National Bankshares, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
 
 ($ in thousands, except for per share data)
 
March 31,
2012
   
March 31,
2011
   
December 31, 2011
 
 Assets
                 
 Cash and due from banks
  $ 12,241     $ 11,800     $ 11,897  
 Interest-bearing deposits
    101,301       55,674       98,355  
 Federal funds sold
    ---       ---       ---  
 Securities available for sale
    198,346       190,844       174,918  
 Securities held to maturity
    139,367       132,669       143,995  
                   Total securities
    337,713       323,513       318,913  
 Mortgage loans held for sale
    1,371       ---       2,623  
 Loans:
                       
      Loans, net of unearned income and deferred fees
    584,564       587,902       588,470  
      Less: allowance for loan losses
    (8,063 )     (8,245 )     (8,068 )
                  Loans, net
    576,501       579,657       580,402  
 Bank premises and equipment, net
    10,563       10,366       10,393  
 Accrued interest receivable
    6,175       6,514       6,304  
 Other real estate owned
    940       2,222       1,489  
 Intangible assets
    10,188       11,272       10,460  
 Bank-owned life insurance
    19,991       17,415       19,812  
 Other assets
    6,858       8,125       6,454  
                 Total assets
  $ 1,083,842     $ 1,026,558     $ 1,067,102  
                         
 Liabilities and Stockholders' Equity
                       
 Noninterest-bearing deposits
  $ 145,070     $ 136,769     $ 142,163  
 Interest-bearing demand deposits
    415,352       372,470       404,801  
 Savings deposits
    65,322       58,273       61,298  
 Time deposits
    306,048       318,383       311,071  
                 Total deposits
    931,792       885,895       919,333  
 Other borrowed funds
    ---       ---       ---  
 Accrued interest payable
    191       260       206  
 Other liabilities
    7,067       6,738       6,264  
                Total liabilities
    939,050       892,893       925,803  
                         
 Stockholders' Equity
                       
 Preferred stock of no par value. Authorized 5,000,000 shares; none issued and outstanding
    ---       ---       ---  
 Common stock of $1.25 par value. Authorized 10,000,000 shares; issued and outstanding  6,939,974 shares at March 31, 2012, 6,935,974 at March 31, 2011 and 6,939,974 at December 31,2011
    8,675       8,670       8,675  
 Retained earnings
    138,374       127,218       133,945  
 Accumulated other comprehensive gain, net
    (2,257 )     (2,223 )     (1,321 )
               Total stockholders' equity
    144,792       133,665       141,299  
 Total liabilities and stockholders' equity
  $ 1,083,842     $ 1,026,558     $ 1,067,102  
 
 
 
National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
 
   
Three Months Ended
 ($ in thousands, except for per share data)  
March 31, 2012
   
March 31, 2011
 
 Interest Income
           
 Interest and fees on loans
  $ 8,878     $ 9,095  
 Interest on federal funds
    ---       ---  
 Interest on interest-bearing deposits
    71       32  
 Interest on securities taxable
    1,589       1,662  
 Interest on securities nontaxable
    1,576       1,676  
              Total interest income
    12,114       12,465  
                 
 Interest Expense
               
 Interest on time deposits of $100,000 or more
    425       561  
 Interest on other deposits
    1,692       1,818  
 Interest on borrowed funds
    ---       ---  
             Total interest expense
    2,117       2,379  
             Net interest income
    9,997       10,086  
 Provision for loan losses
    672       800  
             Net interest income after provision for loan losses
    9,325       9,286  
                 
 Noninterest Income
               
 Service charges on deposit accounts
    631       612  
 Other service charges and fees
    49       58  
 Credit card fees
    794       733  
 Trust income
    326       246  
 Bank-owned life insurance
    200       184  
 Other income
    99       91  
 Realized securities gains, net
    53       10  
              Total noninterest income
    2,152       1,934  
                 
 Noninterest Expense
               
 Salaries and employee benefits
    2,956       2,904  
 Occupancy and furniture and fixtures
    397       423  
 Data processing and ATM
    392       444  
 FDIC assessment
    109       346  
 Credit card processing
    572       586  
 Intangibles and goodwill amortization
    271       271  
 Net costs of other real estate owned
    48       134  
 Franchise taxes
    162       242  
 Other operating expenses
    804       734  
              Total noninterest expense
    5,711       6,084  
 Income before income tax expense
    5,766       5,136  
 Income tax expense
    1,337       1,112  
             Net income
  $ 4,429     $ 4,024  
                 
 Basic net income per share
  $ 0.64     $ 0.58  
 Fully diluted net income per share
  $ 0.64     $ 0.58  
 Weighted average outstanding number of common shares
               
            Basic
    6,939,974       6,933,780  
            Diluted
    6,954,637       6,957,450  
 Dividends declared per share
  $ ---     $ ---  
 Dividend payout ratio
    ---       ---  
 Book value per share
  $ 20.86     $ 19.27  
 
 
 
National Bankshares, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)
 
   
Three Months Ended
 ($ in thousands, except for per share data)
 
March 31, 2012
   
March 31, 2011
 
 Net income
  $ 4,429     $ 4,024  
                 
 Other Comprehensive Income, Net of Tax
               
 Unrealized holding gains (losses) on available for sale securities  net of deferred taxes of $(489) and $228
    (907 )     423  
 Reclassification adjustment, net of income taxes of $(15) and $(3)
    (29 )     (5 )
 Other comprehensive income (loss), net of tax of  $(504) and $225
  $ (936 )   $ 418  
 Total comprehensive income
  $ 3,493     $ 4,442  
 
 
 
Key Ratios and Other Data
(Unaudited)
 
   
Three Months Ended
Average Balances
 
March 31, 2012
   
March 31, 2011
 
Cash and due from banks
  $ 11,865     $ 11,420  
Interest-bearing deposits
    110,901       54,089  
Securities available for sale
    175,232       187,510  
Securities held to maturity
    140,743       132,322  
Mortgage loans held for sale
    1,213       696  
Gross loans
    585,080       585,444  
Loans, net
    575,583       576,614  
Intangible assets
    10,344       11,428  
Total assets
    1,068,848       1,016,979  
Total deposits
    918,387       877,294  
Other borrowings
    ---       ---  
Stockholders' equity
    143,603       131,191  
Interest-earning assets
    1,012,224       959,550  
Interest-bearing liabilities
    780,804       747,612  
                 
Financial Ratios
               
Return on average assets
    1.67 %     1.60 %
Return on average equity
    12.40 %     12.44 %
Net interest margin
    4.36 %     4.68 %
Net interest income  fully taxable equivalent
  $ 10,940     $ 11,066  
Efficiency ratio
    43.63 %     46.80 %
Average equity to average assets
    13.44 %     12.90 %
                 
Allowance for Loan Losses
               
Beginning balance
  $ 8,068     $ 7,664  
Provision for losses
    672       800  
Charge-offs
    (700 )     (243 )
Recoveries
    23       24  
Ending balance
  $ 8,063     $ 8,245  
 
 
 
Asset Quality Data
(Unaudited)
 
Nonperforming Assets
 
March 31, 2012
   
March 31, 2011
 
Nonaccrual loans
  $ 1,789     $ 2,339  
Nonaccrual restructured loans
    3,539       5,314  
Total nonperforming loans
    5,328       7,653  
Other real estate owned
    940       2,222  
Total nonperforming assets
  $ 6,268     $ 9,875  
Accruing restructured loans
  $ 3,742     $ 884  
Loans 90 days or more past due
  $ 209     $ 1,078  
                 
Asset Quality Ratios
               
Nonperforming assets to loans net of unearned income and deferred fees, plus other real estate owned
    1.07 %     1.67 %
Allowance for loan losses to total loans
    1.38 %     1.40 %
Allowance for loan losses to nonperforming loans
    151.33 %     107.74 %
Loans past due 90 days or more to loans net of unearned income and deferred fees
    0.04 %     0.18 %