FOR IMMEDIATE RELEASE
CONTACTS: James G. Rakes, President & CEO (540) 951-6236
J. Robert Buchanan, Treasurer (276) 979-0341
NATIONAL BANKSHARES, INC.
REPORTS SECOND QUARTER EARNINGS
BLACKSBURG, VA, JULY 16, 2004: National Bankshares, Inc. (Nasdaq SmallCap
Market: NKSH) today reported net income of $2.94 million, or basic net
income per share of $0.84, for the second quarter ended June 30. Year-to-
date net income is nearly $5.90 million, which is 8.52% above year-to-date
net income for the same period in 2003. Total assets at the end of the second
quarter were almost $788.43 million. The 11.46% increase in total assets over
last year's figures reflects the purchase of assets of Community National Bank
in Pulaski, Virginia and the purchase of certain assets, primarily loans, of the
Richlands, Virginia branch office of FNB Southeast by the company's bank
subsidiaries. Both of these transactions were completed in the first half of
2004.
James G. Rakes, Chairman, President & CEO of National Bankshares, Inc.
commented, "The recent purchase and assumption transactions have solidified the
presence of our two banks in the Richlands and Pulaski markets. We want to
warmly welcome the new customers who now bank with us as a result of these
transactions." Mr. Rakes added, "At the mid-point of the year we are pleased
with earnings. Net interest income has continued to increase as compared with
the same period last year, and noninterest income totals are up nicely."
National Bankshares, Inc. is the parent company of The National Bank,
with headquarters in Blacksburg, Virginia, and of Bank of Tazewell County of
Tazewell, Virginia. The two banks have a total of 25 office locations throughout
Southwest Virginia. The company also operates a non-bank subsidiary, National
Bankshares Financial Services, Inc., which does business as National Bankshares
Investment Services and National Bankshares Insurance Services. National
Bankshares, Inc. stock trades on the Nasdaq Stock Market with the symbol "NKSH".
Additional information is available at www.nationalbankshares.com.
(unaudited tables follow)
National Bankshares, Inc. And Subsidiaries
(000's), except ratios and Three months Three months
percent data ending ending Year-to-date Year-to-date
Selected Consolidated Data: June, 30 ,2004 June 30, 2003 Change June 30 ,2004 June 30, 2003 Change
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Interest income $10,017 $10,396 -3.65% $19,814 $20,872 -5.07%
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Interest expense 2,659 3,256 -18.34% 5,258 6,734 -21.92%
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Net interest income 7,358 7,140 3.05% 14,556 14,138 2.96%
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Provision for loan losses 304 402 -24.38% 592 842 -29.69%
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Noninterest income 1,681 1,504 11.77% 3,420 2,873 19.04%
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Noninterest expense 4,915 4,569 7.57% 9,735 9,136 6.56%
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Income taxes 884 872 1.38% 1,753 1,600 9.56%
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Net income $2,936 $2,801 4.82% $5,896 $5,433 8.52%
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Basic net income per share $0.84 $0.80 $0.04 $1.68 $1.55 $0.13
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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 --- --- --- $23.12 22.34 $0.78
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Balance sheet at period-end:
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Loans, net --- --- --- $458,853 $412,511 11.23%
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Total securities --- --- --- 258,014 230,560 11.91%
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Total deposits --- --- --- 704,327 625,847 12.54%
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Other borrowings --- --- --- 374 521 -28.21%
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Stockholders' equity --- --- --- 81,430 78,471 3.77%
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Total Assets --- --- --- 788,429 707,381 11.46%
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Daily averages:
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Loans,net $416,228 $412,829 0.82% $409,720 $404,174 1.37%
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Total securities 249,375 228,010 9.37% 244,889 225,590 8.55%
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Total deposits 642,838 620,838 3.54% 633,249 615,646 2.86%
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Other borrowings 178 167 6.59% 226 203 11.33%
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Stockholders' equity 82,967 77,091 7.62% 83,085 75,849 9.54%
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Interest-earning assets 692,101 668,267 3.57% 684,299 661,685 3.42%
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Interest-bearing liabilities 552,946 540,514 2.30% 546,696 538,726 1.48%
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Total Assets 728,378 700,575 3.97% 719,195 694,276 3.59%
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Financial ratios: Note (1)
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Return on average assets 1.62% 1.60% 0.02 1.65% 1.58% 0.07
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Return on average equity 14.23% 14.57% -0.34 14.27% 14.44% -0.17
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Net interest margin 4.70% 4.72% --- 4.70% 4.81% -0.11
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Efficiency ratio --- --- --- 50.04% 49.34% 0.70
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Average equity to average
assets 11.39% 11.00% 0.39 11.55% 10.92% 0.63
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Note (1) Ratio change measured in bp
Allowance for loan losses:
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Beginning balance $5,420 $5,390 0.56% $5,369 $5,092 5.44%
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Provision for losses 304 402 -24.38% 592 842 -29.69%
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Charge-offs -395 -333 18.62% -680 -602 12.96%
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Recoveries 59 34 73.53% 107 161 -33.54%
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Acquisition of C.N.B. 498 --- 100.00% 498 --- 100.00%
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Ending balance $5,886 $5,493 7.15% $5,886 $5,493 7.15%
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Nonperforming assets:
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Nonaccrual loans --- --- --- $550 $106 418.87%
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Restructured loans --- --- --- --- --- ---
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Total nonperforming loans --- --- --- 550 106 418.87%
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Other real estate owned --- --- --- 1,489 743 100.40%
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Total nonperforming assets --- --- --- $2,039 $849 140.16%
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Asset quality ratios: Note (2)
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Nonperforming loans to total
loans --- --- --- 0.12% 0.03% 0.09
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Allowance for loan losses to
total loans --- --- --- 1.27% 1.31% -0.04
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Allowance for loan losses
to nonperforming loans --- --- --- 1070.18% 5182.08% -4111.90
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Note (2) Ratio change measured in bp