National Bankshares Inc. is a bank holding company. Except for a separate investment portfolio Bankshares conducts all of its business operations through its two wholly-owned subsidiaries The National Bank of Blacksburg and Bank of Tazewell County . National Bankshares Inc. has a market cap of $153.6 million; its shares were traded at around $22.16 with a P/E ratio of 11 and P/S ratio of 2.6. The dividend yield of National Bankshares Inc. stocks is 3.7%. National Bankshares Inc. had an annual average earning growth of 24% over the past 5 years. Highlight of Business Operations: Nonperforming loans at March 31, 2009, all of which were nonaccrual loans, were $1,337, or 0.23% of total loans. Nonperforming loans increased by $4 over the $1,333 reported on December 31, 2008. Loans past due 90 days or more at the end of the first quarter of 2009 were $1,607, up $480 from the total at year-end. Although there were modest increases in loans past due 90 days or more from year-end, the ratio of loans 90 days or more past due to total loans remains low when compared with peers and is consistent with the Company’s conservative underwriting policies.
Net interest income for the first three months of 2009 was $8,166, an increase of $862, or 11.80%, when compared with the same period in 2008. This net increase is attributable to a decrease of $995 in interest expense, offset by a decrease in interest income of $133. The substantial decrease in interest expense was primarily caused by a decline in interest rates. In addition, management has focused on deposit pricing to maximize profitability.
A slightly lower volume of credit card accounts, transactions and merchant transactions resulted in credit card fees of $625 for the three months ended March 31, 2009. This was a decrease of $12, or 1.88%, when compared with the $637 total reported for the same period last year.
Trust fees, at $276, were down by $27, or 8.91%, from the $303 earned in the first quarter of 2008. Trust income varies depending on the number of Trust accounts, the types of accounts under management and financial market conditions. The decline in Trust fees is attributable to a combination of all three factors. The financial markets have declined significantly during 2008 and 2009, negatively affecting income. In addition, there are fewer accounts under management. The mix of account types also affected Trust fees during the quarter.
During the first quarter of 2008, the Company recognized $290 in a one-time gain from the initial public offering of Visa, Inc. When the credit card processor went public, the Company was required to sell a portion of its Class B shares. This gain, offset by losses in called investment securities, was the source of the relative high level of realized securities gains for the three months ended March 31, 2008. Realized securities gains for the three months ended March 31, 2009 were $80, as compared with $283 for the same period in 2008.
Credit card processing expense was $463 for the three months ended March 31, 2009, a slight increase of $3 from the total for the three months ended March 31, 2008. This expense is driven by volume and other factors such as merchant discount rates and is subject to a degree of variability.
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