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FOR IMMEDIATE RELEASE
CONTACTS: JAMES G. RAKES, CHAIRMAN, PRESIDENT & CEO
(540) 951-6236 jrakes@nbbank.com
DAVID K. SKEENS, TREASURER & CFO
(540) 951-6347 dskeens@nbbank.com
NATIONAL BANKSHARES, INC. POSTS
HIGHER THIRD QUARTER EARNINGS
BLACKSBURG, VA, October 15, 2009: National Bankshares, Inc. (NASDAQ Capital Market: NKSH) reported today that the Company had total net income of $3.78 million for the three months ended September 30, 2009. This compares with net income of nearly $3.62 million for the same period in 2008. Year-to-date net income for September 30, 2009, was $10.52 million, up over the $10.27 million that National Bankshares, Inc. reported at the end of the third quarter in 2008. This translates to quarterly basic net income per share of $0.55 and year-to-date net income per share of $1.52, as compared with $0.52 and $1.48, respectively, last year. Net loans at the end of the third quarter of 2009 totaled $575.19 million, a 6.24% increase over the total on September 30, 2008. The Company, a financial holding company that is the parent of the National Bank of Blacksburg of Blacksburg, Virginia, ended the third quarter with total assets of nearly $965.89 million, up by 7.05% over the same period in 2009.
The Company’s Chairman, President and CEO, James G. Rakes, said, “I am very pleased to report that National Bankshares, Inc. posted higher third quarter and year-to-date net income. This is a real achievement in a difficult economy, especially when the Company’s FDIC Deposit Insurance Fund assessments increased from $90,000 at September 30, 2008 to nearly $1.43 million at September 30, 2009. Even though the FDIC assessments have negatively affected all banks’ earnings, it is important that the banking industry take whatever steps are necessary to be certain that the Deposit Insurance Fund remains strong.” Mr. Rakes continued, “Because of its conservative and traditional approach to banking and financial services, National Bankshares, Inc. has been successful to date in negotiating the challenges of the economic downturn. As you would expect, we have experienced an increase in nonperforming assets as an effect of the slow economy. However, nonperforming assets remain manageable, and the total compares well with peers. At National Bankshares, Inc., we understand that we are likely to face more challenges before the economy fully recovers. In the meantime, we are prepared to help our customers and our communities by continuing to make good loans and by safeguarding their deposits in a sound and very well-capitalized bank.”
National Bankshares, Inc. is the parent of the 118 year-old National Bank of Blacksburg, which does business as National Bank from 25 offices in Southwest Virginia. The Company has a financial services subsidiary that serves the same markets as National Bankshares Investment Services and National Bankshares Insurance Services. Company stock is traded on the NASDAQ Capital Market under the symbol “NKSH”. Additional information can be found 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 SubsidiariesConsolidated Balance Sheet
(Unaudited) (Unaudited) ($ in thousands, except for per share data) September 30,2009 September 30,2008 December 31,2008Assets Cash and due from banks $ 11,891 $ 16,511 $ 16,316 Interest-bearing deposits 22,935 12,257 29,656 Federal funds sold --- --- --- Securities available for sale 169,457 151,592 147,227 Securities held to maturity 132,786 127,108 117,772 Total securities 302,243 278,700 264,999 Mortgage loans held for sale 628 95 348 Loans: Real estate construction loans 47,671 63,880 60,798 Real estate mortgage loans 167,589 144,510 162,757 Commercial and industrial loans 268,868 232,648 246,218 Consumer loans 98,632 106,914 106,907 Total loans 582,760 547,952 576,680 Less: unearned income and deferred fees (1,119 ) (1,113 ) (1,123 ) Loans, net of unearned income and deferred fees 581,641 546,839 575,557 Less: allowance for loan losses (6,453 ) (5,435 ) (5,858 ) Loans, net 575,188 541,404 569,699 Bank premises and equipment, net 10,734 11,470 11,204 Accrued interest receivable 6,322 6,001 5,760 Other real estate owned 1,944 1,037 1,984 Intangible assets 12,897 13,997 13,719 Other assets 21,106 20,811 21,689 Total assets $ 965,888 $ 902,283 $ 935,374 Liabilities and Stockholders' Equity Noninterest-bearing deposits $ 122,519 $ 113,936 $ 109,630 Interest-bearing demand deposits 277,884 235,809 256,416 Savings deposits 50,241 46,453 45,329 Time deposits 385,229 389,788 406,473 Total deposits 835,873 785,986 817,848 Other borrowed funds 46 56 54 Accrued interest payable 473 636 655 Other liabilities 8,025 6,132 6,709 Total liabilities 844,417 792,810 825,266 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 6,933,474 shares at September 30, 2009, 6,926,974 shares at
September 30, 2008 and 6,929,474 shares at December 31, 20088,667 8,659 8,662 Retained earnings 113,087 104,843 105,356 Accumulated comprehensive income (283 ) (4,029 ) (3,910 ) Total stockholders' equity 121,471 109,473 110,108 Total liabilities and stockholders' equity $ 965,888 $ 902,283 $ 935,374
National Bankshares, Inc. and SubsidiariesConsolidated Statements of Income(Unaudited)
Three Months Ended Nine Months Ended September 30,2009 September 30,2008 September 30,2009 September 30,2008($ in thousands, except for per share data) Interest Income Interest and fees on loans $ 9,316 $ 9,196 $ 28,170 $ 27,682 Interest on federal funds --- --- --- --- Interest on interest-bearing deposits 23 36 73 426 Interest on securities - taxable 1,600 1,726 4,766 5,175 Interest on securities - nontaxable 1,677 1,451 4,896 4,309 Total interest income 12,616 12,409 37,905 37,592 Interest Expense Interest on time deposits 1,379 1,323 4,363 4,502 Interest on other deposits 2,496 2,865 8,197 9,904 Interest on borrowed funds 1 7 2 11 Total interest expense 3,876 4,195 12,562 14,417 Net interest income 8,740 8,214 25,343 23,175 Provision for loan losses 305 280 953 515 Net interest income after provision for loan losses 8,435 7,934 24,390 22,660 Noninterest Income Service charges on deposit accounts 865 930 2,506 2,502 Other service charges and fees 107 88 263 250 Credit card fees 723 728 2,060 2,101 Trust income 255 307 792 929 Bank owned life insurance 201 144 554 446 Other income 78 87 263 314 Realized securities gains/(losses), net (17 ) (76 ) 53 189 Total noninterest income 2,212 2,208 6,491 6,731 Noninterest Expense Salaries and employee benefits 2,784 2,792 8,409 8,395 Occupancy and furniture and fixtures 450 437 1,344 1,328 Data processing and ATM 380 355 1,016 1,033 FDIC assessment 423 47 1,429 90 Credit card processing 550 546 1,551 1,570 Intangibles and goodwill amortization 271 279 822 841 Net costs of other real estate owned 29 52 100 64 Franchise taxes 221 208 666 619 Other operating expenses 783 815 2,364 2,354 Total noninterest expense 5,891 5,531 17,701 16,294 Income before income tax expense 4,756 4,611 13,180 13,097 Income tax expense 976 996 2,656 2,832 Net income $ 3,780 $ 3,615 $ 10,524 $ 10,265 Basic net income per share $ 0.55 $ 0.52 $ 1.52 $ 1.48 Fully diluted net income per share $ 0.54 $ 0.52 $ 1.52 $ 1.48 Weighted average outstanding number of common shares Basic 6,933,474 6,926,974 6,931,672 6,930,133 Diluted 6,948,083 6,932,438 6,942,712 6,937,018 Dividends declared per share --- --- $ 0.41 $ 0.39 Dividend payout ratio --- --- 27.01 26.32 Book value per share --- --- $ 17.52 $ 15.80
Key Ratios and Other Data(Unaudited)
Three Months Ended Nine Months Ended Average Balances September 30,2009 September 30,2008 September 30,2009 September 30,2008Cash and due from banks $ 11,368 $ 12,789 $ 11,886 $ 12,848 Interest-bearing deposits 34,418 7,607 38,706 22,011 Securities available for sale 169,149 156,309 166,446 160,312 Securities held to maturity 135,419 128,915 131,888 123,590 Mortgage loans held for sale 636 356 901 391 Gross loans 579,248 540,911 577,262 531,914 Loans, net 571,837 534,504 570,014 525,577 Intangible assets 13,053 14,158 13,324 14,436 Total assets 974,574 892,260 972,363 894,544 Total deposits 848,836 775,614 849,255 779,078 Other borrowings 48 1,004 50 379 Stockholders' equity 117,868 108,974 115,337 108,297 Interest-earning assets 916,773 831,899 914,332 836,105 Interest-bearing liabilities 730,628 661,912 735,764 666,185 Financial ratios Return on average assets 1.56 % 1.61 % 1.45 % 1.53 % Return on average equity 12.86 % 13.20 % 12.20 % 12.66 % Net interest margin 4.26 % 4.34 % 4.13 % 4.11 % Net interest income - fully taxable equivalent $ 9,735 $ 9,084 $ 28,265 $ 25,743 Efficiency ratio 49.24 % 48.65 % 50.93 % 50.17 % Average equity to average assets 12.09 % 12.21 % 11.86 % 12.11 % Allowance for loan losses Beginning balance $ 6,284 $ 5,267 $ 5,858 $ 5,219 Provision for losses 305 280 953 515 Charge-offs (168 ) (127 ) (422 ) (409 ) Recoveries 32 15 64 110 Ending balance $ 6,453 $ 5,435 $ 6,453 $ 5,435 Asset Quality Data(Unaudited)
Nonperforming assets September 30,2009 September 30,2008Nonaccrual loans $ 3,888 $ 2,003 Restructured loans --- --- Total nonperforming loans 3,888 2,003 Other real estate owned 1,944 1,037 Total nonperforming assets $ 5,832 $ 3,040 Loans 90 days or more past due $ 2,153 $ 1,324 Asset quality ratios Nonperforming loans to loans net of unearned income and deferred fees, plus other real estate owned0.67 % 0.37 % Allowance for loan losses to total loans 1.11 % 0.99 % Allowance for loan losses to nonperforming loans 165.97 % 271.34 % Loans past due 90 days or more to loans net of unearned income and deferred fees 0.37 % 0.24 %