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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000796534-07-000004.txt : 20070202
<SEC-HEADER>0000796534-07-000004.hdr.sgml : 20070202
<ACCEPTANCE-DATETIME>20070202164212
ACCESSION NUMBER:		0000796534-07-000004
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20061231
ITEM INFORMATION:		Results of Operations and Financial Condition
FILED AS OF DATE:		20070202
DATE AS OF CHANGE:		20070202

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NATIONAL BANKSHARES INC
		CENTRAL INDEX KEY:			0000796534
		STANDARD INDUSTRIAL CLASSIFICATION:	NATIONAL COMMERCIAL BANKS [6021]
		IRS NUMBER:				541375874
		STATE OF INCORPORATION:			VA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-15204
		FILM NUMBER:		07577071

	BUSINESS ADDRESS:	
		STREET 1:		PO BOX 90002
		CITY:			BLACKSBURG
		STATE:			VA
		ZIP:			24062-9002
		BUSINESS PHONE:		5405522011

	MAIL ADDRESS:	
		STREET 1:		100 SOUTH MAIN STREET
		STREET 2:		PO BOX 90002
		CITY:			BLACKSBURG
		STATE:			VA
		ZIP:			24062-9002
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form8k.txt
<TEXT>
                     Microsoft Word 11.0.5604;UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 --------------

                                    FORM 8-K
                                 CURRENT REPORT
                         PURSUANT TO SECTION 13 OR 15(d)
                                     OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                                  -------------

Date of Report:  February 2, 2007               Commission File Number: 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 Identification No.)
incorporation or organization)


        101 Hubbard Street
        Blacksburg, VA 24060
- ----------------------------------------
(Address of principal executive offices)

Registrant's telephone number, including area code (540) 951-6300
                                                   --------------



                               Page 1 of 2 Pages
                                     <PAGE>


ITEM 2.02  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

        On February 2, 2007 National Bankshares, Inc. issued a press release
announcing the company's earnings and financial performance for the fourth
quarter and year ended December 31, 2006. A copy of the press release is
attached as Exhibit 99.1.


Exhibit
99.1    National Bankshares, Inc. Press
        Release dated February 2, 2007.



                                    SIGNATURE

        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.


Date:    February 2, 2007             /s/ James G. Rakes
      -----------------------         ------------------------------
                                      James G. Rakes
                                      Chairman
                                      President and  Chief Executive Officer





                                Page 2 of 2 Pages







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>ex99_pressrelease.txt
<DESCRIPTION>2006 EARNINGS
<TEXT>

FOR IMMEDIATE RELEASE


CONTACTS: James G. Rakes, Chairman, President & CEO (540) 951-6236
          J. Robert Buchanan, Treasurer (276) 979-0341


                            NATIONAL BANKSHARES, INC.
                            ANNOUNCES HIGHER EARNINGS
                                     IN 2006


BLACKSBURG, VA, FEBRUARY 2, 2007: National Bankshares, Inc. (Nasdaq Capital
Market: NKSH) today reported that it earned net income of more than $12.63
million in 2006. This was an increase of 1.67% over the $12.42 million in record
earnings posted by the company in 2005. Basic net income per share increased
from $1.77 in 2005 to $1.80 in 2006, reflecting both increased earnings and the
effects of the company's previously-announced stock repurchase plan. For the
full year, National Bankshares had a return on average assets of 1.50% and a
return on average equity of 13.41%. The company ended 2006 with total assets of
just over $868.20 million, up by 3.17% over the nearly $841.50 in total assets
at the end of 2005.

Net income attributable to the fourth quarter of 2006 of $3.20 million was
nearly even with the $3.23 million earned in the same period of 2005. This
translates to basic net income per share of $0.46 in the fourth quarters of both
2005 and 2006.

National Bankshares, Inc.'s Chairman, President & CEO, James G. Rakes stated, "I
am always pleased to report record earnings, although the year-over-year
increase in net income was not large. The continuation well into 2006 of the
pattern of interest-rate increases begun by the Federal Reserve during 2005
compressed our net interest margin and had a negative effect on earnings.
However, in addition to posting higher earnings, there were some other bright
spots in this year's financials. Because loan quality was excellent, there was
no need to fund the provision for loan losses above a minimal level. Other
noninterest income in 2006, at over $7.27 million, showed a nice 17.04% increase
above 2005. We worked hard to contain controllable expenses, such as salary and
benefits and occupancy expense, and these two categories experienced very modest
increases in 2006. Even though there were some costs associated with the merger
of our two community bank subsidiaries in May of 2006, other noninterest expense
this year declined by 6.26% from 2005." Rakes continued, "Last year we completed
both the merger of our two banks and certain upgrades in our technology
infrastructure. These steps will allow us to continue to do what we do best.
That is, to offer a full range of financial services in settings which emphasize
the importance of personal relationships with our customers."

National Bankshares, Inc. is a financial holding company, with two subsidiaries.
The National Bank of Blacksburg, which does business as National Bank, is
headquartered in Blacksburg, Virginia, and the bank has 26 offices throughout
Southwest Virginia. The company also has a non-bank financial services
subsidiary, National Bankshares Financial Services, Inc., which does business in
the same market as National Bankshares Investment Services and National
Bankshares Insurance Services. National Bankshares, Inc. stock is traded on the
Nasdaq Capital Market under the symbol "NKSH". Additional information about the
company is available on its web site at www.nationalbankshares.com.

                            (unaudited tables follow)

<PAGE>

<TABLE>
<CAPTION>
                          National Bankshares, Inc. And
                                  Subsidiaries
- -----------------------------------------------------------------------------------------------------
(000's), except ratios and percent data

Three months ending                          December 31, 2006     December 31, 2005      Change
<S>                                                       <C>                 <C>              <C>
Selected Consolidated Data :
- -----------------------------------------------------------------------------------------------------
Interest income                                           $12,427             $11,594          7.18%
Interest expense                                            5,261               4,095         28.47%
Net interest income                                         7,166               7,499         -4.44%
Provision for loan losses                                       9                  10        -10.00%
Trust income                                                  469                 336         39.58%
Other noninterest income                                    1,830               1,690          8.28%
Salary and benefits                                         2,760               2,731          1.06%
Occupancy expense                                             478                 481         -0.62%
Amortization of intangibles                                   284                 285         -0.35%
Other noninterest expense                                   1,852               1,742          6.31%
Income taxes                                                 -881              -1,051        -16.18%
Net income                                                 $3,201              $3,225         -0.74%
Basic net income per share                                  $0.46               $0.46          $0.00
- -----------------------------------------------------------------------------------------------------

Daily averages:
- -----------------------------------------------------------------------------------------------------
Gross loans                                              $498,366            $495,920          0.49%
Loans,net                                                 492,104             489,479          0.54%
Total securities                                          272,644             263,887          3.32%
Total deposits                                            751,639             736,500          2.06%
Other borrowings                                                0                 177       -100.00%
Stockholders' equity                                       97,741              92,426          5.75%
Cash and due from                                          15,795              17,430         -9.38%
Interest-earning assets                                   792,919             780,753          1.56%
Interest-bearing liabilities                              646,673             622,233          3.93%
Intangible assets                                          16,138              17,444         -7.49%
Total assets                                              854,040             832,999          2.53%
- -----------------------------------------------------------------------------------------------------

Financial ratios: Note (1)
- -----------------------------------------------------------------------------------------------------
Return on average assets                                    1.49%               1.54%          -0.05
Return on average equity                                   12.99%              13.84%          -0.85
Net interest margin                                         4.06%               4.17%          -0.11
Average equity to average assets                           11.44%              11.10%           0.35
- -----------------------------------------------------------------------------------------------------
 Note (1)  Ratio change measured in bp

Allowance for loan losses:
- -----------------------------------------------------------------------------------------------------
Beginning balance                                          $5,252              $5,620         -6.55%
Provision for losses                                            9                  10        -10.00%
Charge-offs                                                  -114                -289        -60.55%
Recoveries                                                     10                 108        -90.74%
Ending balance                                             $5,157              $5,449         -5.36%
- -----------------------------------------------------------------------------------------------------



Year to Date                                 December 31, 2006     December 31, 2005      Change


Selected Consolidated Data :
- -----------------------------------------------------------------------------------------------------
Interest income                                           $47,901             $45,380          5.56%
Interest expense                                           18,564              14,180         30.92%
Net interest income                                        29,337              31,200         -5.97%
Provision for loan losses                                      49                 567        -91.36%
Trust income                                                1,528               1,398          9.30%
Other noninterest income                                    7,274               6,215         17.04%
Salary and benefits                                        11,466              11,265          1.78%
Occupancy expense                                           1,957               1,931          1.35%
Amortization of intangibles                                 1,137               1,117          1.79%
Other noninterest expense                                   7,110               7,585         -6.26%
Income taxes                                               -3,788              -3,924         -3.47%
Net income                                                $12,632             $12,424          1.67%
Basic net income per share                                  $1.80               $1.77          $0.03

<PAGE>

Year to Date                                 December 31, 2006     December 31, 2005      Change


Fully diluted net income per share                          $1.80               $1.76          $0.04
Dividends per share                                           .73                 .71          $0.02
Dividend payout ratio                                       40.44               40.17          $0.27
Book value per share                                       $13.86               13.10          $0.76
- -----------------------------------------------------------------------------------------------------

Balance sheet at period-end:
- -----------------------------------------------------------------------------------------------------
Gross loans                                              $501,702            $493,524          1.66%
Loans, net                                               $495,486            $487,162          1.71%
Total securities                                          285,489             272,541          4.75%
Cash and due From Banks                                    15,283              20,115        -24.02%
Total deposits                                            764,692             745,649          2.55%
Other borrowings                                               73                 357        -79.55%
Stockholders' equity                                       96,755              91,939          5.24%
Intangible assets                                          15,976              17,113         -6.64%
Total assets                                              868,203             841,498          3.17%
- -----------------------------------------------------------------------------------------------------

Daily averages:
- -----------------------------------------------------------------------------------------------------
Gross loans                                              $494,945            $493,668          0.26%
Loans,net                                                 488,624             487,130          0.31%
Total securities                                          271,066             261,743          3.56%
Total deposits                                            741,071             724,015          2.36%
Other borrowings                                               53                 420        -87.38%
Stockholders' equity                                       94,194              90,470          4.12%
Cash and due from                                          15,968              15,976         -0.05%
Interest-earning assets                                   779,018             769,931          1.18%
Interest-bearing liabilities                              632,514             610,534          3.60%
Intangible assets                                          16,025              17,500         -8.43%
Total assets                                              840,080             819,341          2.53%
- -----------------------------------------------------------------------------------------------------

Financial ratios: Note (1)
- -----------------------------------------------------------------------------------------------------
Return on average assets                                    1.50%               1.52%          -0.02
Return on average equity                                   13.41%              13.73%          -0.32
Net interest margin                                         4.14%               4.44%          -0.30
Efficiency ratio                                           52.74%              52.39%           0.35
Average equity to average assets                           11.21%              11.04%           0.17
- -----------------------------------------------------------------------------------------------------
 Note (1)  Ratio change measured in bp

Allowance for loan losses:
- -----------------------------------------------------------------------------------------------------
Beginning balance                                          $5,449              $5,729         -4.89%
Provision for losses                                           49                 567        -91.36%
Charge-offs                                                  -459              -1,101        -58.31%
Recoveries                                                    118                 254        -53.54%
Ending balance                                             $5,157              $5,449         -5.36%
- -----------------------------------------------------------------------------------------------------

Nonperforming assets:
- -----------------------------------------------------------------------------------------------------
Nonaccrual loans                                                0                $178       -100.00%
Restructured loans                                            ---                 ---            ---
Total nonperforming loans Note (2)                              0                 178       -100.00%
Other real estate owned                                       390                 376          3.72%
Total nonperforming assets                                   $390                $554        -29.60%
- -----------------------------------------------------------------------------------------------------

Asset quality ratios: Note (3)
- -----------------------------------------------------------------------------------------------------
Nonperforming loans to total loans                         0.000%               0.04%       -100.00%
Allowance for loan losses to total loans                    1.03%               1.11%         -7.99%
- -----------------------------------------------------------------------------------------------------
Allowance for loan losses to
  nonperforming loans                                         ---            3061.24%       -100.00%
- -----------------------------------------------------------------------------------------------------
 Note (2)  Loans 90 days past due or more not included
 Note (3)  Ratio change measured in bp

</TABLE>

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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