FOR IMMEDIATE RELEASE
CONTACTS: James G. Rakes, Chairman, President & CEO (540) 951-6236
J. Robert Buchanan, Treasurer (276) 979-0341
NATIONAL BANKSHARES, INC.
ANNOUNCES HIGHER EARNINGS
FOR 2005
BLACKSBURG, VA, JANUARY 30, 2006: National Bankshares, Inc. (Nasdaq Capital
Market: NKSH) today announced 2005 net income of over $12.42 million, or basic
net income per share of $3.54. This represents an increase of 1.59% over the
record earnings posted by the company in 2004. For the year, National Bankshares
showed a return on average assets of 1.52% and a return on average equity of
13.73%. Net income attributable to the fourth quarter of 2005 was nearly $3.23
million, up by 3.40% over the fourth quarter of 2004. National Bankshares
experienced growth in total assets of 5.70%, as compared with December 31, 2004,
ending 2005 with total assets of $841.50 million.
In discussing year-end results, National Bankshares Chairman, President & CEO
James G. Rakes said, "Although National Bankshares achieved record earnings once
again in 2005, the year-over-year increase was not large. A major contributor
was the pattern of interest rate increases put into place by the Federal Reserve
during 2005, which compressed our net interest margin and, in turn, impacted
earnings. In addition, non-interest expense categories were higher this year as
compared with 2004, reflecting the first full year of expenses associated with a
bank acquired in mid-2004. However, we are pleased with the solid organic growth
in net assets achieved in 2005. National Bankshares also experienced a good
increase in net loans despite a highly competitive market, ending the year with
net loans of $487.16 million. Each of the measures of loan quality was
excellent, improving from 2004's fine levels." Rakes continued, "We are
committed to the future of community banking, because we believe that personal
relationships and trust are important to people dealing with their finances. The
employees in our banks and insurance and investment subsidiary believe in
working closely with customers to help them reach their goals. National
Bankshares strives to support them in these efforts by offering a full range of
financial services in convenient locations throughout our market area."
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
26 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 Capital Market under the symbol "NKSH". Additional
information about the company is available on its web site at
www.nationalbankshares.com.
(unaudited tables follow)
National Bankshares, Inc. And Subsidiaries
(000's), except ratios and percentdata
Three months ending December 31, 2005 December 31, 2004 Change
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Selected Consolidated Data :
Interest income $11,594 $10,837 6.99%
Interest expense 4,095 2,963 38.20%
Net interest income 7,499 7,874 -4.76%
Provision for loan losses 10 304 -96.71%
Trust income 336 331 1.51%
Other noninterest income 1,690 1,526 10.75%
Salary and benefits 2,731 2,683 1.79%
Occupancy expense 481 460 4.57%
Amortization of intangibles 285 268 6.34%
Other noninterest expense 1,742 1,915 -9.03%
Income taxes -1,051 -982 7.03%
Net income $3,225 $3,119 3.40%
Basic net income per share $0.92 $0.89 $0.03
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Daily averages:
Gross loans $495,920 $475,790 4.23%
Loans,net 489,479 469,159 4.33%
Total securities 263,887 254,778 3.58%
Total deposits 736,500 698,177 5.49%
Other borrowings 177 712 -75.14%
Stockholders' equity 92,426 87,990 5.04%
Cash and due from 17,430 15,449 12.82%
Interest-earning assets 780,753 742,079 5.21%
Interest-bearing liabilities 622,233 594,542 4.66%
Intangible assets 17,444 17,426 0.10%
Total assets 832,999 789,921 5.45%
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Financial ratios: Note (1)
Return on average assets 1.54% 1.57% -0.03
Return on average equity 13.84% 14.10% -0.26
Net interest margin 4.17% 4.62% -0.45
Average equity to average assets 11.10% 11.14% -0.04
Note (1) Ratio change measured in bp
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Allowance for loan losses:
Beginning balance $5,620 $5,835 -3.68%
Provision for losses 10 304 -96.71%
Charge-offs -289 -459 -37.04%
Recoveries 108 49 120.41%
Ending balance $5,449 $5,729 -4.89%
Year to Date December 31, 2005 December 31, 2004 Change
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Selected Consolidated Data :
Interest income $45,380 $41,492 9.37%
Interest expense 14,180 11,125 27.46%
Net interest income 31,200 30,367 2.74%
Provision for loan losses 567 1,189 -52.31%
Trust income 1,398 1,436 -2.65%
Other noninterest income 6,215 5,706 8.92%
Salary and benefits 11,265 10,498 7.31%
Occupancy expense 1,931 1,797 7.46%
Amortization of intangibles 1,117 967 15.51%
Other noninterest expense 7,585 7,074 7.22%
Income taxes -3,924 -3,754 4.53%
Net income $12,424 $12,230 1.59%
Basic net income per share $3.54 $3.48 $0.06
Dividends per share $1.42 $1.28 ---
Dividend payout ratio 40.17 36.83 ---
Book value per share $26.19 24.75 $1.44
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Balance sheet at period-end:
Gross loans $493,524 $478,809 3.07%
Loans, net $487,162 $472,199 3.17%
Total securities 272,541 250,708 8.71%
Cash and due From 20,115 12,493 61.01%
Total deposits 745,649 705,932 5.63%
Other borrowings 357 297 20.20%
Stockholders' equity 91,939 87,088 5.57%
Intangible assets 17,113 16,924 1.12%
Total assets 841,498 796,154 5.70%
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Daily averages:
Gross loans $493,668 $445,210 10.88%
Loans,net 487,130 438,761 11.02%
Total securities 261,743 250,305 4.57%
Cash and due From 15,976 14,322 11.55%
Total deposits 724,015 665,627 8.77%
Other borrowings 420 531 -20.90%
Stockholders' equity 90,470 84,479 7.09%
Cash and due from 15,976 14,322 11.55%
Interest-earning assets 769,931 711,789 8.17%
Interest-bearing liabilities 610,534 572,838 6.58%
Intangible assets 17,500 13,736 27.40%
Total assets 819,341 753,730 8.70%
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Financial ratios: Note (1)
Return on average assets 1.52% 1.62% -0.10
Return on average equity 13.73% 14.48% -0.75
Net interest margin 4.44% 4.70% -0.26
Efficiency ratio 52.39% 50.21% 2.18
Average equity to average assets 11.04% 11.21% -0.17
Note (1) Ratio change measured in bp
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Allowance for loan losses:
Beginning balance $5,729 $5,369 6.71%
Provision for losses 567 1,189 -52.31%
Charge-offs -1,101 -1,550 -28.97%
Recoveries 254 223 13.90%
Acquisition of CNB --- 498 -100.00%
Ending balance $5,449 $5,729 -4.89%
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Nonperforming assets:
Nonaccrual loans $178 $394 -54.82%
Total nonperforming loans Note (2) 178 394 -54.82%
Other real estate owned 376 895 -57.99%
Total nonperforming assets $554 $1,289 -57.02%
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Asset quality ratios: Note (3)
Nonperforming loans to total loans 0.04% 0.08% -0.05
Allowance for loan losses to total 1.11% 1.20% -0.09
loans
Allowance for loan losses to nonperforming loans 3061.24% 1454.06% 1607.18
Note (2) Loans 90 days past due or more not included
Note (3) Ratio change measured in bp
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