National Bankshares, Inc. Announces Higher First Quarter Earnings

| Source: National Bankshares, Inc. National Bankshares, Inc.

BLACKSBURG, VA -- (MARKET WIRE) -- April 19, 2007 -- National Bankshares, Inc. (NASDAQ: NKSH) today announced first quarter net income of nearly $3.12 million, which is 3.76% higher than the $3 million earned in the first quarter of 2006. This translates to basic net income per share of $0.45, as compared with $0.43 for the same period last year. At March 31, National Bankshares, Inc. had total assets of nearly $881.92 million, up by 4% over the total on March 31, 2006.

In announcing first quarter earnings, Chairman, President & CEO James G. Rakes said, "It is nice to have a positive start to the year. We have been able to offset pressure on net interest income by keeping controllable costs in check and with a healthy increase in noninterest income. In historical terms and with reference to our peers, the quality of the loan portfolio is sound, and the allowance for loan losses remains at a good level." Mr. Rakes continued, "At National Bankshares, we are committed to community banking. We focus on what we can do best, that is to offer a full range of financial products and services with a personal approach."

National Bankshares, Inc. is a financial holding company with headquarters in Blacksburg, Virginia. It is the parent company of National Bank, a community bank that operates from 26 offices throughout Southwest Virginia. The company also has 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 under the symbol "NKSH." Additional information is available on the company's web site at www.nationalbankshares.com. 

                National Bankshares, Inc. And Subsidiaries

(000's), except ratios and percent data

Three months ending                        March 31,  March 31,   Change
                                             2007       2006
Selected Consolidated Data :
                                           ---------  ---------  ---------
Interest income                            $  12,530  $  11,583       8.18%
                                           ---------  ---------  ---------
Interest expense                               5,416      4,238      27.80%
                                           ---------  ---------  ---------
Net interest income                            7,114      7,345      -3.14%
                                           ---------  ---------  ---------
Provision for loan losses                         -3         17    -117.65%
                                           ---------  ---------  ---------
Trust income                                     373        380      -1.84%
                                           ---------  ---------  ---------
Other noninterest income                       1,806      1,679       7.56%
                                           ---------  ---------  ---------
Salary and benefits                            2,841      2,911      -2.40%
                                           ---------  ---------  ---------
Occupancy expense                                485        533      -9.01%
                                           ---------  ---------  ---------
Amortization of intangibles                      284        284       0.00%
                                           ---------  ---------  ---------
Other noninterest expense                      1,647      1,771      -7.00%
                                           ---------  ---------  ---------
Income taxes                                    -923       -885       4.29%
                                           ---------  ---------  ---------
Net income                                 $   3,116  $   3,003       3.76%
                                           ---------  ---------  ---------
Basic net income per share                 $    0.45  $    0.43  $    0.02
                                           ---------  ---------  ---------

Daily averages:
                                           ---------  ---------  ---------
Gross loans                                $ 503,040  $ 491,410       2.37%
                                           ---------  ---------  ---------
Loans, net                                   496,839    485,031       2.43%
                                           ---------  ---------  ---------
Total securities                             284,789    272,644       4.45%
                                           ---------  ---------  ---------
Total deposits                               762,817    741,941       2.81%
                                           ---------  ---------  ---------
Other borrowings                                  73        146     -50.00%
                                           ---------  ---------  ---------
Stockholders' equity                          97,927     93,417       4.83%
                                           ---------  ---------  ---------
Cash and due from                             14,684     17,149     -14.37%
                                           ---------  ---------  ---------
Interest-earning assets                      807,632    777,400       3.89%
                                           ---------  ---------  ---------
Interest-bearing liabilities                 659,908    630,151       4.72%
                                           ---------  ---------  ---------
Intangible assets                             15,860     16,988      -6.64%
                                           ---------  ---------  ---------
Total assets                                 867,945    839,478       3.39%
                                           ---------  ---------  ---------

Financial ratios: Note (1)
                                           ---------  ---------  ---------
Return on average assets                        1.46%      1.45%      0.01
                                           ---------  ---------  ---------
Return on average equity                       12.90%     13.04%     -0.14
                                           ---------  ---------  ---------
Net interest margin                             3.96%      4.22%     -0.26
                                           ---------  ---------  ---------
Average equity to average assets               11.28%     11.13%      0.15
                                           ---------  ---------  ---------
 Note (1)  Ratio change measured in bp

Allowance for loan losses:
                                           ---------  ---------  ---------
Beginning balance                          $   5,157  $   5,449      -5.36%
                                           ---------  ---------  ---------
Provision for losses                              -3         17    -117.65%
                                           ---------  ---------  ---------
Charge-offs                                     -136        -87      56.32%
                                           ---------  ---------  ---------
Recoveries                                        27         39     -30.77%
                                           ---------  ---------  ---------
Ending balance                             $   5,045  $   5,418      -6.88%
                                           ---------  ---------  ---------



Year to Date                               March 31,  March 31,   Change
                                             2007       2006
Selected Consolidated Data :
                                           ---------  ---------  ---------
Interest income                            $  12,530  $  11,583       8.18%
                                           ---------  ---------  ---------
Interest expense                               5,416      4,238      27.80%
                                           ---------  ---------  ---------
Net interest income                            7,114      7,345      -3.14%
                                           ---------  ---------  ---------
Provision for loan losses                         -3         17    -117.65%
                                           ---------  ---------  ---------
Trust income                                     373        380      -1.84%
                                           ---------  ---------  ---------
Other noninterest income                       1,806      1,679       7.56%
                                           ---------  ---------  ---------
Salary and benefits                            2,841      2,911      -2.40%
                                           ---------  ---------  ---------
Occupancy expense                                485        533      -9.01%
                                           ---------  ---------  ---------
Amortization of intangibles                      284        284       0.00%
                                           ---------  ---------  ---------
Other noninterest expense                      1,647      1,771      -7.00%
                                           ---------  ---------  ---------
Income taxes                                    -923       -885       4.29%
                                           ---------  ---------  ---------
Net income                                 $   3,116  $   3,003       3.76%
                                           ---------  ---------  ---------
Basic net income per share                 $    0.45  $    0.43  $    0.02
                                           ---------  ---------  ---------
Fully diluted net income per share         $    0.45  $    0.43  $    0.02
                                           ---------  ---------  ---------
Dividends per share                                0          0  $    0.00
                                           ---------  ---------  ---------
Dividend payout ratio                           0.00       0.00  $    0.00
                                           ---------  ---------  ---------
Book value per share                       $   14.30      13.44  $    0.86
                                           ---------  ---------  ---------

Balance sheet at period-end:
                                           ---------  ---------  ---------
Gross loans                                $ 504,278  $ 490,757       2.76%
                                           ---------  ---------  ---------
Loans, net                                 $ 498,129  $ 484,391       2.84%
                                           ---------  ---------  ---------
Total securities                             288,005    275,828       4.41%
                                           ---------  ---------  ---------
Cash and due From                             13,626     18,270     -25.42%
                                           ---------  ---------  ---------
Total deposits                               774,264    749,222       3.34%
                                           ---------  ---------  ---------
Other borrowings                                  71         83     -14.46%
                                           ---------  ---------  ---------
Stockholders' equity                          99,823     94,260       5.90%
                                           ---------  ---------  ---------
Intangible assets                             15,692     16,829      -6.76%
                                           ---------  ---------  ---------
Total assets                                 881,915    847,956       4.00%
                                           ---------  ---------  ---------

Daily averages:
                                           ---------  ---------  ---------
Gross loans                                $ 503,040  $ 491,410       2.37%
                                           ---------  ---------  ---------
Loans, net                                   496,839    485,031       2.43%
                                           ---------  ---------  ---------
Total securities                             284,789    272,644       4.45%
                                           ---------  ---------  ---------
Total deposits                               762,817    741,941       2.81%
                                           ---------  ---------  ---------
Other borrowings                                  73        146     -50.00%
                                           ---------  ---------  ---------
Stockholders' equity                          97,927     93,417       4.83%
                                           ---------  ---------  ---------
Cash and due from                             14,684     17,149     -14.37%
                                           ---------  ---------  ---------
Interest-earning assets                      807,632    777,400       3.89%
                                           ---------  ---------  ---------
Interest-bearing liabilities                 659,908    630,151       4.72%
                                           ---------  ---------  ---------
Intangible assets                             15,860     16,988      -6.64%
                                           ---------  ---------  ---------
Total assets                                 867,945    839,478       3.39%
                                           ---------  ---------  ---------

Financial ratios: Note (1)
                                           ---------  ---------  ---------
Return on average assets                        1.46%      1.45%      0.01
                                           ---------  ---------  ---------
Return on average equity                       12.90%     13.04%     -0.14
                                           ---------  ---------  ---------
Net interest margin                             3.96%      4.22%     -0.26
                                           ---------  ---------  ---------
Efficiency ratio                               52.12%     54.17%     -2.05
                                           ---------  ---------  ---------
Average equity to average assets               11.28%     11.13%      0.15
                                           ---------  ---------  ---------
 Note (1)  Ratio change measured in bp

Allowance for loan losses:
                                           ---------  ---------  ---------
Beginning balance                          $   5,157  $   5,449      -5.36%
                                           ---------  ---------  ---------
Provision for losses                              -3         17    -117.65%
                                           ---------  ---------  ---------
Charge-offs                                     -136        -87      56.32%
                                           ---------  ---------  ---------
Recoveries                                        27         39     -30.77%
                                           ---------  ---------  ---------
Ending balance                             $   5,045  $   5,418      -6.88%
                                           ---------  ---------  ---------

Nonperforming assets:
                                           ---------  ---------  ---------
Nonaccrual loans                               1,132  $      92        ---
                                           ---------  ---------  ---------
Restructured loans                               ---        ---        ---
                                           ---------  ---------  ---------
Total nonperforming loans Note (2)             1,132         92        ---
                                           ---------  ---------  ---------
Other real estate owned                          251        390     -35.64%
                                           ---------  ---------  ---------
Total nonperforming assets                 $   1,383  $     482     186.93%
                                           ---------  ---------  ---------

Asset quality ratios: Note (3)
                                           ---------  ---------  ---------
Nonperforming loans to total loans             0.225%      0.02%   1084.50%
                                           ---------  ---------  ---------
Allowance for loan losses to total loans        1.00%      1.11%    -10.72%
                                           ---------  ---------  ---------
Allowance for loan losses
 to nonperforming loans                       445.76%   5889.13%    -92.43%
                                           ---------  ---------  ---------
 Note (2)  Loans 90 days past due or more not included
 Note (3)  Ratio change measured in bp

Contact Information: CONTACTS: James G. Rakes President & CEO (540) 951-6236 J. Robert Buchanan Treasurer (276) 979-0341

Related Links