National Bankshares, Inc. And Subsidiaries (000's), except ratios and percent data Three months ending September September 30, 2006 30, 2005 Change Selected Consolidated Data: --------- --------- --------- Interest income $ 12,042 $ 11,483 4.87% --------- --------- --------- Interest expense 4,691 3,816 22.93% --------- --------- --------- Net interest income 7,351 7,667 -4.12% --------- --------- --------- Provision for loan losses 16 169 -90.53% --------- --------- --------- Trust income 314 326 -3.68% --------- --------- --------- Other noninterest income 1,918 1,566 22.48% --------- --------- --------- Salary and benefits 2,866 2,822 1.56% --------- --------- --------- Occupancy expense 474 491 -3.46% --------- --------- --------- Amortization of intangibles 284 283 0.35% --------- --------- --------- Other noninterest expense 1,772 1,783 -0.62% --------- --------- --------- Income taxes -970 -957 1.36% --------- --------- --------- Net income $ 3,201 $ 3,054 4.81% --------- --------- --------- Basic net income per share $ 0.46 $ 0.44 $ 0.02 --------- --------- --------- Daily averages: --------- --------- --------- Gross loans $ 495,539 $ 497,152 -0.32% --------- --------- --------- Loans, net 489,243 490,614 -0.28% --------- --------- --------- Total securities 267,339 261,951 2.06% --------- --------- --------- Total deposits 732,009 728,295 0.51% --------- --------- --------- Other borrowings 582 70 731.43% --------- --------- --------- Stockholders' equity 95,443 91,071 4.80% --------- --------- --------- Cash and due from 15,113 16,077 -6.00% --------- --------- --------- Interest-earning assets 771,234 775,015 -0.49% --------- --------- --------- Interest-bearing liabilities 627,895 615,276 2.05% --------- --------- --------- Intangible assets 16,424 17,554 -6.44% --------- --------- --------- Total assets 832,157 823,188 1.09% --------- --------- --------- Financial ratios: Note (1) --------- --------- --------- Return on average assets 1.53% 1.51% 0.02 --------- --------- --------- Return on average equity 13.31% 13.69% -0.38 --------- --------- --------- Net interest margin 4.04% 4.25% -0.21 --------- --------- --------- Average equity to average assets 11.47% 11.06% 0.41 --------- --------- --------- Note (1) Ratio change measured in bp Allowance for loan losses: --------- --------- --------- Beginning balance $ 5,340 $ 5,632 -5.18% --------- --------- --------- Provision for losses 16 169 -90.53% --------- --------- --------- Charge-offs -136 -227 -40.09% --------- --------- --------- Recoveries 32 46 -30.43% --------- --------- --------- Ending balance $ 5,252 $ 5,620 -6.55% --------- --------- --------- Year to Date September September 30, 2006 30, 2005 Change Selected Consolidated Data: --------- --------- --------- Interest income $ 35,474 $ 33,786 5.00% --------- --------- --------- Interest expense 13,303 10,085 31.91% --------- --------- --------- Net interest income 22,171 23,701 -6.46% --------- --------- --------- Provision for loan losses 40 557 -92.82% --------- --------- --------- Trust income 1,059 1,062 -0.28% --------- --------- --------- Other noninterest income 5,444 4,525 20.31% --------- --------- --------- Salary and benefits 8,706 8,534 2.02% --------- --------- --------- Occupancy expense 1,479 1,450 2.00% --------- --------- --------- Amortization of intangibles 853 832 2.52% --------- --------- --------- Other noninterest expense 5,258 5,843 -10.01% --------- --------- --------- Income taxes -2,907 -2,873 1.18% --------- --------- --------- Net income $ 9,431 $ 9,199 2.52% --------- --------- --------- Basic net income per share $ 1.35 $ 1.31 $ 0.04 --------- --------- --------- Fully diluted net income per share $ 1.34 $ 1.30 $ 0.04 --------- --------- --------- Dividends per share .46 .35 $ 0.11 --------- --------- --------- Dividend payout ratio 26.77 26.52 $ 0.25 --------- --------- --------- Book value per share $ 14.00 13.20 $ 0.80 --------- --------- --------- Balance sheet at period-end: --------- --------- --------- Gross loans $ 498,626 $ 499,787 -0.23% --------- --------- --------- Loans, net $ 492,353 $ 493,240 -0.18% --------- --------- --------- Total securities 266,740 263,943 1.06% --------- --------- --------- Cash and due from 14,598 17,114 -14.70% --------- --------- --------- Total deposits 742,793 732,177 1.45% --------- --------- --------- Other borrowings 76 623 -87.80% --------- --------- --------- Stockholders' equity 97,803 92,670 5.54% --------- --------- --------- Intangible assets 16,260 17,397 -6.54% --------- --------- --------- Total assets 844,997 828,907 1.94% --------- --------- --------- Daily averages: --------- --------- --------- Gross loans $ 491,829 $ 492,908 -0.22% --------- --------- --------- Loans, net 485,488 486,338 -0.17% --------- --------- --------- Total securities 270,524 256,713 5.38% --------- --------- --------- Total deposits 736,511 719,989 2.29% --------- --------- --------- Other borrowings 495 758 -34.70% --------- --------- --------- Stockholders' equity 94,499 85,343 10.73% --------- --------- --------- Cash and due from 16,028 15,769 1.64% --------- --------- --------- Interest-earning assets 772,356 762,072 1.35% --------- --------- --------- Interest-bearing liabilities 626,744 606,678 3.31% --------- --------- --------- Intangible assets 16,687 17,519 -4.75% --------- --------- --------- Total assets 835,494 810,292 3.11% --------- --------- --------- Financial ratios: Note (1) --------- --------- --------- Return on average assets 1.51% 1.51% 0.00 --------- --------- --------- Return on average equity 13.34% 13.69% -0.35 --------- --------- --------- Net interest margin 4.17% 4.53% -0.36 --------- --------- --------- Efficiency ratio 53.08% 52.84% 0.24 --------- --------- --------- Average equity to average assets 11.31% 10.53% 0.78 --------- --------- --------- Note (1) Ratio change measured in bp Allowance for loan losses: --------- --------- --------- Beginning balance $ 5,449 $ 5,729 -4.89% --------- --------- --------- Provision for losses 40 557 -92.82% --------- --------- --------- Charge-offs -345 -812 -57.51% --------- --------- --------- Recoveries 108 146 -26.03% --------- --------- --------- Ending balance $ 5,252 $ 5,620 -6.55% --------- --------- --------- Nonperforming assets: --------- --------- --------- Nonaccrual loans 4 $ 251 -100.00% --------- --------- --------- Total nonperforming loans Note (2) 4 251 -100.00% --------- --------- --------- Other real estate owned 390 429 -9.09% --------- --------- --------- Total nonperforming assets $ 394 $ 680 -42.06% --------- --------- --------- Asset quality ratios: Note (3) --------- --------- --------- Nonperforming loans to total loans 0.001% 0.05% -98.42% --------- --------- --------- Allowance for loan losses to total loans 1.06% 1.13% -7.45% --------- --------- --------- Allowance for loan losses to nonperforming loans 1,313.00% 2,239.04% -41.36% --------- --------- --------- Note (2) Loans 90 days past due or more not included Note (3) Ratio change measured in bp
Contact Information: CONTACTS: James G. Rakes Chairman, President & CEO (540) 951-6236 J. Robert Buchanan Treasurer (276) 979-0341