FOR IMMEDIATE RELEASE

National Bankshares, Inc. Reports Results for the Three and Nine Months Ended September 30, 2026

BLACKSBURG, VA., October 22, 2026 -- National Bankshares, Inc. (“the Company”) (Nasdaq: NKSH), parent company of The National Bank of Blacksburg (“the Bank”) and National Bankshares Financial Services, Inc., today announced its results of operations through the third quarter of 2026. The Company reported net income of $15.50 million or $2.43 per diluted common share for the nine months ended September 30, 2026. This compares with net income of $9.95 million or $1.56 per diluted common share for the nine months ended September 30, 2025. For the three month period ended September 30, 2026 the Company reported net income of $5.49 million or $0.86 per diluted common share. This compares with net income for the three month period ended September 30, 2025 of $4.42 million or $0.69 per diluted common share. National Bankshares, Inc. ended September 30, 2026 with total assets of $1.78 billion.

Lara E. Ramsey, President and CEO, commented, "We are pleased to report strong growth in net income for the third quarter and nine months ended September 30, 2026. Year-to-date earnings increased over 55% from the same period last year, or over 33% when adjusted for nonrecurring items recorded in 2025 and 2026. When the third quarter of 2026 is compared with the second quarter of 2026, earnings increased more than 9%, driven by securities yield improvement. Higher yields on assets and reduced deposit costs have supported income growth throughout 2026, and we expect continued loan repricing to sustain the trend."

Ms. Ramsey continued, "Throughout 2026, we have been building momentum with new products and digital banking tools to attract new customers and strengthen existing relationships. We have prioritized enhancing our sales culture and introduced operational technologies to increase efficiency. These efforts reflect our ongoing commitment to shareholder value grounded in sustainable, customer-focused growth."

Comparability

The Company made minor reclassifications during the current period. Prior periods are presented on a comparable basis.

Highlights

Net Interest Income

The net interest margin improved 21 basis points when the third quarter of 2026 is compared with the second quarter of 2026, led by a 54 basis point improvement in the yield on taxable securities resulting from second quarter's restructuring of a portion of the securities portfolio. When the third quarter of 2026 is compared with the third quarter of 2025, the net interest margin improved 49 basis points, due to improvement in taxable securities yield and a decrease in funding costs. The net interest margin for the nine month period ended September 30, 2026 improved 51 basis points compared with the same period of 2025, driven by higher loan and securities yields and lower deposit costs, somewhat offset by lower yield on interest-bearing deposit assets.

Gain on Sale of Equity Investment and Securities Portfolio Restructuring

During the second quarter of 2026, the Company recorded a gain of $6.57 million on the sale of its membership interest (held by the Company's subsidiary, National Bankshares Financial Services, Inc.) in Bearing Insurance Group, LLC.

Also during the second quarter, the Company completed a strategic repositioning of a portion of its securities available for sale portfolio. The Company sold securities with a total amortized cost of $131.87 million and a weighted average yield of

1.80%. Following the sale, the Company purchased $127.33 million in mortgage-backed securities with a weighted average yield of 5.26%. The Company expects that incremental earnings improvement from the repositioning will recover the $6.55 million pre-tax loss on the sale over a period of 1.8 years from the date of the transaction, and provide earnings accretion after the recovery period.

Noninterest Income

When the third quarter of 2026 is compared with the second quarter of 2026, service charges on deposit accounts improved due to increased income for non-sufficient funds and periodic maintenance charges. Trust income improved due to higher estate fees. Other income decreased due to lower commissions on securities sales.

When the third quarter of 2026 is compared with the third quarter of 2025, service charges on deposits increased due to higher NSF fees and periodic maintenance charges. Credit and debit card fees, net, increased due to volume. Trust income decreased due to lower estate fees and other income decreased due to lower commissions on securities sales. Service charges on loans sold decreased due to the strategic retention of mortgages for portfolio.

When the nine month period ended September 30, 2026 is compared with the same period of 2025, noninterest income increased. Credit and debit card fees, net, increased due to improved terms for interchange fee income associated with the Company's core system conversion in May of 2025, trust income increased due to estate fees, and other income increased primarily due to higher commissions on securities sales.

Noninterest Expense

When the third quarter of 2026 is compared with the second quarter of 2026, noninterest expense increased slightly, due to increases in salaries related to medical insurance and data processing for infrastructure upgrades. The increases were substantially offset by lower other operating expense due to improved non-loan charge-offs and expense recorded in the second quarter for the annual meeting of stockholders.

When comparing the three and nine month periods ended September 30, 2026 with the comparable periods of 2025, total noninterest expense increased. Salaries and employee benefits increased due to higher medical insurance, incentive programs and pension service cost. Occupancy, furniture and fixtures increased due to depreciation and amortization of assets placed into service during 2025 for the new core system and the Company's Roanoke and Lynchburg branch locations. Data processing increased due to infrastructure upgrades. During 2025, the Company recorded specific expense for the core system conversion, as well as associated marketing and mailing expense included in other noninterest expense. Other operating expense also decreased due to improvement in the pension non-service benefit.

Securities

The net unrealized loss on securities worsened when September 30, 2026 is compared with June 30, 2026 and September 30, 2025, due to volatility in the bond market related to the Iran War that began in 2026 and market concerns related to inflation. Analysis as of September 30, 2026 did not indicate credit risk concerns with any of the Company’s securities.

Deposits and Borrowings

Deposits decreased when September 30, 2026 is compared with June 30, 2026, due to annual cyclicality in the Company's municipal deposit base. Trend analysis indicates that municipal deposits reach a low point during the third quarter and increase during the fourth quarter. The Company’s depositors within its market areas are diverse and include individuals, businesses and municipalities. The Company does not have any brokered deposits. Depositors are insured up to the FDIC maximum of $250 thousand. Municipal deposits, which account for 19% of the Company’s deposits, have additional security from bonds pledged as collateral, in accordance with state regulation. Of the Company’s non-municipal deposits, approximately 21% are uninsured.

The Company's borrowings as of September 30, 2026 are short-term and supported securities purchases at attractive yields. The Company expects securities paydowns and maturities during the fourth quarter will pay off those borrowings.

Liquidity

The Company’s liquidity position remains solid. The Company maintains borrowing lines with the Federal Home Loan Bank of Atlanta (“FHLB”) and the Federal Reserve that provide substantial borrowing capacity. Combined with a low loan-to-deposit ratio, positive results of the latest liquidity stress testing and strategic deposit marketing, the Company believes it is well positioned to meet foreseeable liquidity demands.

Loans and Credit Quality

Loans increased from June 30, 2026 and from September 30, 2025. The Company is positioned to make every loan within it's legal lending limit and that meets its underwriting standards and strategic portfolio mix goals. Loan metrics continue to reflect low credit risk, with low charge-off and past due levels. The Company recorded a provision for credit losses for the third quarter of 2026, similar to the amount recorded for the second quarter of 2026. When the nine month period ended September 30, 2026 is compared with the same period of 2025, the provision for credit losses decreased due to a lower ACL ratio, determined by the Company's analysis of credit risk factors.

Stockholders’ Equity

Stockholders’ equity decreased when September 30, 2026 is compared with June 30, 2026 and September 30, 2025 due to unrealized losses on available for sale securities, which are reflected, net of tax, in accumulated other comprehensive loss. Accumulated other comprehensive loss is excluded from the Bank’s regulatory capital and does not affect regulatory capital ratios. The Bank is considered well capitalized, with capital ratios substantially higher than minimum regulatory requirements, and meets all requirements for borrowing from the FHLB. The Company paid a semiannual dividend of $0.75 to shareholders on June 1, 2026.

About National Bankshares

National Bankshares, Inc., headquartered in Blacksburg, Virginia, is the parent company of The National Bank of Blacksburg, which does business as National Bank, and of National Bankshares Financial Services, Inc. National Bank is a community bank operating from 28 full-service offices in Southwestern, Western and Central Virginia, and one loan production office in Charlottesville, Virginia and operates 26 automated teller machines in its service area. National Bankshares Financial Services, Inc. is an investment and insurance subsidiary in the same trade area. The Company’s stock is traded on the Nasdaq Capital Market under the symbol “NKSH.” Additional information is available at www.nationalbankshares.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast and are subject to significant uncertainty. Although we believe that our expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of our existing knowledge of our business and operations, there can be no assurance that actual future results, performance, achievements, or trends will not differ materially from any projected future results, performance, achievements or trends expressed or implied by such forward-looking statements. Actual future results, performance, achievements or trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the following: the level of inflation; interest rates; national and local economic conditions; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau and the Federal Deposit Insurance Corporation, and the impact of any policies or programs implemented pursuant to financial reform legislation; unanticipated increases in the level of unemployment in the Company’s market; the quality or composition of the loan and/or investment portfolios; the sufficiency of the Company’s allowance for credit losses; demand for loan products; deposit flows, including impact on liquidity; competition; demand for financial services in the Company’s market; the real estate market conditions in the Company’s market; laws, regulations and policies impacting financial institutions; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer behavior; technological risks and developments, and cyber-threats, attacks or events; the Company’s technology initiatives; geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts; the occurrence of significant natural disasters, including severe weather conditions, floods, and other catastrophic events; the Company's ability to identify, attract, and retain experienced management, relationship managers, and support personnel, particularly in a competitive labor environment; performance by the Company’s counterparties or vendors; applicable accounting principles, policies and guidelines; the impact of public health events, including the adverse impact on our business and operations and on our customers; and other factors described from time to time in the Company’s reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.