8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) April 12, 2012

NATIONAL BANKSHARES, INC.

(Exact name of Registrant as specified in its charter)

Virginia	0-15204	54-1375874
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

101 Hubbard Street

Blacksburg, VA 24060

(Address of principal executive offices)

 (540) 951-6300

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report) Not applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02.  RESULTS OF OPERATIONS, FINANCIAL STATEMENTS AND EXHIBITS

On April 12, 2012, National Bankshares, Inc. issued a press release announcing and commenting on its financial results for the quarter ended March 31, 2012.  A copy of the press release is attached as Exhibit 99.1.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

(a) Exhibits

99.1     National Bankshares, Inc. Press Release, dated April 12, 2012.

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NATIONAL BANKSHARES, INC.

Date:    April 12, 2012

By:           /s/ JAMES G. RAKES

James G. Rakes

Chairman

President and CEO

Page 2 of 2 Pages

EX-99.1

FOR IMMEDIATE RELEASE

CONTACTS:   

JAMES G. RAKES, CHAIRMAN, PRESIDENT & CEO

(540) 951-6236   jrakes@nbbank.com

DAVID K. SKEENS, TREASURER & CFO

(540) 951-6347   dskeens@nbbank.com

NATIONAL BANKSHARES, INC. REPORTS

HIGHER FIRST QUARTER INCOME

BLACKSBURG, VA, APRIL 12, 2012:  Today, National Bankshares, Inc. (NASDAQ Capital Market: NKSH) announced net income of almost $4.43 million for the quarter ended March 31, 2012, or 10.06%, above the total reported for the first quarter of 2011.  Basic net income per share was $0.64, which compares with $0.58 for the first three months last year.  The return on average assets for the first quarter was 1.67%, and it was 1.60% for the three months ended March 31, 2011.  The return on average equity was 12.40% and 12.44% for the same two periods.  Total loans at quarter-end, at $585.49 million, were down slightly from the total of $588.88 million at the end of March last year.  Noninterest income was $2.15 million, an 11.27% increase over the $1.93 million at March 31, 2011.  At March 31, 2012, the Company had total assets of $1.08 billion, an increase of 5.58% over the end of the first quarter of 2011 and up slightly from total assets of nearly $1.07 billion at year-end.

National Bankshares’ Chairman, President & CEO James G. Rakes commented, “The increase in our first quarter earnings reflects continued economic recovery for our customers.  We see encouraging indications of loan demand, but that demand remains slower than we would like.  We also see steady growth in most noninterest income categories, and we have been able to contain noninterest expense.” 

National Bankshares, Inc., headquartered in Blacksburg, Virginia, is the parent company of National Bank of Blacksburg, which does business as National Bank, and of National Bankshares Financial Services, Inc.  National Bank is a community bank operating from 25 offices throughout Southwest Virginia.  National Bankshares Financial Services, Inc. is an investment and insurance subsidiary in the same trade area.  The Company’s stock is traded on the NASDAQ Capital Market under the symbol “NKSH.”  Additional information is available at www.nationalbankshares.com.

Forward-Looking Statements

Certain statements in this press release may be “forward-looking statements.”  Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results that are not statements of historical fact and that involve significant risks and uncertainties.  Although the Company believes that its expectations with regard to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual Company results will not differ materially from any future results implied by the forward-looking statements.  Actual results may be materially different from past or anticipated results because of many factors, some of which may include changes in economic conditions, the interest rate environment, legislative and regulatory requirements, new products, competition, changes in the stock and bond markets and technology.  The Company does not update any forward-looking statements that it may make.

National Bankshares, Inc. and Subsidiaries

Consolidated Balance Sheet

(Unaudited)

($ in thousands, except for per share data)	March 31, 2012			March 31, 2011			December 31, 2011
Assets
Cash and due from banks	$	12,241		$	11,800		$	11,897
Interest-bearing deposits		101,301			55,674			98,355
Federal funds sold		---			---			---
Securities available for sale		198,346			190,844			174,918
Securities held to maturity		139,367			132,669			143,995
Total securities		337,713			323,513			318,913
Mortgage loans held for sale		1,371			---			2,623
Loans:
Loans, net of unearned income and deferred fees		584,564			587,902			588,470
Less: allowance for loan losses		(8,063	)		(8,245	)		(8,068	)
Loans, net		576,501			579,657			580,402
Bank premises and equipment, net		10,563			10,366			10,393
Accrued interest receivable		6,175			6,514			6,304
Other real estate owned		940			2,222			1,489
Intangible assets		10,188			11,272			10,460
Bank-owned life insurance		19,991			17,415			19,812
Other assets		6,858			8,125			6,454
Total assets	$	1,083,842		$	1,026,558		$	1,067,102
Liabilities and Stockholders' Equity
Noninterest-bearing deposits	$	145,070		$	136,769		$	142,163
Interest-bearing demand deposits		415,352			372,470			404,801
Savings deposits		65,322			58,273			61,298
Time deposits		306,048			318,383			311,071
Total deposits		931,792			885,895			919,333
Other borrowed funds		---			---			---
Accrued interest payable		191			260			206
Other liabilities		7,067			6,738			6,264
Total liabilities		939,050			892,893			925,803
Stockholders' Equity
Preferred stock of no par value. Authorized 5,000,000 shares; none issued and outstanding		---			---			---
Common stock of $1.25 par value. Authorized 10,000,000 shares; issued and outstanding 6,939,974 shares at March 31, 2012, 6,935,974 at March 31, 2011 and 6,939,974 at December 31,2011		8,675			8,670			8,675
Retained earnings		138,374			127,218			133,945
Accumulated other comprehensive gain, net		(2,257	)		(2,223	)		(1,321	)
Total stockholders' equity		144,792			133,665			141,299
Total liabilities and stockholders' equity	$	1,083,842		$	1,026,558		$	1,067,102

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Three Months Ended
($ in thousands, except for per share data)	March 31, 2012		March 31, 2011
Interest Income
Interest and fees on loans	$	8,878	$	9,095
Interest on federal funds		---		---
Interest on interest-bearing deposits		71		32
Interest on securities – taxable		1,589		1,662
Interest on securities – nontaxable		1,576		1,676
Total interest income		12,114		12,465
Interest Expense
Interest on time deposits of $100,000 or more		425		561
Interest on other deposits		1,692		1,818
Interest on borrowed funds		---		---
Total interest expense		2,117		2,379
Net interest income		9,997		10,086
Provision for loan losses		672		800
Net interest income after provision for loan losses		9,325		9,286
Noninterest Income
Service charges on deposit accounts		631		612
Other service charges and fees		49		58
Credit card fees		794		733
Trust income		326		246
Bank-owned life insurance		200		184
Other income		99		91
Realized securities gains, net		53		10
Total noninterest income		2,152		1,934
Noninterest Expense
Salaries and employee benefits		2,956		2,904
Occupancy and furniture and fixtures		397		423
Data processing and ATM		392		444
FDIC assessment		109		346
Credit card processing		572		586
Intangibles and goodwill amortization		271		271
Net costs of other real estate owned		48		134
Franchise taxes		162		242
Other operating expenses		804		734
Total noninterest expense		5,711		6,084
Income before income tax expense		5,766		5,136
Income tax expense		1,337		1,112
Net income	$	4,429	$	4,024
Basic net income per share	$	0.64	$	0.58
Fully diluted net income per share	$	0.64	$	0.58
Weighted average outstanding number of common shares
Basic		6,939,974		6,933,780
Diluted		6,954,637		6,957,450
Dividends declared per share	$	---	$	---
Dividend payout ratio		---		---
Book value per share	$	20.86	$	19.27

National Bankshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended
($ in thousands, except for per share data)	March 31, 2012			March 31, 2011
Net income	$	4,429		$	4,024
Other Comprehensive Income, Net of Tax
Unrealized holding gains (losses) on available for sale securities net of deferred taxes of $(489) and $228		(907	)		423
Reclassification adjustment, net of income taxes of $(15) and $(3)		(29	)		(5	)
Other comprehensive income (loss), net of tax of $(504) and $225	$	(936	)	$	418
Total comprehensive income	$	3,493		$	4,442

Key Ratios and Other Data

(Unaudited)

	Three Months Ended
Average Balances	March 31, 2012			March 31, 2011
Cash and due from banks	$	11,865		$	11,420
Interest-bearing deposits		110,901			54,089
Securities available for sale		175,232			187,510
Securities held to maturity		140,743			132,322
Mortgage loans held for sale		1,213			696
Gross loans		585,080			585,444
Loans, net		575,583			576,614
Intangible assets		10,344			11,428
Total assets		1,068,848			1,016,979
Total deposits		918,387			877,294
Other borrowings		---			---
Stockholders' equity		143,603			131,191
Interest-earning assets		1,012,224			959,550
Interest-bearing liabilities		780,804			747,612
Financial Ratios
Return on average assets		1.67	%		1.60	%
Return on average equity		12.40	%		12.44	%
Net interest margin		4.36	%		4.68	%
Net interest income – fully taxable equivalent	$	10,940		$	11,066
Efficiency ratio		43.63	%		46.80	%
Average equity to average assets		13.44	%		12.90	%
Allowance for Loan Losses
Beginning balance	$	8,068		$	7,664
Provision for losses		672			800
Charge-offs		(700	)		(243	)
Recoveries		23			24
Ending balance	$	8,063		$	8,245

Asset Quality Data

(Unaudited)

Nonperforming Assets	March 31, 2012			March 31, 2011
Nonaccrual loans	$	1,789		$	2,339
Nonaccrual restructured loans		3,539			5,314
Total nonperforming loans		5,328			7,653
Other real estate owned		940			2,222
Total nonperforming assets	$	6,268		$	9,875
Accruing restructured loans	$	3,742		$	884
Loans 90 days or more past due	$	209		$	1,078
Asset Quality Ratios
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned		1.07	%		1.67	%
Allowance for loan losses to total loans		1.38	%		1.40	%
Allowance for loan losses to nonperforming loans		151.33	%		107.74	%
Loans past due 90 days or more to loans net of unearned income and deferred fees		0.04	%		0.18	%