BLACKSBURG, VA, FEBRUARY 4, 2010: National Bankshares, Inc. (NASDAQ Capital Market: NKSH) announced today that it posted record net income of nearly $14.32 million for the year ended December 31, 2009. Net income for the year is 5.34% higher than the $13.59 million earned by the Company in 2008. Basic net income per share increased from $1.96 last year to $2.07 for 2009. National Bankshares, Inc. ended 2009 with total assets of nearly $982.37 million, an increase of 5.02% over the $935.37 million at December 31, 2008. Net loans, which were at $583.02 million at the end of 2009, experienced a 2.34% increase compared to net loans at year-end 2008. The return on average assets for the twelve months ended December 31, 2009 was 1.47%, and the return on average equity for the period was 12.23%.
For the three months ending December 31, 2009, National Bankshares, Inc. had net income of nearly $3.80 million, or basic net income per share of $0.55. This compares with nearly $3.33 million, or basic net income per share of $0.48, for the same three month period in 2008.
Chairman, President & CEO, James G. Rakes, commented on the year’s financial performance. “Last year, National Bankshares benefited from the fact that our subsidiary community bank, National Bank, maintained its traditional, conservative approach to banking. Record earnings in 2009 came largely from higher net interest income, coupled with limited increases in controllable noninterest expense. We were able to take advantage of the low and stable interest rate environment, and net interest income grew by almost 10.77%, from $31.29 million for 2008 to $34.66 million for 2009. A portion of the growth in interest income came from meeting the credit needs of borrowers in our market area. We experienced $14.33 million of growth in the loan portfolio, as our bankers continued to make good loans despite the difficult economy. At the same time as net interest income was improving, we were keeping careful watch on controllable costs. As a result, total noninterest expense for the year was only $1.83 million above 2008 levels, despite FDIC Deposit Insurance Fund assessments climbing by $1.52 million from 2008 to 2009.”
Mr. Rakes continued, “Our region of the country has not totally escaped the effects of the recession and the slow economic recovery. Fortunately, we have not been as seriously impacted as some other areas. In the last half of 2008, we began to see a rise in the level of total nonperforming assets. Anticipating that this trend would continue and worsen during 2009, we increased the provision for loan losses as the year progressed. In 2008, the provision for losses was $1.12 million, and in 2009 we set aside over $1.63 million. By December 31, 2009, the allowance for loan losses had grown to almost $6.93 million from $5.86 million at the end of 2008, and the ratio of the allowance for loan losses to total loans had gone from 1.02% at year-end 2008 to 1.17% at December 31, 2009. Because of this preparation and because our earnings and capital levels allow us to approach loan workouts in a deliberate fashion, we feel that we can respond appropriately to the increase in total nonperforming assets that is being reported for year-end 2009. Although having total nonperforming assets at almost $8.88 million at December 31, 2009 is high for our Company, the total remains quite low when compared with peers. The ratio of nonperforming loans to net loans was at 1.14% at year-end, a reasonable level in today’s difficult economy.” Mr. Rakes went on to say, “National Bankshares, Inc. is both people focused and value driven. We can trace our heritage back to the founding of National Bank in 1891. Despite the current challenges, we are proud to be traditional bankers, and we are committed to the communities we serve.”
National Bankshares, Inc. is a financial holding company that is the parent of National Bank of Blacksburg, which does business as National Bank from 25 offices in Southwest Virginia. National Bank offers a full range of banking products and services, including Trust services. The Company has its headquarters in Blacksburg, Virginia. It also has a financial services subsidiary that does business in the same markets as National Bankshares Investment Services and National Bankshares Insurance Services. Its stock is traded on the NASDAQ Capital Market under the symbol “NKSH”.
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.