National Bankshares, Inc. Announces Higher Earnings in 2006
BLACKSBURG, VA, FEBRUARY 2, 2007: National Bankshares,
Inc. (Nasdaq Capital Market: NKSH) today reported that it earned net
income of more than $12.63 million in 2006. This was an increase of
1.67% over the $12.42 million in record earnings posted by the company
in 2005. Basic net income per share increased from $1.77 in 2005 to
$1.80 in 2006, reflecting both increased earnings and the effects of
the company's previously-announced stock repurchase plan. For the full
year, National Bankshares had a return on average assets of 1.50% and
a return on average equity of 13.41%. The company ended 2006 with total
assets of just over $868.20 million, up by 3.17% over the nearly $841.50
in total assets at the end of 2005.
Net income attributable to the fourth quarter of 2006 of $3.20 million was nearly even with the $3.23 million earned in the same period of 2005. This translates to basic net income per share of $0.46 in the fourth quarters of both 2005 and 2006.
National Bankshares, Inc.'s Chairman, President
& CEO, James G. Rakes stated, "I am always pleased to report
record earnings, although the year-over-year increase in net income
was not large. The continuation well into 2006 of the pattern of interest-rate
increases begun by the Federal Reserve during 2005 compressed our net
interest margin and had a negative effect on earnings. However, in addition
to posting higher earnings, there were some other bright spots in this
year's financials. Because loan quality was excellent, there was no
need to fund the provision for loan losses above a minimal level. Other
noninterest income in 2006, at over $7.27 million, showed a nice 17.04%
increase above 2005. We worked hard to contain controllable expenses,
such as salary and benefits and occupancy expense, and these two categories
experienced very modest increases in 2006. Even though there were some
costs associated with the merger of our two community bank subsidiaries
in May of 2006, other noninterest expense this year declined by 6.26%
from 2005." Rakes continued, "Last year we completed both
the merger of our two banks and certain upgrades in our technology infrastructure.
These steps will allow us to continue to do what we do best. That is,
to offer a full range of financial services in settings which emphasize
the importance of personal relationships with our customers."
National Bankshares, Inc. is a financial holding company, with two subsidiaries.
The National Bank of Blacksburg, which does business as National Bank,
is headquartered in Blacksburg, Virginia, and the bank has 26 offices
throughout Southwest Virginia. The company also has a non-bank financial
services subsidiary, National Bankshares Financial Services, Inc., which
does business in the same market as National Bankshares Investment Services
and National Bankshares Insurance Services. National Bankshares, Inc.
stock is traded on the Nasdaq Capital Market under the symbol "NKSH".