UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number:
March 31, 1997 0-15204
NATIONAL BANKSHARES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 54-1375874
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 South Main Street
P.O. Box 90002
Blacksburg, Virginia 24062-9002
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (540)552-2011
-------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 25, 1997
- ------------------------------- ---------------------------------
COMMON STOCK, $2.50 PAR VALUE 3,792,833
(This report contains 20 pages) <PAGE>
NATIONAL BANKSHARES, INC.
FORM 10-Q
INDEX
Page
----
PART I FINANCIAL INFORMATION
- --------------------------------
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS, MARCH 31, 1997
AND DECEMBER 31, 1996 4-5
CONSOLIDATED STATEMENTS OF INCOME,
THREE MONTHS ENDED MARCH 31, 1997 AND 1996 6
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY, THREE MONTHS ENDED
MARCH 31, 1997 AND 1996 7
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996 8-9
SELECTED CONSOLIDATED FINANCIAL DATA 10-14
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 15-18
PART II OTHER INFORMATION
- ----------------------------
ITEMS 1 - 3 - LEGAL PROCEEDINGS; CHANGES IN
SECURITIES; DEFAULTS UPON SENIOR SECURITIES 19
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 19
ITEM 5 - OTHER INFORMATION 19
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8 - K 19
SIGNATURES 20
-2-<PAGE>
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
PART I
------
FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
The consolidated financial statements of National Bankshares, Inc. (Bankshares)
and its wholly-owned subsidiaries, The National Bank of Blacksburg (NBB) and
Bank of Tazewell County (BTC), conform to generally accepted accounting
principles and to general practices within the banking industry. The
accompanying interim period consolidated financial statements are unaudited;
however, in the opinion of management, all adjustments consisting of normal
recurring adjustments which are necessary for a fair presentation of the
consolidated financial statements have been included. The results of operations
for the three months ended March 31, 1997 are not necessarily indicative of
results of operations for the full year or any other interim period. The
interim period consolidated financial statements and financial information
included herein should be read in conjunction with the notes to consolidated
financial statements included in the Corporation's 1996 Annual Report to
Stockholders and additional information supplied in the 1996 Form 10-K.
-3-<PAGE>
CONSOLIDATED BALANCE SHEETS
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
MARCH 31, DECEMBER
($000's) 1997 31, 1996
========= ========
ASSETS
Cash and due from banks $ 10,973 9,989
Interest-bearing deposits 3,994 91
Federal funds sold 11,395 1,910
Securities available for sale 57,661 62,534
Securities held to maturity (fair value
$98,184 in 1997 and $108,755 in 1996) 98,938 108,710
Mortgage loans held for sale 205 516
Loans:
Real estate construction loans 9,265 6,295
Real estate mortgage loans 42,622 43,917
Commercial and industrial loans 89,034 87,519
Loans to individuals 61,863 60,991
-------- -------
Total loans 202,784 198,722
Less unearned income and deferred fees 2,502 2,549
-------- -------
Loans, net of unearned income and
deferred fees 200,282 196,173
Less allowance for loan losses 2,445 2,575
-------- -------
Loans, net 197,837 193,598
-------- -------
Bank premises and equipment, net 5,112 5,037
Accrued interest receivable 3,561 3,510
Other real estate owned, net 445 474
Other assets 2,757 2,481
-------- -------
Total assets $392,878 388,850
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing demand deposits $ 42,539 44,096
Interest-bearing demand deposits 76,702 73,804
Savings deposits 48,394 48,164
Time deposits 169,891 168,520
-------- -------
Total deposits 337,526 334,584
-------- -------
Other borrowed funds 533 627
Accrued interest payable 722 700
Other liabilities 1,551 1,495
-------- -------
Total liabilities 340,332 337,406
-------- -------
Common stock subject to ESOP put option 1,668 1,643
-------- -------
-4-<PAGE>
Stockholders' equity:
Preferred stock of no par value. Authorized
5,000,000 shares; none issued and outstanding --- ---
Common stock of $2.50 par value. Authorized
5,000,000 shares; issued and outstanding
3,792,833 shares 9,482 9,482
Retained earnings 43,740 42,210
Net unrealized losses on securities available
for sale (676) (248)
Common stock subject to ESOP put option (1,668) (1,643)
-------- -------
Total stockholders' equity 50,878 49,801
Commitments and contingent liabilities
-------- -------
Total liabilities and
stockholders' equity $392,878 388,850
======== =======
-5-<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
MARCH 31, MARCH 31,
($000's, except per share data) 1997 1996
========= =========
INTEREST INCOME
Interest and fees on loans $4,602 3,997
Interest on interest-bearing deposits 20 ---
Interest on federal funds sold 82 162
Interest on securities-taxable 1,998 2,338
Interest on securities-nontaxable 463 502
------ ------
Total interest income 7,165 6,999
------ ------
INTEREST EXPENSE
Interest on time deposits of $100,000 or more 533 515
Interest on other deposits 2,643 2,762
Interest on borrowed funds 25 7
------ ------
Total interest expense 3,201 3,284
------ ------
Net interest income 3,964 3,715
Provision for loan losses 109 45
------ ------
Net interest income after provision
for loan losses 3,855 3,670
------ ------
NONINTEREST INCOME
Service charges on deposit accounts 278 258
Other service charges and fees 84 56
Credit card fees 120 110
Trust income 182 132
Other income 6 2
Realized securities gains, net 8 4
------ ------
Total noninterest income 678 562
------ ------
NONINTEREST EXPENSE
Salaries and employee benefits 1,372 1,202
Occupancy and furniture and fixtures 244 236
Data processing and ATM 74 52
FDIC assessment 3 ---
Credit card processing 120 97
Goodwill amortization 7 5
Net costs of other real estate owned 1 2
Other operating expense 620 691
------ ------
Total noninterest expense 2,441 2,285
------ ------
Income before income tax expense 2,092 1,947
Income tax expense 562 552
------ ------
Net income $1,530 1,395
====== ======
Net income per share $ 0.40 0.37
====== ======
-6-<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
NET
UNREALIZED
GAINS COMMON
(LOSSES) STOCK
ON SUBJECT
SECURITIES TO ESOP
COMMON RETAINED AVAILABLE PUT
($000's) STOCK EARNINGS FOR SALE OPTION TOTAL
====== ========= ========== ====== =====
Balances, December 31,
1995 $9,482 38,390 282 --- 48,154
Net income --- 1,395 --- --- 1,395
Change in net unrealized
gains (losses) on
securities available
for sale, net of income
tax benefit of $372 --- --- (722) --- (722)
------ ------ ----- ------ ------
Balances, March 31, 1996 $9,482 39,785 (440) --- 48,827
====== ====== ===== ====== ======
Balances, December 31,
1996 $9,482 42,210 (248) (1,643) 49,801
Net income --- 1,530 --- 1,530
Change in net unrealized
gains (losses) on
securities available
for sale, net of income
tax benefit of $220 --- --- (428) --- (428)
Change in common stock
subject to ESOP put
option --- --- --- (25) (25)
------ ------ ----- ------ ------
Balances, March 31, 1997 $9,482 43,740 (676) (1,668) 50,878
====== ====== ===== ====== ======
-7-<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
MARCH 31, MARCH 31,
($000's) 1997 1996
========= =========
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,530 1,395
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 109 45
Provision for deferred income taxes (127) ---
Depreciation of bank premises and equipment 113 114
Amortization of intangibles 31 30
Amortization of premiums and accretion of
discounts, net --- (3)
Gains on bank premises and equipment
disposals (2) ---
Gains on sales and calls of securities
available for sale, net (23) (4)
Gains on calls of securities held to
maturity, net (8) ---
Net decrease in mortgage loans held for sale
Losses and writedowns on other real estate --- ---
owned 311 306
(Increase) decrease in:
Accrued interest receivable --- ---
Other assets
Increase (decrease) in: (51) (250)
Accrued interest payable 41 (487)
Other liabilities
22 7
56 (441)
------- ------
Net cash provided by operating
activities 2,002 712
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in federal funds sold (9,485) (7,845)
Net increase in interest-bearing deposits (Note 1) (3,994)
Proceeds from calls and maturities of securities ---
available for sale 4,726
Proceeds from calls and maturities of securities 5,746
held to maturity 12,795
Purchases of securities available for sale (500) 11,249
Purchases of securities held to maturity (2,993) (5,969)
Purchases of loan participations --- (9,702)
Collections of loan participations 174 (1,996)
Net increase in loans made to customers (4,475) 529
Proceeds from disposal of other real estate owned 29 (901)
Recoveries on loans charged-off 47 1
Bank premises and equipment expenditures (190) 12
Proceeds from sale of bank premises and equipment --- (207)
------- ---
------
Net cash used in investing
activities (3,866) (9,083)
------- ------
-8-<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in time deposits 1,371 1,648
Net increase in other deposits 1,571 5,125
Net increase (decrease) in other borrowed funds (94) 966
------- ------
Net cash provided by financing
activities 2,848 7,739
------- ------
Net increase (decrease) in cash and due from
banks 984 (632)
Cash and due from banks at beginning of period 9,989 10,055
------- ------
Cash and due from banks at end of period $10,973 9,423
======= ======
SUPPLEMENTAL CASH FLOW INFORMATION
Unrealized gains/losses in securities available
for sale (gross) $ (648) (1,094)
Deferred income tax benefit 220 372
------- ------
Net unrealized losses on securities
available for sale $ (428) (722)
======= ======
Loans charged to the allowance for loan losses $ 286 77
======= ======
Interest paid $ 3,179 3,277
======= ======
Note (1) Interest-bearing deposits have been reclassified on the balance sheet
for the period ended March 31, 1997. Included in the cash flow of
$3,994 is $91 which represents the reclassification of the December
31, 1996 period-end balance, which was included in Cash and due from
deposits.
-9-<PAGE>
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
SELECTED BALANCE SHEET DATA
MARCH 31, DECEMBER 31,
($000's) 1997 1996
========= ============
SELECTED DATA AT PERIOD-END
Loans, net $197,837 193,598
Total securities 156,599 171,244
Total assets 392,878 388,850
Total deposits 337,526 334,584
Stockholders' equity 50,878 49,801
SELECTED DATA DAILY AVERAGES
Loans, net $195,355 177,419
Total securities 163,788 177,403
Total assets 389,743 388,045
Total deposits 333,400 335,938
Stockholders' equity 50,457 49,459
-10-<PAGE>
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
SELECTED INCOME STATEMENT DATA
MARCH 31, DECEMBER 31,
($000's, except per share data) 1997 1996 1996
====== ====== ============
SELECTED RATIOS AND PER SHARE DATA
Interest income $ 7,165 6,999 28,647
Interest expense 3,201 3,284 13,036
Net interest income 3,964 3,715 15,611
Provision for loan losses 109 45 331
Noninterest income 678 562 2,693
Noninterest expense 2,441 2,285 9,515
Income taxes 562 552 2,341
Net income 1,530 1,395 6,117
Return on average assets 1.59% 1.45% 1.58%
Return on average equity 12.30% 11.37% 12.37%
Net income per share $ 0.40 0.37 1.61
Book value per share (1) 13.85 12.88 13.56
Note - Book value per share has been computed including common stock subject
to ESOP put option as part of stockholders' equity.
-11-<PAGE>
<TABLE>
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
AVERAGE BALANCES AND INTEREST RATES
<CAPTION>
($000's) MARCH 31, 1997 MARCH 31, 1996 DECEMBER 31, 1996
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE COST BALANCE COST BALANCE COST
======= ======= ======= ======= ======= =======
<S> <C> <C> <C> <C> <C> <C>
Interest-earning
assets(1) $368,671 8.18% 361,871 8.19% 364,575 8.16%
Interest-bearing
liabilities 293,968 4.42% 293,302 4.49% 294,374 4.43%
----- ----- -----
Net interest spread 3.76% 3.70% 3.73%
===== ===== =====
Net interest margin 4.66% 4.55% 4.59%
===== ===== =====
(1) The yield on interest-earning assets is shown on a fully tax equivalent basis.
</TABLE>
-12-<PAGE>
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
LOAN LOSS DATA
For the periods ended
MARCH 31, MARCH 31, DECEMBER 31,
($000's) 1997 1996 1996
========= ========= ============
Balance at beginning of period $ 2,575 2,551 2,625
Provision for loan losses 109 45 331
Loans charged-off (286) (77) (506)
Recoveries 47 12 125
------- ------ ------
Balance at end of period $ 2,445 2,531 2,575
======= ====== ======
Ratio of allowance for loan
losses to loans, net of
unearned income and deferred
fees 1.22% 1.55% 1.31%
======= ====== ======
Ratio of net charge-offs to
average loans, net of
unearned income and deferred
fees (1) .49% .15% .21%
======= ====== ======
Ratio of allowance for loan
losses to nonperforming loans
(2) 677.29% 357.34% 418.02%
======= ====== ======
(1) Net charge-offs are on an annualized basis.
(2) Bankshares defines nonperforming loans as total nonaccrual and restructured
loans. Excluded are loans 90 days past due and still accruing.
-13-<PAGE>
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
NONPERFORMING ASSETS, PAST DUE LOANS AND IMPAIRED LOANS
MARCH 31, MARCH 31, DECEMBER 31,
($000's) 1997 1996 1996
========= ========= ============
Nonperforming Assets
--------------------
Nonaccrual loans $ 361 729 536
Restructured loans --- --- ---
------ ------ ------
Total nonperforming loans 361 729 536
------ ------ ------
Nonaccrual securities 65 215 80
(Net of valuation allowance)
Foreclosed property 445 761 474
Other repossessed property 23 3 27
------ ------ ------
Total foreclosed and
repossessed properties 468 764 501
------ ------ ------
Total nonperforming assets $ 894 1,708 1,117
====== ====== ======
Ratio of nonperforming assets to
loans, net of unearned income and
deferred fees and foreclosed/
repossessed assets (excludes
nonaccrual securities) .41% .88% .52%
====== ====== ======
Accruing Loans Past Due 90 Days or More
---------------------------------------
Past due 90 days or more and
still accruing $ 460 562 458
====== ====== ======
Ratio of loans past due 90 days or
more to loans, net of unearned
income and deferred fees .23% .33% .23%
====== ====== ======
Impaired Loans
--------------
Total impaired loans $ 435 1,031 725
====== ====== ======
Impaired loans with a
valuation allowance 109 377 371
Valuation allowance --- (296) (290)
------ ------ ------
Impaired loans net of allowance $ 109 81 81
====== ====== ======
Impaired loans with no
valuation allowance $ 326 301 354
====== ====== ======
Average recorded investment
in impaired loans $ 580 1,041 800
====== ====== ======
Income recognized on impaired loans $ 6 5 33
====== ====== ======
Amount of income recognized
on a cash basis $ 3 5 23
====== ====== ======
-14-<PAGE>
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The purpose of this discussion is to set forth information about the
financial condition and results of operations of National Bankshares, Inc. and
its wholly-owned subsidiaries (the Company), which are not otherwise apparent
from the consolidated financial statements and other information included in
this report. Reference should be made to the financial statements and other
information included in this report as well as the 1996 Annual Report and Form
10-K for an understanding of the following discussion and analysis.
Results of Operations
- ---------------------
Net income for the three months ended March 31, 1997 was $1,530,000 which
represents an increase of $135,000 or 9.68% over the first three months of 1996.
The return on average assets as of March 31, 1997 and March 31, 1996 were 1.59%
and 1.45%, respectively. The return on average equity was 12.30% and 11.37% at
March 31, 1997 and 1996, respectively.
Earnings per share at the end of the first quarter of 1997 was $0.40 per
share, an increase of $0.03 per share over the first quarter of 1996.
The overall improvement in performance was attributable to continued growth
in all major income categories. Noninterest expense categories reflected
controlled increases. Income tax expense increased as a result of the higher
level of taxable income.
Net Interest Income
- -------------------
Net interest income at the end of the first three months of 1997 was
$3,964,000, an increase of $249,000 or 6.70% over the same period in 1996. The
net interest margin increased to 4.66% from 4.55% as a result of a slight
decline in the yield on earning assets by 1 basis point during that period while
the cost to fund earning assets declined by 12 basis points. The net increase
was due to the shifting of investments to loans.
Provision for Loan Losses
- -------------------------
The provision for loan losses for the period ended March 31, 1997 was
$109,000, an increase of $64,000 from the same period the previous year. The
increased level of the provision in 1997 was primarily due to loan growth and
the need to maintain a satisfactory ratio of the allowance for loan losses to
loans. Net charge-offs, which bear directly on the amount of provisions, were
up $174 in the first quarter of 1997. This increased level of net charge-offs
reflects the write-off of previously identified and allocated credits and does
not reflect an overall deterioration of asset quality or a declining trend.
Management anticipates that additional provisions will be needed in future
periods to ensure an adequate allowance for loan losses, due in most part to
future loan growth.
Since the amount of the provision is largely dependent on loan growth, the
level of which is difficult to ascertain, management is unable to precisely
determine the amount of provision that may ultimately be necessary.
-15-<PAGE>
Noninterest Income
- ------------------
Noninterest income for the period ended March 31, 1997 was $678,000, an
increase of $116,000 or 20.64%. Service charges on deposits increased by 7.75%
and was primarily attributable to an increased collection of return check fees.
Bankcard fees also improved by 9.09% due to the increased levels of business
activity. Trust income, which is dependent on the market values of assets
managed and the types of services provided, increased 37.88%. Trust income also
benefited from the acquisition of new business.
Noninterest Expense
- -------------------
Noninterest expense for the first three months of 1997 was up 6.83% when
compared to the same period in 1996. Salaries and benefits expense increased by
$170,000, which was due in part to normal merit and promotion related salary
increases.
Occupancy expense remained essentially stable when the periods ending March
31, 1997 and March 31, 1996 are compared. It is anticipated that such expenses
will increase with the opening of a new branch in Rich Creek, Virginia by NBB.
Balance Sheet
- -------------
Total assets at the end of the first three months of 1997 were
$392,878,000, an increase of $4,028,000 or 1.04% over year-end 1996. Total
deposits at period-end March 31, 1997 were $337,526,000 an increase of
$2,942,000 from year-end 1996. While the interest-bearing deposits grew during
the first three months of 1997, demand deposits at period-end reflected a 3.53%
decrease.
Asset Quality
- -------------
Nonperforming loans, which include nonaccrual loans and restructured loans
but exclude loans past due 90 days and still accruing, totaled $361,000 at March
31, 1997 and $536,000 at December 31, 1996. Total foreclosed properties and
other repossessed property were $468,000 at March 31, 1997 a decline of $33,000
from December 31, 1996. The ratio of net charge-offs to average loans, net of
unearned income and deferred fees was .49% at March 31, 1997. At year-end
December 31, 1996, the ratio was .21%. The increased level of net charge-offs
reflects for the most part, the write-off of previously identified and allocated
credits and does not represent an overall deterioration of credit quality or the
onset of an unfavorable trend based on information presently available to
management.
While asset quality trends are generally favorable at present, management
cannot predict the duration of the current trend as it can be affected by
changes in the local and national economic conditions, the impact of which
cannot be precisely determined.
Liquidity
- ---------
Liquidity is the ability to provide sufficient cash levels to meet
financial commitments and to fund loan demand and deposit withdrawals. Net cash
from operating activities was $2,002,000 at March 31, 1997. Net cash used in
-16-<PAGE>
investing activities was $3,866,000 with the majority of that cash invested in
securities and federal funds sold. Net cash from financing activities was
$2,848,000. Net cash increased $984,000 from December 31, 1996.
Management is not aware of any trend, commitment or events that will result
in or that are reasonably likely to result in a decrease in liquidity that would
be adverse and to a degree that operations would be materially impaired.
Capital Resources
- -----------------
Total stockholder equity increased $1,077,000 or 2.16% from December 31,
1996. During the first quarter of 1997, retained earnings grew by $1,530,000.
This was, however, offset in part by a $428,000 increase in unrealized net
losses on securities held for sale and a $25,000 increase in the value of common
stock subject to put option. The common stock subject to put option is affected
by the current market price of Bankshares common stock.
The following table sets forth the various ratios by which bank capital is
measured. Bankshares and its subsidiaries continue to be well capitalized.
March 31, December 31,
1997 1996
========= ============
Capital Ratios
--------------
Total capital (to risk
weighted assets) 23.24% 23.00%
Tier 1 Capital (to risk
weighted assets) 22.20% 21.89%
Tier 1 capital (to average
assets, leverage ratio) 13.50% 12.96%
Accounting Considerations
- -------------------------
The Company adopted the provisions of SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"
on January 1, 1997. This Statement provides accounting and reporting standards
for transfers and servicing of financial assets and extinguishments of
liabilities based on consistent application of a financial-components approach
that focuses on control. It distinguishes transfers of financial assets that
are sales from transfers that are secured borrowings. Adoption of this
Statement did not have a material impact on the Company's consolidated financial
position, results of operations or liquidity.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share". Statement 128
establishes standards for computing and presenting earnings per share (EPS) and
applies to entities with publicly held common stock or potential common stock.
Statement 128 simplifies the standards for computing earnings per share
previously found in APB Opinion No. 15, "Earnings per Share", and makes them
comparable to international EPS standards. It replaces the presentation of
primary EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the income statement for
-17-<PAGE>
all entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation.
Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted-average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity.
Statement 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods; earlier application
is not permitted. Statement 128 requires restatement of all prior-period EPS
data presented. It is not anticipated that Statement 128 will have any effect
on current or prior year's EPS data presented by the Company.
-18-<PAGE>
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Items 1-3. Legal Proceedings; Changes in Securities; Defaults Upon Senior
Securities
None for the period ended
March 31, 1997.
Item 4. Submission of Matters to a Vote of Security Holders
None for the period ended
March 31, 1997.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Form 8-K
None
-19-<PAGE>
NATIONAL BANKSHARES, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
National Bankshares, Inc.
(Registrant)
Date: 05/13/97 /s/James G. Rakes
------------- -----------------------------
James G. Rakes, President and
Chief Executive Officer
Date: 05/13/97 /s/Joan C. Nelson
------------- -----------------------------
Joan C. Nelson, Treasurer
(principal financial officer)
-20-<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THI SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE MARCH 31,
1997 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,973
<INT-BEARING-DEPOSITS> 3,994
<FED-FUNDS-SOLD> 11,395
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 57,661
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<DEPOSITS> 337,526
<SHORT-TERM> 533
<LIABILITIES-OTHER> 3,941
<LONG-TERM> 0
0
0
<COMMON> 9,482
<OTHER-SE> 41,396
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<INTEREST-LOAN> 4,602
<INTEREST-INVEST> 2,461
<INTEREST-OTHER> 102
<INTEREST-TOTAL> 7,165
<INTEREST-DEPOSIT> 3,176
<INTEREST-EXPENSE> 3,201
<INTEREST-INCOME-NET> 3,964
<LOAN-LOSSES> 109
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<EXPENSE-OTHER> 2,441
<INCOME-PRETAX> 2,092
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,530
<EPS-PRIMARY> .40
<EPS-DILUTED> .40
<YIELD-ACTUAL> 0
<LOANS-NON> 0
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<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
