FOR IMMEDIATE RELEASE

National Bankshares, Inc. Reports Results for the Three and Six Months Ended June 30, 2026

BLACKSBURG, VA., July 23, 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 second quarter of 2026. The Company reported net income of $10.01 million or $1.57 per diluted common share for the six months ended June 30, 2026. This compares with net income of $5.53 million or $0.87 per diluted common share for the six months ended June 30, 2025. For the three month period ended June 30, 2026, the Company reported net income of $5.03 million or $0.79 per diluted common share. This compares with net income for the three month period ended June 30, 2025 of $2.29 million or $0.36 per diluted common share. National Bankshares, Inc. ended June 30, 2026 with total assets of $1.83 billion.

Lara E. Ramsey, President and CEO, commented, "We are pleased to report our second quarter results, with net income significantly improved from the same period last year. Notably, during the second quarter of 2026, we sold our stake in a community-bank insurance consortium and invested the proceeds in restructuring a portion of the securities portfolio to enhance profitability in the near and medium term. In the second half of 2026 and beyond, we continue to focus on building market share, especially through our recent expansions, while optimizing our products, technology, and training to deliver a top-notch personalized banking experience and outstanding shareholder value."

Comparability

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

Highlights

Gain on Sale of Equity Investment

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.

Securities Portfolio Repositioning

Also during the second quarter, the Company completed a strategic repositioning of a portion of its securities available-for-sale portfolio. The Company sold agency securities with a total amortized cost of $110.69 million and mortgage-backed securities with a total amortized cost of $21.18 million. The securities sold had a weighted average yield of 1.80%. Following the sale, the Company purchased mortgage-backed securities, designated available-for-sale, with a total amortized cost of $127.33 million and a weighted average yield of 5.26%. The sale of securities resulted in a pre-tax loss of $6.55 million, which the Company expects to recover with improved earnings over approximately 1.8 years. The repositioning is expected to increase the Company's interest income by $4.25 million annually, adding 12 basis points to the projected net interest margin for 2026 and 24 basis points to the projected 2027 net interest margin.

Net Interest Income

The net interest margin improved when the second quarter of 2026 is compared with the first quarter of 2026 due to reduction in the cost of time deposits. When the second quarter of 2026 is compared with the second quarter of 2025, improvement in net interest margin stemmed from higher yields on loans and taxable securities and lower cost of time deposits and interest bearing deposit accounts. When the six month period ended June 30, 2026 is compared with the same period of 2025, the

net interest margin improvement was driven by higher loan and securities yields and lower deposit costs, somewhat offset by lower yield on interest-bearing deposit assets.

Noninterest Income

When the second quarter of 2026 is compared with the first quarter of 2026, service charges on deposit accounts improved due to increased fee income for non-sufficient funds, credit and debit card fees, net, improved due to volume, trust income improved due to estate fee income recorded during the second quarter, and the gain on sale of mortgage loans held for sale improved due to higher volume. Other service charges and fees decreased due to the timing of recognition of safe deposit box income. During the first quarter, the Company recorded an annual bonus commission on insurance business production related to its ownership interest in Bearing Insurance. The Company does not expect that the annual bonus commission will be paid in future years due to the sale of its interest in Bearing Insurance.

When the three and six month periods ended June 30, 2026 are compared with the same periods 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 fee income, other income increased primarily due to higher commissions on securities sales and the gain on sale of mortgage loans held for sale improved due to higher volume.

Noninterest Expense

When the second quarter of 2026 is compared with the first quarter of 2026, noninterest expense decreased slightly, primarily due to winter weather-related costs during the first quarter.

When comparing the three and six month periods ended June 30, 2026 with the comparable periods of 2025, total noninterest expense decreased. 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. Salaries and employee benefits increased due to higher medical insurance and incentive programs. 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 various categories. Professional services decreased due to lower legal expense. Other operating expense also decreased due to improvement in the pension non-service benefit.

Securities

The net unrealized loss on securities improved when June 30, 2026 is compared with March 31, 2026 and June 30, 2025, primarily due to the securities portfolio repositioning. Analysis as of June 30, 2026 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 21.7% 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 20.8% 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 strategic deposit marketing, the Company believes it is well positioned to meet foreseeable liquidity demands.

Loans and Credit Quality

Loans increased from March 31, 2026 and from June 30, 2025, driven primarily by growth in construction 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 provision for credit losses for the second quarter of 2026, compared with a recovery of credit losses for the first quarter of 2026, reflecting portfolio growth and some softening in certain economic factors. When the six month period ended June 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

The Company paid a semiannual dividend of $0.75 to shareholders on June 1, 2026. Stockholders’ equity increased when June 30, 2026 is compared with March 31, 2026 and 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 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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