National Bankshares, Inc. Posts Higher Third Quarter Earnings

BLACKSBURG, VA, October 15, 2009: National Bankshares, Inc. (NASDAQ Capital Market: NKSH) reported today that the Company had total net income of $3.78 million for the three months ended September 30, 2009. This compares with net income of nearly $3.62 million for the same period in 2008. Year-to-date net income for September 30, 2009, was $10.52 million, up over the $10.27 million that National Bankshares, Inc. reported at the end of the third quarter in 2008. This translates to quarterly basic net income per share of $0.55 and year-to-date net income per share of $1.52, as compared with $0.52 and $1.48, respectively, last year. Net loans at the end of the third quarter of 2009 totaled $575.19 million, a 6.24% increase over the total on September 30, 2008. The Company, a financial holding company that is the parent of the National Bank of Blacksburg of Blacksburg, Virginia, ended the third quarter with total assets of nearly $965.89 million, up by 7.05% over the same period in 2009.

The Company's Chairman, President and CEO, James G. Rakes, said, "I am very pleased to report that National Bankshares, Inc. posted higher third quarter and year-to-date net income. This is a real achievement in a difficult economy, especially when the Company's FDIC Deposit Insurance Fund assessments increased from $90,000 at September 30, 2008 to nearly $1.43 million at September 30, 2009. Even though the FDIC assessments have negatively affected all banks' earnings, it is important that the banking industry take whatever steps are necessary to be certain that the Deposit Insurance Fund remains strong." Mr. Rakes continued, "Because of its conservative and traditional approach to banking and financial services, National Bankshares, Inc. has been successful to date in negotiating the challenges of the economic downturn. As you would expect, we have experienced an increase in nonperforming assets as an effect of the slow economy. However, nonperforming assets remain manageable, and the total compares well with peers. At National Bankshares, Inc., we understand that we are likely to face more challenges before the economy fully recovers. In the meantime, we are prepared to help our customers and our communities by continuing to make good loans and by safeguarding their deposits in a sound and very well-capitalized bank."

National Bankshares, Inc. is the parent of the 118 year-old National Bank of Blacksburg, which does business as National Bank from 25 offices in Southwest Virginia. The Company has a financial services subsidiary that serves the same markets as National Bankshares Investment Services and National Bankshares Insurance Services. Company stock is traded on the NASDAQ Capital Market under the symbol "NKSH".

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.

View tables