At $0.79 per diluted share for the three months ended June 30, 2026, National Bankshares, Inc. (Nasdaq: NKSH) printed more than double the $0.36 it earned in Q2 2025. The complication: a $6.57 million gain on the sale of its stake in Bearing Insurance Group, LLC and a nearly identical $6.55 million pre-tax loss on securities sold in the same quarter both sit inside that number, making the year-over-year swing harder to read at face value.
The repositioning math
The Blacksburg, Virginia company sold agency securities and mortgage-backed securities carrying a combined amortized cost of $131.87 million and a weighted average yield of 1.80%. In their place, NKSH bought $127.33 million in mortgage-backed securities at a weighted average yield of 5.26%. National Bankshares expects to recover the $6.55 million pre-tax loss over approximately 1.8 years, with the swap projected to add $4.25 million to annual interest income. The company said the repositioning adds 12 basis points to the projected 2026 net interest margin and 24 basis points to 2027's.
President and CEO Lara E. Ramsey said proceeds from selling the Bearing Insurance stake were directed into the securities restructuring, with the aim of improving profitability over the near and medium term.
Six-month results
For the six months ended June 30, 2026, diluted EPS reached $1.57, up from $0.87 in the same period of 2025. Net income for the half was $10.01 million versus $5.53 million a year earlier. National Bankshares closed June 30, 2026 with $1.83 billion in total assets. Loan growth was concentrated in construction lending, and management said the company intends to make every loan meeting its underwriting standards.
The counterargument
Strip out the insurance gain and the picture changes. The $6.57 million from Bearing Insurance Group does not repeat: with the stake sold, so is the annual bonus commission on insurance business production that National Bankshares historically received, most recently in Q1 2026. Two non-recurring revenue lines are leaving the income statement simultaneously. Q2 2026 net income was $5.03 million; back out the gain and the underlying result is materially smaller.
On balance, the line to watch is the $4.25 million projected income lift from the repositioned portfolio. The 24-basis-point NIM addition penciled in for 2027 is where the investment thesis rests.