EX-99 2 ex99.txt 2ND QUARTER 2005 PRESS RELEASE 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 15, 2005: National Bankshares, Inc. (Nasdaq SmallCap Market: NKSH) today reported net income for the second quarter of $3.15 million. This translates to $0.90 per share and compares with $2.99 million earned in the first quarter of 2005 and with $2.94 million earned in the same quarter last year. Year-to-date net income is nearly $6.15 million, which is an increase of 4.22% above the $5.90 million that was reported on June 30, 2004. Total assets at the end of the second quarter were over $819.57 million, up by 3.95% over the same period last year. James G. Rakes, Chairman, President & CEO of National Bankshares, Inc., commented, "It is gratifying to report positive earnings news, despite higher noninterest expense. The increase in this expense category came largely from acquisitions in late June, 2004 and in February, 2005. Now that the recent bank and branch office purchases are complete and the related computer conversions are behind us, our employees are totally focused on the basics of community banking, providing a full range of financial products with a personalized approach." National Bankshares, Inc. is a financial holding company with headquarters in Blacksburg, Virginia. Its two community bank subsidiaries, The National Bank of Blacksburg and Bank of Tazewell County, operate from 27 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. (unaudited tables follow)
National Bankshares, Inc. And Subsidiaries (000's), except ratios and percent data Three months ending June 30, 2005 June 30, 2004 Change Selected Consolidated Data : ------------------------------------------------------------------------------------------------------- Interest income $11,268 $10,017 12.49% ------------------------------------------------------------------------------------------------------- Interest expense 3,226 2,659 21.32% ------------------------------------------------------------------------------------------------------- Net interest income 8,042 7,358 9.30% ------------------------------------------------------------------------------------------------------- Provision for loan losses 198 304 -34.87% ------------------------------------------------------------------------------------------------------- Noninterest income 1,927 1,681 14.63% ------------------------------------------------------------------------------------------------------- Noninterest expense 5,591 4,915 13.75% ------------------------------------------------------------------------------------------------------- Income taxes -1,028 -884 16.29% ------------------------------------------------------------------------------------------------------- Net income $3,152 $2,936 7.36% ------------------------------------------------------------------------------------------------------- Basic net income per share $0.90 $0.84 $0.06 ------------------------------------------------------------------------------------------------------- Daily averages: ------------------------------------------------------------------------------------------------------- Loans,net $490,660 $416,228 17.88% ------------------------------------------------------------------------------------------------------- Total securities 263,965 249,375 5.85% ------------------------------------------------------------------------------------------------------- Total deposits 723,047 642,838 12.48% ------------------------------------------------------------------------------------------------------- Other borrowings 1,331 178 647.75% ------------------------------------------------------------------------------------------------------- Stockholders' equity 90,031 82,967 8.51% ------------------------------------------------------------------------------------------------------- Interest-earning assets 769,531 692,101 11.19% ------------------------------------------------------------------------------------------------------- Interest-bearing liabilities 608,116 552,946 9.98% ------------------------------------------------------------------------------------------------------- Total Assets 817,805 728,378 12.28% ------------------------------------------------------------------------------------------------------- Financial ratios: Note (1) ------------------------------------------------------------------------------------------------------- Return on average assets 1.55% 1.62% -0.07 ------------------------------------------------------------------------------------------------------- Return on average equity 14.04% 14.23% -0.19 ------------------------------------------------------------------------------------------------------- Net interest margin 4.58% 4.70% --- ------------------------------------------------------------------------------------------------------- Efficiency ratio --- --- --- ------------------------------------------------------------------------------------------------------- Average equity to average assets 11.01% 11.39% -0.38 ------------------------------------------------------------------------------------------------------- Note (1) Ratio change measured in bp Allowance for loan losses: ------------------------------------------------------------------------------------------------------- Beginning balance $5,712 $5,420 5.39% ------------------------------------------------------------------------------------------------------- Provision for losses 197 304 -35.20% ------------------------------------------------------------------------------------------------------- Charge-offs -331 -395 -16.20% ------------------------------------------------------------------------------------------------------- Recoveries 54 59 -8.47% ------------------------------------------------------------------------------------------------------- Acquisition of CNB --- 498 -100.00% ------------------------------------------------------------------------------------------------------- Ending balance $5,632 $5,886 -4.32% ------------------------------------------------------------------------------------------------------- Year to Date June 30, 2005 June 30, 2004 Change Selected Consolidated Data : ------------------------------------------------------------------------------------------------------- Interest income $22,303 $19,814 12.56% ------------------------------------------------------------------------------------------------------- Interest expense 6,269 5,258 19.23% ------------------------------------------------------------------------------------------------------- Net interest income 16,034 14,556 10.15% ------------------------------------------------------------------------------------------------------- Provision for loan losses 388 592 -34.46% ------------------------------------------------------------------------------------------------------- Noninterest income 3,695 3,420 8.04% ------------------------------------------------------------------------------------------------------- Noninterest expense 11,280 9,735 15.87% ------------------------------------------------------------------------------------------------------- Income taxes -1,916 -1,753 9.30% ------------------------------------------------------------------------------------------------------- Net income $6,145 $5,896 4.22% ------------------------------------------------------------------------------------------------------- Basic net income per share $1.75 $1.68 $0.07 ------------------------------------------------------------------------------------------------------- Dividends per share $0.70 $0.63 11.11% ------------------------------------------------------------------------------------------------------- Dividend payout ratio 40.08% 37.58% --- ------------------------------------------------------------------------------------------------------- Book value per share $25.60 23.12 $2.48 ------------------------------------------------------------------------------------------------------- Balance sheet at period-end: ------------------------------------------------------------------------------------------------------- Loans, net $491,882 $458,853 7.20% ------------------------------------------------------------------------------------------------------- Total securities 259,385 258,014 0.53% ------------------------------------------------------------------------------------------------------- Total deposits 725,997 704,327 3.08% ------------------------------------------------------------------------------------------------------- Other borrowings 485 374 29.68% ------------------------------------------------------------------------------------------------------- Stockholders' equity 89,820 81,430 10.30% ------------------------------------------------------------------------------------------------------- Total Assets 819,574 788,429 3.95% ------------------------------------------------------------------------------------------------------- Daily averages: ------------------------------------------------------------------------------------------------------- Loans,net $469,919 $409,720 14.69% ------------------------------------------------------------------------------------------------------- Total securities 260,547 244,889 6.39% ------------------------------------------------------------------------------------------------------- Total deposits 696,554 633,249 10.00% ------------------------------------------------------------------------------------------------------- Other borrowings 2,725 226 1105.75% ------------------------------------------------------------------------------------------------------- Stockholders' equity 88,722 83,085 6.78% ------------------------------------------------------------------------------------------------------- Interest-earning assets 747,749 684,299 9.27% ------------------------------------------------------------------------------------------------------- Interest-bearing liabilities 584,512 546,696 6.92% ------------------------------------------------------------------------------------------------------- Total Assets 789,871 719,195 9.83% ------------------------------------------------------------------------------------------------------- Financial ratios: Note (1) ------------------------------------------------------------------------------------------------------- Return on average assets 1.57% 1.65% -0.08 ------------------------------------------------------------------------------------------------------- Return on average equity 13.97% 14.27% -0.30 ------------------------------------------------------------------------------------------------------- Net interest margin 4.74% 4.70% 0.04 ------------------------------------------------------------------------------------------------------- Efficiency ratio 53.15% 50.04% 3.11 ------------------------------------------------------------------------------------------------------- Average equity to average assets 11.23% 11.55% -0.32 ------------------------------------------------------------------------------------------------------- Note (1) Ratio change measured in bp Allowance for loan losses: ------------------------------------------------------------------------------------------------------- Beginning balance $5,729 $5,369 6.71% ------------------------------------------------------------------------------------------------------- Provision for losses 387 592 -34.63% ------------------------------------------------------------------------------------------------------- Charge-offs -584 -680 -14.12% ------------------------------------------------------------------------------------------------------- Recoveries 100 107 -6.54% ------------------------------------------------------------------------------------------------------- Acquisition of CNB --- 498 -100.00% ------------------------------------------------------------------------------------------------------- Ending balance $5,632 $5,886 -4.32% ------------------------------------------------------------------------------------------------------- Nonperforming assets: ------------------------------------------------------------------------------------------------------- Nonaccrual loans $252 $550 -54.18% ------------------------------------------------------------------------------------------------------- Restructured loans --- --- --- ------------------------------------------------------------------------------------------------------- Total nonperforming loans 252 550 -54.18% ------------------------------------------------------------------------------------------------------- Other real estate owned 483 1,489 -67.56% ------------------------------------------------------------------------------------------------------- Total nonperforming assets $735 $2,039 -63.95% ------------------------------------------------------------------------------------------------------- Asset quality ratios: Note (2) ------------------------------------------------------------------------------------------------------- Nonperforming loans to total loans 0.05% 0.12% -0.07 ------------------------------------------------------------------------------------------------------- Allowance for loan losses to total loans 1.13% 1.27% -0.14 ------------------------------------------------------------------------------------------------------- Allowance for loan losses to nonperforming loans 2234.92% 1070.18% 1164.74 ------------------------------------------------------------------------------------------------------- Note (2) Ratio change measured in bp