Note 11 - Restrictions on Dividends

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Restrictions on Dividends, Loans and Advances [Text Block]

Note

11

: Restrictions on Dividends

The Company’s principal source of funds for dividend payments is dividends received from its subsidiary bank. For the years ended

December 31, 2017,

2016

and

2015,

dividends received from the subsidiary bank were

$8,141,

$9,071

and

$7,930,

respectively. National Bankshares Financial Services provided

$350

in dividends to Bankshares in

2016.

Substantially all of Bankshares’ retained earnings are undistributed earnings of its sole banking subsidiary, which are restricted by various regulations administered by federal bank regulatory agencies. Bank regulatory agencies restrict, without prior approval, the total dividend payments of a bank in any calendar year to the bank’s retained net income of that year to date, as defined, combined with its retained net income of the preceding

two

years, less any required transfers to surplus. At

December 31, 2017,

NBB’s retained net income, which was free of such restriction, amounted to approximately

$20,820.