Defined Benefit Plan

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

Note 6: Defined Benefit Plan

Components of Net Periodic Benefit Cost:

	Pension Benefits
	Six Months ended June 30,
	2011			2010
Service cost	$	218		$	200
Interest cost		352			344
Expected return on plan assets		(406	)		(304	)
Amortization of prior service cost		(50	)		(50	)
Amortization of net obligation at transition		---			(6	)
Recognized net actuarial loss		146			124
Net periodic benefit cost	$	260		$	308

2011 Plan Year Employer Contribution

Without considering the prefunding balance, NBI’s minimum required contribution to the National Bankshares, Inc. Retirement Income Plan (the “Plan”) is $816. Considering the prefunding balance, the 2011 minimum required contribution is $0. The Company elected to contribute $292 to the Plan in the quarter ended June 30, 2011.

2010 Plan Year Employer Contributions

On March 29, 2011, NBI made an additional 2010 plan year contribution of $2,500,000 to the Plan. Taken together with the $585,047 the Company previously contributed to the defined benefit plan, the total 2010 plan year contribution was $3,085,047. The Company accrues a liability for pension plan contributions based on actuarial calculations. The 2010 additional contribution was made from the accrued liability and had no material effect on the Company’s income statement, capital ratios or liquidity.