EX-99 2 ex99.txt FOR IMMEDIATE RELEASE CONTACTS: James G. Rakes, President & CEO (540) 951-6236 J. Robert Buchanan, Treasurer (276) 979-0341 NATIONAL BANKSHARES, INC. ANNOUNCES THIRD QUARTER EARNINGS BLACKSBURG, VA, OCTOBER 14, 2005: National Bankshares, Inc. (Nasdaq SmallCap Market: NKSH) announced that it has posted net income of over $3.05 million for the third quarter. This translates to basic net income per share of $0.87. Year-to-date net income at September 30 was nearly $9.20 million, slightly above the $9.11 million that was reported on September 30, 2004. Net loans, at $493.24 million, grew by 5.79% when compared with the $466.26 million in net loans at the end of the third quarter in 2004. The ratio of non-performing loans to total loans on September 30 was 0.05%, down from 0.10% last year. Total assets at the end of the third quarter were nearly $828.91 million, up by 5.92% over the same period last year. In discussing year-to-date results, James G. Rakes, Chairman, President & CEO of National Bankshares, Inc., noted, "We are experiencing some compression of the net interest margin in this rising interest rate environment, and it has impacted earnings. Loan demand remains strong, particularly in our New River Valley markets, and measures of loan quality are solid. Despite the challenging rate environment and higher non-interest expense attributable to recent acquisitions, we are pleased to post earnings that are ahead of 2004. At National Bankshares, we believe that success comes from focusing on our strengths. Our employees are committed to community banking. They are friendly professionals who provide a full range of financial products and services to our customers at convenient offices, over the phone and on the Internet." 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 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. (unaudited tables follow)
National Bankshares, Inc. And Subsidiaries (000's), except ratios and percent data Three months ending September 30, 2005 September 30, 2004 Change Selected Consolidated Data : -------------------------------------------------------------------------------------------------------------------- Interest income $11,483 $10,841 5.92% -------------------------------------------------------------------------------------------------------------------- Interest expense 3,816 2,904 31.40% -------------------------------------------------------------------------------------------------------------------- Net interest income 7,667 7,937 -3.40% -------------------------------------------------------------------------------------------------------------------- Provision for loan losses 169 293 -42.32% -------------------------------------------------------------------------------------------------------------------- Trust income 326 274 18.98% -------------------------------------------------------------------------------------------------------------------- Other noninterest income 1,566 1,591 -1.57% -------------------------------------------------------------------------------------------------------------------- Salary and benefits 2,822 2,723 3.64% -------------------------------------------------------------------------------------------------------------------- Occupancy expense 491 473 3.81% -------------------------------------------------------------------------------------------------------------------- Amortization of intangibles 283 233 21.46% -------------------------------------------------------------------------------------------------------------------- Other noninterest expense 1,783 1,846 -3.41% -------------------------------------------------------------------------------------------------------------------- Income taxes -957 -1,019 -6.08% -------------------------------------------------------------------------------------------------------------------- Net income $3,054 $3,215 -5.01% -------------------------------------------------------------------------------------------------------------------- Basic net income per share $0.87 $0.91 -$0.04 -------------------------------------------------------------------------------------------------------------------- Daily averages: -------------------------------------------------------------------------------------------------------------------- Gross loans $497,152 $472,495 5.22% -------------------------------------------------------------------------------------------------------------------- Loans,net $490,614 $465,806 5.33% -------------------------------------------------------------------------------------------------------------------- Total securities 261,951 256,727 2.03% -------------------------------------------------------------------------------------------------------------------- Total deposits 728,295 697,119 4.47% -------------------------------------------------------------------------------------------------------------------- Other borrowings 70 1,086 -93.55% -------------------------------------------------------------------------------------------------------------------- Stockholders' equity 91,071 83,919 8.52% -------------------------------------------------------------------------------------------------------------------- Cash and due From 16,077 17,223 -6.65% -------------------------------------------------------------------------------------------------------------------- Interest-earning assets 775,015 736,198 5.27% -------------------------------------------------------------------------------------------------------------------- Interest-bearing liabilities 615,276 603,017 2.03% -------------------------------------------------------------------------------------------------------------------- Intangible assets 17,554 17,659 -0.59% -------------------------------------------------------------------------------------------------------------------- Total assets 823,188 786,220 4.70% -------------------------------------------------------------------------------------------------------------------- Financial ratios: Note (1) -------------------------------------------------------------------------------------------------------------------- Return on average assets 1.47% 1.63% -0.16 -------------------------------------------------------------------------------------------------------------------- Return on average equity 13.30% 15.24% -1.94 -------------------------------------------------------------------------------------------------------------------- Net interest margin 4.31% 4.70% -0.39 -------------------------------------------------------------------------------------------------------------------- Efficiency ratio --- --- --- -------------------------------------------------------------------------------------------------------------------- Average equity to average assets 11.06% 10.67% 0.39 -------------------------------------------------------------------------------------------------------------------- Note (1) Ratio change measured in bp Allowance for loan losses: -------------------------------------------------------------------------------------------------------------------- Beginning balance $5,632 $5,886 -4.32% -------------------------------------------------------------------------------------------------------------------- Provision for losses 169 293 -42.32% -------------------------------------------------------------------------------------------------------------------- Charge-offs -227 -411 -44.77% -------------------------------------------------------------------------------------------------------------------- Recoveries 46 67 -31.34% -------------------------------------------------------------------------------------------------------------------- Acquisition of CNB --- --- -------------------------------------------------------------------------------------------------------------------- Ending balance $5,620 $5,835 -3.68% -------------------------------------------------------------------------------------------------------------------- Year to Date September 30, 2005 September 30, 2004 Change Selected Consolidated Data : -------------------------------------------------------------------------------------------------------------------- Interest income $33,786 $30,655 10.21% -------------------------------------------------------------------------------------------------------------------- Interest expense 10,085 8,162 23.56% -------------------------------------------------------------------------------------------------------------------- Net interest income 23,701 22,493 5.37% -------------------------------------------------------------------------------------------------------------------- Provision for loan losses 557 885 -37.06% -------------------------------------------------------------------------------------------------------------------- Trust income 1,062 1,105 -3.89% -------------------------------------------------------------------------------------------------------------------- Other noninterest income 4,525 4,180 8.25% -------------------------------------------------------------------------------------------------------------------- Salary and benefits 8,534 7,815 9.20% -------------------------------------------------------------------------------------------------------------------- Occupancy expense 1,450 1,337 8.45% -------------------------------------------------------------------------------------------------------------------- Amortization of intangibles 832 699 19.03% -------------------------------------------------------------------------------------------------------------------- Other noninterest expense 5,843 5,159 13.26% -------------------------------------------------------------------------------------------------------------------- Income taxes -2,873 -2,772 3.64% -------------------------------------------------------------------------------------------------------------------- Net income $9,199 $9,111 0.97% -------------------------------------------------------------------------------------------------------------------- Basic net income per share $2.62 $2.59 $0.03 -------------------------------------------------------------------------------------------------------------------- Fully diluted net income per share --- --- --- -------------------------------------------------------------------------------------------------------------------- Dividends per share --- --- --- -------------------------------------------------------------------------------------------------------------------- Dividend payout ratio --- --- --- -------------------------------------------------------------------------------------------------------------------- Book value per share $26.39 24.81 $1.58 -------------------------------------------------------------------------------------------------------------------- Balance sheet at period-end: -------------------------------------------------------------------------------------------------------------------- Gross loans $499,787 $472,958 5.67% -------------------------------------------------------------------------------------------------------------------- Loans, net $493,240 $466,256 5.79% -------------------------------------------------------------------------------------------------------------------- Total securities 263,943 255,841 3.17% -------------------------------------------------------------------------------------------------------------------- Cash and due From 17,114 16,206 5.60% -------------------------------------------------------------------------------------------------------------------- Total deposits 732,177 690,291 6.07% -------------------------------------------------------------------------------------------------------------------- Other borrowings 623 2,214 -71.86% -------------------------------------------------------------------------------------------------------------------- Stockholders' equity 92,670 87,270 6.19% -------------------------------------------------------------------------------------------------------------------- Intangible assets 17,397 17,565 -0.96% -------------------------------------------------------------------------------------------------------------------- Total assets 828,907 782,613 5.92% -------------------------------------------------------------------------------------------------------------------- Daily averages: -------------------------------------------------------------------------------------------------------------------- Gross loans $492,908 $434,943 13.33% -------------------------------------------------------------------------------------------------------------------- Loans,net $486,338 $405,903 19.82% -------------------------------------------------------------------------------------------------------------------- Total securities 261,033 226,692 15.15% -------------------------------------------------------------------------------------------------------------------- Cash and due From 15,464 13,952 10.84% -------------------------------------------------------------------------------------------------------------------- Total deposits 719,797 615,958 16.86% -------------------------------------------------------------------------------------------------------------------- Other borrowings 758 195 288.72% -------------------------------------------------------------------------------------------------------------------- Stockholders' equity 89,819 76,648 17.18% -------------------------------------------------------------------------------------------------------------------- Interest-earning assets 766,392 659,963 16.13% -------------------------------------------------------------------------------------------------------------------- Interest-bearing liabilities 606,678 537,631 12.84% -------------------------------------------------------------------------------------------------------------------- Intangible assets 17,519 12,445 40.77% -------------------------------------------------------------------------------------------------------------------- Total assets 814,827 695,291 17.19% -------------------------------------------------------------------------------------------------------------------- Financial ratios: Note (1) -------------------------------------------------------------------------------------------------------------------- Return on average assets 1.51% 1.64% -0.13 -------------------------------------------------------------------------------------------------------------------- Return on average equity 13.69% 14.60% -0.91 -------------------------------------------------------------------------------------------------------------------- Net interest margin 4.53% 4.73% -0.20 -------------------------------------------------------------------------------------------------------------------- Efficiency ratio 52.84% 50.01% 2.83 -------------------------------------------------------------------------------------------------------------------- Average equity to average assets 11.02% 11.02% 0.00 -------------------------------------------------------------------------------------------------------------------- Note (1) Ratio change measured in bp Allowance for loan losses: -------------------------------------------------------------------------------------------------------------------- Beginning balance $5,729 $5,369 6.71% -------------------------------------------------------------------------------------------------------------------- Provision for losses 557 885 -37.06% -------------------------------------------------------------------------------------------------------------------- Charge-offs -812 -1,091 -25.57% -------------------------------------------------------------------------------------------------------------------- Recoveries 146 174 -16.09% -------------------------------------------------------------------------------------------------------------------- Acquisition of CNB --- 498 -100.00% -------------------------------------------------------------------------------------------------------------------- Ending balance $5,620 $5,835 -3.68% -------------------------------------------------------------------------------------------------------------------- Nonperforming assets: -------------------------------------------------------------------------------------------------------------------- Nonaccrual loans $251 $478 -47.49% -------------------------------------------------------------------------------------------------------------------- Restructured loans --- --- --- -------------------------------------------------------------------------------------------------------------------- Total nonperforming loans Note (2) 251 478 -47.49% -------------------------------------------------------------------------------------------------------------------- Other real estate owned 429 1,010 -57.52% -------------------------------------------------------------------------------------------------------------------- Total nonperforming assets $680 $1,488 -54.30% -------------------------------------------------------------------------------------------------------------------- Asset quality ratios: Note (3) ------------------------------------ Nonperforming loans to total loans 0.05% 0.10% -0.05 -------------------------------------------------------------------------------------------------------------------- Allowance for loan losses to total loans 1.13% 1.24% -0.11 -------------------------------------------------------------------------------------------------------------------- Allowance for loan losses --- --- --- to nonperforming loans 2239.04% 1220.71% 1018.33 -------------------------------------------------------------------------------------------------------------------- Note (2) Loans 90 days past due or more not included Note (3) Ratio change measured in bp