SOURCE: National Bankshares, Inc.

National Bankshares, Inc.

April 14, 2011 16:30 ET

National Bankshares, Inc. Reports Higher First Quarter Income

BLACKSBURG, VA--(Marketwire - Apr 14, 2011) - Today, National Bankshares, Inc. (NASDAQ: NKSH) announced net income of over $4.02 million for the quarter ended March 31, 2011. Net income is $255,000, or nearly 6.77%, above the total reported for the first quarter of 2010. Basic net income per share was $0.58, which compares with $0.54 for the first three months last year. The return of average assets for the first quarter was 1.60%, and it was 1.57% for the three months ended March 31, 2010. The return on average equity was 12.44% and 12.27% for the same two periods. Total loans at quarter-end, at $588.88 million, were down slightly from the total of $589.13 million at the end of March last year, but were up from $577.39 million reported at December 31, 2010. At March 31, 2011, the Company had total assets of $1.03 billion, an increase of 3.40% over the end of the first quarter of 2010 and up slightly from total assets of $1.02 billion at year-end.

National Bankshares' Chairman, President & CEO James G. Rakes commented, "The stable interest rate environment during the first quarter of the year allowed us to maintain a healthy net interest margin, which resulted in an increase in net interest income. We have seen some tentative signs that the economic recovery may be reaching our market area, but loan demand remains slower than we would like and some customers continue to struggle. Our lenders have been working with these customers to try to help them through their difficulties. We are still prudently funding the provision for loan losses as we look forward to indications of a sustained recovery."

National Bankshares, Inc., headquartered in Blacksburg, Virginia, is the parent company of National Bank of Blacksburg, which does business as National Bank, and of National Bankshares Financial Services, Inc. National Bank is a community bank operating from 25 offices throughout Southwest Virginia. National Bankshares Financial Services, Inc. is an investment and insurance subsidiary in the same trade area. The Company's stock is traded on the NASDAQ Capital Market under the symbol "NKSH". Additional information is available at www.nationalbankshares.com.

Forward-Looking Statements

Certain statements in this press release may be "forward-looking statements." Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results that are not statements of historical fact and that involve significant risks and uncertainties. Although the Company believes that its expectations with regard to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual Company results will not differ materially from any future results implied by the forward-looking statements. Actual results may be materially different from past or anticipated results because of many factors, some of which may include changes in economic conditions, the interest rate environment, legislative and regulatory requirements, new products, competition, changes in the stock and bond markets and technology. The Company does not update any forward-looking statements that it may make.

                National Bankshares, Inc. and Subsidiaries
                        Consolidated Balance Sheet
                                (Unaudited)



($ in thousands, except for per       March 31,    March 31,   December 31,
 share data)                            2011         2010         2010
                                     -----------  -----------  -----------
Assets
Cash and due from banks              $    11,800  $    11,744  $     9,858
Interest-bearing deposits                 55,674       55,706       69,400
Federal funds sold                           ---          ---          ---
Securities available for sale            190,844      161,543      184,907
Securities held to maturity              132,669      125,547      131,000
                                     -----------  -----------  -----------
    Total securities                     323,513      287,090      315,907
                                     -----------  -----------  -----------
Mortgage loans held for sale                 ---        1,358        2,460
Loans:
  Real estate construction loans          48,671       47,245       46,169
  Real estate mortgage loans             173,785      165,604      173,533
  Commercial and industrial loans        280,607      284,242      269,818
  Consumer loans                          85,816       92,035       87,868
                                     -----------  -----------  -----------
    Total loans                          588,879      589,126      577,388
  Less: unearned income and
   deferred fees                            (977)      (1,052)        (945)
                                     -----------  -----------  -----------
    Loans, net of unearned income
     and deferred fees                   587,902      588,074      576,443
  Less: allowance for loan losses         (8,245)      (7,141)      (7,664)
                                     -----------  -----------  -----------
    Loans, net                           579,657      580,933      568,779
                                     -----------  -----------  -----------
Bank premises and equipment, net          10,366       10,729       10,470
Accrued interest receivable                6,514        6,186        6,016
Other real estate owned                    2,222        2,567        1,723
Intangible assets                         11,272       12,355       11,543
Other assets                              25,645       24,276       26,082
                                     -----------  -----------  -----------
    Total assets                     $ 1,026,663  $   992,944  $ 1,022,238
                                     ===========  ===========  ===========

Liabilities and Stockholders' Equity
Noninterest-bearing deposits         $   136,769  $   116,153  $   131,540
Interest-bearing demand deposits         372,470      325,214      365,040
Savings deposits                          58,273       53,977       55,800
Time deposits                            318,383      362,124      332,203
                                     -----------  -----------  -----------
    Total deposits                       885,895      857,468      884,583
                                     -----------  -----------  -----------
Other borrowed funds                         ---          ---          ---
Accrued interest payable                     260          392          257
Other liabilities                          6,843        8,580        8,211
                                     -----------  -----------  -----------
    Total liabilities                    892,998      866,440      893,051
                                     -----------  -----------  -----------

Stockholders' Equity
Preferred stock of no par value.
 Authorized 5,000,000 shares; none
 issued and outstanding                      ---          ---          ---
Common stock of $1.25 par value.
 Authorized 10,000,000 shares;issued
 and outstanding 6,935,974 shares at
 March 31, 2011 and 6,933,474 at
 December 31, 2010                         8,670        8,667        8,667
Retained earnings                        127,218      117,670      123,161
Accumulated other comprehensive
 income (loss), net                       (2,223)         167       (2,641)
                                     -----------  -----------  -----------
    Total stockholders' equity           133,665      126,504      129,187
                                     -----------  -----------  -----------
      Total liabilities and
       stockholders' equity          $ 1,026,663  $   992,944  $ 1,022,238
                                     ===========  ===========  ===========





                National Bankshares, Inc. and Subsidiaries
                    Consolidated Statements of Income
                                (Unaudited)



                                                     Three Months Ended
                                                   March 31,    March 31,
($ in thousands, except for per share data)           2011         2010
                                                  ------------ -----------
Interest Income
Interest and fees on loans                        $      9,095 $     9,176
Interest on federal funds                                  ---         ---
Interest on interest-bearing deposits                       32          19
Interest on securities- taxable                          1,662       1,443
Interest on securities- nontaxable                       1,676       1,602
                                                  ------------ -----------
  Total interest income                                 12,465      12,240
                                                  ------------ -----------

Interest Expense
Interest on time deposits of $100,000 or more              561         946
Interest on other deposits                               1,818       2,033
Interest on borrowed funds                                 ---         ---
                                                  ------------ -----------
  Total interest expense                                 2,379       2,979
                                                  ------------ -----------
  Net interest income                                   10,086       9,261
Provision for loan losses                                  800         647
                                                  ------------ -----------
  Net interest income after provision for loan
   losses                                                9,286       8,614
                                                  ------------ -----------

Noninterest Income
Service charges on deposit accounts                        612         714
Other service charges and fees                              58          47
Credit card fees                                           733         666
Trust income                                               246         269
Bank-owned life insurance                                  184         185
Other income                                                91         104
Realized securities gains (losses), net                     10         (14)
                                                  ------------ -----------
  Total noninterest income                               1,934       1,971
                                                  ------------ -----------

Noninterest Expense
Salaries and employee benefits                           2,904       2,856
Occupancy and furniture and fixtures                       423         491
Data processing and ATM                                    444         357
FDIC assessment                                            346         263
Credit card processing                                     586         508
Intangibles and goodwill amortization                      271         271
Net costs of other real estate owned                       134          33
Franchise taxes                                            242         239
Other operating expenses                                   734         766
                                                  ------------ -----------
  Total noninterest expense                              6,084       5,784
                                                  ------------ -----------
Income before income tax expense                         5,136       4,801
Income tax expense                                       1,112       1,032
                                                  ------------ -----------
  Net income                                      $      4,024 $     3,769
                                                  ============ ===========

Basic net income per share                        $       0.58 $      0.54
                                                  ============ ===========
Fully diluted net income per share                $       0.58 $      0.54
                                                  ============ ===========
Weighted average outstanding number of common
 shares
  Basic                                              6,933,780   6,933,474
                                                  ============ ===========
  Diluted                                            6,957,450   6,952,812
                                                  ============ ===========
Dividends declared per share                               ---         ---
                                                  ============ ===========
Dividend payout ratio                                      ---         ---
                                                  ============ ===========
Book value per share                              $      19.27 $     18.25
                                                  ============ ===========





                        Key Ratios and Other Data
                                (Unaudited)


                                                       Three Months Ended
                                                       March 31,  March 31,
Average Balances                                         2011       2010
                                                      ---------  ---------
Cash and due from banks                               $  11,420  $  11,197
Interest-bearing deposits                                54,089     34,866
Securities available for sale                           187,510    163,438
Securities held to maturity                             132,322    125,448
Mortgage loans held for sale                                696        619
Gross loans                                             585,444    589,379
Loans, net                                              576,614    581,296
Intangible assets                                        11,428     12,511
Total assets                                          1,016,979    971,844
Total deposits                                          877,294    838,697
Other borrowings                                            ---        ---
Stockholders' equity                                    131,191    124,529
Interest-earning assets                                 959,550    909,654
Interest-bearing liabilities                            747,612    723,107

Financial ratios
Return on average assets                                   1.60%      1.57%
Return on average equity                                  12.44%     12.27%
Net interest margin                                        4.68%      4.57%
Net interest income - fully taxable equivalent        $  11,066  $  10,142
Efficiency ratio                                          46.84%     47.70%
Average equity to average assets                          12.90%     12.81%

Allowance for loan losses
Beginning balance                                     $   7,664  $   6,926
Provision for losses                                        800        647
Charge-offs                                                (243)      (456)
Recoveries                                                   24         24
                                                      ---------  ---------
Ending balance                                        $   8,245  $   7,141
                                                      =========  =========





                            Asset Quality Data
                                (Unaudited)

                                                        March 31, March 31,
Nonperforming assets                                      2011      2010
                                                        --------  --------
Nonaccrual loans                                        $  2,339  $  7,743
Restructured loans                                         6,198       ---
                                                        --------  --------
Total nonperforming loans                                  8,537     7,743
Other real estate owned                                    2,222     2,567
                                                        --------  --------
Total nonperforming assets                              $ 10,759  $ 10,310
                                                        ========  ========
Loans 90 days or more past due                          $  1,078  $  2,217
                                                        ========  ========

Asset quality ratios
Nonperforming assets to loans net of unearned income
 and deferred fees, plus other real estate owned            1.82%     1.75%
Allowance for loan losses to total loans                    1.40%     1.21%
Allowance for loan losses to nonperforming loans           96.58%    92.23%
Loans past due 90 days or more to loans net of unearned
 income and deferred fees                                   0.18%     0.38%


Contact Information

  • CONTACTS:
    JAMES G. RAKES
    CHAIRMAN, PRESIDENT & CEO
    (540) 951-6236
    Email Contact

    DAVID K. SKEENS
    TREASURER & CFO
    (540) 951-6347
    Email Contact