FOR IMMEDIATE RELEASE
CONTACTS: James G. Rakes, Chairman, President & CEO (540) 951-6236
J. Robert Buchanan, Treasurer (276) 979-0341
NATIONAL BANKSHARES, INC.
ANNOUNCES EXCELLENT THIRD QUARTER EARNINGS
BLACKSBURG, VA, October 17, 2003: National Bankshares, Inc. (Nasdaq SmallCap
Market: NKSH) announced today that the Company posted record year-to-date net
income of more than $8.34 million on September 30, 2003. Net income is 13.32%
above the year-to-date total at the end of the third quarter one year ago. Total
assets at September 30, 2003 were nearly $699.57 million, down slightly from the
$707.38 reported at June 30, but 4.78% higher than last year at this time. These
results translate to a return on average assets of 1.60% and a return on average
equity of 14.55%.
National Bankshares had net loans at quarter end of $407.03 million, a slight
decline from the $410.39 million on September 30 in 2002. The ratio of
non-performing loans to total loans on September 30 was a low 0.05%, and the
allowance for loan losses to total loans was at 1.33%.
James G. Rakes, the Chairman, President & CEO of National Bankshares, Inc.,
said, "This year's solid earnings have come as a result of maintaining a good
net interest margin while keeping increases in non-interest expense at
reasonable levels. Our community bankers have been challenged to keep the net
interest margin and loan quality in mind in a very competitive loan market, and
they have been successful in meeting that challenge."
National Bankshares, Inc. is the parent company of The National Bank, founded in
Blacksburg, Virginia in 1891, and Bank of Tazewell County, headquartered in
Tazewell, Virginia since 1889. Together the two community banks operate 24
offices throughout Southwest Virginia. The Company also owns a non-bank
financial services subsidiary which does business in the same market as National
Bankshares Investment Services and National Bankshares Insurance Services.
National Bankshares, Inc. stock is 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
September September September 30, September 30,
30, 2003 30, 2002 Change 2003 2002 Change
Selected Consolidated Data:
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Interest income $10,262 10,760 -4.63% $31,134 $31,999 -2.70%
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Interest expense 2,840 3,783 -24.93% 9,574 12,009 -20.28%
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Net interest income 7,422 6,977 6.38% 21,560 19,990 7.85%
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Provision for loan losses 435 519 -16.18% 1,277 1,711 -25.37%
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Noninterest income 1,522 1,482 2.70% 4,395 4,397 -0.05%
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Noninterest expense 4,704 4,380 7.40% 13,840 13,117 5.51%
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Income taxes 894 848 5.42% 2,494 2,196 13.57%
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Net income $2,911 2,712 7.34% $8,344 7,363 13.32%
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Basic net income per share $0.83 0.78 $0.05 $2.38 2.10 $0.28
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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 --- --- --- $22.56 20.80 $1.76
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Balance sheet at period-end:
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Loans, net --- --- --- $407,027 410,388 -0.82%
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Total securities --- --- --- 232,527 196,139 18.55%
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Total deposits --- --- --- 617,770 591,578 4.43%
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Other borrowings --- --- --- 92 587 -84.33%
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Stockholders' equity --- --- --- 79,268 73,012 8.57%
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Total Assets --- --- --- 699,565 667,646 4.78%
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Daily averages:
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Loans,net $409,307 409,413 -0.03% $405,903 404,668 0.31%
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Total securities 228,794 186,411 22.74% 226,692 186,746 21.39%
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Total deposits 616,574 583,937 5.59% 615,958 575,880 6.96%
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Other borrowings 181 312 -41.99% 195 297 -34.34%
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Stockholders' equity 78,143 71,104 9.90% 76,648 68,817 11.38%
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Interest-earning assets 665,040 624,619 6.47% 659,963 613,747 7.53%
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Interest-bearing liabilities 532,100 509,026 4.53% 537,631 502,712 6.95%
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Total Assets 697,216 657,504 6.04% 695,291 647,301 7.41%
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Financial ratios: Note (1)
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Return on average assets 1.66% 1.65% 0.01 1.60% 1.52% 0.08
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Return on average equity 14.78% 15.30% -0.52 14.55% 14.31% 0.24
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Net interest margin --- --- --- 4.83% 4.76% 0.07
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Efficiency ratio --- --- --- 49.04% 50.01% -0.97
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Average equity to average
assets 11.21% 10.81% 0.39 11.02% 10.63% 0.39
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Note (1) Ratio change measured in bp
2
Allowance for loan losses:
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Beginning balance $5,493 $4,843 13.42% $5,092 $4,272 19.19%
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Provision for losses 435 519 -16.18% 1,277 1,711 -25.37%
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Charge-offs -457 -369 23.85% -1,059 -1067 -0.75%
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Recoveries 31 16 93.75% 192 93 106.45%
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Ending balance $5,502 $5,009 9.84% $5,502 $5,009 9.84%
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Nonperforming assets:
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Nonaccrual loans --- --- --- $190 $368 -48.37%
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Restructured loans --- --- --- --- --- ---
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Total nonperforming loans --- --- --- 190 368 -48.37%
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Other real estate owned --- --- --- 940 269 249.44%
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Total nonperforming assets --- --- --- $1,130 $637 77.39%
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Asset quality ratios: Note
(2)
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Nonperforming loans to total
loans --- --- --- 0.05% 0.09% -0.04
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Allowance for loan losses to
total loans --- --- --- 1.33% 1.21% 0.12
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Allowance for loan losses
to nonperforming loans --- --- --- 2895.79% 1361.14% 1534.65
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Note (2) Ratio change measured in bp
3