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United States SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 Annual Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 for
the fiscal year ended December 31, 2006
 Commission File Number 0-14773
 National Bancshares Corporation
 (Exact name of registrant as specified in its charter)
 Ohio
    
    34-1518564(State or other jurisdiction
    
    (IRS Employerof incorporation or organization)
    
    Identification No.)
 (Address, including zip code, and telephone number,
 including area code, of registrants principal executive offices
 Securities
registered pursuant to section 12(b) of the Act none
 Securities registered pursuant to section 12(g) of the Act common stock,
without par value
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   Documents Incorporated by Reference




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Table of Contents
 PagePart IItem 1
    
    Business
    
    
    2Item 1A
    
    Risk Factors
    
    
    14Item 1B
    
    Unresolved Staff Comments
    
    
    17Item 2
    
    Properties
    
    
    17Item 3
    
    Legal Proceedings
    
    
    18Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    18Part IIItem 5
    
    Market for Registrants Common Equity and Related
Stockholder Matters
    
    
    19Item 6
    

Selected Financial Data
    
    
    19Item 7
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    19Item 7A
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 8
    
    Financial Statements and Supplementary Data
    
    
    19Item 9
    
    Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    19Item 9A
    
    Controls and Procedures
    
    
    20Item 9B
    
    Other Information
    
    
    20Part IIIItem 10
    
    Directors, Executive Officers and Corporate Governance
    
    
    21Item 11
    
    Executive Compensation
    
    
    22Item 12
    
    Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    22Item 13
    
    Certain Relationships and Related Transactions and
Director Independence
    
    
    22Item 14
    
    Principal Accounting Fees and Services
    
    
    22Part IVItem 15
    
    Exhibits and Financial Statement Schedules
    
    
    23Signatures
    
    
    
    
    25EX-13EX-14.1EX-14.2EX-21EX-23EX-31.1EX-31.2EX-32
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Item 1  Business
 Forward-looking Statements
  
    
    the strength of the United States economy in general and the
strength of the local economies in which we conduct our operations;
general economic conditions, either nationally or regionally, may
be less favorable than we expect, resulting in a deterioration in
the credit quality of our loan assets, among other things
    
    the effects of, and changes in, trade, monetary and fiscal
policies and laws, including interest-rate policies of the Federal
Reserve Board
    
    inflation, interest rate, market, and monetary fluctuations
    
    the development and acceptance of new products and services of
National Bancshares and its subsidiary and the perceived overall
value of these products and services by users, including the
features, pricing, and quality compared to competitors products
and services
    
    the willingness of users to substitute our products and services
for those of competitors
    
    the impact of changes in financial services laws and regulations
(including laws concerning taxes, banking, securities, and
insurance)
    
    changes in consumer spending and saving habits
  Company Milestones
 1881
    
    First National Bank is chartered under the name Orrville Banking Company1902
    
    the Banks name is changed to Orrville National Bank1933
    
    the Bank is reorganized and renamed once again, the National Bank of Orrville1965
    
    on May 12 the Bank opens its first branch, on West High Street1968
    
    on February 1 the Bank merges with the First National Bank of Dalton, becoming the First
National Bank Orrville-Dalton1969
    
    on November 1 the Bank merges with the Bank of Mt. Eaton Company
 2




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1972
    
    on January 1 the Farmers and Merchants Bank Company of Smithville merges with the Bank, and
changes its name to First National Bank1975
    
    on July 5 the Bank opens its Midway office in Apple Creek1978
    
    the Bank opens a drive-through only office (Northside) in Orrville on September 181986
    
    National Bancshares Corporation becomes the holding company for First National Bank on June 21989
    
    the Bank enters Medina County with the purchase of its Lodi office on April 141994
    
    on December 16 the Bank establishes its second Medina County office with the purchase of the
Seville branch1999
    
    the Bank opens its Cleveland Road office in the city of Wooster on April 192002
    
    the acquisition of Peoples Financial Corporation and its subsidiary, Peoples Federal Savings
and Loan Association of Massillon, is completed on April 3, adding three more banking offices,
our first offices in Stark County2005
    
    the Bank closes its MarketPlace office in the city of Massillon on May 31 and opens its
Burbank Road office in the city of Wooster on June 302006
    
    First National Bank celebrates its 125year anniversary
 Market Area
 www.odod.state.oh.us/research) lmi.state.oh.us Ohio County Profiles www.odod.state.oh.us/research
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Competition
  www.fdic.gov rd th th th
  4




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Lending
    5




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
    
    accounts receivable, inventory and working capital loans
    
    renewable operating lines of credit
    
    loans to finance capital equipment
    
    term business loans
    
    short-term notes
 
    
    selected guaranteed or subsidized loan programs for small businesses
    
    loans to professionals
    
    commercial real estate loans, including agricultural loans secured by farmland
    
    loans for agricultural production and other loans to farmers
       
    
    residential construction loans to borrowers who will occupy the premises upon completion
of construction,
    
    residential construction loans to builders,
    
    commercial construction loans, and
    
    real estate acquisition and development loans.
   6




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Loan Solicitation and Processing
  Income from Lending Activities
 Delinquent Loans
  Investments
 Sources of Funds Deposit Accounts
 7




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Borrowings
 Personnel
 Minority Ownership of a Title Insurance Agency
 Available Information http://www.sec.gov www.fnborrville.com
 Supervision and Regulation
    8




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Regulation of Bank Holding Companies Bank and Bank Holding Company Acquisitions
 
    
    directly or indirectly acquiring ownership or control of any voting shares of another
bank or bank holding company, if after the acquisition the acquiring company would own or
control more than 5% of the shares of the other bank or bank holding company (unless the
acquiring company already owns or controls a majority of the shares),
    
    acquiring all or substantially all of the assets of another bank, or
    
    merging or consolidating with another bank holding company.
   Nonbanking Activities
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Financial Holding Companies
 
    
    financial in nature or incidental to that financial activity, or
    
    complementary to a financial activity and that does not pose a substantial risk to the
safety and soundness of depository institutions or the financial system generally.
  
    
    acting as principal, agent, or broker for insurance,
    
    underwriting, dealing in, or making a market in securities, and
    
    providing financial and investment advice.
  Holding Company Capital and Source of Strength
  Federal Deposit Insurance
 10




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Interstate Banking and Branching
 de novo de novo de novo
 Capital Risk-Based Capital Requirements
  11




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Prompt Corrective Action
 Limits on Bank Dividends to the Holding Company
 12




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Transactions with Affiliates
 
    
    limit the extent to which a bank or its subsidiaries may lend to or engage in various
other kinds of transactions with any one affiliate to an amount equal to 10% of the banks
capital and surplus, limiting the aggregate of covered transactions with all affiliates to
20% of capital and surplus,
    
    impose restrictions on investments by a subsidiary bank in the stock or securities of
its holding company,
    
    impose restrictions on the use of a holding companys stock as collateral for loans by
the subsidiary bank, and
    
    require that affiliate transactions be on terms substantially the same or at least as
favorable to the institution or subsidiary as those provided to a non-affiliate.
  Community Reinvestment Act
  13




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Monetary Policy
 Sarbanes-Oxley Act of 2002.
  
 ITEM 1A  RISKS FACTORS
 Success in the banking industry requires disciplined management of lending risks
 Concentration of service area could negatively affect financial performance.
 Changing interest rates have a direct and immediate impact on financial institutions
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First National Bank has significant competition in both attracting and retaining deposits and
in originating loans.
 The banking industry is heavily regulated; the compliance burden to the industry is
considerable; the principal beneficiary of federal and state regulation is the public at large and
depositors, not shareholders
  National Bancshares Corporation common stock is thinly traded. It is therefore susceptible to
wide price swings ®
  
    
    a company must have an audit committee consisting of independent directors,
    
    the audit committee must be responsible for the appointment, compensation,
retention, and oversight of the independent auditor,
    
    the audit committee must establish procedures for the submission of complaints
about accounting, auditing, and internal control issues and for the anonymous
submission of accounting and auditing concerns by employees,
    
    the audit committee must have authority to engage its own advisors, and
    
    the company must ensure that the audit committee has ample funding for payment
of independent auditor compensation, for compensation of advisors, and for other
administrative expenses.
 
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Government regulation could restrict our ability to pay cash dividends
 We could incur liabilities under federal and state environmental laws if we foreclose on
commercial properties
 Growth through acquisition involves special risks
  Accounting for probable loan losses is a critical accounting policy
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Item 1b  Unresolved Staff Comments
  
 Item 2  Properties
  Net Book ValueLocation
    
    County
    
    
    (Dollars in Thousands)Main Office:112 West Market Street
    
    Wayne
    
    $
    352Orrville, Ohio 44667Other Offices:12 West Main Street
    
    Wayne
    
    $
    109Dalton, Ohio 446181320 West High Street
    
    Wayne
    
    $
    86Orrville, Ohio 446674934 Kidron Road
    
    Wayne
    
    $
    854Kidron, Ohio 44636153 East Main Street
    
    Wayne
    
    $
    61Smithville, Ohio 4467715974 East Main Street
    
    Wayne
    
    $
    32Mt. Eaton, Ohio 44659U.S. Route 30 at County Road 44
    
    Wayne
    
    $
    957227 Lincoln
Way East 
Apple Creek, Ohio 446061720 North Main Street
    
    Wayne
    
    $
    70Orrville, Ohio 446671725 Cleveland Road
    
    Wayne
    
    $
    543Wooster, Ohio 446914192 Burbank Road
    
    Wayne
    
    $
    899Wooster, Ohio 44691
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Net Book ValueLocation
    
    County
    

    (Dollars in Thousands)211 Lincoln Way East
    
    Stark
    
    $
    664Massillon, Ohio 446462312 Lincoln Way N.W.
    
    Stark
    
    $
    390Massillon, Ohio 4464751 Massillon Marketplace Drive S.W.
    
    Stark
    
    $
    8Massillon, Ohio 44646(cash ATM only)(leased location)106 Ainsworth Street
    
    Medina
    
    $
    312Lodi, Ohio 44254121 Greenwich Road
    
    Medina
    
    $
    18Seville, Ohio 44667(leased facility)
 
 
 Item 3  Legal Proceedings
  
 Item 4  Submission of Matters to a Vote of Security Holders
  18




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Part II
 
 Item 5  Market for Registrants Common Equity and Related Stockholder
Matters
  See
  Issuer Purchase of Equity Securities
  
 Item 6  Selected Financial Data
  
 Item 7  Managements Discussion and Analysis of Financial Condition and Results of
Operations
  
 Item 7A  Quantitative and Qualitative Disclosures About Market Risk
  
 Item 8  Financial Statements and Supplementary Data
  
 Item 9  Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
  19




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Item 9A  Controls and Procedures
  
 Item 9B  OTHER INFORMATION
  20




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Part III
 
 Item 10  Directors, Executive Officers and Corporate Governance
   Name
    
    Age
    
    PositionDavid C. Vernon
    
    
    66
    
    
    President and Chief Executive Officer of
National Bancshares Corporation and First
National Bank. He serves as a director and
Vice-Chairman of Central Federal Corporation
and its wholly owned subsidiary CFBank, a
federally chartered savings association
headquartered in Fairlawn in Summit County,
Ohio. He served as Chairman of Central
Federal Corporation and CFBank from January
2003 until January 1, 2006. He also served
as Central Federal Corporations and CFBanks
Chief Executive Officer in 2003 and 2004 and
as President of both companies from March
2003 to January 2005. Before joining Central
Federal and CFBank, he was Chairman,
President and Chief Executive Officer of
Founders Capital Corporation in Akron, Ohio
from September 2002 to February 2003; a
Strategic Planning Consultant to Westfield
Bank in Westfield, Ohio from May 2000 to July
2002; a Consultant to Champaign National Bank
in Urbana, Ohio from July 1999 to April 2002;
and a Consultant to First Place Bank in
Warren, Ohio from April 1999 to February
2001. In February 1999, Mr. Vernon retired
as Chairman, President and Chief Executive
Officer of Summit Bank, an Akron-area
community bank he founded in January 1991.Marc Valentin
    
    
    39
    
    
    Senior Vice President and Treasurer of National Bancshares Corporation since
September
2005 and Senior Vice President and Chief Financial Officer of First
National Bank since September 2006. Mr. Valentin served as First
National Banks Vice President and Controller from September 2005
until September 2006. Additionally, he has served as First National
Banks Vice President of Human Resources from September 2004 until
December 2006. Mr. Valentin is the principal financial and
accounting officer. Prior to joining First National Bank, he was a
business unit controller for Bekaert-Contours for one year, a
manufacturing firm in Orrville, Ohio. Prior to that position, he was
the controller for Contours, Ltd., a member of the Bekaert Group for
five years.Kenneth R. VanSickle
    
    
    60
    
    
    Senior Vice President and Secretary of National Bancshares Corporation
since April
1997. Mr. VanSickle has been a senior loan officer of First National
Bank since 1986, currently serving as Senior Vice President and Chief
Loan OfficerJames A. Huntsberger
    
    
    45
    
    
    Vice President of Operations and Cashier of First National Bank since
August 2005.
Previously, Mr. Huntsberger served as asset and liability manager,
internal auditor and credit analyst of First National Bank.Tammy L. Starkey
    
    
    42
    
    
    Vice President of Compliance, Human Resources and Security since December 2006.
Prior to this, in August 2005, Ms. Starkey was appointed Vice
President, Risk Management. She served as internal auditor for First
National Bank since 2003. Prior to joining First National Bank, she
was employed by Dollar Bank and National City Bank in various
internal audit and branch management capacities.
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Name
    
    Age
    
    PositionPaul G. Kubiak
    
    
    46
    
    
    Vice President of Client Services
for First National Bank since August 2005. Prior to this, Mr. Kubiak was a business development officer for the Bank
since March 2004. Prior to joining the Bank, he served as Manager of
Customer Service for Bekaert Contours and Contours, Ltd., a
manufacturing firm in Orrville, Ohio.
    
 Item 11  Executive Compensation
  
 Item 12  Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
  
 Item 13  Certain Relationships and Related Transactions
  
 Item 14  Principal Accounting Fees and Services
  22




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Part IV
 
 Item 15  Exhibits AND Financial Statement Schedules
 (a)(1) Financial Statements

The following financial statements are included in this document in Item 8:
 
    
    Report of Independent Registered Public Accounting Firm
    
    Consolidated Balance Sheets at December 31, 2006 and 2005
    
    Consolidated Statements of Income for the Years Ended December 31, 2006, 2005, and 2004
    
    Consolidated Statements of Changes in Shareholders Equity for the Years Ended December 31, 2006, 2005, and 2004
    
    Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005, and 2004
    
    Notes to Consolidated Financial Statements
 (a)(2) Financial Statement Schedules
  (a)(3) Exhibits
  Exhibits Required by Item 601 of Regulation S-K
 ExhibitNumber
    
    Description
    
    Location3.1
    
    Amended Articles of Incorporation
    
    Incorporated by reference to the identically numbered
exhibit to the Annual Report on Form 10-K for the fiscal
year ended December 31, 2003, filed on March 26, 20043.2
    
    Code of Regulations
    
    Incorporated by reference to the identically numbered
exhibit to the Annual Report on Form 10-K for the fiscal
year ended December 31, 2003, filed on March 26, 200410.1*
    
    Directors Defined Benefit Plan Agreement
    
    Incorporated by reference to the identically numbered
exhibit to the Annual Report on Form 10-K for the fiscal
year ended December 31, 2000, filed on March 29, 200110.2*
    
    Special Separation Agreement of Charles J.
Dolezal, President and Chief Executive Officer
    
    Incorporated by reference to the identically numbered exhibit
to the Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, filed on March 29, 2001.10.3*
    
    Special Separation Agreement of Marc
Valentin
    
    Incorporated by reference to the identically numbered exhibit
on Form 10-Q for the quarter ended September 30, 2004,
filed on November 15, 2004.10.4*
    
    Separation and Release Agreement entered
into by Charles J. Dolezal and National
Bancshares and First National Bank
    
    Incorporated by reference to the identically numbered exhibit
on Form 10-Q for the quarter ended June 30, 2006 filed on
August 14, 2006.10.5*
    
    Employment Agreement entered into by
David C. Vernon and National Bancshares
and First National Bank
    
    Incorporated by reference on Form 8-K dated December 7, 2006.10.6*
    
    Special Separation Agreement of Kenneth R.
VanSickle
    
    Incorporated by reference to exhibit number 10.2
to the Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, filed on March 29, 2001.
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Exhibits Required by Item 601 of Regulation S-K (continued)
 ExhibitNumber
    
    Description
    
    Location13
    
    2006 Annual Report to Security Holders
    
    Filed herewith14.1
    
    Code of Business Conduct and Ethics
    
    Filed herewith14.2
    
    Code of Ethical Conduct for the Finance Officers
And Finance Department Personnel
    
    Filed herewith21
    
    Subsidiaries
    
    Filed herewith23
    
    Consent of Crowe Chizek and Company LLC
    
    Filed herewith31.1
    
    Certification of Chief Executive Officer under
Sarbanes-Oxley Act section 302
    
    Filed herewith31.2
    
    Certification of Chief Financial Officer under
Sarbanes-Oxley Act section 302
    
    Filed herewith32
    
    Certification under Sarbanes-Oxley Act section
906
    
    Filed herewith
 
 *
    
    Management contract or compensatory plan or arrangement 24




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Signatures
  National Bancshares CorporationBy:
    
    /s/ David C. VernonDavid C. VernonPresident and Chief Executive OfficerDate:
    
    March 20, 2007
  /s/ David C. Vernon
    
    
    
    March 13, 2007David C. VernonPresident, Chief Executive Officer, and Director/s/ Marc Valentin
    
    
    
    March 13, 2007Marc Valentin, Sr. Vice President & Treasurer(Principal Accounting and Financial Officer)/s/ Sara E Steinbrenner Balzarini
    
    
    
    March 13, 2007Sara E. Steinbrenner Balzarini, Director/s/ John Cook, CPA, Ph. D.
    
    
    
    March 13, 2007John Cook, CPA, Ph. D., Director/s/ Bobbi E. Douglas
    
    
    
    March 13, 2007Bobbi E. Douglas, Director/s/ John W. Kropf
    
    
    
    March 13, 2007John W. Kropf, Director/s/ Steven W. Schmid
    
    
    
    March 13, 2007Steven W. Schmid, Director/s/ John E. Sprunger
    
    
    
    March 13, 2007John E. Sprunger, Director/s/ Howard J. Wenger
    
    
    
    March 13, 2007Howard J. Wenger, Director/s/ Albert W. Yeagley
    
    
    
    March 13, 2007Albert W. Yeagley, Director
 25