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National Bankshares: A Strong Buy

Zacks Equity Research

On Mar 6, Zacks Investment Research upgraded National Bankshares Inc. (NKSH) to Zacks Rank #1 (Strong Buy).

Why the Upgrade?

National Bankshares has been witnessing rising earnings estimates owing to strong fourth quarter 2012 results. Moreover, this regional bank delivered positive earnings surprises in 2 of the last 4 quarters with an average beat of 2.1%.

National Bankshares reported fourth-quarter results on Feb 14. Earnings per share came in at 67 cents, lagging the year-ago earnings by 4.3%. However, the earnings beat the Zacks Consensus Estimate by 9.84%. Results were primarily aided by improved net interest income and lower provision for credit losses, partially offset by a rise in expenses and lower non-interest income.

Net interest income rose 0.7% year over year to $10.3 million. However, non-interest income declined 2.7% to $2.2 million. Further, total non-interest expenses hiked 10.2% year over year to $5.9 million.

Credit quality was mixed at National Bankshares. Provision for credit losses declined to $0.6 million from $0.8 million in the prior-year quarter. However, as of Dec 31, 2012, nonperforming assets were 1.19% of total loans, up 6 basis points (bps) from the prior-year quarter. Moreover, allowance for loans losses were 1.41% of total loans, up 4 bps from the prior-year quarter.

The Zacks Consensus Estimate for 2013 increased 4.0% to $2.58.

Other Stocks to Consider

Besides National Bankshares, other stocks in the same sector like WesBanco Inc. (WSBC), Monarch Financial Holdings, Inc. (MNRK) and Bank of Kentucky Financial Corp. (BKYF) carry a Zacks Rank #1 and are worth considering.

Read the Full Research Report on NKSH

Read the Full Research Report on MNRK

Read the Full Research Report on BKYF

Read the Full Research Report on WSBC

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