National Bankshares, Inc. · NASDAQ:NKSH
National Bankshares — Investor Presentation (May 2024)
23 slides from National Bankshares's investor presentation, May 2, 2024
Slide 1: Successfully Executing Strategy to Drive Long-Term Value for All Shareholders
Successfully Executing Strategy to Drive Long-Term Value for All Shareholders
Slide 2: Forward-Looking Statements
Forward-Looking Statements National Barkshres, ie (he “Company” or wa") makes lorwardoling sateen this presentation tht are subject o significant sts and uncertainties. These lorwnndoolang seers inchide Yanctonts oparing Gur prlablay tps olomance for cre tases, ort oe snr, tart x grontstlegy, tris t
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This pretrial cvinaGiniil ilarinton earn by math ta than la scdondaie with wit principles Genaray wecepied nt ed Staten of Amercat (GAAP? Tne Companys management uses ese now GAAP finance! measures nts ara} of Ihe Companys perlrmance. These measures Qpreny cde nagibesard
Slide 4: Q1 2024 Highlights
Q1 2024 Highlights ROATCE Efficiency Ratio EPS CORE™ { v Reported netincome for the quarter (of $2.17 million or $0.37 per common share and core net income of $2.65 milion ‘or $0.45 per common share”? ¥ Earnings continue to be negatively impacted by higher interest rates and elevated deposit costs;
Slide 5: NKSH at a Glance
NKSH at a Glance $ incontinent tor A tavcte bch cont Financial Highlights (as of or for the quarter ended 3/31/2024) ches = — = Set A pnt ra Conon a
Slide 6: Delivering Exceptional Returns to Our Shareholders
Delivering Exceptional Returns to Our Shareholders Total Shareholder Return: January 2000 to March 2024 Francia covet Can Pandemic vB Fatout COEOTE As s ot A Ae Seng coma se 2 ees sevonghe 1/2097 20% aco toon pen nto
Slide 7: Consistently Growing Our Dividend
Consistently Growing Our Dividend ‘Common Dividends
Slide 8: Peer-Leading Efficiency
Peer-Leading Efficiency
Slide 9: Dominant Market Share in Our Core Markets
Dominant Market Share in Our Core Markets Market Branches in Depositsin Deposit %of County Rank Market Market ($M) Market Share Franchise Montgomery H 7 $683 234% 145.8%) Tazewell | 7 255 197% { | Pulaski t 3 198 39.4% eee arenes Giles } 3 157 615% P ee Wythe 1 99 12.4% | fepresenting } Radford (Cit
Slide 10: Deposit Base Well Positioned for Higher Rates
Deposit Base Well Positioned for Higher Rates FV Retail and small business-oriented deposit base NKSH Cost of Interest-Bearing Deposits vs Fed Funds! | ¥ Low deposit bea during las Fad tightening ecle | ¥ Limited reliance on time deposits and wholesale funding | | 7 Strong liquidity position - incre
Slide 11: Responsible Lending Drives Pristine Credit Quality
Responsible Lending Drives Pristine Credit Quality (Changin | | prcianaaaaia essai 2 co Wine. lial |v No lending to VCIPE industry | V Low LTVs and high DSCRe
Slide 12: Performance During Periods of Stress
Performance During Periods of Stress TSR: Financial Crisis Peak to Trough'’ ‘TSR: Financial Crisis Peak to Current id-19 Pandemic Peak to Trough’ TSR: Covid-19 Pandemic Peak to Current?) q 1 j I - UJ 7 aK = nas SeecwdPeenia) —— s8F US RR Boris Nest ‘Selected Peari2) Barks Fonlersesettsvenitepisens p
Slide 13: Peer-Leading Capital Levels and Return
| Peer-Leading Capital Levels and Return Actual Well Dividend Payout Ratio % NBB at 3/31/2024 Ratio | Capitalized ve sca alee Tier 1 Copital 17.29% 8.00% 2 eI ss a ‘Common Equity Tier 1 17.29% 6.50% Md SS Tn no fo 0 de 8 ‘7 NKSH and NBB possess robust regulatory capital levels | INNA Selected Peart)
Slide 14: Strong Financial Position Provides Optionality
Strong Financial Position Provides Optionality Organic Growth Mergers and + Contiguous and new markets flr more growth prospects thanlegeey Acquisitions wanes a nina seit oh Capital Return 7 nant testes cas’ Bont! Cocminby Bur ci ag te colony 25008 Chaloner VA, ¥ Will continue to weigh NOMISTANS Ade
Slide 15: Acquisition of Frontier Community Bank
| Acquisition of Frontier Community Bank
Slide 16: Frontier Community Bank Overview
Frontier Community Bank Overview Financial Highlights © Frontier Branch 30005) 2001 _2022__ 202301 2028 Tota Aasets $144701 sts0979 sssa16 $153422 Grows towne va77 1254s 13277012968 Denosts 127074 130487 126989130380 Lean / Deporte S92 967% TOLER 9K PAG? / Acts 005% —ag0K 0.00% 0.00% J Renee oars 10
Slide 17: Transaction Key Assumptions and Impact
Transaction Key Assumptions and Impact Transaction Terms * Frontier Community Bank to merge into The National Bank of Blacksburg + Ench share of Frontier common stockto be exchanged forthe right to receive ether 0.4250 shares of NKSH common stock or $14.48 in cash + Shareholder elections are subject
Slide 18: Pro Forma Overview
| Pro Forma Overview Key Highlights Pro Forma Branch Map TNKSH Branch (257) Ik NKSHLPO G3) Total Total Total Frontier Branch (3) Assets Loans Deposits ~$1.7B ~$980M ~$1.6B Pro Forma Loan Composition) Pro Forma Deposit Composition) [Real Estato Construction I Consumer Roa Estato [Hb Non-tntrost Beari
Slide 19: Transaction Rationale
Transaction Rationale Markets + Expands franchise into Strategic + Expands branch footprint around existing NKSH LPO. + Deploy our non lending products across Frontier's Financial + Financially competing transaction wth meaningful feamings accretion and ‘manageable TRV dilution + Mainzain exceptiona
Slide 20: Appendix
| Appendix
Slide 21: Peer Group Detail
Peer Group Detail NKSH Selected Peers' ‘ACNB Corporation First United Corporation ‘American National Bankshares Inc. Mid Penn Bancorp Amerisery Financial, ne. Ole Point Financial Corporation ‘C&F Financial Corporation Penns Woods Bancorp, Inc. Capstar Financial Holdings, Inc. Peoples Bancorp of Nort
Slide 22: Non-GAAP Reconciliations - Q1 2024
Non-GAAP Reconciliations - Q1 2024 “Tangible common equity: Tota stocenaders egy (GAAP) Less Goodwit angio cannon equity (non GAAP) Tangible assis: ‘Tota asents GAAP) leas: Goodwit Trangia assatsner-GAAP) ‘Tangs common wut (nonGAAP) Tangio assets ore GAAP) “Tang's common equ /tngise acets (non-GAAP)
Slide 23: Non-GAAP Reconciliations - Q1 2024
Non-GAAP Reconciliations - Q1 2024 ‘Unadjusted ROATCE: Net come (GAAP) $2,174 ‘Average tangible common equity (nom GAAP) 130391 Unadjusted ROATCE (non-GAAP) orm Core net income (non-GAAP) $2450, ‘Average tangle comnon eau (non GAAP) 330,91 Core ROATCE non-GAAP) 819% Unadjusted ROAA: Not come (GAAP)
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