What changed in this filing

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Item 1. Business

2026-03-27 compared with 2025-03-28 · 79 added, 82 removed, 252 unchanged (39% of the section changed)

1 unchanged sentence

National Bankshares, Inc.

(the “Company” or “NBI”) is a financial holding company that was organized in 1986 under the laws of Virginia and is registered under the Bank Holding Company Act of 1956.

(the “Company” or “NBI”) is a financial holding company that was organized in 1986 under the laws of Virginia and is registered under the Bank Holding Company Act of 1956, as amended ("BHCA").

National Bankshares, Inc.

10 unchanged sentences

NBB is a community-oriented financial institution headquartered in Blacksburg, Virginia.

Through 27 banking locations across southwest and central Virginia and two loan production offices in Roanoke and Charlottesville, Virginia, NBB offers a full range of retail and commercial banking services to individuals, businesses, non-profits and local governments.

Construction on a branch in Roanoke, Virginia is underway, with a planned completion date during the first quarter of 2025.

Through 28 banking locations across southwest, western and central Virginia, including a new branch opened in 2025 in Roanoke, Virginia, a recently upgraded Lynchburg, Virginia location and a loan production office in Charlottesville, Virginia, NBB offers a full range of retail and commercial banking services to individuals, businesses, non-profits and local governments.

NBB offers telephone, mobile and internet banking and it operates 26 automated teller machines (“ATMs”) in its service area.

30 unchanged sentences

Interest on Investments

The Company serves customers through its offices in southwest and central Virginia.

The Company serves customers through its offices in southwest, western and central Virginia.

Although largely rural, the market area is home to several major state-supported universities, including Virginia Polytechnic Institute and State University (“Virginia Tech”) and Radford University.

The recently acquired branches and the loan production office in Charlottesville also service areas that contain the University of Virginia, James Madison University, Virginia Military Institute, Washington and Lee University, Liberty University, and Mary Baldwin University.

The branches acquired in 2024 and the loan production office in Charlottesville also service areas that contain the University of Virginia, James Madison University, Virginia Military Institute, Washington and Lee University, Liberty University, and Mary Baldwin University.

In addition to education, the market area has a diverse economic base with manufacturing, agriculture, tourism, healthcare, retail and service industries.

Large manufacturing facilities in the region include Celanese Acetate, the largest employer in Giles County, and Volvo Heavy Trucks, the largest company in Pulaski County.

Both of these companies have experienced cycles of hiring and layoffs within the past several years.

Tazewell County is largely dependent on the coal mining industry and on agriculture for its economic base.

Tazewell County's economic base is centered on the coal mining industry and agriculture.

Montgomery County, Bluefield in Tazewell County, Abingdon in Washington County and the cities of Roanoke, Charlottesville, Waynesboro, Lynchburg and Staunton are regional retail centers and have facilities to provide basic health care for the regions.

NBI’s market area offers the advantages of a good quality of life, scenic beauty, moderate climate and historical and cultural attractions.

The region has had success attracting retirees, particularly from the Northeast and urban northern Virginia.

Because NBI’s market area is economically diverse and includes large public employers, it has historically avoided the most extreme effects of past economic downturns.

4 unchanged sentences

Many of these competitors are much larger in total assets and capitalization, have greater access to capital markets and offer a broader array of financial services than NBB.

In order to compete, NBB relies upon a deep knowledge of its markets, a service-based business philosophy, personal relationships with customers, specialized services tailored to meet customers’ needs and the convenience of office locations and technological access.

In order to compete, NBB relies upon a deep knowledge of its markets, a service-based business philosophy, personal relationships with customers, speci alized services tailored to meet customers’ needs and the convenience of office locations and technological access.

In addition, the Bank is competitive with other financial institutions in its market area with respect to interest rates paid on deposit accounts, interest rates charged on loans and other service charges on loans and deposit accounts.

1 unchanged sentence

NBI, NBB and NBFS are organized in a holding company/subsidiary structure.

As of December 31, 2024, NBB had 242 full time equivalent employees and NBFS had 3 full time equivalent employees.

As of December 31, 2025, NBB had 243 full time employees and 11 part time employees.

NBFS had two full time employees and 1 part time employee..

NBB performs services for and charges commensurate fees to NBI and NBFS.

4 unchanged sentences

National Bankshares, Inc.

NBI is a bank holding company qualified as a financial holding company under the federal Bank Holding Company Act of 1956, as amended (“BHCA”), which is administered by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

NBI is a bank holding company qualified as a financial holding company under the BHCA, which is administered by the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

As such, NBI is subject to the supervision, examination, and reporting requirements of the BHCA and the regulations of the Federal Reserve.

NBI is required to furnish to the Federal Reserve an annual report of its operations at the end of each fiscal year and such additional

information as the Federal Reserve may require pursuant to the BHCA.

NBI is required to furnish to the Federal Reserve an annual report of its operations at the end of each fiscal year and such additional information as the Federal Reserve may require pursuant to the BHCA.

The Federal Reserve is authorized to examine NBI and its subsidiaries.

With some limited exceptions, the BHCA requires a bank holding company to obtain prior approval from the Federal Reserve before acquiring or merging with a bank or before acquiring more than 5% of the voting shares of a bank unless it already controls a majority of shares.

With some limited exceptions, the BHCA requires

a bank holding company to obtain prior approval from the Federal Reserve before acquiring or merging with a bank or before acquiring more than 5% of the voting shares of a bank unless it already controls a majority of shares.

The Bank Holding Company Act.

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For smaller financial institutions such as NBI and NBB, the CFPB coordinates its examination activities through their primary regulators.

In February 2025, the Trump administration halted the CFPB’s operations, and its employees were instructed to cease all supervision and examination activity.

As a result, the future of the CFPB and its impact on our business are uncertain.

During 2025, the CFPB reduced its staff by over 80%.

The reduction in force is the subject of litigation, and the staffing cuts are currently stayed pending the federal circuit court’s rehearing of the case.

The impact of these developments on banking organizations is uncertain.

States and state attorneys general may increase regulatory, investigative and enforcement activity with respect to consumer protection, in response to changes in regulation, supervision and enforcement of consumer protection laws by federal regulators.

Notwithstanding ongoing, legal, budgetary and structural challenges affecting the CFPB, the CFPB remains an active federal regulatory agency with continuing supervisory and enforcement authority and retains its broad authority to pursue enforcement actions, including investigations, civil actions and cease and desist proceedings.

The CFPB may also refer civil and criminal findings to the Department of Justice for prosecution.

NBB is also subject to other federal and state consumer protection laws and regulations that, among other things, prohibit unfair, deceptive and abusive, corrupt or fraudulent business practices, untrue or misleading advertising and unfair competition.

Source of Strength.

3 unchanged sentences

Any capital loans by a bank holding company to any of its subsidiary banks are subordinate in right of payment to depositors and to certain other indebtedness of such subsidiary banks.

In the event of a bank holding company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

The Economic Growth, Regulatory Reform and Consumer Protection Act of 2018.

The Economic Growth, Regulatory Reform and Consumer Protection Act of 2018 ("EGRRCPA") amended provisions of the Dodd-Frank Act and other statutes administered by banking regulators.

Among these amendments are provisions to tailor applicability of certain of the enhanced prudential standards for Systemically Important Financial Institutions and to increase the $50 billion asset threshold in two stages to $250 billion to which these enhanced standards apply.

The EGRRCPA exempts insured depository institutions (and their parent companies) with less than $10

billion in consolidated assets and that meet certain tests from the Volker Rule (which prohibits banks from conducting certain investment activities with their own accounts) .

The EGRRCPA also increased the asset threshold from $1 billion to $3 billion for financial institutions to qualify for an 18 month on site examination schedule.

The EGRRCPA addressed numerous other regulatory requirements based on the size and complexity of financial institutions, particularly benefiting smaller institutions like the Company.

In the event of a bank holding

company’s bankruptcy, any commitment by the bank holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment.

The National Bank of Blacksburg

13 unchanged sentences

On October 24, 2023, the federal bank regulatory agencies issued a final rule to modernize their respective CRA regulations.

The revised rules substantially alter the methodology for assessing compliance with the CRA, with material aspects taking effect January 1, 2026 and revised data reporting requirements taking effect January 1, 2027.

Among other things, the revised rules evaluate lending outside traditional assessment areas generated by the growth of non-branch delivery systems, such as online and mobile banking, apply a metrics-based benchmarking approach to assessment, and clarify eligible CRA activities.

The final rule has been subject to an injunction since March 29, 2024, and the effective dates will be extended pending resolution of the lawsuit.

The revised rules would have substantially altered the methodology for assessing compliance with the CRA, and likely would have made it more challenging and/or costly for NBB to maintain its “satisfactory” rating.

Following its finalization on March 29, 2024, the 2023 modernization rule became subject to an ongoing injunction.

On July 16, 2025, the federal bank regulatory agencies issued a joint proposal to rescind the 2023 modernization rule.

The agencies continue to apply the CRA rules as they existed before the 2023 modernization, considering the injunction and pending finalization of the rescission of the modernization rule.

Privacy Legislation .

4 unchanged sentences

In October 2024, the CFPB issued a final rule regarding personal financial data rights that is designed to promote “open banking.” The final rule requires, among other things, that data providers, including any financial institution, make available to consumers and certain authorized third parties, upon request, certain covered transaction, account, and payment information.

Institutions with at least $1.5 billion but less than $3 billion in total assets, including the Company, are required to comply with the final rule by April 1, 2029.

Institutions with at least $1.5 billion but less than $3 billion in total assets, including the Company, were required to comply with the final rule by April 1, 2029.

On the same day the final rule was released, certain industry participants filed a complaint against the CFPB challenging the final rule.

6 unchanged sentences

There are numerous disclosure and other compliance requirements associated with the consumer laws and regulations.

The EGRRCPA modified a number of these requirements, including, for qualifying institutions with less than $10 billion in assets, a safe harbor for compliance with the “ability to pay” requirements for consumer mortgage loans.

Deposit Insurance.

4 unchanged sentences

An institution’s assessment base is consolidated total assets less its average tangible equity as defined by the FDIC.

In October 2022, the FDIC adopted a final rule to increase the assessment base rate schedules uniformly by two basis points beginning with the first quarterly assessment period of 2023.

The FDIC has authority to impose special measures to boost the deposit insurance fund such as prepayments of assessments and additional special assessments.

15 unchanged sentences

Common Equity Tier 1 Capital (“CET1”) is capital according to the balance sheet, adjusted for goodwill and intangible assets and other prescribed adjustments.

At NBB’s election, CET1 is also adjusted to exclude accumulated other comprehensive loss.

At NBB’s election, CET1 is also adjusted to exclude accumulated other comprehensive income or loss.

Tier 1 Capital is CET1 adjusted for additional capital deductions.

1 unchanged sentence

The Leverage Ratio is the ratio of Tier 1 Capital to total average assets, less goodwill and intangibles and certain deferred tax assets.

As of December 31, 2024, NBB’s capital ratios exceeded the above minimum ratios including the capital conservation buffer.

As of December 31, 2025, NBB’s capital ratios exceeded the minimum ratios including the capital conservation buffer.

NBB is also subject to the “prompt corrective action” regulations pursuant to Section 38 of the Federal Deposit Insurance Act, as amended, which incorporates a CET1 ratio and increases certain other capital ratios.

27 unchanged sentences

The AML laws and their regulations also provide for information sharing, subject to conditions, between federal law enforcement agencies and financial institutions, as well as among financial institutions, for counter-terrorism purposes.

Federal banking regulators are required,

when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering activities of the applicants.

Federal banking regulators are required, when reviewing bank holding company acquisition and bank merger applications, to take into account the effectiveness of the anti-money laundering activities of the applicants.

To comply with these obligations, the Company has implemented appropriate internal practices, procedures, and controls.

2 unchanged sentences

OFAC publishes lists of prohibited parties that are regularly consulted by the Company in the conduct of its business in order to assure compliance.

The Company is responsible for, among other things, blocking accounts of, and transactions with, prohibited parties identified by OFAC, avoiding unlicensed trade and financial transactions with such parties and reporting blocked transactions after their occurrence.

The Company is responsible for, among other things, blocking accounts of, and transactions with, prohibited parties identified by OFAC, avoiding unlicensed trade and financial transactions with such

parties and reporting blocked transactions after their occurrence.

Failure to comply with OFAC requirements could have serious legal, financial and reputational consequences for the Company.

2 unchanged sentences

Section 956 of the Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities that encourage inappropriate risk-taking by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.

The federal banking agencies issued such proposed rules in March 2011 and issued a revised proposed rule in June 2016 implementing the requirements and prohibitions set forth in Section 956.

The revised proposed rule would apply to all banks, among other institutions, with at least $1 billion in average total consolidated assets for which it would go beyond the existing Interagency Guidance on Sound Incentive Compensation Policies to (i) prohibit certain types and features of incentive-based compensation arrangements for senior executive officers, (ii) require incentive-based compensation arrangements to adhere to certain basic principles to avoid a presumption of encouraging inappropriate risk, (iii) require appropriate board or committee oversight, (iv) establish minimum recordkeeping, and (v) mandate disclosures to the appropriate federal banking agency.

In May 2024, the FDIC, the OCC, and the Federal Housing Finance Agency reproposed the 2016 proposed rule and requested comment on specific alternatives and general questions, given the passage of time since the 2016 proposed rule was issued.

Despite numerous proposals, no regulation has been finalized.

The Federal Reserve will review, as part of the regular, risk-focused examination process, the incentive compensation arrangements of financial institutions, such as the Company, that are not “large, complex banking organizations.” These reviews will be tailored to each financial institution based on the scope and complexity of the institution’s activities and the prevalence of incentive compensation arrangements.

4 unchanged sentences

The Nasdaq Stock Market, LLC, the exchange on which our common stock is listed, enacted a listing rule that became effective in 2023 requiring listed companies to adopt policies mandating the recovery or “clawback” of excess incentive compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

The Company has adopted a clawback policy compliant with such rule, a copy of which is attached as Exhibit 97.1 to this Form 10-K.

The Company has adopted a clawback policy compliant with such rule, a copy of which is included as Exhibit 97.1 to this Form 10-K.

Cybersecurity .

6 unchanged sentences

The rule requires financial institutions to notify their primary federal regulator as soon as possible and no later than 36 hours after the institution determines that a cybersecurity incident has occurred that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the institution’s:

revenue, profit, or franchise value, or (iii) operations, including associated services, functions and support, as applicable, the failure or discontinuance of which would pose a threat to the financial stability of the United States.

(i) ability to carry out banking operations, activities, or processes, or deliver banking products and services to a material portion of its customer base, in the ordinary course of business, (ii) business line(s), including associated operations, services, functions, and support, that upon failure would result in a material loss of revenue, profit, or franchise value, or (iii) operations, including associated services, functions and support, as applicable, the failure or discontinuance of which would pose a threat to the financial stability of the United States.

In July 2023, the SEC issued a final rule to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incident reporting by public companies that are subject to the reporting requirements of the Exchange Act.

1 unchanged sentence

Cybersecurity of this Form 10-K for a discussion of the Company’s cybersecurity risk management, strategy and governance.

Fair Access to Financial Services .

In August 2025, President Trump signed Executive Order 14331, “Guaranteeing Fair Banking Access for All Americans,” which states that it is the policy of the United States that no American should be denied access to financial services because of their constitutionally or statutorily protected beliefs, affiliations, or political views.

The Executive Order directs the Treasury Secretary and federal banking regulators to address politicized or unlawful debanking activities.

In recent years, certain states have also enacted, or have proposed to enact, statutes, regulations or policies that prohibit financial institutions from denying or canceling products or services to a person or business, or otherwise discriminating against a person or business in making available products or services, on the basis of certain social or political factors or other activities.

Artificial Intelligence.

CFPB and other federal regulatory guidance reiterates that creditors are not excused from the adverse action notice requirements under the Equal Credit Opportunity Act if they rely on complex algorithmic underwriting models.

States have also

started to regulate the use of artificial intelligence technologies.

In July 2024, the federal banking agencies issued a final rule that requires, among other things, financial institutions to ensure that their automated valuation models for property valuation follow certain quality control standards, including a requirement that such valuation models comply with nondiscrimination laws.

Monetary Policy

17 unchanged sentences

Executive Officers of the Company

The following is a list of names and ages of all executive officers of the Company;

The following table presents the executive officers of the Company;

their terms of office as officers;

the positions and offices within the Company held by each officer;

and each person’s principal occupation or employment during the past five years.

and thier principal occupation or employment during the past five years.

Offices and Positions Held

National Bankshares, Inc.:

Chairman and Chief Executive Officer (“CEO”), May 2019 to Present;

Chairman, President and CEO, May 2019 to December 31, 2024;

President and CEO, September 2017 – May 2019;

Executive Vice President, April 2008 – August 2017.

Chief Executive Officer ("CEO"), July 2025 to Present;

President, January 1, 2025 to Present;

Corporate Secretary, June 2016 to June 2025;

Executive Vice President ("EVP")/Chief Operating Officer ("COO") May 2022 to December 31, 2024;

Senior Vice President ("SVP")/Administration, June 2011 to December 2017;

Vice President/Human Resources, January 2001 – June 2011.

The National Bank of Blacksburg:

Chairman, September 2017 to Present;

CEO, July 2025 to Present;

President July 2014 to December 31, 2024;

Executive Vice President/Chief Operating Officer ("COO"), October 2002 – July 2014.

President, January 1, 2025 to Present;

Corporate Secretary, June 2016 to June 2025;

EVP/COO, May 2022 to December 31, 2024;

SVP/Administration, January 2018 to May 2022;

Vice President/Human Resources, January 2001 to June 2011.

National Bankshares Financial Services, Inc.:

Chairman, President and CEO, September 2017 to Present;

Treasurer, June 2011 to Present.

Chairman, President and CEO, July 2025 to Present.

National Bankshares, Inc.:

Executive Vice President/Chief Risk Officer, January 8, 2025 to Present;

Senior Vice President/Senior Operations, Risk and Technology Officer, May 2022 to January 7, 2025;

Treasurer and CFO, January 2009 to May 2022.

EVP/COO, February 1, 2026 to Present;

EVP/Chief Risk Officer, January 8, 2025 to January 31, 2026;

SVP/Senior Operations, Risk and Technology Officer, May 2022 to January 7, 2025;

Treasurer and Chief Financial Officer ("CFO"), January 2009 to May 2022.

The National Bank of Blacksburg:

Executive Vice President/Chief Risk Officer, January 8, 2025 to Present;

Senior Vice President/Senior Operations, Risk and Technology Officer, May 2022 to January 7, 2025;

Senior Vice President/Operations and Risk Management and Chief Financial Officer ("CFO"), January 2009 – May 2022;

Senior Vice President/Operations and Risk Management, February 2008 – January 2009;

EVP/COO, February 1, 2026 to Present;

EVP/Chief Risk Officer, January 8, 2025 to January 31, 2026;

SVP/Senior Operations, Risk and Technology Officer, May 2022 to January 7, 2025;

SVP/Operations and Risk Management and CFO, January 2009 – May 2022;

SVP/Operations and Risk Management, February 2008 – January 2009;

Vice President/Operations and Risk Management, April 2004 – February 2008.

National Bankshares, Inc.:

President, January 1, 2025 to Present;

Corporate Secretary, June 2016 to Present;

Executive Vice President/COO May 2022 to December 31, 2024;

Senior Vice President/Administration, June 2011 – December 2017;

Vice President/Human Resources, January 2001 – June 2011.

The National Bank of Blacksburg:

President, January 1, 2025 to Present;

Corporate Secretary, June 2016 to Present;

Executive Vice President/COO, May 2022 to December 31, 2024;

Senior Vice President/Administration, January 2018 – May 2022;

Vice President/Human Resources, January 2001 – June 2011.

National Bankshares, Inc.:

Executive Vice President/Chief Lending Officer, November 2019 to Present;

Senior Vice President/Chief Lending Officer, August 2016 – November 2019

EVP/Chief Lending Officer, November 2019 to Present;

SVP/Chief Lending Officer, August 2016 – November 2019

The National Bank of Blacksburg:

Executive Vice President/Chief Lending Officer, November 2019 to Present;

Senior Vice President/Chief Lending Officer, August 2016 – November 2019;

Senior Vice President/Loans, August 2012 – August 2016.

EVP/Chief Lending Officer, November 2019 to Present;

SVP/Chief Lending Officer, August 2016 – November 2019;

SVP/Loans, August 2012 – August 2016.

National Bankshares, Inc.:

Executive Vice President/CFO and Treasurer, January 8, 2025 to Present;

Senior Vice President/CFO and Treasurer, May 2022 to January 7, 2025;

EVP/CFO and Treasurer, January 8, 2025 to Present;

SVP/CFO and Treasurer, May 2022 to January 7, 2025;

Vice President/Controller, May 2014 – May 2022;

1 unchanged sentence

The National Bank of Blacksburg:

Executive Vice President/CFO and Cashier, January 8, 2025 to Present;

Senior Vice President/CFO and Cashier, May 2022 to January 7, 2025;

EVP/CFO and Cashier, January 8, 2025 to Present;

SVP/CFO and Cashier, May 2022 to January 7, 2025;

Vice President/Controller, May 2014 – May 2022;

Corporate Analysis Officer June 2011 – May 2014.

National Bankshares Financial Services, Inc.:

Treasurer, July 1, 2025 to Present.

National Bankshares, Inc.:

Senior Vice President/Chief Credit Officer, March 2022 to Present.

SVP/Chief Credit Officer, March 2022 to Present.

The National Bank of Blacksburg:

Senior Vice President/Chief Credit Officer, March 2022 to Present.

SVP/Chief Credit Officer, March 2022 to Present.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business