SOURCE: National Bankshares, Inc.

October 14, 2005 16:30 ET

National Bankshares, Inc. Announces Third Quarter Earnings

BLACKSBURG, VA -- (MARKET WIRE) -- October 14, 2005 -- National Bankshares, Inc. (NASDAQ: NKSH) announced that it has posted net income of over $3.05 million for the third quarter. This translates to basic net income per share of $0.87. Year-to-date net income at September 30 was nearly $9.20 million, slightly above the $9.11 million that was reported on September 30, 2004. Net loans, at $493.24 million, grew by 5.79% when compared with the $466.26 million in net loans at the end of the third quarter in 2004. The ratio of non-performing loans to total loans on September 30 was 0.05%, down from 0.10% last year. Total assets at the end of the third quarter were nearly $828.91 million, up by 5.92% over the same period last year.

In discussing year-to-date results, James G. Rakes, Chairman, President & CEO of National Bankshares, Inc., noted, "We are experiencing some compression of the net interest margin in this rising interest rate environment, and it has impacted earnings. Loan demand remains strong, particularly in our New River Valley markets, and measures of loan quality are solid. Despite the challenging rate environment and higher non-interest expense attributable to recent acquisitions, we are pleased to post earnings that are ahead of 2004. At National Bankshares, we believe that success comes from focusing on our strengths. Our employees are committed to community banking. They are friendly professionals who provide a full range of financial products and services to our customers at convenient offices, over the phone and on the Internet."

National Bankshares, Inc. is a financial holding company with headquarters in Blacksburg, Virginia. Its two community bank subsidiaries, The National Bank of Blacksburg and Bank of Tazewell County, operate from 26 offices throughout Southwest Virginia. The company also has a non-bank subsidiary, National Bankshares Financial Services, Inc., which does business as National Bankshares Investment Services and National Bankshares Insurance Services. National Bankshares, Inc. stock trades on the Nasdaq Stock Market under the symbol "NKSH". Additional information is available on the company's web site at www.nationalbankshares.com.

        National Bankshares, Inc. And Subsidiaries
(000's), except ratios and percent data
Three months ending                  September 30, September 30,  Change
                                          2005        2004
                                       ----------  ----------  ----------
Selected Consolidated Data :
Interest income                        $   11,483  $   10,841        5.92%
Interest expense                            3,816       2,904       31.40%
Net interest income                         7,667       7,937       -3.40%
Provision for loan losses                     169         293      -42.32%
Trust income                                  326         274       18.98%
Other noninterest income                    1,566       1,591       -1.57%
Salary and benefits                         2,822       2,723        3.64%
Occupancy expense                             491         473        3.81%
Amortization of intangibles                   283         233       21.46%
Other noninterest expense                   1,783       1,846       -3.41%
Income taxes                                 -957      -1,019       -6.08%
Net income                             $    3,054  $    3,215       -5.01%
Basic net income per share             $     0.87  $     0.91      -$0.04

Daily averages:
Gross loans                            $  497,152  $  472,495        5.22%
Loans,net                              $  490,614  $  465,806        5.33%
Total securities                          261,951     256,727        2.03%
Total deposits                            728,295     697,119        4.47%
Other borrowings                               70       1,086      -93.55%
Stockholders' equity                       91,071      83,919        8.52%
Cash and due From                          16,077      17,223       -6.65%
Interest-earning assets                   775,015     736,198        5.27%
Interest-bearing liabilities              615,276     603,017        2.03%
Intangible assets                          17,554      17,659       -0.59%
Total assets                              823,188     786,220        4.70%

Financial ratios: Note (1)
Return on average assets                     1.47%       1.63%      -0.16
Return on average equity                    13.30%      15.24%      -1.94
Net interest margin                          4.31%       4.70%      -0.39
Efficiency ratio                                -           -           -
Average equity to average assets            11.06%      10.67%       0.39
 Note (1)  Ratio change measured in bp

Allowance for loan losses:
Beginning balance                      $    5,632  $    5,886       -4.32%
Provision for losses                          169         293      -42.32%
Charge-offs                                  -227        -411      -44.77%
Recoveries                                     46          67      -31.34%
Acquisition of CNB                              -           -
Ending balance                         $    5,620  $    5,835       -3.68%

Year to Date                         September 30, September 30,  Change
                                          2005        2004
                                       ----------  ----------  ----------
Selected Consolidated Data :
Interest income                        $   33,786  $   30,655       10.21%
Interest expense                           10,085       8,162       23.56%
Net interest income                        23,701      22,493        5.37%
Provision for loan losses                     557         885      -37.06%
Trust income                                1,062       1,105       -3.89%
Other noninterest income                    4,525       4,180        8.25%
Salary and benefits                         8,534       7,815        9.20%
Occupancy expense                           1,450       1,337        8.45%
Amortization of intangibles                   832         699       19.03%
Other noninterest expense                   5,843       5,159       13.26%
Income taxes                               -2,873      -2,772        3.64%
Net income                             $    9,199  $    9,111        0.97%
Basic net income per share             $     2.62  $     2.59  $     0.03
Fully diluted net income per share              -           -           -
Dividends per share                             -           -           -
Dividend payout ratio                           -           -           -
Book value per share                   $    26.39       24.81  $     1.58

Balance sheet at period-end:
Gross loans                            $  499,787  $  472,958        5.67%
Loans, net                             $  493,240  $  466,256        5.79%
Total securities                          263,943     255,841        3.17%
Cash and due From                          17,114      16,206        5.60%
Total deposits                            732,177     690,291        6.07%
Other borrowings                              623       2,214      -71.86%
Stockholders' equity                       92,670      87,270        6.19%
Intangible assets                          17,397      17,565       -0.96%
Total assets                              828,907     782,613        5.92%

Daily averages:
Gross loans                            $  492,908  $  434,943       13.33%
Loans, net                             $  486,338  $  405,903       19.82%
Total securities                          261,033     226,692       15.15%
Cash and due From                          15,464      13,952       10.84%
Total deposits                            719,797     615,958       16.86%
Other borrowings                              758         195      288.72%
Stockholders' equity                       89,819      76,648       17.18%
Interest-earning assets                   766,392     659,963       16.13%
Interest-bearing liabilities              606,678     537,631       12.84%
Intangible assets                          17,519      12,445       40.77%
Total assets                              814,827     695,291       17.19%

Financial ratios: Note (1)
Return on average assets                     1.51%       1.64%      -0.13
Return on average equity                    13.69%      14.60%      -0.91
Net interest margin                          4.53%       4.73%      -0.20
Efficiency ratio                            52.84%      50.01%       2.83
Average equity to average assets            11.02%      11.02%       0.00
 Note (1)  Ratio change measured in bp

Allowance for loan losses:
Beginning balance                      $    5,729  $    5,369        6.71%
Provision for losses                          557         885      -37.06%
Charge-offs                                  -812      -1,091      -25.57%
Recoveries                                    146         174      -16.09%
Acquisition of CNB                              -         498     -100.00%
Ending balance                         $    5,620  $    5,835       -3.68%

Nonperforming assets:
Nonaccrual loans                       $      251  $      478      -47.49%
Restructured loans                              -           -           -
Total nonperforming loans Note (2)            251         478      -47.49%
Other real estate owned                       429       1,010      -57.52%
Total nonperforming assets             $      680  $    1,488      -54.30%

Asset quality ratios: Note (3)
Nonperforming loans to total loans           0.05%       0.10%      -0.05
Allowance for loan losses to total
 loans                                       1.13%       1.24%      -0.11
Allowance for loan losses                       -           -           -
to nonperforming loans                    2239.04%    1220.71%    1018.33
 Note (2)  Loans 90 days past due or more not included
 Note (3)  Ratio change measured in bp

Contact Information

  • CONTACTS:
    James G. Rakes
    President & CEO
    (540) 951-6236

    J. Robert Buchanan
    Treasurer
    (276) 979-0341