FOR IMMEDIATE RELEASE
CONTACTS: James G. Rakes, Chairman, President & CEO (540) 951-6236
J. Robert Buchanan, Treasurer (276) 979-0341
NATIONAL BANKSHARES, INC.
REPORTS RECORD SECOND QUARTER EARNINGS
BLACKSBURG, VA, July 11, 2003: National Bankshares, Inc. (Nasdaq SmallCap
Market: NKSH) today reported record year-to-date net income of over $5.43
million on June 30, 2003. This total is 16.81% higher than the $4.65 million in
net earnings reported at the end of the second quarter in 2002. Total assets at
quarter-end were $707.38 million, up by 8.86% over the same period last year.
These results translate to a return on average assets of 1.58% and a return on
average equity of 14.44%.
James G. Rakes, Chairman, President & CEO of National Bankshares said, "Even
though interest income totals have been steadily declining with falling interest
rates, we have been able to maintain a healthy net interest margin because
interest expense has been dropping as well. We believe it is important to share
this success with our stockholders. So, on June 2 we paid a semi-annual dividend
of $0.54 per share, which is 17.39% higher than the dividend that was paid in
June, 2002. We are certainly pleased with results at the mid-point of the year."
The Company also reported net loans of over $412.51 million, a slight increase
from the $410.25 million at June 30 last year. On June 30, 2003 the ratio of
non-performing loans to total loans was a low 0.03 %, and the allowance for loan
losses to total loans was at 1.31%.
National Bankshares, Inc. is the parent company of two historic community banks
that operate 23 branches throughout Southwest Virginia. The National Bank was
founded in Blacksburg in 1891, and Bank of Tazewell County has been in Tazewell
since 1889. The Company also has a non-bank financial services subsidiary which
does business in the same market as National Bankshares Investment Services and
National Bankshares Insurance Services. Shares of National Bankshares, Inc. are
traded on the Nasdaq Stock Market under the symbol "NKSH". Additional
information is available at www.nationalbankshares.com.
(unaudited tables follow)
1
National Bankshares, Inc. And Subsidiaries
(000's), except ratios and Three months Three months
percent data ending ending Year-to-date Year-to-date
June 30, 2003 June 30, 2002 Change June 30, 2003 June 30, 2002 Change
Selected Consolidated Data:
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Interest income $10,396 10,645 -2.34% $20,872 $21,239 -1.73%
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Interest expense 3,256 3,960 -17.78% 6,734 8,226 -18.14%
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Net interest income 7,140 6,685 6.81% 14,138 13,013 8.65%
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Provision for loan losses 402 546 -26.37% 842 1,192 -29.36%
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Noninterest income 1,504 1,546 -2.72% 2,873 2,915 -1.44%
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Noninterest expense 4,569 4,348 5.08% 9,136 8,737 4.57%
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Income taxes 872 790 10.38% 1,600 1,348 18.69%
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Net income $2,801 2,547 9.97% $5,433 4,651 16.81%
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Basic net income per share $0.80 0.72 $0.08 $1.55 .13 $0.23
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Fully diluted net income per
share --- --- --- --- --- ---
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Dividends per share --- --- --- --- --- ---
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Dividend payout ratio --- --- --- --- --- ---
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Book value per share --- --- --- $22.34 19.79 $2.55
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Balance sheet at period-end:
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Loans, net --- --- --- $412,511 410,246 0.55%
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Total securities --- --- --- 230,560 191,014 20.70%
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Total deposits --- --- --- 625,847 578,037 8.27%
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Other borrowings --- --- --- 521 321 62.31%
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Stockholders' equity --- --- --- 78,471 69,478 12.94%
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Total Assets --- --- --- 707,381 649,823 8.86%
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Daily averages:
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Loans,net $407,415 406,119 0.32% $404,174 402,256 0.48%
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Total securities 228,010 186,308 22.38% 225,590 186,913 20.69%
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Total deposits 620,838 575,750 7.83% 615,646 572,071 7.62%
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Other borrowings 167 97 72.16% 203 292 -30.48%
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Stockholders' equity 77,091 68,449 12.63% 75,849 67,651 12.12%
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Interest-earning assets 668,267 612,585 9.09% 655,612 608,218 7.79%
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Interest-bearing liabilities 533,088 500,930 6.42% 538,726 499,505 7.85%
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Total Assets 700,575 646,533 8.36% 694,276 642,400 8.08%
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Financial ratios: Note (1)
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Return on average assets 1.60% 1.58% 0.02 1.58% 1.46% 0.12
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Return on average equity 14.57% 14.92% -0.35 14.44% 13.86% 0.58
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Net interest margin --- --- --- 4.81% 4.72% 0.09
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Efficiency ratio --- --- --- 49.34% 50.97% -1.63
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Average equity to average
assets 11.00% 10.59% 0.42 10.92% 10.53% 0.39
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Note (1) Ratio change measured in bp
Allowance for loan losses:
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Beginning balance $5,390 $4,614 16.82% $5,092 $4,272 19.19%
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Provision for losses 402 546 -26.37% 842 1,192 -29.36%
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Charge-offs -333 -354 -5.93% -602 -698 -13.75%
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Recoveries 34 37 -8.11% 161 77 109.09%
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Ending balance $5,493 $4,843 13.42% $5,493 $4,843 13.42%
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Nonperforming assets:
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Nonaccrual loans --- --- --- $106 $579 -81.69%
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Restructured loans --- --- --- --- --- ---
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Total nonperforming loans --- --- --- 106 579 -81.69%
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Other real estate owned --- --- --- 743 301 146.84%
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Total nonperforming assets --- --- --- $849 $880 -3.52%
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Asset quality ratios: Note (2)
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Nonperforming loans to total
loans --- --- --- 0.03% 0.14% -0.11
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Allowance for loan losses to --- --- --- 1.31% 1.17% 0.14
total loans
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Allowance for loan losses --- --- --- --- --- ---
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to nonperforming loans --- --- --- 5182.08% 836.44% 4345.64
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Note (2) Ratio change measured in bp
2