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 THIRD QUARTER EARNINGS
BLACKSBURG, VA, October 13, 2006: National Bankshares, Inc. (Nasdaq Capital
Market: NKSH) announced today that it had net income for the third quarter of
$3.2 million. This is an increase of 4.8% over the same quarter in 2005, and it
translates to basic net income per share of $0.46. Year-to-date net income at
September 30 totaled $9.43 million, an increase of 2.5% over the same period
last year, and basic net income per share was $1.35. At the end of the third
quarter, the financial holding company headquartered in Blacksburg, Virginia,
had total assets of nearly $845 million.
James G. Rakes, National Bankshares' Chairman, President & CEO, noted that the
company's earnings continue to experience the effects of compression of the net
interest margin. "Interest income earned primarily from loans has lagged behind
the increased interest paid on bank deposits, because loans tend to re-price at
a slower pace than deposits." Mr. Rakes said that he is encouraged by
indications from the Federal Reserve that it is changing its long program of
regular rate increases.
National Bankshares is the parent company of 115 year-old National Bank of
Blacksburg, which does business as National Bank in 26 locations throughout
Southwest Virginia. The company has a non-bank subsidiary, National Bankshares
Financial Services, Inc. that offers investments and insurance. Additional
information about National Bankshares, Inc. is available at
www.nationalbankshares.com.
(unauditied tables follow)
National Bankshares, Inc. And Subsidiaries
(000's), except ratios and percent data
Three months ending September 30, 2006 September 30, 2005 Change
Selected Consolidated Data :
- ---------------------------------------------------------------------------------------------------------------------
Interest income $12,042 $11,483 4.87%
Interest expense 4,691 3,816 22.93%
Net interest income 7,351 7,667 -4.12%
Provision for loan losses 16 169 -90.53%
Trust income 314 326 -3.68%
Other noninterest income 1,918 1,566 22.48%
Salary and benefits 2,866 2,822 1.56%
Occupancy expense 474 491 -3.46%
Amortization of intangibles 284 283 0.35%
Other noninterest expense 1,772 1,783 -0.62%
Income taxes -970 -957 1.36%
Net income $3,201 $3,054 4.81%
Basic net income per share $0.46 $0.44 $0.02
- ---------------------------------------------------------------------------------------------------------------------
Daily averages:
- ---------------------------------------------------------------------------------------------------------------------
Gross loans $495,539 $497,152 -0.32%
Loans,net 489,243 490,614 -0.28%
Total securities 267,339 261,951 2.06%
Total deposits 732,009 728,295 0.51%
Other borrowings 582 70 731.43%
Stockholders' equity 95,443 91,071 4.80%
Cash and due from 15,113 16,077 -6.00%
Interest-earning assets 771,234 775,015 -0.49%
Interest-bearing liabilities 627,895 615,276 2.05%
Intangible assets 16,424 17,554 -6.44%
Total assets 832,157 823,188 1.09%
- ---------------------------------------------------------------------------------------------------------------------
Financial ratios: Note (1)
- ---------------------------------------------------------------------------------------------------------------------
Return on average assets 1.53% 1.51% 0.02
Return on average equity 13.31% 13.69% -0.38
Net interest margin 4.04% 4.25% -0.21
Average equity to average assets 11.47% 11.06% 0.41
- ---------------------------------------------------------------------------------------------------------------------
Note (1) Ratio change measured in bp
Allowance for loan losses:
- ---------------------------------------------------------------------------------------------------------------------
Beginning balance $5,340 $5,632 -5.18%
Provision for losses 16 169 -90.53%
Charge-offs -136 -227 -40.09%
Recoveries 32 46 -30.43%
Ending balance $5,252 $5,620 -6.55%
- ---------------------------------------------------------------------------------------------------------------------
Year to Date September 30, 2006 September 30, 2005 Change
Selected Consolidated Data :
- ---------------------------------------------------------------------------------------------------------------------
Interest income $35,474 $33,786 5.00%
Interest expense 13,303 10,085 31.91%
Net interest income 22,171 23,701 -6.46%
Provision for loan losses 40 557 -92.82%
Trust income 1,059 1,062 -0.28%
Other noninterest income 5,444 4,525 20.31%
Salary and benefits 8,706 8,534 2.02%
Occupancy expense 1,479 1,450 2.00%
Amortization of intangibles 853 832 2.52%
Other noninterest expense 5,258 5,843 -10.01%
Income taxes -2,907 -2,873 1.18%
Net income $9,431 $9,199 2.52%
Basic net income per share $1.35 $1.31 $0.04
Fully diluted net income per share $1.34 $1.30 $0.04
Dividends per share .46 .35 $0.11
Dividend payout ratio 26.77 26.52 $0.25
Book value per share $14.00 13.20 $0.80
- ---------------------------------------------------------------------------------------------------------------------
Balance sheet at period-end:
- ---------------------------------------------------------------------------------------------------------------------
Gross loans $498,626 $499,787 -0.23%
Loans, net $492,353 $493,240 -0.18%
Total securities 266,740 263,943 1.06%
Cash and due From Banks 14,598 17,114 -14.70%
Total deposits 742,793 732,177 1.45%
Other borrowings 76 623 -87.80%
Stockholders' equity 97,803 92,670 5.54%
Intangible assets 16,260 17,397 -6.54%
Total assets 844,997 828,907 1.94%
- ---------------------------------------------------------------------------------------------------------------------
Daily averages:
- ---------------------------------------------------------------------------------------------------------------------
Gross loans $491,829 $492,908 -0.22%
Loans,net 485,488 486,338 -0.17%
Total securities 270,524 256,713 5.38%
Total deposits 736,511 719,989 2.29%
Other borrowings 495 758 -34.70%
Stockholders' equity 94,499 85,343 10.73%
Cash and due from 16,028 15,769 1.64%
Interest-earning assets 772,356 762,072 1.35%
Interest-bearing liabilities 626,744 606,678 3.31%
Intangible assets 16,687 17,519 -4.75%
Total assets 835,494 810,292 3.11%
- ---------------------------------------------------------------------------------------------------------------------
Financial ratios: Note (1)
- ---------------------------------------------------------------------------------------------------------------------
Return on average assets 1.51% 1.51% 0.00
Return on average equity 13.34% 13.69% -0.35
Net interest margin 4.17% 4.53% -0.36
Efficiency ratio 53.08% 52.84% 0.24
Average equity to average assets 11.31% 10.53% 0.78
- ---------------------------------------------------------------------------------------------------------------------
Note (1) Ratio change measured in bp
Allowance for loan losses:
- ---------------------------------------------------------------------------------------------------------------------
Beginning balance $5,449 $5,729 -4.89%
Provision for losses 40 557 -92.82%
Charge-offs -345 -812 -57.51%
Recoveries 108 146 -26.03%
Ending balance $5,252 $5,620 -6.55%
- ---------------------------------------------------------------------------------------------------------------------
Nonperforming assets:
- ---------------------------------------------------------------------------------------------------------------------
Nonaccrual loans 4 $251 -100.00%
Total nonperforming loans Note (2) 4 251 -100.00%
Other real estate owned 390 429 -9.09%
Total nonperforming assets $394 $680 -42.06%
- ---------------------------------------------------------------------------------------------------------------------
Asset quality ratios: Note (3)
- ---------------------------------------------------------------------------------------------------------------------
Nonperforming loans to total loans 0.001% 0.05% -98.42%
Allowance for loan losses to total loans 1.06% 1.13% -7.45%
Allowance for loan losses
to nonperforming loans 1313.00% 2239.04% -41.36%
- ---------------------------------------------------------------------------------------------------------------------
Note (2) Loans 90 days past due or more not included Note (3) Ratio change
measured in bp