FOR IMMEDIATE RELEASE
CONTACTS: James G. Rakes, Chairman, President & CEO (540) 951-6236
J. Robert Buchanan, Treasurer (276) 979-0341
NATIONAL BANKSHARES, INC.
ANNOUNCES RECORD EARNINGS FOR 2003
BLACKSBURG, VA, JANUARY 23, 2004: National Bankshares, Inc. (Nasdaq SmallCap
Market: NKSH) today announced net income for 2003 of $11.44 million, or basic
net income per share of $3.26. This represents an increase of 14.26% over the
company's 2002 net income of $10.01 million, or $2.85 per share. For 2003,
the company had a return on average assets of 1.64% and a return on average
equity of 14.77%.
James G. Rakes, National Bankshares Chairman, President & CEO, commented, "We
are very pleased to report another year of record earnings. We enjoyed a nice
net interest rate margin throughout 2003, and this translated into a 6.84%
increase in net interest income over 2002. In addition, non-interest income was
8.30% above 2002 totals. The allowance for loan losses grew appropriately and
was at 1.32% of total loans at year-end 2003, as compared with 1.24% in 2002. At
National Bankshares, Inc., we continue to focus on providing the best in
community banking, with a full range of financial products. We work to foster
long-term relationships with our customers by offering them quality personalized
service."
National Bankshares, Inc. ended 2003 with total assets of $708.56 million, up
from $684.94 at the end of 2002. Net loans at December 31, 2003 were at nearly
$401.43, a slight decline of 0.70% from the same period in 2002.
National Bankshares, Inc. is a financial holding company with two community bank
subsidiaries, The National Bank, headquartered in Blacksburg, Virginia, and Bank
of Tazewell County, with headquarters in Tazewell, Virginia. The two banks have
24 offices throughout Southwest Virginia. The company also operates a non-bank
financial services subsidiary, National Bankshares Financial Services, Inc.,
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 about the company is available on its web site at
www.nationalbankshares.com.
(tables follow)
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National Bankshares, Inc. And Subsidiaries
(000's), except ratios and Three months Three months
percent data ending ending Year-to-date Year-to-date
December 31, December 31, Change December 31, December 31, Change
Selected Consolidated Data: 2003 2002 2003 2002
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Interest income $9,947 10,748 -7.45% $41,081 $42,747 -3.90%
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Interest expense 2,678 3,755 -28.68% 12,252 15,764 -22.28%
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Net interest income 7,269 6,993 3.95% 28,829 26,983 6.84%
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Provision for loan losses 414 540 -23.33% 1,691 2,251 -24.88%
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Noninterest income 1,791 1,315 36.20% 6,186 5,712 8.30%
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Noninterest expense 4,806 4,310 11.51% 18,646 17,427 6.99%
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Income taxes 742 807 -8.05% 3,236 3,003 7.76%
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Net income $3,098 2,651 16.86% $11,442 10,014 14.26%
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Basic net income per share $0.88 0.75 $0.13 $3.26 2.85 $0.41
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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 --- --- --- $22.94 20.82 $2.12
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Balance sheet at period-end:
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Loans, net --- --- --- $401,428 404,247 -0.70%
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Total securities --- --- --- 230,154 219,294 4.95%
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Total deposits --- --- --- 625,378 608,271 2.81%
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Other borrowings --- --- --- 135 748 -81.95%
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Stockholders' equity --- --- --- 80,641 73,101 10.31%
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Total Assets --- --- --- 708,560 684,935 3.45%
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Daily averages:
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Loans,net $405,082 404,864 0.05% $405,696 409,482 -0.92%
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Total securities 235,914 205,573 14.76% 229,004 191,493 19.59%
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Total deposits 619,365 605,051 2.37% 616,823 583,298 5.75%
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Other borrowings 187 351 -46.72% 194 311 -37.62%
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Stockholders' equity 80,052 73,135 9.46% 77,486 69,895 10.86%
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Interest-earning assets 669,654 647,833 3.37% 664,543 622,339 6.78%
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Interest-bearing liabilities 536,140 529,000 1.35% 537,257 509,340 5.48%
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Total Assets 702,183 680,745 3.15% 697,012 655,783 6.29%
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Financial ratios: Note (1)
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Return on average assets 1.75% 1.56% 0.19 1.64% 1.53% 0.11
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Return on average equity 15.35% 14.54% 0.81 14.77% 14.33% 0.44
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Net interest margin --- --- --- 4.82% 4.74% 0.08
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Efficiency ratio --- --- --- 49.03% 49.51% -0.48
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Average equity to average assets 11.40% 10.74% 0.66 11.12% 10.66% 0.46
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Note (1) Ratio change measured in bp
Allowance for loan losses:
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Beginning balance $5,502 $5,009 9.84% $5,092 $4,272 19.19%
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Provision for losses 414 540 -23.33% 1,691 2,251 -24.88%
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Charge-offs -601 -504 19.25% -1,660 -1571 5.67%
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Recoveries 54 47 14.89% 246 140 75.71%
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Ending balance $5,369 $5,092 5.44% $5,369 $5,092 5.44%
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Nonperforming assets:
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Nonaccrual loans --- --- --- $354 $288 22.92%
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Restructured loans --- --- --- --- --- ---
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Total nonperforming loans --- --- --- 354 288 22.92%
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Other real estate owned --- --- --- 1,663 537 209.68%
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Total nonperforming assets --- --- --- $2,017 $825 144.48%
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Asset quality ratios: Note (2)
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Nonperforming loans to total loans --- --- --- 0.09% 0.07% 0.02
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Allowance for loan losses to
total loans --- --- --- 1.32% 1.24% 0.08
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Allowance for loan losses
to nonperforming loans --- --- --- 1516.67% 1768.06% -251.39
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Note (2) Ratio change measured in bp
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