National Bankshares, Inc. And Subsidiaries
(000's), except ratios and percent data	Three months ending September 30, 2004	Three months ending September 30, 2003	Change	Year-to-date September 30, 2004	Year-to-date September 30, 2003	Change
Selected Consolidated Data:
Interest income	$10,841	$10,262	5.64%	$30,655	$31,134	-1.54%
Interest expense	2,904	2,840	2.25%	8,162	9,574	-14.75%
Net interest income	7,937	7,422	6.94%	22,493	21,560	4.33%
Provision for loan losses	293	435	-32.64%	885	1,277	-30.70%
Noninterest income	1,865	1,522	22.54%	5,285	4,395	20.25%
Noninterest expense	5,275	4,704	12.14%	15,010	13,840	8.45%
Income taxes	-1,019	(894)	13.98%	-2,772	-2,494	11.15%
Net income	$3,215	$2,911	10.44%	$9,111	$8,344	9.19%
Basic net income per share	$0.91	$0.83	$0.08	$2.59	$2.38	$0.21
Fully diluted net income per share	---	---	---	---	---	---
Dividends per share	---	---	---	---	---	---
Dividend payout ratio	---	---	---	---	---	---
Book value per share	---	---	---	$24.81	22.56	$2.25
Balance sheet at period-end:
Loans, net	---	---	---	$466,256	$407,027	14.55%
Total securities	---	---	---	255,841	232,527	10.03%
Total deposits	---	---	---	690,291	617,770	11.74%
Other borrowings	---	---	---	2,214	92	2306.52%
Stockholders' equity	---	---	---	87,270	79,268	10.09%
Total Assets	---	---	---	782,613	699,565	11.87%
Daily averages:
Loans,net	$465,806	$409,307	13.80%	$428,552	$405,903	5.58%
Total securities	256,727	228,794	12.21%	248,868	226,692	9.78%
Total deposits	697,119	616,574	13.06%	654,814	615,958	6.31%
Other borrowings	1,086	181	500.00%	468	195	140.00%
Stockholders' equity	83,919	78,143	7.39%	83,372	76,648	8.77%
Interest-earning assets	736,198	665,040	10.70%	701,684	659,963	6.32%
Interest-bearing liabilities	603,017	532,100	13.33%	565,674	537,631	5.22%
Total Assets	786,220	697,216	12.77%	741,743	695,291	6.68%
Financial ratios: Note (1)
Return on average assets	1.63%	1.66%	-0.03	1.64%	1.60%	0.04
Return on average equity	15.24%	14.78%	0.46	14.60%	14.55%	0.05
Net interest margin	4.70%	4.86%	---	4.73%	4.83%	-0.10
Efficiency ratio	---	---	---	50.01%	49.04%	0.97
Average equity to average assets	10.67%	11.21%	-0.53	11.24%	11.02%	0.22
Note (1) Ratio change measured in bp
Allowance for loan losses:
Beginning balance	$5,886	$5,493	7.15%	$5,369	$5,092	5.44%
Provision for losses	293	435	-32.64%	885	1,277	-30.70%
Charge-offs	-411	-457	-10.07%	-1,091	-1,059	3.02%
Recoveries	67	31	116.13%	174	192	-9.38%
Acquisition of C.N.B.	0	---	100.00%	498	---	100.00%
Ending balance	$5,835	$5,502	6.05%	$5,835	$5,502	6.05%
Nonperforming assets:
Nonaccrual loans	---	---	---	$478	$190	151.58%
Restructured loans	---	---	---	---	---	---
Total nonperforming loans	---	---	---	478	190	151.58%
Other real estate owned	---	---	---	1,010	940	7.45%
Total nonperforming assets	---	---	---	$1,488	$1,130	31.68%
Asset quality ratios: Note (2)
Nonperforming loans to total loans	---	---	---	0.10%	0.05%	0.06
Allowance for loan losses to total   loans	---	---	---	1.24%	1.33%	-0.09
Allowance for loan lossesto   nonperforming loans	---	---	---	1220.71%	2895.79%	-1675.08
Note (2) Ratio change measured in bp