumptions and result in underaccrual or overaccrual of pension obligations. Please refer to Note 1 and Note 8 of Notes to Consolidated Financial Statements for information on these and other accounting policies. 22 Table of Contents Performance Summary Key to understanding the Company’s results of operations and financial position is the interest rate environment, the core system conversion in 2025 and the acquisition of FCB in 2024. The Federal Reserve's interest rate cuts between September 2024 and December 2025 eased deposit pricing pressure for the fourth quarter of 2024 and the year ended December 31, 2025. The interest rate environment continues at a level that allows adjustable rate loans to reprice higher than their previous rates. The Company completed the core system conversion of both the former FCB and the legacy bank during the second quarter of 2025, with related expenses presented in core system conversion expense on the Consolidated Statements of Income. The acquisition of FCB on June 1, 2024 expanded the Company's footprint into desirable markets and increased its growth potential. The acquisition added to the balance sheet $118,743 in loans, $129,717 in deposits and $14,299 in equity. The Company also recorded one-time expenses of $2,916 and provision for credit loss of $1,290 associated with the merger. For more information on the acquisition, see Note 22: Business Combination. Summary information on results of operations, changes in key balances and asset quality is presented below. Expanded discussion is provided in subsequent sections. Summary Results of Operations The following tables present summary income, expenses and key performance indicators for the years indicated. Key performance indicators provide [Excerpt truncated for page length; the complete text is on the linked full-MD&A page.] Read the full FY 2025 MD&A: /company/NKSH/mda/fy2025/ All MD&A years: /company/NKSH/mda/ ## MD&A history Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page. - [FY 2024 MD&A](/company/NKSH/mda/fy2024/): filed 2025-03-28; accession 0000950170-25-046763 (https://www.sec.gov/Archives/edgar/data/796534/000095017025046763/nksh-20241231.htm) - [FY 2023 MD&A](/company/NKSH/mda/fy2023/): filed 2024-03-19; accession 0001437749-24-008428 (https://www.sec.gov/Archives/edgar/data/796534/000143774924008428/nksh20231231_10k.htm) - [FY 2022 MD&A](/company/NKSH/mda/fy2022/): filed 2023-03-10; accession 0001437749-23-006097 (https://www.sec.gov/Archives/edgar/data/796534/000143774923006097/nksh20221231_10k.htm) - [FY 2021 MD&A](/company/NKSH/mda/fy2021/): filed 2022-03-11; accession 0001437749-22-005975 (https://www.sec.gov/Archives/edgar/data/796534/000143774922005975/nksh20211231_10k.htm) ## Macro cross-references Indicators mapped to this company's SIC classification (industry 6021 National Commercial Banks) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim. - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity Macro-to-micro threads including this sector: [Interest rates & the Fed](/thread/interest-rates-fed/), [Money & trade](/thread/money-trade/), [Consumer & credit](/thread/consumer-credit/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/). All macro indicators: /indicators/ ## For LLMs & downloads Markdown twin: /company/NKSH.md · JSON record: /company/NKSH.json · verified financials: /company/NKSH/financials.json / /company/NKSH/financials.csv · machine TOC for the whole site: /llms.txt