Exhibit 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE:
National Bancshares Corporation Reports 2003 Earnings 17.2% Above Last Year
ORRVILLE, Ohio, February 20 -- National Bancshares Corporation (OTC: NBOH), the
holding company of First National Bank, Orrville, Ohio, released their financial
results for the year 2003. The year 2003 brought continued growth for National
Bancshares Corporation with total assets reaching over $300 million. Total
deposits increased over $3.5 million while net loans decreased $3.5 million,
compared to the end of the previous year. With the low interest rate environment
that existed throughout the past year, many customers elected to refinance their
home mortgage loans. During this time, many fixed rate mortgage loans were paid
off, refinanced, or sold into the secondary market. Having acquired primarily
fixed rate residential mortgage loans from the acquisition of Peoples Financial
Corporation in 2002, this mortgage activity assisted First National Bank in
repositioning the balance sheet by shifting certain loan exposure from fixed
rate mortgages to variable rate commercial loans. "This should have a positive
impact on earnings in an increasing interest rate environment," said Charles
Dolezal, president. Net income increased by over $388 thousand or 17.2% above
the year 2002.
Total cash dividends declared during 2003 amounted to 58 cents per share. This
is a 7.4% increase over the total cash dividends declared in 2002. This growth
exemplifies National Bancshares Corporation's long-term trend of increasing cash
dividends, which has continued for over 35 consecutive years. "The market value
of our common stock has also continued to increase during the past year,
finishing the year approximately 10.2% above the end of the previous year," said
Dolezal.
"With the growth we experienced during the past few years, we have been actively
restructuring a number of areas of the bank to support current growth, and
better position the organization for future growth," continued Dolezal.
"Additional lending and support staff have been hired. We have also embarked
upon extensive staff training on sales and problem solving. New systems are
being put into place to more effectively manage a larger and growing
organization."
To gain operational efficiencies while supporting an expanding organization,
First National has embraced the use of a number of technological advancements
available in the industry. Computers have been upgraded and servers added within
the organization. Deposit documentation software has been upgraded to keep in
step with the ever-changing regulatory environment. In the fourth quarter of
this past year First National completed installation and testing of check
imaging, a service which was introduced to customers in January 2004. "The time
efficiency for information retrieval on checks will be greatly enhanced with
this service," said Dolezal. "Check imaging also positions us to more
efficiently meet the upcoming changes the Federal Reserve will begin
implementing in 2004 regarding check truncation."
National Bancshares Corporation's subsidiary, First National Bank, is
headquartered in Orrville, Ohio, with fourteen banking offices located in
Orrville, Wooster, Smithville, Apple Creek, Dalton, Kidron, Mt. Eaton,
Massillon, Lodi and Seville. First National Bank's web site address is
www.fnborrville.com.
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Forward-looking Statements -- This press release contains forward-looking
statements as referenced in the Private Securities Litigation Reform Act of
1995. Forward-looking statements are necessarily subject to many risks and
uncertainties. A number of things could cause actual results to differ
materially from those indicated by the forward-looking statements. These include
factors such as changes in the competitive marketplace, changes in the interest
rate environment, economic conditions, changes in the regulatory environment,
changes in business conditions and inflation, risks associated with credit
quality and other factors discussed in the Company's filings with the Security
and Exchange Commission, including its Annual Report on Form 10-K for the year
ended December 31, 2002. The company disclaims any obligation to publicly update
or revise any forward-looking statements based on the occurrence of future
events, the receipt of new information, or otherwise.
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NATIONAL BANCSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 2003 and 2002
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2003 2002
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ASSETS
Cash and due from the banks $ 11,506,999 $ 10,010,654
Federal funds sold -- 6,315,000
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Total cash and cash equivalents 11,506,999 16,325,654
Interest-bearing time deposits with other banks 999,048 997,185
Securities available for sale 67,189,563 52,364,712
Securities held to maturity (fair value: 2003 - $17,300,084;
2002 - $18,985,565) 16,603,556 18,441,685
Federal bank stock 2,771,350 2,689,450
Loans, net of allowance for loan losses: 2003 - $1,603,568;
2002 - $1,604,200 187,056,241 190,559,663
Premises and equipment, net 4,737,018 4,816,253
Goodwill 4,723,075 4,723,075
Identified intangible assets 1,654,086 1,929,734
Accrued interest receivable 1,622,090 1,495,506
Other assets 2,386,349 2,407,248
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$ 301,249,375 $ 296,750,165
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LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 38,821,286 $ 35,852,184
Interest-bearing 204,026,005 203,445,043
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Total deposits 242,847,291 239,297,227
Repurchase agreements 2,786,848 3,006,221
Federal Reserve note account 319,563 1,000,000
Federal Home Loan Bank advances 17,034,291 17,205,743
Accrued expenses and other liabilities 3,456,647 3,050,924
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Total liabilities 266,444,640 263,560,115
Shareholders' equity
Common stock, no par value; 6,000,000 shares authorized;
2,289,528 shares issued 11,447,640 11,447,640
Additional paid-in capital 4,689,800 4,689,800
Accumulated other comprehensive income 2,006,889 1,739,751
Retained earnings 17,849,899 16,502,352
Treasury stock, at cost (55,040 shares) (1,189,493) (1,189,493)
------------- -------------
Total shareholders' equity 34,804,735 33,190,050
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$ 301,249,375 $ 296,750,165
============= =============
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NATIONAL BANCSHARES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 2003, 2002 and 2001
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2003 2002 2001
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INTEREST AND DIVIDEND INCOME
Loans, including fees $10,833,688 11,974,356 $ 9,036,841
Federal funds sold 85,635 136,263 353,756
Securities:
Taxable 3,186,618 2,980,610 3,160,784
Nontaxable 937,868 849,924 1,005,366
----------- ----------- -----------
Total interest and dividend income 15,043,809 15,941,153 13,556,747
INTEREST EXPENSE
Deposits 3,016,172 4,384,154 4,677,652
Short-term borrowings 6,996 13,551 98,275
Federal Home Loan Bank advances 716,848 530,069 178,430
----------- ----------- -----------
Total interest expense 3,740,016 4,927,774 4,954,357
----------- ----------- -----------
NET INTEREST INCOME 11,303,793 11,013,379 8,602,390
Provision for loan losses 245,000 1,569,402 40,000
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 11,058,793 9,443,977 8,562,390
NONINTEREST INCOME
Checking account fees 752,833 754,341 656,441
Gain on sale of loans 115,982 8,409 43,750
Securities gains, net 72,290 182,324 97,003
Other 590,915 512,957 348,044
----------- ----------- -----------
Total noninterest income 1,532,020 1,458,031 1,145,238
NONINTEREST EXPENSE
Salaries and employee benefits 4,844,909 4,338,987 3,517,438
Data processing fees 794,932 738,643 627,799
Net occupancy expense 404,489 345,858 216,709
Depreciation - furniture and fixtures 353,601 327,634 237,967
Franchise taxes 321,824 302,880 314,869
Maintenance and repairs 267,261 238,735 197,234
Amortization of intangibles 275,647 145,227 52,330
Other 1,877,853 1,560,810 1,238,759
----------- ----------- -----------
Total noninterest expense 9,140,516 7,998,774 6,403,105
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 3,450,297 2,903,234 3,304,523
Income tax expense 806,746 648,460 777,320
----------- ----------- -----------
NET INCOME $ 2,643,551 $ 2,254,774 $ 2,527,203
=========== =========== ===========
Weighted average common shares outstanding 2,234,488 2,228,510 2,230,013
=========== =========== ===========
Basic and diluted earnings per common share $ 1.18 $ 1.01 $ 1.13
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