FOR IMMEDIATE RELEASE

National Bankshares, Inc. Reports Results for the Three and Nine Months Ended September 30, 2025

BLACKSBURG, VA., October 23, 2025 -- 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 2025. The Company reported net income of $9.95 million or $1.56 per diluted common share for the nine months ended September 30, 2025. This compares with net income of $4.54 million or $0.75 per diluted common share for the nine months ended September 30, 2024. For the three month period ended September 30, 2025, the Company reported net income of $4.42 million or $0.69 per diluted common share. This compares with net income for the three month period ended September 30, 2024 of $2.68 million or $0.42 per diluted common share. National Bankshares, Inc. ended September 30, 2025 with total assets of $1.80 billion.

Lara E. Ramsey, President and CEO, commented, "We are pleased to report improvement in net income through the third quarter of 2025, compared with the previous year. Growing returns on loans and lower deposit costs have had a positive impact on our net interest margin.”

Ms. Ramsey continued, “In the third quarter, we leveraged our new technology and our expanded branch network to position ourselves as the community bank of choice throughout southwest, western, and central Virginia. Our core system upgrade, completed in the second quarter, improved many facets of our customer experience and increased our operational efficiency. Our new Roanoke, Virginia full-service office continues to develop our footprint in this key market. The upcoming relocation of our Lynchburg, Virginia, office will offer customers a modern, more convenient location. We are excited about the transformational changes we have made this year, and we remain focused on expanding service, responding to community needs, and delivering value to shareholders.."

Comparability

The Company acquired Frontier Community Bank ("FCB") on June 1, 2024. In accordance with generally accepted accounting principles, periods prior to June 1, 2024 have not been restated and do not include assets acquired, liabilities assumed or results of operations related to FCB prior to acquisition. On the date of merger, the transaction increased the Company's stockholders' equity by $14.3 million and added loans of $118.7 million, goodwill of $4.9 million, core deposit intangibles of $2.1 million, and customer deposits of $129.7 million. More information about assets acquired and liabilities assumed is provided in the Company's 2024 Form 10-K.

During the second quarter of 2025, the Company reclassified certain deposit products between savings deposits and time deposits, and made other minor reclassifications. Prior periods are presented on a comparable basis.

Highlights

Net Interest Income

Lower deposit costs and higher loan yields drove improvement in the net interest margin when the third quarter of 2025 is compared with the second quarter of 2025 and the third quarter of 2024, and when the nine month period ended September 30, 2025 is compared with the nine month period ended September 30, 2024.

Noninterest Income

Growth in trust income and an incentive payment recognized in credit and debit card fees, net drove the improvements in noninterest income when the third quarter of 2025 is compared with the second quarter of 2025, and when the three and

nine month periods ended September 30, 2025 are compared with the respective periods of 2024. When comparing the nine month periods ended September 30, 2025 and 2024, higher service charges on deposits and growth in BOLI income are reflective of the FCB acquisition.

Noninterest Expense

Noninterest expense decreased when the third quarter of 2025 is compared with the second quarter of 2025 due to expense recognized in the second quarter for the Company's core system conversion. When comparing the nine month periods ended September 30, 2025 and 2024, higher noninterest expense is reflective of both the core system conversion and operations of the combined Company, which include the acquired operations of FCB. Noninterest expense in 2024 includes merger expenses related to the FCB acquisition.

Securities and Borrowings

The Company purchased $49.86 million in securities during the third quarter of 2025. The purchases were funded with borrowings, providing a small spread until the borrowings are repaid by the end of 2026, after which the Company expects to fully benefit from the yield. Analysis as of September 30, 2025 did not indicate credit risk concerns with any of the Company’s securities.

Deposits
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 21.2% 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 20.4% are uninsured.

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 success of deposit marketing, the Company believes it is well positioned to meet foreseeable liquidity demands.

Loans and Credit Quality

Loans increased from June 30, 2025, primarily driven by growth in construction, consumer real estate and commercial non real estate loans. The Company is positioned to continue to make every loan that meets its underwriting standards. Loan metrics continue to reflect low credit risk, with low charge-off and past due levels. The Company recorded a larger provision for the third quarter of 2025 when compared with the second quarter of 2025, reflecting portfolio growth and an increase in the allowance for credit losses related to certain economic factors.

Stockholders’ Equity

The Company paid a semiannual dividend of $0.73 to shareholders on June 1, 2025. Stockholders’ equity increased when September 30, 2025 is compared with June 30, 2025 due to net income and improvement in 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.

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, primarily in southwestern, western and central Virginia, and one loan production office in Charlottesville, Virginia. 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.

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Consolidated Balance Sheets

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